Fed Enters ‘Uncharted Territory’ as Assets Hit $3 Trillion

 
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Federal Reserve Chairman Ben Bernanke's unprecedented bond buying pushed the Fed's balance sheet to a record $3 trillion as he shows no sign of softening his effort to bring down 7.8 percent unemployment.

The Fed is purchasing $85 billion of securities every month, using the full force of its balance sheet to stoke the economic recovery. The central bank began $40 billion in monthly purchases of mortgage-backed securities in September and added $45 billion in Treasury securities to that pace this month.

"We're in uncharted territory," said Julia Coronado, chief economist for North America at BNP Paribas SA in New York, and a former Fed economist. Even as "the easy money will flow through financial markets and into the real economy at some point and lift us to a better growth trajectory," the U.S. faces "a lot of risks," she said.