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However, simply halting QT may not be sufficient. A more exhaustive approach, such as executing an "Operation Twist” could help by adjusting the composition of bonds held by the Federal Reserve. Nevertheless, these monetary policy adjustments may only yield limited success at driving down borrowing rates across the broader economy.
The Importance of Fiscal and Regulatory Reform
To genuinely achieve lower borrowing costs that impact the general economy, drastic cuts in government spending are paramount. So far, reductions in spending initiated by the government have not made a significant dent in the overall budget. A major overhaul could involve reductions of $3 trillion or more, which would significantly relieve pressure on borrowing costs.