Trade deficits reduce economic growth, according to a theory posited by the great 18th-century Scottish economist and philosopher David Hume. The outflow of gold to pay the shortfall (trade deficit) would contract the money supply and automatically lead to the reduction of domestic prices as if by an ‘invisible hand.’
Many people view money and banking similarly to how the field is idyllically portrayed in the movie It’s a Wonderful Life, in which Jimmy Stewart’s S&L takes in deposits and lends them out to individuals in the community.
The bigger a central bank’s balance sheet is, the more the government is involved in the production of money, and the less capitalistic an economy becomes.
Quantitative easing (QE) became quantitative tightening (QT) in October 2018. That was when the number of treasuries and mortgage-backed securities (MBS) not being reinvested ($50 billion per month) by the Federal Reserve was close to the level of maturing treasury bonds and mortgage payments from homeowners.
Seven months into a plan where $36 billion should have been shrunk only $14 billion has been reduced. (The Federal Reserves owned $1.68 trillion of mortgage-backed securities when they started)
Apparently, the Congress does not know who benefited from QE nor do they understand how the Federal Reserve reduces their balance sheet. Because if they did, there is no way they would support this tax bill.