The argument also has a serious timing problem. The Federal Reserve’s balance sheet likely will be normalized by late this decade, before the federal debt-to-GDP ratio even increases materially from today’s level.
Under the reasonable projection mentioned above, the debt-to-GDP ratio will remain roughly stable until 2020 before rising significantly in the next decade.8 That’s not a favorable longer-term forecast, all the more so because it is importantly the result of demographic changes that have been expected for decades.