the end is where we start from

Ben Bernanke steps down as chair of the Federal Reserve. He had a surprise and pulled a token taper out of his vest of just $10 billion. The Fed's Wednesday taper decision will cut monthly purchases from $85 billion to $75 billion in January, with further curbs if the economy continues to improve. The taper decision took all year. Anyone win a pool on this?

Oh, by the way, the Fed balance sheet swelled to $4 trillion. At $4.01 trillion for the week ended December 18th. It was less than $1 trillion before the financial crisis in 2008. The taper will only slow that balance sheet boom. Exiting the unprecedented quantitative easing could be even harder, even as policymakers have acknowledged that that the balance sheet raises risks. The full exit could take years.

Active selling of assets would drive mortgage and Treasury rates higher. That could also depress bond prices.

The central bank could hold its assets and keep interest low. This means the drag on the economy continues. So the end is near for Bernanke as chairman. The end seems like the place to start.







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