Feb 20 (Reuters) – The Federal Reserve minutes show real
concern and debate over how big its balance sheet can grow and
for how long it can stay that way.
You should share that concern, because a Fed which is buying
fewer bonds, or even, heaven forfend, selling some, is a central
bank creating, once again, the needed conditions for deflating
the bubbles they just blew.
“Several” members of the Federal Open Market Committee
argued that they should be prepared to vary the amount of bond
purchases, now $85 billion per month. “A number,” a form of
words meaning less than “several,” said the costs and risks of
asset buys might indicate that the Fed should taper or end them
before it has reached its avowed employment goal.
Yet another “several” advocated against an early decrease,
while “a few” offered the alternative of just pledging to hold
on to bonds longer as a kind of palliative or supplement.
Something there for everyone, but the upshot is that the
discussion over how and when the great bond-buying experiment
might be unwound is getting more serious, which, for risk asset
investors, is a little like being told they will have to move
out of their parents’ basement and fend for themselves.