The Fed’s tapering gives us the chance to focus on the economy’s real problems

Abstract

Last week, in his final press conference as Chairman of the Federal Reserve, Ben Bernanke announced that the Fed would be ‘tapering’ its program of buying Treasury and mortgage-backed securities (also known as quantitative easing or QE) by $10 billion a month starting January. Steven Horwitz argues that this move has been long overdue as the Fed’s policy of QE has had limited effect on the economy and has created a significant inflationary risk if the economy does begin to grow again. He writes that the Fed’s next challenge will be to determine how it can offload the trillions worth of reserves it now holds