Quantitive easing: Should tightening be frightening?

This month the Fed began tightening its belt too: reducing the size of its balance sheet. It had doubled - to $8.5trn - from its pre-Covid level. But could quantitative tightening (QT) be a squeeze too far? In anticipating the likely effects of QT on both economies and markets, it pays to revisit its controversial precursor, QE. Some argue that by recklessly ‘printing money', central bankers brought about the very inflation they were entrusted to keep under control. Others, notably central bankers themselves, insist that QE is more nuanced than merely dropping wads of cash out of figu...