Yellen faces a logistical nightmare

The impending transition from Ben Bernanke to Janet Yellen at the US Federal Reserve is taking place at a particularly sensitive time, argues David Rowe – the new chair faces the logistical nightmare of unwinding a massive increase in the central bank’s balance sheet

Public discussion of US monetary policy over the past five years has been remarkably ignorant. Critics of Ben Bernanke often claim that, under his chairmanship, the Federal Reserve has been destroying the integrity of the US dollar and encouraging runaway inflation. This seems to be based on a misunderstanding of how fractional reserve banking works. 

Understanding Fed policy since late 2008 requires some familiarity with the extended debate among economists about the causes of the Great