Is ‘Chaos’ Ahead? Some Truths About Fed Policy

(Before It's News)

Photo Credit: Wikipedia

CNBC

By: Jeff Cox | Senior Writer 

Investors focusing on the tapering question probably are missing the bigger picture about Federal Reserve policy and how it will continue to shape financial markets.

The central bank itself has been insistent recently that the $85 billion a month in bond purchases surrounding the tapering question are the less relevant of the two main prongs—the other being the near-zero funds rate—of the historically easy monetary policy since the financial crisis.

Still, investors continue to focus on Long-Scale Asset Purchases—known formally as quantitative easing and less so as money-printing—while not paying enough attention to the more important question of forward guidance and how that affects the interest rate picture. 

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