Performance Art

I stand simply astonished at the most recent talk regarding the run off in the Federal Reserves Balance sheet, ostensibly chapter one in the cessation of the decade long monetary science experiment known as QE. What is most amazing is that the talk generally assumes that there is some path forward for Central Bankers to follow, some historical north star that might guide them in this multi-trillion dollar diet program. What seems apparent to almost no one, is that there is no precedent for QT, primarily because there have been almost no historical examples of QE (Japan is an obvious example, but instead really represents a situation of almost perennial QE). There has never been in the history of Central Banking a situation whereby a Central Bank has attempted to offload private and public assets(of this magnitude) in a measured, communicated way. The Fed undertaking can’t be called science because science assumes some direct cause and effect, it can’t be called art because that would imply that there is some nuanced behavior on the part of Central Bankers that can be shifted based on real time economic variables. Perhaps, we can term the balance sheet experiment performance art. In performance art there are lots of movements most of which don’t make sense, you never know where things are going to go next, and generally even though you are praying for it to end, the ending is both unexpected and unexplainable.

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