Erm, folks, you need to get your economic history straight here.
“In 2014 Bernanke hinted that the time had come to sell some of this vast fund back to private investors or, more precisely, to stop buying back the bonds when they matured.
Widely seen as a precursor to much higher interest rates, this had the effect of sending the cost of borrowing in dollars over the next 30 years rocketing.
Markets across the world went into shock. The taper tantrum, as it became known,”
No. As part of the Fed itself says, that’s not what happened at all:
First, positive economic news in the spring of 2013 led Federal Reserve Chairman Ben Bernanke to testify to Congress on May 22, 2013, that the Fed would likely start slowing—that is, tapering—the pace of its bond purchases later in the year, conditional on continuing good economic news. This testimony laid the groundwork for the June 19 press conference in which the Chairman optimistically described economic conditions and again suggested that asset purchases might be reduced later in 2013: “[T]he Committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year.”
It was in 2013, not 2014. And it wasn’t about selling bonds back into the market, nor was it about not replacing bonds as they matured. It was about *not adding* to the stock of QE bonds. The taper tantrum was about not increasing the amount of QE, not about not maintaining the amount of QE that is.
Getting basic historical facts wrong does lead to slight concerns about the validity of the subsequent analysis, doesn’t it?
As to which, if borrowing is indeed out of control then raising rates to curb borrowing is the appropriate policy, isn’t it?