The Fed balance sheet contains 20% of all publicly held federal debt and 34% of the value of all outstanding government-guaranteed mortgage-backed securities. As the economy returns to normal growth, getting rid of those assets risks runaway inflation or a crippled recovery or both. MORE

Is it possible that the Fed, like Odysseus, can hug the cliff of Scylla with its high interest rates and avoid the Charybdis of inflation without crashing into the cliff and derailing the recovery?

It won’t be easy.