The U.S. Senate confirmed Janet Yellen as the next Federal Reserve chair last week. One of her first tasks will be to wind down the "QE3" stimulus program.
The first cut takes place this month. But managing the process to scale it down at the right speed, in the right increments, will require an incredible amount of finesse.
If Yellen leads the Fed to dial back too fast, it could disrupt the budding economic recovery. But if they "taper" too slow, we could get an even more dangerous financial bubble, higher inflation, or both.
This is the reason I call the Federal Reserve the most-powerful economic body in the world. Any mistake on their part could seriously damage the U.S. and the global economy as well.
