The perspective of Fed’s unconventional policies through the analysis of quantitative tightening

Federal Reserve unconventional monetary policy has been quite often discussed through the lens of quantitative easing (QE). The latter has been extensively described in the literature. This article makes a tentative attempt to move beyond QE. In order to achieve it, the attention focuses on two issues here. One of them is a phenomenon known as the divorce of money from monetary policy. The second one is quantitative tightening (QT), which cannot be merely perceived as a reversal of a formerly introduced quantitative easing. This text is an attempt to offer a detailed description of such tightening based upon the Fed’s experience. Furthermore, the text contains a preliminary assessment of the consequences of the policies pursued in the last eighteen years along with a brief description of the challenges the Fed is facing in the years ahead. One of them is the need to adjust its policy in the wake of the advent of cryptocurrencies, which can be perceived as the side effect of unconventional monetary policies.