“A Dangerous State Of Affairs”: Why Powell Freaked Out After The Taper Tantrum

Original post

The dramatic flip-flop by Jerome Powell over the past month, when the former lawyer and PE partner mutated from a bubble-busting hawk to a BTFDove in response to the market’s reaction to the Fed’s “autopilot” comment on the Fed’s balance sheet, was not the first time the Fed chair radically reassessed his monetary policy view in response to the market.

He also did so back in 2013, before and after the Fed’s bond tapering announcement, when the US central bank first hinted it would start reducing its bond purchases as it sought to normalize its balance sheet, and which culminated with the infamous Taper Tantrum of 2013 when bond yields spiked and stocks tumbled over fears the Fed was removing

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