Tapering IS Quantitative Tightening

The only times a factor like the size of the Fed’s balance sheet will be useful is when there is a change in rate of growth. As long as its growing (or shrinking) at a constant rate, it will be of no help to predict any future effect on the economy or asset prices, no matter what a simple overlay chart suggests.

What these indices have in common is that, with the exception of credit spread measures which are mean-reverting and don’t trend, they only consider the change in a factor rather than the outright level. This is because a change in an indicator is more meaningful to determining the impulse to growth. In other words, an indicator in a steady state h