If Janet Yellen had any illusions about running the Federal Reserve, the International Monetary Fund blew them away Wednesday, warning that she could wipe out trillions of dollars worth of bonds if she gets her first calls wrong.
President Obama is expected to nominate Yellen as Ben Bernanke’s successor Wednesday afternoon. That means she’ll probably be the one orchestrating the first steps in withdrawing the huge monetary stimulus that has supported economies and markets around the world since the financial crisis.
Assuming the U.S. government shutdown is resolved soon and that Congress can agree on raising the debt ceiling, weaning the world off the Fed’s bond-buying program is the biggest challenge facing the world economy.
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