With Continued QE, the Fed Moves Farther Off the Map

After rapidly expanding the balance sheet, the Fed may have trouble finding its way back to normal.

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As the Fed gets deeper into its stimulus program, it's increasingly going off the map.

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"The size of the potential mistakes and the damage of a potential error grows with the size of it," he says. "I would rather err on the side of keeping it smaller rather than keeping it too big."

Laurenti adds that if the Fed manages to make a flawless exit from its hefty balance sheet, it will be "nothing short of a miracle."

[READ: Yellen: Don't Fear a QE3 Showdown]

Kroszner agrees: "In determining when to pull the trigger, it really comes down to the forecast, and those are always imperfect," he says. "Will the Fed get that perfectly right? Probably not."

However, he adds that the Fed can mitigate its mistakes in open market operations by using what he calls "open mouth operations"—that is, talking about it, loudly and clearly. Helping to manage inflation expectations is one way to manage inflation. In addition, making sure that its moves are not too surprising could keep from shocks to either the bond market or the stock market, which has benefited from all of the easing. But all the talking in the world may not be able to save the economy from a major misstep.

"It's very difficult even to think [how they'll] get it right," says Laurenti. "The question is the nature of the mistake: Will it be a benign mistake or it will be something worse?"

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