Is Ben Bernanke Getting Ready to Grow the Fed’s Balance Sheet?

As Stephen Oliner, a resident scholar at the American Enterprise Institute and former Fed Board advisor, would say, “We are deep into experimentation at this point.”

Oliner is referencing the decisions Federal Reserve Chairman Ben Bernanke and other policymakers will have to make at a meeting on December 11 and 12. The fiscal cliff looms, Washington meanders, the economy struggles, and the ball’s in Bernanke’s court.

Bernanke’s policy of quantitative easing has been thoroughly vetted by the media and the markets. Some like it, some don’t, but for better or worse it’s helping provide the liquidity that the economy is floating on. The latest iteration of the policy, QE3, has been gobbling up billions in mortgage-backed securities since September in an effort to keep mortgage rates low — the 30-year fixed rate was just 3.31 percent in November.

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The other side of Bernanke’s initiative to slay America’s economic demons was Operation Twist…