This Fed Is the Economy's Hero

Here's the most important thing anybody can tell you about the taper: It's not the taper that matters, but the signal the taper sends. By the same logic, the Federal Reserve's decision today to delay the taper matters little on its own. What counts for everything is the signal: This Fed is committed to restoring vigorous economic growth.

The Fed currently buys $85 billion in bonds each month. If the Fed defers the taper until its December meeting, that adds at most $255 billion extra to its balance sheet for an extra three months. That's a trifling amount -- less than a tenth of its total assets and maintained for a trivial amount of time. So the specific month should have no impact.