The Federal Reserve (Fed) has taken extraordinary steps to mitiga

The Federal Reserve (Fed) has taken extraordinary steps to mitigate the effects of the 2008 Crisis as well as the COVID-19 pandemic. As a result, they have expanded the balance sheet by over $3 trillion each time and now sit on a balance sheet of over $7 trillion as a result of the cumulative impact. This would not be the case if the Fed had the opportunity to contract the balance sheet after the first episode in 2008, which they publicly state they intend to do (look into Taper Tantrum if you want to know what happened when they indicated they would decrease the size of the balance sheet). The predicament is difficult to manage since the market is not accustomed to digesting the amount of issuance supply that is being delivered to the market by the US Treasury and mortgage agencies. Using public information regarding the Feds balance sheet size and composition, its purchasing programs, public statements, the US Treasury fiscal situation and your perspective on the economy how would you advise the Fed navigate the process of decreasing the balance sheet? (Address what they should target for a balance sheet, why, what should be in their communication to the public and the pace of the change you recommend.) What do you envision the impact to be if they follow your guidance?