Big or small Fed balance sheet, what difference does it make?

Hawk, dove or chicken? Or perhaps a mix of all three, creating a new field of monetary ornithology... Knowing where to place Kevin Warsh, the future Fed chairman, is not a matter of indifference to the markets. Let's take a look at the positions that could place Warsh in the first category. As early as 2010, he criticised the expansion of the Fed's balance sheet, arguing, not without reason, that this practice created distortions in asset prices and encouraged governments to lose their sense of fiscal responsibility, knowing that they could always count on the central bank to buy their debt. Conversely, aiming for a narrow balance sheet risks pushing up long-term rates and causing bouts of volatility.