How did the balance sheet get so big that it's now a quarter the size of our entire economy? It was built up over eight years of buying Treasury and mortgage bonds, in the mistaken notion that massive Fed cash infusions into those markets would bolster the economy and foster a return to normalcy.

Instead, like a patient put on a respirator for too long, the economy didn't thrive. During the Fed's balance-sheet buildup and its zero-interest rate experiment, the economy grew at a tepid 2% rate, a full third below its long-term average. During that period, as a result, the U.S. by our own conservative estimate suffered the loss of at least $2.3 trillion in potential GDP growth. These policies stimulated nothing.