The day that the world's investors have been dreading has arrived: The U.S. Federal Open Market Committee on Oct. 29 announced the end of its latest quantitative easing program, commonly known as QE3. Quantitative easing entails a central bank expanding the monetary supply through a bond-buying program. The end of quantitative easing in the United States -- which is what the Federal Reserve intends for the current economic cycle -- is a seismic event, signifying the break point between six years of exceedingly loose monetary policy and the relatively unknown future of the global economy.
The ubiquity of quantitative easing during the financial crisis should not blur the fact that not only is it unconventional; it is unprecedented (except for Japan, where the policy was developed). For example, the global financial system usually is able to turn to the Bank of England's 300 years of monetary policy history for a precedent....