Quietly, without much fanfare, the U.S. Federal Reserve is taking the first steps to mop up some of the ocean of greenbacks it has pumped into the global economy. The success or failure of its efforts will have a lot to say about the future of inflation and of gold prices.

According to the New York Times, the Fed is going to begin lending some of its trillion-dollar portfolio of mortgage-backed securities to the private sector. While this is just a test—please remain in your seats and stay calm—the results will be an excellent indicator of whether the U.S. economy is is headed back to normality.

Fed policy has been anything but normal during the past two years. In the darkest days of the financial crisis, as banks panicked and attempted to ditch risky assets, the Fed embarked on extreme measures to make sure the system didn’t collapse. It took the risky assets that banks wanted to dump onto the Fed’s own balance sheet; in exchange, it loaned the banks the most risk-free asset imaginable—freshly created U.S. dollars.

This strategy tamed the panic, but it also resulted in the creation of trillions of dollars. The torrent of dollars would normally push consumer prices far, far higher, but the Fed found ingenious ways to prevent a surge in inflation, most importantly by beginning to pay interest on the reserves that banks held with the Fed. This practice made it profitable for the banks to maintain those reserves with the Fed rather than lend them out. It effectively penned up most of the extra dollars that the Fed had created, rather than letting the money out into the real economy.

At some point, though, the Fed wants to mop up the flood of dollars it has created. The natural way to do that is push the risky assets back to the private sector and take back the dollars that it had issued to buy them.

This will work—if the risky assets are still worth close to what the Fed paid for them. The problem, of course, is if they’re not. In that case, there is no easy way to take back the dollars created over the past couple of years and there is risk of much higher inflation.

John Hempton of Bronte Capital believes the Fed’s exit strategy will work. He argues that inflation hedges, such as gold, will ultimately prove to be lousy investments. But he believes that many experts, including Paul Krugman, are caught in what appears to be a logical contradiction on this point. On the one hand, they think the banking system was insolvent this spring, which would seem to imply that the assets on the Fed’s balance sheet are worth very little; on the other hand, they believe that inflation is not a danger. In Hempton’s view, you can logically believe one or the other, but not both.