Lloyd BlankfeinFormer international derivatives broker Rob Kirby thinks the Fed’s recent cut back in money printing or “taper” is a con game.
Kirby says, “The threat of taper made rates go up. The actual taper has made the 10-year Treasury drop 40 basis points in less than a month. The notion that the taper had anything to do with interest rates going higher seems to be a non-story.” The Fed has long claimed it was buying bonds to hold down interest rates, but if that is not true, what was the Fed doing buying all of those so-called toxic mortgage bonds from the big banks? Kirby says, “My thesis about taper is that the banks in the U.S. had mortgage bonds on their books probably close to the tune of a trillion dollars that they could not sell to anyone. It was dead money, and they had to write them off somehow. The problem with writing off close to a trillion dollars’ worth of mortgage bonds that were held in all the U.S. banks is that kind of money is probably more than the total market capitalization of the U.S. banking industry. So, they had to figure a way to get those mortgage bonds off the books of the banks and silo them somewhere without basically admitting that the U.S. banking system was insolvent.” Kirby goes on to say, “For the most part, with them now tapering, we can almost say mission accomplished. They’ve taken these mortgage bonds off the books of the banks, and they are held right now on the balance sheet of the Federal Reserve.”

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  1. After the Dodd Frank Act made the FED disclose some of its loans it became apparent they were playing a shell game. 
    I thought all along we’d see the weaker countries fall first.  Greece, Spain, Argentina, Venezuela now it’s been affecting India and even the Russian Ruble.
    It seems the currency warfare is going up a notch.  I imagine gold will start hitting new highs in quite a few currencies during the next 3 to 4 months but maybe not in the dollar just yet. 

  2. That was one great interview especially on my favorite subject the Derivatives Market and if Mr. Kirby is correct then there is a chance we all can make some Fiat to buy more Silver. Lol Starts at the 31 min mark. Keep Stacking

  3. The Fed is a world wide toxic waste dump 
    It gets old when everyone had to eat turd sandwiches.
    The Fed is essentially killing everything it touches most particularly emerging markets which by definition are more susceptible to foreign, er, Fed, intervention.  The reckoning over the damage this foul central bank has done to the people of this world will be massive. Ditto for the IMF and the World Bank. Kill all the bakers.

  4. Mr. Kirby’s view on QE is not only uniquely insightful, but THE most logical I’ve yet heard put out into the discourse. I really think he’s ‘spot on’.

    When asked by Mr. Hunter, what effect that will have on the Fed’s balance sheet, I was surprised he didn’t further see that those MBS’s are being ‘siloed’ for filling up the train of retirement account dump-trucks being lined up in the Treasury’s ‘parking lot’.

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