Eric King: “Bill, you wrote about the Fed’s expansion of its balance sheet and the fact that they (now) own 20% of the outstanding U.S. debt. You said there were going to be dislocations at some point, and I’m just wondering what that will look like?”
Fleckenstein: “Let’s say Ben (Bernanke) comes out tomorrow and says, ‘We are not going to taper.’ But let’s just say the bond market trades down anyway, and the next thing you know we go through the recent highs and a month from now the 10-Year is at 3%. And people start to realize they are not even tapering and the bond market is backed up.”
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