The Phaserl


The Federal Reserve Lies About Everything — Rob Kirby

from USA Watchdog:

Financial writer and former 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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