Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: Toddsterpatriot
Why is leverage important to a Central Bank?

It is one more straw that will break the camel's back.

So these things keep happening; but here is the problem, Chris: the Fed has printed almost four trillion dollars to put out the fire from 2008. What is going to happen if we have a liquidity crisis next month or next year? They are at the limit of their balance sheet. They are already insolvent on a mark-to-market basis. And again, that is not guesswork. I actually was told that by a member of the Federal Open Market Committee. They are leveraged 80-to-1. They cannot do more. So the next crisis is going to be bigger than the Fed. It is like they build a five foot sea wall and here comes a forty foot tsunami. There is only one clean balance sheet left in the world and that is the IMF. So the only way you are only going to reliquify the world in the next liquidity crisis is by the IMF printing their world money, these Special Drawing Rights or SDRs, and that is going to be the end of the dollar as a global reserve currency.

65 posted on 09/22/2014 6:11:01 PM PDT by SkyPilot
[ Post Reply | Private Reply | To 59 | View Replies ]


To: SkyPilot
It is one more straw that will break the camel's back.

But why?

What is going to happen if we have a liquidity crisis next month or next year? They are at the limit of their balance sheet.

Why are they at the limit? They have no need to borrow. They can create money at will.

They are already insolvent on a mark-to-market basis. And again, that is not guesswork.

Insolvent? That's when you can't pay your bills. What bills does the Fed have? Why can't they pay them?

As far as mark to market, they've been buying bonds for 5 plus years, from when rates were higher. They have capital gains, not to mention income of $80 billion or more per year.

It's not guesswork, it's just wrong.

They are leveraged 80-to-1. They cannot do more.

Sure they can.

72 posted on 09/22/2014 6:49:54 PM PDT by Toddsterpatriot (Science is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 65 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson