Today James Turk told stunned King World News when he warned, “… the Federal Reserve is already insolvent.” Turk also stated, “Because of the intense leverage that the Federal Reserve employs, this means the mark-down on its $2.844 billion of securities is, in reality, a staggering $57 billion loss.” Here is what Turk had to say in this extraordinary interview: “There was an interesting article in The Telegraph here in London over the weekend, Eric. It highlighted a study just released by former a Federal Reserve governor that examined the Fed’s solvency.”
James Turk continues:
“As The Telegraph explains, “The Federal Reserve is acutely vulnerable because it has stretched the average maturity of its bond holdings to 11 years, and the longer the date, the bigger the losses when yields rise.” The paper then went on to say that “trouble could start by mid-decade and then compound at an alarming pace, with yields spiking up to double-digit rates by the late 2020s.”
I have been watching the yield on the 10-Year T-note and long-bond carefully here. It is significant that yields have been rising fairly steadily over the last several months, and yields are already well above the record low they made back in June. So I decided to read the study….
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