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Federal Reserve Leveraged Like Crazy, One Interest Rate Rise From Bankruptcy


Kenneth Schortgen Jr

Who does the US call for help if our central bank goes bust? That is a question no one wants to answer, but one that may be staring us in the face as we see insiders of the Federal Reserve coming out and reporting that the Fed appears on the brink of bankruptcy.

Late last week, former Federal Reserve governor William Ford did an interview with Larry Kudlow of CNBC, and in that interview, he spoke on the current state of the Fed, and just how close they may be to bankruptcy.

Not a good sign as China begins a push towards assuring the Yuan will be the world’s next reserve currency.

In the interview, William Ford agreed with Kudlow that the current $2 Trillion+ on their balance sheet is so toxic that their liabilities will be greater than their assets when Mark to Market takes place in 2011.

The fact that the Federal Reserve has kept interest rates down so low for such a long time the game cannot go on forever. As soon as inflation begins to climb, and it will happen very very fast with as much currency that has been pumped out into the system over the past 3 years, interest rates will go up, and this is when the insolvency will accelerate.

For every 1% rise in interest rates on long-term bonds, the Fed will lose $150 Billion dollars in value. Two weeks ago, the capital value of their balance sheet was only at $50 Billion.

And this is using a non-GAAP methods of accounting. Mark to Market accounting will take place across the board this year, and subsequently, the Fed’s capital balance will be even worse when these rules take effect.

The Federal Reserve has chosen a path of hyperinflate or die. They cannot afford for deflation to take shape, because this will cause interest rates to jump up even faster. Therefore, they probably know the end result of their efforts, and it is up to you as a consumer and investor to be prepared for the implosion of our system that will inevitably take place.

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