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Below is Fitzwilson’s exclusive piece for KWN:


Fitzwilson:  It is popular to claim that there is no exit strategy for the U.S. Federal Reserve and Chairman Bernanke.  But in reality it is always a long shot to assume that the Fed is out of options.


We agree with those who suggest a reaffirmation of the criteria for triggering “tapering” to begin.  The criteria will tie the action and the magnitude of the tapering to employment, general economic conditions, interest rates and inflation.  That said, we would not be surprised to see another announcement about a perfectly plausible path to an exit for the Fed....


Continue reading the Robert Fitzwilson piece below...  




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“Since the 2008 meltdown, the Fed purchased many financial instruments including mortgage-backed securities to arrive at the current $4 trillion balance sheet.  It seems to us that the cornerstone of an exit strategy would be to securitize the mortgage-backed securities, and sell those back into the retirement and endowment funds. 


A recent estimate of the total retirement assets just in the U.S. tallied close to $17 trillion.  Packaging up those securities and distributing back into the system would go a long way toward a major reduction in the Fed’s balance sheet and make room for the continuing monetization of the budgets deficits which are sure to accelerate as the onslaught of unfunded liabilities hits the public and private sectors.


Rising interest rates would impact the value of those securities, but the Fed could easily make it so that buyers could value them at par for reporting purposes.  Given the mortgage rates are only likely to continue higher, the likelihood of significant refinancing affecting the pools of mortgages is very low.


KWN readers should not be surprised if the idea outlined above will also be part of the plan going forward.  This would offload tremendous liabilities off of the Fed’s balance sheet and open up their ability to print even more money.  All of this is extremely positive for hard assets.”


© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.


The audio interviews with Rob Arnott, Egon von Greyerz, Gerald Celente, James Turk, John Embry, Dr. Philippa Malmgren, Bill Fleckenstein, Eric Sprott, Rick Rule, Jim Grant and Art Cashin are available now.  Also, be sure to hear the other recent KWN interviews which include Marc Faber and Felix Zulauf by CLICKING HERE.


Eric King

KingWorldNews.com

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