This Can Cause The Entire Financial System To Collapse
November 5, 2013
Today KWN is pleased to share an incredibly powerful piece from 50-year veteran Art Cashin, who is Director of Floor Operations at UBS ($650 billion under management). Cashin covers one of the greatest dangers facing the financial system today.
By Art Cashin Director of Floor Operations at UBS
November 5 (King World News) – “Do We need A Dodd-Frank Rule For Central Banks? – I was paging through my friend, John Hussman’s latest report and came across this rather astounding paragraph:
A brief update on the bloated condition of the Federal Reserve’s balance sheet. At present, the Fed holds $3.84 trillion in assets, with capital of just $54.86 billion, putting the Fed at 70-to-1 leverage against its stated capital. Given the relatively long maturity of Fed asset holdings, even a 20 basis point increase in interest rates effectively wipes out the Fed’s capital. With the present 10-year Treasury yield already above the weighted average yield at which the Fed established its holdings, this is not a negligible consideration.