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    Why the “Is QE 3 Coming?” Debate is a Moot Point Pt 2

    By cmaukonen on Sun, 05/22/2011 - 11:13pm |

    The continuing story of Ben Bernanke and his fabulous printing machine.

    Again, the Fed knew for over 10 years (possibly longer) that the derivatives market was a disaster waiting to happen. So believe me when I tell you than Ben Bernanke knew exactly what caused 2008.

     Indeed, his actions make it clear just what he was fighting (a derivatives collapse) as 90% of his major moves were meant to prop up the four banks with the largest derivatives exposure.

     Now, as stated before, 2008 was caused by the CDS market, which was $50-60 trillion in size. In contrast, the derivative market based on interest rates is $196 TRILLION in size.

     In fact, derivatives based on interest rates represent 84% of ALL derivatives in the US.

     So with that in mind, it is clear the Fed will be engaging in QE 3 and QE 4 and on and on for as long as it can. The reason? Because if the Fed loses control of the interest rate curve, it could trigger a systemic collapse that is FOUR TIMES as large as that of 2008.

     So more money printing is coming. There’s no question of that.

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