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The Taper Trap

Written by Gary North on August 13, 2013

The big question these days is this: “When will the Federal Reserve System start to taper off its purchases of U.S.Treasury debt and Fannie/Freddie debt?”

The commonly held view is next month.

A Reuter’s reporter went up to David Kotok’s annual gathering at Leen Lodge in Maine. He brings in 50 or so big names in the investment world. They can chat with each other. There are formal presentations.

She asked several of them when the FED will taper. The answer was unified: not soon.

Pippa Malmgren said it best: if the FED moves from buying 75% of the Treasuries issued this year to selling them, the market will react violently. She was not talking “taper.” She was talking “exit.” There will be no exit, she said. These bonds will remain in the FED’s portfolio.

Reuters does not offer the video in an embed format. You must click the link. So, click the link.

Continue Reading on insider.thomsonreuters.com

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2 thoughts on “The Taper Trap

  1. No one spends $85 billion a month on anything (for more than 30 months) without the : a. markets noticing, b. prices reflecting the " over supply", and c. anticipation of the prices falling…except the free money users.
    This crash will make the real estate bubble look like soap bubble compared to tsunami, even if Soros doesn't participate.

    No one but the Fed, founded in 1913…hint hint.

  2. The Fed must continue to give Obama cover until after the next election. Although the Fed is an "independent" agency it's leadership is ideologically tied to the Obama administration. No change for now. See my blog at http://cranky-conservative.blogspot.com