Fed Balance Sheet-Firecracker to Great Big Bomb-Karl Denninger
By Greg Hunter’s USAWatchdog.com
Analyst/trader Karl Denninger thinks the Federal Reserve’s $3 trillion balance sheet could blow up the economy. The Fed is adding $85 billion to it every month! Denninger says, “The larger the balance sheet gets, the more powder Bernanke is piling into the brick house. So, instead of a firecracker, he’s got a great big bomb in there now.” Denninger asks, “What happens when you have to sell to raise money to pay the interest on the excess reserves.” The “excess reserves” is money the big banks are holding at the Fed—for now. Denninger predicts, “The only way Bernanke wins his bet on not getting trapped by this is if we are Japan . . . that means no economic growth and no recovery.” Denninger goes on to say, “The only thing that holds this whole ball of string together is the federal government running deficits, and we have this little problem called the sequester.” Join Greg Hunter as he goes One-on-One with Karl Denninger of Market-Ticker.org.