Fed Faces Explaining Billion-Dollar Losses in QE Exit Stress

Ah, finally some truth serum coming out of Congress and Fed Chairman Bernanke:  if interest rates rise (i.e. bond yields rise), the Fed's QE program of purchasing Treasuries and mortgage-backed securities automatically becomes a "buy high, sell low" program, which would of course, induce massive losses on the Fed's balance sheet--and eventual insolvency.  We posted this in 2011 here and in 2012 here.

See, Chairman Bernanke:  money doesn't grow on trees.  And oh, by the way, for this and other reasons, there will be no Fed exit on monetary stimulus.  Because if that were to occur, the global banking system collapses.  But hey, let's discuss it so the gold bugs won't go crazy, shall we?

http://www.businessweek.com/news/2013-02-26/fed-faces-explaining-billion-dollar-losses-in-stress-of-qe3-exit