Monday, October 14, 2013

Shilling concerned about interest rates and fed bond buying

Gary Shilling talks about the Fed bond buying program and its concern. 

"For now, because economic growth is tepid, this isn’t producing any overheating in the world of bank lending. But when the economy resumes faster growth, excess reserves could propel the economy through full employment and into serious inflation,” That may not happen for a few years, he adds. But the risk is still one for the Fed to ponder, because that giant balance sheet of bonds can’t be adjusted in a hurry. “If assets are sold off rapidly, interest rates could well leap, precipitating a recession.”