Financial Derivatives Have Already Blown Up!

• DERIVATIVES HAVE ALREADY BLOWN UP! 
  by Bill Holter, http://blog.milesfranklin.com/ 
  “Audit the Fed!”, there is now another movement within Congress to do this. Will it ever happen? Maybe, but not unless the Chinese (and rest of the world) demand it in my opinion. Let me explain this but please remember what came to light the last time back in 2010, when we found out the Fed had lent over $16 trillion (yes, with a capital “T”) during the 2008 financial crisis. Some of this $16 trillion went to U.S. banks, brokers, insurance companies and mortgage institutions …but, the majority went to FOREIGN institutions!
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  A full and true audit in my opinion would only do one thing, totally crash confidence in the dollar and put a permanent end to the charade we call “reserve currency status”. I do not believe Congress will ever call for a full audit for this very reason, it is known (by Congress and anyone in associated finance) just how dirty the books really are. Can you imagine the reaction when 1,000′s of S+P contracts, 1,000′s of Treasury bond contracts along with short oil and gold turn up on (“off”) their books? Can you imagine how many more “back door loans” have been made since 2008? Talk about the crazy aunt in the basement, an audit of the Fed would put an overflowing insane asylum of crazy aunts in full view! In my opinion, the only way this movement goes forward is if it is demanded by foreigners under threat of dollar boycott.
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  A connected topic to the audit is the recent strength in the dollar. Why has the dollar been so strong and what does it mean? First, as I mentioned yesterday, the dollar carry trade is unwinding and dollar shorts are being squeezed. The ramifications are plentiful. Foreigners are experiencing local inflation as their currencies drop versus dollar based food commodities etc.. This will not put the U.S. in any favorable light as foreigners now lose more control over internal pricing of external products. The strong dollar, and moving as rapidly as it has is also creating margin calls within the global financial system. We have not gotten news from any individual banks yet but rest assured, some have already been rendered bankrupt by being short dollars, long oil or some combination. I believe the derivatives market is no longer in danger of blowing up, I believe it already has!
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