The point that Rob Kirby made in his excellent interview on USAwatchdog.com was that QE was 85 billion a month where the 45 billion went to buying treasuries (because someone has to do it) and 40 billion went to buying mortgage backed securities. So, lo and behold, after two and half years of QE, the FED starts talking taper. Why ?

Rob then states that in the 2008 Financial crisis, the banks had about 1 trillion dollars in worthless sludge on their books called mortgage backed securities and that this was more than the total capitalization of the banks at the time. The securities were unmarketable and would never have any value.

So let's do the math - 30 months of QE at 40 billion a month......1.2 trillion. So over the last 2 plus years.... the worthless toxic sludge was removed from the banks balance sheets and added to the Fed balance sheet. Mission accomplished.

So, the point he is making is that the funnelling of 1 trillion has already been completed and the sludge extricated from the banks and buried deeper in the system - so of course they can reduce the amount of QE. When you are done paying off your car do you continue making payments ?

So taper has nothing to do with the crap the Fed feeds you about good data or economic recovery .... it has to do with the 1 trillion dollar goal has been met.