This is a good article on the dangers of mortgage REIT such as AGNC and NLY.
http://seekingalpha.com/article/276613-mortgage-reits-where-danger-lurks
However, I disagree with the author on this statement, “When the economy accelerates again, which I believe could be very soon, rates are likely to rise, perhaps dramatically, even if the Fed doesn’t tighten anytime soon.”
The economy is not going to accelerate unless the commercial bankers expand lending. Bankers are terrified of more bad loans. If they cease being terrified and expand lending, then their 1.3 trillion dollars of excess reserves will become part of the money supply. This will increase the M1 money supply and prices would more than double from where they are no. See Murray Rothbard’s book “The Mystery of Banking” for more details on how the fractional reserve process works. http://mises.org/resources/614/Mystery-of-Banking-The
I think we are years away from commercial bankers being brave enough to lend their unprecedented excess reserves that the Federal Reserve printed out of thin air.
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