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From Mr Robert A. Clarke.

Sir, Robert Jenkins, in his thought-provoking article “It’s time to think the unthinkable on America’s debt” (Insight, November 15), notes that as a result of quantitative easing the Fed now owns all but around $750bn of Treasuries with maturities longer than 10 years. As a result, he further points out that the US’s creditors are “less vulnerable than imagined to the threat of market losses”. Clearly; but who will pick up the losses once interest rates rise and bonds (particularly the longer-dated variety) crater, as they must surely do at some point?

Presumably the Fed will be faced with marking to market this massive (and extraordinarily risky) portfolio? If so, what new sleight of hand will it use first to reconcile its own balance sheet and then explain this, not only to the American people, but also to investors still holding US debt?

Robert A. Clarke, Fontainebleau, France

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