This afternoon we get the Fed minutes from the September “no rate rise” meeting.

I don’t expect to read any serious debate, although it may be framed that way by some chronicling the episode, since the vote only had one dissention.

This way the Fed can point to how veryclose we are to exiting zero-interest, when nothing is further from the truth.

As I wrote yesterday, the economic modeling the Fed is using is perverted by its own actions in the market.

Why after seven years of pumping over $4 trillion into the economy are we still struggling with near zero growth and negative interest rates moving out the duration curve?

Because most of the $4 trillion has not been sterilized. It’s sitting on banks balance sheets in the form of treasury notes, masquerading as an asset for the bank.

This asset can’t and won’t enter the real economy. It can’t be used to raise wages (the principal action needed for inflation). It can’t be deployed as loans to business or homeowners either.

It needs to be sitting on the balance sheet in the form of “proven reserves” to offset much of the toxicity that still festers there.

You just don’t find many “market mavens” speaking on this, since its Wall St.’s dirty little secret.

Deutsche Bank is taking a $6.8 trillion writedown for the quarter. As it brings on a new CEO, the German bank  — some say — is taking a “kitchen sink” approach to clearing out the toxic paper sitting on its balance sheet.

The “kitchen sink” approach is when a new CEO gets one pass to clean things up so you throw everything — including the “kitchen sink” — into the writedown.

However, this is not the first or second or third time the bank has changed CEOs or taken massive writedowns in the past three years. The bank has also recently failed a stress test on its balance sheet by not having enough “proven reserves” to bolster its Greek exposure.

Lastly to recap the two items above. A rise in rates by the Fed, would in all likelihood raise yields on the “proven reserves” sitting on the banks balance sheets. This action would then lower the price of that “asset,” which would further cripple the bank.

So it’s Catch 22, on the rate rise scenario, which no one again talks about.