Betting On An Infinite Bernanke Put? Not So Fast, Says Fed Governor Kevin Warsh

Tyler Durden's picture

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Brokenarrow's picture

Uh-huh.....interesting piece.

Now--run out and short the YM all in! In two months you'll be BK.

Whatever Fed officials leak to the public? Do the exact oposite.

Personally, I have been certain that the US equity market would crash for the last 400 s&p pts.

Yeah, Baby! Go all in with your bad self.

russki standart's picture

The cake is already baked... even if the Fed changed policies overnight, the USD will self destruct since higher interest rates will BK the US government overnight.

Turd Ferguson's picture

Exactly! Thank you, Russki, for saving me from having to type the same thing.

Same old Central Bank bullshit. This is nothing more than a response to thids:

All that's left is talk and it's working, at least tonight. Mr. Governor's op-ed got himself a 50bp kick in the USDX. HellyBenny might have to give him a little more sizable Christmas bonus.


bigdumbnugly's picture

wait a minute.  less than one week from the QE2 announcement a fed governor is coming out with this claptrap?

what, did he just now awaken from a rip van winkle-like slumber?

i either smell desperation or ass covering.  or both.


cswjr's picture

Whatever the reason, it's very unorthodox.  As a matter of course, FOMC members don't discuss what occurs at FOMC meetings, at least until the minutes come out.  Not that he disclosed anything material.  Still... odd.  Maybe BB is having some misgivings.

ebworthen's picture

Ass covering was my first thought; head-fake and obfuscation my second.

This was a very interesting read on why the markets could just keep going up (yes, the man is in jail, but some compelling arguments):



NumberNone's picture

Agreed.  Warsh thanks for the insightful analysis after the house is already on fire and burning to the ground.  Would have been fucking nice if you had given this all a bit more thought several years ago.  Frightening that you have to actually see the flames licking up the sides of the building before you realize that it was gasoline you were actually pouring on the fire and not water.  Maybe admiring your Economics PhD kept you busy.

RockyRacoon's picture

I'm in the ass-covering camp.  He can point back to this when folks say, "We never saw THIS coming!".  Yeah, right.   What they meant to say was, "We saw it but we hadn't finished the looting at that time.".

Buddha_Gorilla's picture

My $'s on smokescreen.  Carefully orchestrated PR to reinforce the Fed's credibility in public while they undermine it in private.  Of course, my $ isn't worth what it used to be.  :)    

Spitzer's picture

Thats right.

The dollar would even have been done in 08 if they didnt temporarily instill some more confidence in it by bailing out America Inc.

Now that everyone has refinanced to lower rates, the gap that bankrupts the banks is even smaller.

RockyRacoon's picture

I'm about to do my part and move from a 5.25 to a 4.00 rate.

Always glad to pitch in.

Dollar Damocles's picture

The (most recent) massive worldwide run on the world bank (FED) that began over a decade ago (visible in the USDX and the Gold's long-term charts) is not going to be satisfied by a mere $5,000 an oz gold.  Ultimately a currency's value will come into balance with the productive capacity of the issuing nation and it's underlying assets.  Wealth follows capital structure (the ability to produce wealth) and so does purchasing power.  Asia is where it is at and they are going to drain western gold like vampires until gold is revalued to a price that will let it function without suppression in the role that it has ALWAYS served - the ultimate settlement and balancer of international trade imbalances.  The USD is toast - $5000 an oz gold, hahaha don't make me laugh.  How about 30k an oz gold in todays dollars, and 1Trillion dollar an oz gold in Bernanke dollars - more realistic.

AndrewJackson's picture

Yep you are correct. The only thing that is politically acceptable is high inflation. Thus, the bernanke put through QE(Infinity) is well protected. Might as well go buy some longer term pm call options.

justbuygold's picture

Exactly correct.  The Fed has no choice but to keep monetizing and buying U.S debt becuase there are no other buyers, they have all evaporated or are now sellers.  The Bernake put is almost infinite and the numbers will only get bigger and bigger which will in turn cause other debt buyers to become more and more on the sell side.  I say " almost infinite" becuase it will end one a U.S  default.


Got Gold ?

Vampyroteuthis infernalis's picture

How long before this dissenting voice gets canned for telling the truth?

gimli's picture

Ya know, there could be other reasons for commodities to continue their current trajectory -- this could help a bit:


snowball777's picture

Addressing the same forum, Israel's Defense Minister Ehud Barak was pessimistic about diplomatic engagement halting Iran's drive for a nuclear weapon. "Based on experience and looking at the example which they (the Iranians) are using, which is probably the North Korean example, you can easily see ... the objective is to defy, deceive and deter the whole world," he said.

Because Israel never defies, deceives, or deters the whole world. And especially not with respect to say the proliferation of nuclear weapons.

STFU, hypocrite.

Arthur's picture



Barak is just stating the obvious.  Do you think Iran only has peaceful intentions for its nuclear program?     Israel is presumed to have had the A-Bomb for almost 40 years, if they admit having the bomb then everyone in the neighborhood has to have one too.  Israel is coy about the A-Bomb but clearly projects a MADD deterrent policy.   Who thinks Iran wants the an A-bomb for the same reason?  How many countries and terrorist groups are pledged to the destruction of Israel and how many to Iran?



The majority of the Arab countries don't want Iran to have the bomb either.


Ivanovich's picture

I'm sorry, why would corn and wheat go up because of this?  Or soy?  or cocoa?  or....

RockyRacoon's picture

From the article:

Early Sunday, the influential Senator Lindsey Graham (R. South Carolina), member of the Armed Services and Homeland Defense committees, said: "The US should consider sinking the Iranian navy, destroying its air force and delivering a decisive blow to the Revolutionary Guards." In an address to the Halifax International Security forum, he declared "They should neuter the regime, destroy its ability to fight back and hope Iranians will take the chance to take back their government."

Good move, Graham.  I'm sure that destroying half the country would give the man on the street a motivation to do what the U. S. would like to see.   The Iranians would probably "welcome us as liberators" as well.

plocequ1's picture

How dare Warsh question the Emperor. We can not have this. The Emperor is displeased. This drama is so fucking obvious, It makes me cringe.  Nice media for all the subduded mass to watch and enjoy while they play with their Ipads.

Turd Ferguson's picture

If you think this is genuine dissent, you're f-ing crazy.

This is simply SPIN...a blatant attempt to verbally support the $. Interestingly enough, on a light-volume Sunday night, its actually worked to the tune of 50 bps in the USDX.

No doubt, CNBS will pick it up and SPIN it like crazy tomorrow morning. All the while, the Fed cranks up another $4B in POMO at 11:00. 

Buddha_Gorilla's picture

+1.  Expect more "verbal inflation" as cover for more monetary inflation.  I'm probably just paying closer attention, but it does seem like we're hearing more and from more board members (and in more prominent places) these days.

beanieville's picture

It's funny you mentioned "f*cking obvious" when it didn't seem obvious to you that the market would go higher on grounds of quantative easing.

johngaltfla's picture

Exactly. The myth that anyone is going to do anything but go along to get along within the Ivory tower is a myth. The Emperor will simply smite those who dare oppose him.

Lapri's picture

Warsh still voted yes on QE2.

Seems like his article is to appease those Europeans and Chinese and Brazilians hyperventilating over Ben's QE2.

Good cop, bad cop routine.

Walter_Sobchak's picture

a central banker will always cry out in pain as he cuts you in the jugular.

Fred G Sanford's picture

Good point. Warsh's vote for QE2 says it all.

Bob's picture

Pretty obvious spin to me as well. 

Nevermind's picture

Warsh is an E. coli in Bernanke's punchbowl...not a Tootsie Roll. 

Heh heh's picture

This is the Michael Jackson market. Dr. Bernanke brings it up and takes it down.

Charles Mackay's picture

Since when do three potential dissenting  members consistute a majoirty on the FOMC, assuming they they actually will dissent?

Jim B's picture

Agree!  It is suprising to here more than one voice of common sense @ the FED!

gwar5's picture

She's my favorite vampire

Rodent Freikorps's picture

Here is a tribute to her in latex...with guns.

Underworld - Our Solemn Hour


ebworthen's picture

Reminds me of my ex-Wife; it was a good 20 years from 19-39.

trav7777's picture

reminds me of mine too...didn't get anywhere near 20 lol, just too batshit crazy

Djirk's picture

Looks like Estee Lauder makeup

magis00's picture

I see what you did here.

RockyRacoon's picture

You know what they say: 

Somebody, somewhere, is tired of putting up with her shit.

Revolution_starts_now's picture

Margin Call Bitchez,

sorry I couldn't help it.

Nat Turner's picture

A real Michael Jackson market. Where's my bleach, bitchez!

hamurobby's picture

" Translation: if gold continues to exhibit a beta > 1 w/r/t ES, then we are screwed,


Yes, looking for nice new furniture.

lolmaster's picture

Krugman and fluffer DeLong


got em.

more generally speaking this is just the last b-boy (hint: not break) to be tasked with creating diversionary cover for the real game plan. 

we are clearly headed to a ron/rand showdown.