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Bill Gross: Bernanke Running a Bigger Ponzi Scheme than Charles Ponzi
Bill Gross writes today:
Check
writing in the trillions is not a bondholder’s friend; it is in fact
inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public
debt, actually, has always had a Ponzi-like characteristic. Granted,
the U.S. has, at times, paid down its national debt, but there was
always the assumption that as long as creditors could be found to roll
over existing loans – and buy new ones – the game could keep going
forever. Sovereign countries have always implicitly acknowledged that
the existing debt would never be paid off because they would “grow” their way out of the apparent predicament, allowing future’s prosperity to continually pay for today’s finance.
Now, however, with growth in doubt, it seems that the Fed has taken
Charles Ponzi one step further. Instead of simply paying for maturing
debt with receipts from financial sector creditors – banks, insurance
companies, surplus reserve nations and investment managers, to name the
most significant – the Fed has joined the party itself. Rather than
orchestrating the game from on high, it has jumped into the pond with
the other swimmers. One and one-half trillion in checks were written in
2009, and trillions more lie ahead. The Fed, in effect, is telling the
markets not to worry about our fiscal deficits, it will be the buyer of
first and perhaps last resort. There is no need – as with Charles
Ponzi – to find an increasing amount of future gullibles, they will
just write the check themselves. I ask you: Has there ever been a Ponzi
scheme so brazen? There has not.
This isn't the first time Gross has called the U.S. economy a Ponzi scheme. He did so in January 2009.
Nouriel Roubini, Laurence Kotlikoff, Steve Keen, Michel Chossudovsky and the Wall Street Journal agree.
Hyman Minsky would agree if he were alive today.
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The FED has just become one Giant Hedge Fund. Just look at what they Own in the 3 Maiden Lane "investments". They even own CDS. So, it could even appear that they are betting against "some" Companies.
The difference is that when the FED starts to lose Money on their investments, they just go to the Tax Payers account and print another Trillion or two to pump their account back up. But, what happens when there are not enough Tax Receipts to pay all of that Debt to the FED? Print 10 times the Money until everything Collapes?
"Hyman Minsky would agree if he were alive today."
dead or alive i know i agree.
two observations
http://www.rollingstone.com/politics/news/17390/222206?RS_show_page=0
nuff said
The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not.
Yes indeed Bill. Nice to know some folks get it up there in them thar hills. Especially with the reality that there aren't enough taxpayers pockets, or treasure contained within them to make it money good without the fed filling the gap. However wide. What a way to treat financial alchemy and price discovery to a good time. (It must be a trip to see the 90 second rule come to relationship at nearly all levels...:)
Meanwhile, Mr. Market has a buyer of last resort so it's time to party! It's an open bar and everyone knows how Ben & Janet pour heavy.
The ongoing bailouts would be easier to tolerate if there was:
a) any contrition by the bankers involved
b) at least some of the criminals in jail
c) some movement of any kind to clean up the system and stop it being simply a criminal scam to rob citizens of the world and fund corruption.
Nothing at all has been fixed and now the criminals know that they can get away with anything without paying any penalty at all. Very sad for the US people.
and a modest contribution from the bank bondholders?
We all know the truth, few loyal ZH readers see anything new here..and tommorrow? The Tea Party? When will we have a legitimate, intelligent third option? Wipe out the debt, bring home the armies, restore the Republic, end the FED...here is the one journey from Liberal to Libertarian....with an actionable agenda...it just needs a face.. http://www.thecactusland.com
I like the term 'debt kiting scheme'. The Federal Reserve and its back and forth with the US Treasury and its bonds have been a brilliant contrived way to monetize two centuries of goodwill the US formerly enjoyed.
Appropos Buffet, Gross et al:
In 1987 Katya Komisaruk, a peace activist, damaged control equipment at Vandenberg AFB in act of protest against 1st-strike weapons.
Asked about business leaders who spend a lifetime obsessed with just business and making money, her poignant response:
"...because they cannot think any higher than that."
According to the ancient Indians (Vedic), there are 4 stages of life. The one, these banker/business clowns are stuck in is the second stage of life where family and business dominate everything.
IMO, they are retarded in their thinking and cannot advance as a human being. It is actually a tragedy for them ... they would most likely not agree.
Watch the YouTube video "EASING into DEPRESSION 1930's style!" (http://youtu.be/hGQ9dSPn8es) for more information on the greatest PONZI scheme in US history.
Welcome to the New World Order people!
Christopher
I wish we could stone them all in the public square... not going to happen. The more things change the more they stay the same.
I believe that the more people become aware the more likely change will happen.
Alas, even Glenn Beck is at least, (in his weird way) pointing out the need to educate yourself about what the oligarchs are up to.
Personally I'll take Max Keiser anyday.
Twice in two weeks Gross proves he is no different than Buffett, both interested only in their own wealth and willing to do whatever it takes to "win" what is to them nothing more than The Great Game.
Never forget, if it wasnt for the US taxpayer Buffett would be broke, wiped out. That he was allowed to lobby congress to bail out the TBTF banks and retain his equity thanks to the taxes to be paid by current taxpayer's children and grandchildren, is something the vast majority of the public doesnt understand.
I truly hope this congress investigates the TBTF bailouts, the Fed's balance sheet, and the machinations behind all the graft that took place during the shakedown.
If not, we have yet to see the fullness of what Moral Hazard really means.... with all the mortgage's on the Fed's book it has a huge vested interest in asset inflation. Huge.
AMDG
HCSKnight
+1
but how do you figure Buffet would have been wiped out? surely not just the GS deal. was there more? or are you simply talking about the fact that a bailout was needed to stave off immediate financial collapse of the entire equity market?
it would have been a pleasure to see that asshole broke.
Wells Fargo is bankrupt as would have been Golden Sacks of shit.
Gross and Buffet are whores.
And he's known it far longer than he's admitted it...Like all non-operators who make money off a ponzi, he just kept doing it, and actually STEERED fresh money into the scheme. And has argued to maintain the scheme, right until it was clear that unity among global, and in particular US, financial elite was cracking. NOW he says it's a ponzi.
Still Gross can go fuck himself.
++
This guy does and says nothing from the kindness of his heart....but he is right