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Bill Gross Compares Ben Bernanke To Satan, Calls For A Bondholder-Citizen "Exorcizing" Comintern

Tyler Durden's picture


As if things couldn't get any more surreal, in Bill Gross' just released February letter, the PIMCO multi-billionaire compares Ben Bernanke and his policies to satan (A low or negative real interest rate for an “extended
period of time” is the most devilish of all policy tools)
, and concludes with a very peculiar call for a ressurection of the comintern: "Bondholders may be presented with a devil’s bargain,
but exorcists are coming to life. Bondholders and citizens of America
unite! Mammon may be ascendant in this secular world, but there’s always
space for heavenly intentions and their antidotes for policy haircuts.
Practice “safe spread,” fear the devil, and avoid the barbershop."

Devil's Bargain

Bill Gross, PIMCO

  • Money has become the economic and political wedge for profound changes in American society.
  • Perhaps the most deceptive policy tool to lessen debt loads is the
    “negative” or exceedingly low real interest rate that central banks
    impose on savers and debt holders.
  • Old-fashioned gilts and Treasury bonds may need to be “exorcised”
    from model portfolios and replaced with more attractive alternatives
    both from a risk and a reward standpoint.

are lots of ways to describe money: moolah, lean green, dinero … I
memorized one definition of “money” from an economic textbook way back
in 1966: “A medium of exchange and a store of value,” it said. Well,
yes, I suppose, although it failed miserably in the latter capacity in
subsequent years. My primer also neglected to mention the increasingly
dominant function that money was to assume in a finance-oriented,
capitalistic system: Money can be used to make money. Not that
interest rates and biblical usury aren’t millenniums old. I remember a
story from Sidney Homer’s history of finance that described how a BC-era
borrower would be forced to turn over his wife as collateral upon
default – wondering at the time whether that might be an incentive for a
future Mesopotamian debt bubble! Still, my textbook was nowhere near
contemplating the half century of financial “innovation” that was ahead
and how money and its levering was to be the foundation for much of
America’s prosperity.

Money would also become the economic and political wedge for profound
changes in American society. Fifty years ago, the highest paid and most
prestigious professions were that of a doctor or a 707 airline pilot
who flew the “golden” route from Los Angeles to Honolulu. Today the
yellow brick road begins on Wall Street or the City. Aside from
supernova innovators such as Steve Jobs or Mark Zuckerberg, the money is
made from securitizing things instead of booting and rebuilding
America. The tallest buildings in almost every major city are banks,
with tens of thousands of people shuffling and trading paper for a
living. One of this country’s premier investment banks paid each of its
26,000 employees an average of $370,000 in 2010, nearly ten times the
take-home pay of other American workers. Almost a quarter of the 400
wealthiest people on Forbes annual richest list make their money from
money, whereas only 8% could make that claim in its first issue in
1982, and probably close to 0% when I first read my economic primer in

Having been part of this process and even a member of the rogue’s
gallery itself, I know one thing for sure: This is not God’s work – it
has the unmistakable odor of Mammon. PIMCO, while Mammonesque, is a
company to be proud of. I can say with confidence that there are very
few clients who have not benefited from our investment management over
the years. Some of the rest of this industry, however, I’m not so sure
of: rating agencies that perpetually fail at commonsensical quality
judgments, bankers that make loans to subterranean credits and then
extend the beggar’s bowl for themselves, and 80% of active money
managers that underperform the market. As a profession we have failed miserably at our primary function – the efficient and productive allocation of capital: The S&L debacle of the early 1980s, the Asian crisis, LTCM, dotcoms, subprimes, Lehman and the resurrection, instead of the reformation,
of Wall Street, are major sins of the modern era of money. Hang your
heads, moneychangers. And no, it is not yet time to move on, as many
banking CEOs suggest. How can bond traders make ten, one hundred, one
thousand times more money than an engineer or social worker given their
dismal historical performance? Why is it that some of today’s doctors
are using food stamps while investment banking executives complain about
millions of dollars in compensation that might be deferred in case of a
future bailout?

Financiers have lost their high ground and, if truth be told, we
began to lose it a long time ago when we figured out that money was more
than a medium of exchange or a poor substitute for a store of value. We
figured out a turbocharged way to make money with money and
proclaimed ourselves geniuses in the process. Well, we’re not. We may be
categorized as “opportunists,” to be generous, but society’s “paragons”
and a legitimate destination for a significant percentage of college
graduates? Hardly. To paraphrase Paul Volcker, the only productive
invention to come out of the banking industry over the past generation
was the ATM.

This country desperately requires a rebalancing of priorities. After
readjusting the compensation scales via regulation and/or free market
common sense, America needs to anoint a new set of Mensans who can
create something more than a cash machine and make this country
competitive again in the global marketplace. We need to find a new
economic Keynes or at least elect a chastened Congress that can take our
structurally unemployed and give them a chance to be productive workers
again. We must have a President whose idea of “centrist” policy is not
to hand out presents to the right and the left and then altruistically
proclaim the benefits of bipartisanship. We need a President who does
more than propose “Win The Future” at annual State of the Union
addresses without policy follow-up. America requires more than a
makeover or a facelift. It needs a heart transplant absent the
contagious antibodies of money and finance filtering through the system.
It needs a Congress that cannot be bought and sold by lobbyists on K
Street, whose pockets in turn are stuffed with corporate and special
interest group payola. Are record corporate profits a fair price for
America’s soul? A devil’s bargain more than likely.

This metaphorical devil’s bargain has its equivalent in the credit
markets these days. Central bankers have lowered the cost of money for
30 years now, legitimately following global disinflationary forces
downward, but also validating increased leverage via lower real
interest rates. Today’s rock-bottom yields, however, have less to do
with disinflation and more to do with providing fuel for an asset-based
economy that promotes unsustainable wealth creation and a false
confidence in perpetual capital gains. Real 10-year interest rates fell
from over 5% in the early 1980s to just under 1% in recent months and
have arguably been responsible for 3,000–4,000 Dow points and 2–3%
annual appreciation in bonds over those three decades.

Ultimately, however, the devil gets his due or at least the central
bankers run out of mathematical room to lower real yields below
commonsensical floors. Today’s negative real yield on a 5-year TIPS
(Treasury Inflation Protected Securities) is perhaps reflective of a
market that has lost its fundamental value anchor. A century-long
history of average 5-year real yields would point out that bond
investors in Aaa 5-year sovereign space have demanded and received a
real interest rate return of 1.5% instead of today’s -0.1%. We are being
shortchanged, in other words, by 160 basis points from the get-go, a
“haircut” that is but one of four ways that governments attempt to
escape from an over-levered national balance sheet.

As I pointed out in a recent Barron’s Roundtable in early
January, a “haircut” is a euphemism for government default. A bondholder
can receive a “buzz” the old-fashioned way by principal default, but
that rather visible and embarrassing option is usually reserved for
countries like Greece, which cannot devalue its currency. The second and
more surreptitious policy maneuver of currency devaluation raises
import prices and lowers a country’s standard of living while allowing
politicians to hold up their heads higher than countries that simply say
– “Hell no, we won’t pay.” Third on the policymakers’ list of
barber-shopping techniques is to assure bondholders and citizens that
inflation, and importantly inflationary expectations, should be
extremely low in future years. “Forget about those $1.5 trillion annual
deficits! With wages and the ‘core’ CPI firmly in check at 1% or lower,
there is no need to worry about the inflationary erosion of money as a
‘store of value,’” they would emphasize. “Good as gold – those
dollar-based bonds – and they yield 2–3% to boot! Try to match that, oh
barbarous relic.” Well, yes, but somehow, as is increasingly obvious in
the U.K., the headline CPI seems to outdistance the core by several
hundred basis points over a 5-year moving average and the barbarous
relic morphs from the yellow metal to a long-term gilt that goes down in
price and “haircuts” its owner by several points a year. U.S.
Treasuries are not in the same egregious company as gilts, but they’re
hanging out in the “wrong neighborhood,” as my parents used to say. Or
maybe, to stick to the coiffure analogy, they’re sporting a ducktail and
a beehive instead of a conservative crew cut and a ponytail. Whatever
the haircut, the bondholder is missing some lean green or moolah at the
end of the calendar year.

Fourth, and perhaps most deceptive in the barbershop quartet of
policy tools that lessen debt loads, is the aforementioned “negative” or
exceedingly low real interest rate that central banks impose on savers
and debt holders. I’ve alluded to those missing 160 basis points in
prior paragraphs and even some Investment Outlooks where I’ve
tortuously detailed my shock at the 0.01% return on my money market
account. Even if, dear reader, your broker is offering you 0.25% (and
good for you for finding an honest firm that doesn’t clip all of it to
justify its “expenses”) you and your money are being “haircutted” by
inflation at a much higher rate – core or no core.

To rebalance debt loads and re-equitize financial
institutions that should have known better, central banks and
policymakers are taking money from one class of asset holders and giving
it to another. A low or negative real interest rate for an “extended
period of time” is the most devilish of all policy tools. And the asset
class holder that it affects, or better yet, “infects,” is the small
saver and institutions such as insurance companies and pension funds
that hold long-term fixed income assets.
It is anyone who holds
bonds with coupons that cannot keep up with inflation or the depositor
in a local bank who cumulatively holds trillions of dollars in time
deposits that don’t earn a real rate of interest. This is the framework
that has been created by modern-day policymakers who have innovated far
beyond their biblical counterparts. To put it bluntly, they are robbing
savers and taking money surreptitiously from longer-term asset holders
who are incorrectly measuring future inflation.

Well, boo-hoo, you bondholders and PIMCOs of the world. Maybe it’s
just that nice guys always finish last and you can’t beat City Hall,
Washington DC, or even Wall Street. After all, you gotta invest your
money in something and even if it’s a negative real interest rate –
whatever that is – or 0.01%, it’s probably better than nothing. So suck
it up. Big boys don’t cry unless their last name is Boehner, or they’re a
banker in need of a bailout.

Well, not so fast. This lad and this company are not going away so
easily. Devils may or may not be present in this earthly world,
depending on your point of view, but if they are, there’s a good chance
that exorcists do too and PIMCO’s got just the antidote. Instead
of accepting historical durational risk and the prospect of a
barbershop quartet of possible haircuts, bondholders should recognize
that yield or “spread” comes in different varieties. Maturity extension
is just one of them, yet if yields are too low based on historical
example, an investor should analyze other yields or other “spreads”
which are not. That is what we call “safe spread” – the recognition that
credit spreads, or emerging market returns, or currencies with positive
and high real interest rates are more attractive than those
old-fashioned gilts and Treasury bonds offering 2–3%.
Those are
markets that need to be “exorcised” from model portfolios and replaced
with more attractive alternatives both from a risk and a reward standpoint. It
is still possible to produce 4–5% returns from a conservatively
positioned bond portfolio – you just have to do it with a different mix
of global assets.

Usurious? Hardly. Justification for turning your spouse over as
collateral? Never. Bondholders may be presented with a devil’s bargain,
but exorcists are coming to life. Bondholders and citizens of America
unite! Mammon may be ascendant in this secular world, but there’s always
space for heavenly intentions and their antidotes for policy haircuts.
Practice “safe spread,” fear the devil, and avoid the barbershop.


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Wed, 02/02/2011 - 08:58 | 926744 Michael
Michael's picture

When did Bill Gross get religion?

Groundhog thought of the day.

The pain, suffering, and severity of the final phase of the economic collapse increases by 5% to 10% each month that goes by without curbing the banking cartel activities. For example, If Ron Paul had been elected president in 2008 and put his plans in place, we would have had a mild depression and would have been well on our way to recovery by now just like Iceland.  If the complete and total economic collapse happened today, the depression will be 2 to 3 times worse. If things continue the way they are, the economic collapse that is a mathematical certainty will make the great depression look like a picnic.

Wed, 02/02/2011 - 09:15 | 926798 Salinger
Salinger's picture

When did Bill Gross get religion?


perhaps he  got a call from an Oncologist

Wed, 02/02/2011 - 09:22 | 926818 Michael
Michael's picture

Egyptian Revolution Update.

The real fight club breaking out in Cairo square. Anderson Cooper of CNN got smacked in the head 10 times and fled the scene.

Oil workers pro Mubarak were order to go and protest for the dictator. The revolution is getting interesting.

Wed, 02/02/2011 - 09:37 | 926842 More Critical T...
More Critical Thinking Wanted's picture

For example, If Ron Paul had been elected president in 2008 and put his plans in place, we would have had a mild depression

How about using the USA as an example, instead of some far-away small island isolated in the Atlantic, and fact check a real US recession which occurred during the "gold standard", when there was no Federal Reserve yet?

If you check the "Crash of 1893" recession:

Then you will realize that Ron Paul is delusional: "ronpaulian" US recessions were deep, long, painful and ugly under the "no Fed" gold standard.

And that recession was just one of many that occured in that era. Raw, unbuffered boom and bust was frequent back then, and recoveries were painful.

What was true back then was that rich idiots who picked the right parents weathered these periods of "libertarian austerity" in their country clubs, enjoying the proceeds of a deflating family money/gold with no real work performed, when the rest of the country was suffering from unemployment and when many depositors lost all their life savings deposited in crashed banks (there was no Fed FDIC in those years).

If you want to see that again, if you want the "Panic of 1893", the "Panic of 1907" and similar very painful periods of history again you must either be an idiot or you must be a sadist.


Wed, 02/02/2011 - 09:38 | 926875 Robert Neville
Robert Neville's picture

So allowing economic pressure to build by kicking the can down the road while elites rob wealth from the middle class is somhow preferable? The great depression occurred on the Feds watch. The collapse that is coming will be because of Fed actions.  There is no free lunch. There will always be economic cycles. No one is smart enough to central mange an economy.

Wed, 02/02/2011 - 09:51 | 926914 JLee2027
JLee2027's picture

There is no free lunch.

+++ Indeed.

Wed, 02/02/2011 - 10:00 | 926939 More Critical T...
More Critical Thinking Wanted's picture

The great depression occurred on the Feds watch.

This is another one of those libertarian delusions.

The Great Depression occurred under a much different, passive "libertarian Fed": there was no FDIC and the gold standard was still kept intact during much of the Great Depression: the price of gold was fixed at $20.67.

In 1934, under Roosevelt, the Fed's regulatory powers got vastly expanded - and there were no similar depressions for 70+ years, neither have the painful boom and bust cycles repeated. Nor has any depositor lost all life savings to a bank crash in the past 70 years.

You thought the dotcom bust was bad? You haven't seen real busts then ... just look at the graph I linked to.

Say what you want about abuses of the financial system (and I'd agree with most of those complaints) - but historic data shows that the booms and busts got much better with a central bank in place.

Just like the relative number of car-wreck deaths and severe injuries was reduced since seatbelts became mandatory.


Wed, 02/02/2011 - 10:05 | 926960 Michael
Michael's picture

How Much things cost in 1933
Average Cost of new house $5,750.00
Average wages per year $1,550.00
Cost of a gallon of Gas 10 cents
Average Cost for house rent $18.00 per month
Vacuum Cleaner $17.75
A loaf of Bread 7 cents
Newport Boulevard Ladies Hat $1.69
A LB of Hamburger Meat 11 cents
Silk and Rayon Stockings 39 cents a Pair
Plymouth 6 Car $445.00
Health Building Tonic 89 cents
Campbells Vegetable Soup 10 cents
1933 Vintage Radio $52.00
Average Laborers Wage $20.00 per week

Wed, 02/02/2011 - 10:15 | 926978 More Critical T...
More Critical Thinking Wanted's picture


So with a year's wage they could buy about 20 thousand loafs of bread in 1933.

Today you can buy about 20 thousand loafs of bread, from the average income of 2009.

(Depending on the quality of the bread it might be less or more loafs of bread.)

The standard of living improved dramatically compared to 1933, and not just for everyday necessities: there's running water, good roads, clean air in most cities and a very advanced medical system that will serve as a 'birthright' service to every US citizen starting at around 2014.

And the US does not have 25% unemployment and does not have thousands of banks gone bankrupt with all depositor money lost.

So your numbers are supporting my arguments.


Wed, 02/02/2011 - 10:19 | 926989 More Critical T...
More Critical Thinking Wanted's picture

I just double checked your figures and it appears that according to other sources a loaf of bread was 9 cents in 1933 in other areas of the country:

That would make it about 16 thousand loafs of bread from a year's wage.

But prices fluctuated back then too so it's hard to tell conclusively.


Wed, 02/02/2011 - 10:34 | 927080 Sancho Ponzi
Sancho Ponzi's picture

It is 'loaves of bread', not loafs. Loaf is what you see when you look in the mirror.

Wed, 02/02/2011 - 10:47 | 927141 More Critical T...
More Critical Thinking Wanted's picture

Thanks for the correction.

Wed, 02/02/2011 - 10:47 | 927144 ColonelCooper
ColonelCooper's picture

Please NEVER use yahoo answers as a source.  That insults everybody, yourself included.

Wed, 02/02/2011 - 13:24 | 927862 More Critical T...
More Critical Thinking Wanted's picture


When I posted that link I checked various other sources as well and the numbers are scattered but the Yahoo result look correct.

Please ONLY criticize a data source if you can show that it's wrong :-)


Wed, 02/02/2011 - 10:26 | 927035 Michael
Michael's picture

How many loves of bread can the 22% unemployed, according to shadow stats, buy?

Today, the concentration of privately held wealth at the top is at its highest peak since 1929.

Top 10% of income earners take 60% of all wages, or something like that.

The standard of living thing is overrated.


Wed, 02/02/2011 - 10:34 | 927081 More Critical T...
More Critical Thinking Wanted's picture



How many loves of bread can the 22% unemployed, according to shadow stats, buy?

How much was unemployment in 1933 according to shadow stats, if the official stats were 25%? How many loafs of breads could they buy, living in the "Hooverville" shanty town:


How many people got to live in one of the hooverville's because they lost all their savings in the thousands of bank crashes?

You are really out of touch with how life was back in the Great Depression or during the "Crash of 1893" ...


Wed, 02/02/2011 - 10:44 | 927122 Michael
Michael's picture

Check out the Obamavilles on youtube. Todays depression will not be televised.

Obamaville Tent City

Wed, 02/02/2011 - 10:53 | 927164 More Critical T...
More Critical Thinking Wanted's picture


You really need to check your facts. Millions of unemployed Americans were living in Hoovervilles:

The video you linked to did not show any large-scale dwellings at all, it showed a couple of tents and quickly went to close-ups, presumably not to ruin the sensational story by showing the real size of the area :-)

How can you possibly compare that to Hoovervilles?


Wed, 02/02/2011 - 10:58 | 927178 Michael
Michael's picture

43+ million on food stamps. Unemployment welfare checks and section 8 hide what you are not willing to see. The economy is going to collapse. It is a mathematical certainty. Then again, you ain't seen nothing yet.

Wed, 02/02/2011 - 12:30 | 927614 More Critical T...
More Critical Thinking Wanted's picture


Amazing, so a 2010 insurance system that works and keeps people with at least some income and keeps them fed until they find a job you equate to the 1933 situation of millions of americans living and often starving in shanty towns with no sanitation and no income whatsoever?

Wow, to not see the difference you must be a really cruel, heartless person.


Wed, 02/02/2011 - 11:55 | 927436 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

7,000,000 Americans died during the Great Depression of starvation and the effects of malnutrition.  And, then 90% of the population was rural.  Now 90% of the population is urban.  This will not be pretty!

Wed, 02/02/2011 - 11:58 | 927452 ColonelCooper
ColonelCooper's picture

That was the driving force behind my comment about not feeding the world.  Of course 90% of that 90% don't understand that the shit they eat produced by "Monsanto" is only a slower acting poison than the takeout food they rely so heavily upon.

Wed, 02/02/2011 - 10:40 | 927107 ColonelCooper
ColonelCooper's picture

I agree with much of your comment.  The problem is we bought it with a credit card. 

REAL unemployment may not yet be 25%, but it is much greater than the 9.5% clapdrivel we're handed.

How many banks have closed so far?  How many are on a watch list?  If the government would have bailed out the banks with borrowed money during the Great Depression, how many would have closed?  Where does the FDIC insurance money come from?  Oh yeah.  That same credit card.

Look.  I will agree with you that the lifestyle of the American people is MUCH better than it was a century ago.  But I ask you to speak to the sustainability of that. 

I am not saying a gold standard is the answer, but as I see it, our currency needs to be pinned to SOMETHING with tangible value rather than faith.  The only advantage to gold or silver is that the faith has lasted centuries instead of decades.  As time goes on, I'm coming to the conclusion that both sides are wrong.  Perhaps I am transforming into Mako, but with either solution, nobody wins.  We cannot feed, house, and clothe the people on our planet while energy dwindles and costs rise.

Please don't counter with the modern agriculture solution.  The minority feeding the majority who have been conditioned not to contribute, with genetically modified poison crops and chemically treated water may be "life", but is just a slow shitty road to dying anyway.  People who live in slums and are fed shitty food for generations are becoming that hamster your kids wanted so bad, but after a month or two is now just a chore.  I'm not trying to sound cruel, but it IS that third rail of sociology that nobody wants to talk about.

You offer intelligent arguments as to why and how the standard of living is better today; few would dispute that claim.  But please then, explain how the path we're on can be maintained.  It seems to be the missing link to your argument, which seems focused on how goldbugs (for lack of a better word) are just wrong.  Tell us then, how you are right?  Long term, not for the next five years. 


Wed, 02/02/2011 - 10:49 | 927149 Michael
Michael's picture

At the very least, our money must be printed by the US Treasury under the supervision of congress.

When the government borrows money for extreme events, it borrows money from itself, We the people, at 0%.

Wed, 02/02/2011 - 10:57 | 927173 ColonelCooper
ColonelCooper's picture

Thank you for helping to make my point.  You OFFER to the discussion by throwing out possibilities of change.  Muscleman needs to offer some new ideas; I would bet that his junk ratio would plummet as he is not a cut and paster, and doesn't jump into the insult throwing.

He likes to call himself a contrarian; we need that in order to work through ideas.  But it is a fine line between trolling and arguing without bringing anything to the table. 

Wed, 02/02/2011 - 11:04 | 927204 More Critical T...
More Critical Thinking Wanted's picture

I posted this reply further below as well, but let me repeat it, because it's relevant to the argument you make here:

What I did in this thread was that I pointed out that the "solution" that was suggested is absurd on its face and led to much worse results in the past.

What do I need to "offer" in addition to stating the obvious that please do not make the situation worse than it already is?

Your goals might be noble, but now I'm going to be blunt: you wont improve the situation if your logic is broken, if the premises are false, if the conclusions are flawed and if your memory of history is short ...

The road to hell is paved with good intentions ...

Wed, 02/02/2011 - 11:23 | 927282 More Critical T...
More Critical Thinking Wanted's picture


Btw., I do have suggestions about how to improve the financial system.

Firstly, get rid of the government provided subsidy given to commercial banks called the "Reserve Lending Window".

Instead create a central clearing entity (computerized, no human discretion allowed) that handles "money" all electronically, with a single 'interest rate' attached to the system as a control parameter.

Then get rid of the bank special status monopoly altogether: everyone would be able to run a "bank" simply by having an account with the central clearing entity. Every citizen would have an account there, and every company.

This type of "electronic money" has special properties: the central clearing entity can set a rate that applies to all deposits. This rate can be positive (increases the amount of M0, a mild stimulus) or even negative if needed, if the economy has overheated. Negative yields would be coupled with a "redistribute equally amongst citizens" function, to remove the deflationary effect on the economy - i.e. M0 would still be constant in this 'negative yield' case.

Banks can still exist and offer deposits but would have to do so on their own risk and customers would have no deposit insurance if they deposited with such a bank. (I.e. banks could still offer accounts similar to today's brokerage margin accounts: high risk, high reward, but no automatic guarantees.)

This monetary structure would solve a whole range of problems with the monetary systems we have today. It has far, far better qualities than any rigid gold standard or "create your own money" Ron Paul solution. Bank crashes would literally not exist. Bail-outs would not exist (at least for the financial system). Both boom and bust could be handled symmetrically via the interest rate.

It's not realistic though to implement this, it's IMO too detached from traditional notions of money and could be circumvented via off-shore banking.


Wed, 02/02/2011 - 11:30 | 927313 ColonelCooper
ColonelCooper's picture

The idea has considerable merit; the other big flaw is that as long as human nature programs the computers there will always be manipulation. 

Thank you for the response.

Wed, 02/02/2011 - 12:34 | 927637 More Critical T...
More Critical Thinking Wanted's picture


Sure, but once the system has been in place for some time there will be more and more resistence against manipulation.

Just like bank account balances today very rarely get manipulated downwards by the bank - there's an angry person behind that shrinking bank account after all ...


Wed, 02/02/2011 - 10:59 | 927185 ronin12
ronin12's picture

"We cannot feed, house, and clothe the people on our planet while energy dwindles and costs rise."

I call BS on this, the resources and means are there.

Think about the massive concentration of wealth that exists, the massive misallocations of capital and the massive amounts of people who sit around and do jacksh*t.

The resources (human, technological and natural) certainly are there to clothe and feed the population.



Wed, 02/02/2011 - 11:05 | 927209 ColonelCooper
ColonelCooper's picture

Read the rest of the post.  Perhaps the statement you quoted from me is flawed in its literalness (is that a word;), but again, the MINORITY cannot FEED the majority without recompense for eternity.  And as the poor population grows while the people who feed them shrink, the "on a long enough timeline.." phrase becomes applicable.  I'm talking about a sustainable system of life for another 200 years, not the next ten. 

Wed, 02/02/2011 - 11:16 | 927260 Michael
Michael's picture

Our goals for a sustainable system of life for another 200 years should include different measures of growth. Not just digitally inflated numbers on a balance sheet. Understanding exponential functions should suggest maximum growth rates of 1% or less as a goal.

Wed, 02/02/2011 - 11:45 | 927355 ColonelCooper
ColonelCooper's picture

The biggest obstacle I see is trying to create a level of growth that can keep pace with the world's population growth, AND not implement a fractional reserve; it will be the death knell of any change.

Earlier, Muscleman quoted the phrase, "the road to Hell is paved with good intentions", and I agree.  We have completely tried to factor out the cruel reality of nature in society.  We keep old people alive on feeding tubes for years, babies born months premature have a good chance of survival, we feed and provide medicine to third world countries who breed faster than their ecosystems can support them.  I'm not passing judgement, or advocating population control, or genocide or anything of the like.  But the harsh truth is that it is those same good intentions that have fed, housed and clothed every possible person, which have subverted a natural selection process that used to solve a large part of the problem with a horrible efficiency.

Wed, 02/02/2011 - 12:52 | 927698 Michael
Michael's picture

Population numbers control themselves one way or another. I figure the planet can handle about 25 billion people.

Growth percentage should be an easy function of population numbers.

What I would really like to see is 1 tax total from the paycheck that includes all taxes owed by the individual.

A super computer can deal with disseminating the money to all the various entities. 

Wed, 02/02/2011 - 11:46 | 927384 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Exactly!  How many technologies that could feed the world are being sat upon?!  Instead of helping mankind these globalist demons are poisoning our water, air and food.  They are eugenisists with the objective of reducing the world population by 90%.

Wed, 02/02/2011 - 11:27 | 927307 destiny
destiny's picture

Enjoy it while it still lasts....

Clean air ??  hum.   Running water, yeah, not sure that what's in it is really all that healthy !   

Wed, 02/02/2011 - 11:42 | 927365 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Haven't you heard!?  Sodium Flouride is good for you.  They put it in rat poison but it's good for human consumption.  That's why San Diego, the largest U.S. city not to have already done so, willl soon be adding it to their water supply.  Sodium Flouride causes sterility, dental flourosis (sp) and bone cancer amongst other maladies but it's good for you.  Your government cares for you and is here to help!

Wed, 02/02/2011 - 13:40 | 927922 J K
J K's picture

But the 1933 Vintage Radio only received AM stations!

Wed, 02/02/2011 - 11:06 | 927216 LowProfile
LowProfile's picture

The GD was due to excessive leverage and fractional reserve lending.

...You dumb fuckin' idiot!

Wed, 02/02/2011 - 11:12 | 927234 Robert Neville
Robert Neville's picture

You are forgetting about the bust every ten years or so since WWII and that really big one in the seventies. I don't care what your government statistics say I lived through that Fed caused disaster. I have the feeling that the 70's will be the good old days by the time you and you ilk are done doinking over what's left of our country.

Wed, 02/02/2011 - 09:57 | 926932 More Critical T...
More Critical Thinking Wanted's picture


Wed, 02/02/2011 - 09:39 | 926876 Michael
Michael's picture

We didn't have an Internet back then to get good information out with crowed sourced analysis of bubbles like we do now.

A competing currency that Dr. Paul advocates will go a long way in leveling the playing field.

Not just gold, but a basket of commodities can be used as currency backing. A loaf of bread can cost 10 cents with a precious metals backed currency.

Failure is an option from time to time in order to flush out stupidity. See how simple it can be?

Wed, 02/02/2011 - 09:51 | 926877 attst487
attst487's picture

OMG! You mean to tell me that back when most grew their own food and were independent of reliance on an "economy" that there was little economic stability? Damn, how did they ever survive withhout debt? Alternatively, instead of losing deposits in crashed banks, now we lose our money to thriving banks before we even earn it, much less have a chance to deposit.

Wed, 02/02/2011 - 09:49 | 926909 Pants McPants
Pants McPants's picture

Guys, ignore this retard.  He's a troll.

Wed, 02/02/2011 - 10:30 | 927051 More Critical T...
More Critical Thinking Wanted's picture


Well, while I indeed post contrarian analysis here that many find inconvenient I'm not a troll: I linked to the hard data that I based my opinion on and I'm willing to admit when either the data I'm citing is wrong or the logic I use is faulty - and have done so in the past.


Wed, 02/02/2011 - 10:36 | 927091 ms1408
ms1408's picture

No, you don't post an analysis - you post a threat. A threat to lock me in jail unless I use your fiat crap.

Wed, 02/02/2011 - 10:45 | 927129 ColonelCooper
ColonelCooper's picture

I don't think you are a troll, I just think that you don't offer any solutions along with your argument that we are wrong.  Your value as a contrarian dwindles as your message doesn't OFFER anything.

At least the anti fiat people are trying to make adjustments to a system that maybe didn't work perfectly, but perhaps could function better than before.  Freegold, and basket of commodities, just pinning the shit to tangible value are at least solutions that have enough merit to be considered.  Fiat?  It is always the same.

Wed, 02/02/2011 - 11:02 | 927190 More Critical T...
More Critical Thinking Wanted's picture


I don't think you are a troll, I just think that you don't offer any solutions along with your argument that we are wrong.

Well, I pointed out that the "solution" that was suggested here is absurd on its face and led to much worse results in the past.

What do I need to "offer" in addition to stating the obvious that please do not make the situation worse than it already is?

Your goals might be noble, but now I'm going to be blunt: you wont improve the situation if your logic is broken, if the premises are false, if the conclusions are flawed and if your memory of history is short ...


Wed, 02/02/2011 - 11:14 | 927244 ColonelCooper
ColonelCooper's picture

You may be blunt all you want, I'm a big boy.  But, "please do not make the situation worse than it already is?"  is no more an answer than a fixed gold standard.  Doing nothing will lead to disaster as great as collapse and a "do-over", it will just take a few more years.   Don't mistake my being civil and asking questions about a solution for having noble goals.  I am probably the least noble person here.  While I do what I can for others who can't, I am a selfish SOB, and really don't give a shit about the masses because I think they are doomed.  I am also fully aware that I am very likely part of "they", but I will try my damndest to not be.

They are doomed under a fixed gold standard, and they are doomed under our current system.  People have a tendancy to grow faster than wealth.  Nobody has found an answer to that. What I'm asking you, is what do you want to do about it?  From your answer, I can only assume: nothing.  Good luck with that.

Wed, 02/02/2011 - 11:43 | 927372 ColonelCooper
ColonelCooper's picture

Got your post above.  If you would consistently include input like that with your criticism, people may argue with you, but I bet nobody would be calling you Troll anymore.

Wed, 02/02/2011 - 13:29 | 927688 More Critical T...
More Critical Thinking Wanted's picture


Doing nothing will lead to disaster as great as collapse and a "do-over", it will just take a few more years.

That is your opinion and I disagree with it. I think civilization will muddle through, as usual. The costs of the financial system are essentially a fixed rate tax of around 1% of GDP, but spread out and hidden well enough for the average citizen to not notice.

The system itself is stable (even the 'perfect storm' 2008 crisis was survivable) - just more expensive than it could be. It could be near 0% - once you have a central notion of money you do not actually need commercial banks with expensive, socialized-cost 'guarantees'.

But some of the 'replacements' I see suggested here are much, much worse than a 1% of GDP cost. They not only are more expensive, they materially reduce already achieved levels of civilization.

I'm sorry, but I'd rather see Goldman employees steal $10 billion per year than see the elderly not offered Medicare insurance. I'd rather like to see Bank Of America employees steal $5 billion per year than see no central clearing authority at all and see the government run to the banks for bail-outs. Believe me, politicians will do it. The US had that in the early 1900s and the effects were not pretty. Europe had that model for most of its medieval history, and the results were spectacularly bloody.

But in any case, this is clearly an opinion I have and I cannot prove it - but I think it's an honest basis on which to disagree with your opinion. It also gives me the honest grounds to point out various flaws in the solutions suggested here, when I see them.


Wed, 02/02/2011 - 15:49 | 928403 ColonelCooper
ColonelCooper's picture

In order to muddle through this in the manner I infer from your statement, we (the U.S., I'm not sure where you're from) need to seriously switch back to a production society rather than one of consumption.  I'm not sure that is a realistic goal given the attitude of the average American.  

We will never be able to revive manufacturing in the US at wage levels sufficient to maintain a middle class as we know it today.  Should we be able to when there are people willing to do it for less?  I don't know.  I am one of the few people I know who is willing to take a MASSIVE haircut in standard of living, but no way, no how, am I going to bust my ass on the farm so that government officials can arbitrarily decide how much of my profit (ie, FOOD) I'm going to give to people I don't know, who don't contribute Jack Shit to putting their own supper on the table.  I will support my extended family, and aid those others who I am able, but it should be my decision.   If sustainability means living more in the fashion of my grandparents, I'm all for it, but in return we need to bring back personal responsibility.  No work, no food.  And yes, I understand the ramifications of what I say.  It is a cruel thing to say, but I am becoming a rabid fan of allowing Mother Nature to run her course.  

This is my opinion, and I understand that many not only disagree with it, but abhor it because of its apparent cold heartedness.  I don't wish harm to anybody, in fact quite the opposite.  I do expect people to do their damndest to live up to their potential; the sad part is that thanks to all of our "good intentions" we have millions of people whose potential is severely limited.


Wed, 02/02/2011 - 15:56 | 928422 Kayman
Kayman's picture

More Critical T

Your choices are a Faustian Bargain indeed ! I'd rather cut off my left arm than my right arm.

I'd rather reward fraudulent behavior than not feed the poor.

How about reward productive behavior ? You hypothesize about extreme and absurd choices.

If you put the American Middle Class to work instead of rewarding criminality and sloth, then this would be a very different economy.

Thu, 02/03/2011 - 08:41 | 930397 More Critical T...
More Critical Thinking Wanted's picture


Well, if you want to use that analogy then the way I see is that right now we have the choice between cutting off an arm or cutting off hair - and I go for the haircut: it will grow back and eventually we'll be able to get rid of that parasite barber as well.

Some of the suggestions here amount to cutting off a leg or two - I disagree with those "solutions".

You of course disagree with me.

That is why we are having a rational discussion: you are trying to prove that what I see as a hair-cut is in fact an insane person with a scalpel and is causing brain damage, while I'm showing hard facts that demonstrate the disadvantages of cutting off limbs and I am proving that your diagnosis of 'frost legs' is incorrect and that amputation is not really the best treatment against dirty legs.



Wed, 02/02/2011 - 11:46 | 927385 Ricky Bobby
Ricky Bobby's picture

Critical don't waste our time you boot licking, state worshipping apparatchik.

Wed, 02/02/2011 - 14:35 | 928150 Double.Eagle.Gold
Double.Eagle.Gold's picture

Fact check

  1. 1907 - bank failures
  2. 1893 - bank failures

Nothing to do with medium of exchange, store of value.


You sir are misinformed.


Wed, 02/02/2011 - 18:07 | 928879 Sam Clemons
Sam Clemons's picture

You realize that in real terms (like gold then), we haven't had growth since 2000 and we have 10% unemployment now.  That sounds like the same "depressions" from the 1800s.  They are just measured in paper terms now so that they will end by creating more paper and you will have less frequent ones.  This allows us to lie to ourselves, and it appears to work on most people.


The 1800s had loads of inventions and prices fell through productivity increases.  Those things make it better for the average person.  Now, everything is about building wealth at the top, and most of it is done through theft from the little guy.  Please think a little.



Wed, 02/02/2011 - 09:35 | 926867 Salinger
Salinger's picture

any video of the Anderson smack down?

Wed, 02/02/2011 - 09:42 | 926885 Michael
Michael's picture

News at 11.

Wed, 02/02/2011 - 11:32 | 927324 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Good. I'm glad he got smacked.  He has CIA connections.  Whatever news he provides, the opposite will be true.

Wed, 02/02/2011 - 09:23 | 926819 Michael
Michael's picture

Duplicate deleted.

Wed, 02/02/2011 - 09:27 | 926831 More Critical T...
More Critical Thinking Wanted's picture


Wed, 02/02/2011 - 09:39 | 926863 Oh regional Indian
Oh regional Indian's picture

Salinger, given what he is spewing, he probably got his religion during a call from his proctologist.


Wed, 02/02/2011 - 09:50 | 926897 The Limerick King
The Limerick King's picture

Bondholders are all getting fleeced

So Bill thinks that Ben is The Beast

Well I won't disagree

As in fact, he may be

Mr. Gross, I don't care in the least



Wed, 02/02/2011 - 09:46 | 926903 I Am The Unknow...
I Am The Unknown Comic's picture

Wow, I was thinking the same thing.  When I see him on TV it looks to me like he has some kind of malignancy....maybe prostate or colorectal....I don't know, but his pallor is noticeable.  Bill if you're reading this, go see a doctor or get a better makeup crew. 

Wed, 02/02/2011 - 11:30 | 927317 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

The bond pimp is really dead.  This is the same fella that the CIA uses to impersonate Osama Bin Laden who died long ago.  The bond pimp was left-handed like Osama.  This fella is right-handed.

Wed, 02/02/2011 - 09:32 | 926854 bunkermeatheadp...
bunkermeatheadprogeny's picture

He didn't find religion.

He sees what is coming and wanted to get ahead of the curve with those statements so he doesn't look like a bad guy.

It won't be just populist pressure, it's special interest pressure that will push back on the Fed's policy because it is not just savers that are hurting from the policy, it is every industry other than banking that is hurting from the Fed's policy.

Wed, 02/02/2011 - 10:54 | 927165 Michael
Michael's picture

I think you have something there.

Wed, 02/02/2011 - 12:12 | 927521 bb5
bb5's picture


Wed, 02/02/2011 - 08:51 | 926748 Green Leader
Green Leader's picture

Bernanke is more like a higher order demon. Satan is his boss.

Wed, 02/02/2011 - 09:26 | 926839 Oh regional Indian
Oh regional Indian's picture

But in the end they're all pawns in the chessboard of our collective mind eh, GL?


Wed, 02/02/2011 - 10:10 | 926969 Cognitive Dissonance
Cognitive Dissonance's picture

It is so difficult for people to understand (usually because they don't wish to understand since it doesn't fit within their worldview) that all that is happening is simply a manifestation and reflection of us, of the collective mind.

Wed, 02/02/2011 - 13:42 | 927929 J K
J K's picture


Wed, 02/02/2011 - 08:53 | 926752 satansanus
satansanus's picture

How dare he insult Satan like that! At least Satan is doing gods work by casting out sinners!

Wed, 02/02/2011 - 09:41 | 926882 snowball777
snowball777's picture

Uh, you missed a few...

Wed, 02/02/2011 - 09:43 | 926892 attst487
attst487's picture

If he is preparing a place to keep all the bad people seperated from the rest, he can't be that bad of a guy, eh?

Wed, 02/02/2011 - 08:55 | 926754 ak_khanna
ak_khanna's picture

Th­e rich corporatio­­­­ns and the too big to fail bunch of banksters have a lot of influence on the political class, the rule makers and the rule enforcers due to their enormous purchasing power. So irrespecti­­­­­­­­­ve of the position in the government­­­­­­­­­, everyone works for their benefit.

The politician­­­­­s around the world are nothing more than auction items which can be sold to the highest bidder. They will do whatever they can for the lobbyist paying them the maximum amount of money or votes, be it the unions, the banksters, the richest corporatio­­­­­ns or individual­­­­­s. They are in the power seat to extract maximum advantage for themselves in the small time frame they occupy the seat of power.

The rest of the population is least of their concerns. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.


Thu, 02/03/2011 - 04:53 | 928147 slewie the pi-rat
slewie the pi-rat's picture


i know, ak, but tyler is so funny, here!

i got up to pee and was headed back to bed b/c rosie was thinkin about a brief chat w/ the earl of morningwood, but, nooo, slewie had to check the PMs, first!  ...oh, well,'s too hot in norcal to go back to bed this morning, anyway...

tyler: "Devils may or may not be present in this earthly world, depending on your point of view..."

i don't see how anyone could miss them who has ever read jimmy hatlo on a sunday morning, back when brothers HAD to be nice to each other b/c there was only one comic section and it was MOM's!

gross is lookin for cover, doncha think?

besides if you were attached at the hip pocket to an egyptian named el-erian, you'd want to try to get along rather just cut the cheese and start waving the covers to give yourself a good, strong, first impression, given the current gestalt...

this cisco kid and pancho are so slow on the draw, they're probably still happy they can mark-to-the-moon on all that enron off-balance sheet stuff they've never come clean on, yet.

tyler, you are a threat to my health!

Wed, 02/02/2011 - 08:56 | 926756 Xibalba
Xibalba's picture

Perhaps someone can inform Mr. Gross that there is no inflation. 

Wed, 02/02/2011 - 08:56 | 926757 eigenvalue
eigenvalue's picture

The Bernank is not Satan. He is an angel. Without him, silver would never appreaciate so quickly and the end of this ponzi would never come so fast. All hail the Holy Bernank!!!

Wed, 02/02/2011 - 08:59 | 926762 Temporalist
Temporalist's picture

Bill ought spend some of that trillion at Pimco on some gold and they say 5-10% of your portfolio Bill.

Wed, 02/02/2011 - 09:01 | 926764 spanish inquisition
spanish inquisition's picture

For a second there I thought he would say he is gonna start dumping bonds or telling people to cash out at their banks and pull out of the market. No, if I interpret this right he said, "this sucks, here is some lube".

p.s. Bill, eventually the Fed is going to come after that last bit of spread.

Wed, 02/02/2011 - 09:09 | 926781 whatz that smell
whatz that smell's picture

to have and to hold from this day forward until default do we part.

Wed, 02/02/2011 - 09:14 | 926789 SWRichmond
SWRichmond's picture

Bill seems to come out with pieces like this one every now and again, in between whining about needing the dot gov to step in and save the bond market.  He is right, of course, about financiers having lost the high ground, about DC being corrupted by money...

Wed, 02/02/2011 - 09:14 | 926791 pagan
pagan's picture

So why not sell the bonds?

Wed, 02/02/2011 - 09:42 | 926886 snowball777
snowball777's picture

Too levered?

Wed, 02/02/2011 - 11:09 | 927221 nobita
nobita's picture

Well because he has so many of them it would effect the market in a big way i guess, and he is not prepared to do that yet.

But trying to read between the lines it feels like he is threatening to do just that. His letters seem to get angrier and angrier. When QE3 is annouced he might just flip...

Wed, 02/02/2011 - 09:14 | 926792 blindfaith
blindfaith's picture

This man makes me as sick to my stomach as did Greenspan.

Gross had no problem kissing the hand of the prince of darkness to get inside info on Fed and Treasury speak, rub shoulders, and split a beer after a hard days work fucking tax payers.

Mr. Bill had better watch his step with Mr Ben and Timmy, these boys don't like exposure to public criticism after having let you into the fraternity meetings.

Mr Bill can go down in flames.

Wed, 02/02/2011 - 09:14 | 926795 Pants McPants
Pants McPants's picture

Considering Bill Gross' relationship with the US political establishment I found this article to be disingenuous and hypocritical.  Maybe Gross has a future in politics, I don't know.

Wed, 02/02/2011 - 11:02 | 927192 bigdumbnugly
bigdumbnugly's picture

agreed though you glossed over your own point with the 2nd sentence.

gross has had a controlling hand on the strings of the politicos for some time.  but now that it isn't going according to his plan he is (however correct) whining.

he probably couldn't have a larger effect on politics if he was a senator from some state than he has in his present position.  nevertheless, when a titan like gross expresses this kind of concern - it does mean people better take notice.

Wed, 02/02/2011 - 12:09 | 927507 Pants McPants
Pants McPants's picture

Thank you, I stand corrected.  He has much more influence in current position than he would as an elected official. 

Wed, 02/02/2011 - 09:15 | 926799 Jason T
Jason T's picture

article I wrote back in June: 

The title of my article is the title of a book I recently got from the library. It was written in 1975 by William Guttmann and Patricia Meehan and is about the period in Germany from 1919 - 1923.

The title of Chapter 1 is "A license to Print Money" and starts off with a quick story from a play written a century prior called "Faust" by a famous German Poet named Goethe. In his play, there is a scene where the Emperor, who sold his soul to the Devil, Mephistopheles, is lacking money and asks the Devil to create it. The Devil accepts this task and a prototype note is created and multiplied a thousand times by magicians overnight. The Chancellor then gives the Emperor the note that has turned an ill into a good.

The authors go on to write on pg. 42 from this book:

It is fitting that licence to print money should have originated with a spirit akin to the Devil, the father of lies. The currency of Germany during the inflation years was a gigantic lie, which the nation recognized for what it was only in the last stage. (emphasis mine) The road to inflation, like the road to hell, is paved with good intentions, and it was to turn "ill into good" that the German government gave the licence to print money.

I can't help but recall the speech our Federal Reserve Chairman, Mr. Ben Bernanke, gave in November of 2002, known as his Helicopter Speech, in which he stated:

The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.

Wed, 02/02/2011 - 09:35 | 926864 Snidley Whipsnae
Snidley Whipsnae's picture

What if find most fascinating about the Weimar hyperinflation is that the average citizen did not realize what was actually happening even during the worst of inflation.

The average German did not cry out 'stop the hyperinflation', but instead cried out 'print more money and get it to us as quickly as possible'.

The old refrain about 'not one individual in a million realizes what inflation is doing to them' is therefore absolutely correct imo.

How many people do you personally know that compare the price of an auto in 1980 to the price of a similar auto today? The people are so conditioned to prices continually rising that they do not consider the source of the rising prices, but simply consider it normal or, at best, a rise in cost due to improved autos.

Wed, 02/02/2011 - 11:25 | 927298 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Sad but true!

Wed, 02/02/2011 - 11:31 | 927311 Rogerwilco
Rogerwilco's picture

"What if find most fascinating about the Weimar hyperinflation is that the average citizen did not realize what was actually happening even during the worst of inflation."

My German grandfather saw all too well what was happening, and he made plans to emigrate to Brazil with his wife and three kids. When he sold his casket/cabinet shop, the payment was literally a suitcase full of paper money. It took a month after the sale to arrange for the travel, and in that time the money lost so much value, his plan had to be scrapped. He and his family where trapped in Germany for the mess that followed and WWII.

Wed, 02/02/2011 - 18:07 | 928877 strannick
strannick's picture

Wow. Thanks for the story... Get silver seems to be the lesson, and dont trust inept corrupt governments

Wed, 02/02/2011 - 11:48 | 927397 Kayman
Kayman's picture

Snid Whip

That be true, but food and gasoline are yardsticks that most everyone use. Governments inflation propaganda machine grinds to a halt even to the most blinded citizen, when using food and fuel as a base line. 

Wed, 02/02/2011 - 09:41 | 926881 A Man without Q...
A Man without Qualities's picture

"The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost."

This comment by Bernanke suggests to me that he doesn't really understand how importance sound money is for a the democratic system. 

Wed, 02/02/2011 - 11:11 | 927229 searcher68
searcher68's picture

Re: "The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost."

Yeah right, fucktard. Servicing the debt on those magic dollars is most certainly a cost. Why doesn't our government literally print its own money without the "debt"  part of the instrument? It's absurd to pay/owe interest to ourselves, and our government certainly has the sovereign right to issue non-debt denominated fiat. It says so in that antiquated piece of paper the political hacks like to use for tp.

Wed, 02/02/2011 - 11:20 | 927281 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Why doesn't our government literally print its own money.


No!  That would be constitutional and besides isn't that what got Abe Lincoln shot?

Wed, 02/02/2011 - 11:34 | 927330 Kayman
Kayman's picture

"that allows it to produce as many US dollars.... at essentially no cost"


If Bernanke submitted a paper to me with that conclusion, I would flunk him and suggest he take up knitting.


Let's follow the logic.  You are hungry and devour a bowl of soup.  Ben says that is good; now you must eat one hundred bowls before you get up from the table.


There is a cost Benny, there is a terrible cost.




Wed, 02/02/2011 - 15:18 | 928251 slewie the pi-rat
slewie the pi-rat's picture


Jason T:  Balzac marched to this myth, also, in a short, fun, little ditty called "The Wild Ass's Skin".

Honore's protag is a busted fop of a gambler who has just borrowed the last few louie's he could get his paws on and lost them on the wheel, trying to get even.

so, as he's about to arc himself into the Seine, he notices a nice little antique shop which he'd never realized was there, before.

lamps are lit, in there.

he is curious and goes to check it out.

the nicest man offers him the magic skin;  just sign this little contract where i get your soul when you die. 

talk about hope you can believe in!  why not, the guy's one leap away, already.

no problemo.  i'll take the skin if it will grant my every wish 'til death does it's fart.

after a while, he bigins to notice that everytime it grants a wish, the skin gets a litle bit smaller...hmmm...

after a few decades and a HELLUVA good time, things begin to get serious,as the skin is now about the size of a grape skin...

...and so on...

Wed, 02/02/2011 - 09:23 | 926824 CU1981
CU1981's picture

Someone Rang ?

Wed, 02/02/2011 - 09:29 | 926834 Antifederalist
Antifederalist's picture

The unmitigated gall of this asshole is on full display in this letter.

For thirty years he plays the game and games the system, frontrunning the Fed and feathering his own nest.  Now he gets religion.

Sorry Bill.  We don't buy it.  You are scum and will always be scum.


Wed, 02/02/2011 - 09:44 | 926894 Hephasteus
Hephasteus's picture

Wow. When they fake indignation it really does work.

Wed, 02/02/2011 - 09:29 | 926850 Oh regional Indian
Oh regional Indian's picture

This new Gross Bill is really too much. I understand that big fat men who got big and fat with their mouth firmly in the Gubbermint trough, do what they are told to do.

But this (these last few pieces by him), and especially the name calling is pure theater.

The theater of the absurd for sure!


Wed, 02/02/2011 - 10:19 | 926990 Cognitive Dissonance
Cognitive Dissonance's picture


At the level of money management Bill Gross occupies he is essentially a politician. He has a constituency, his investors, as well as his base supporters, those long term investors who have profited from his actions.

Bill Gross is a money manger ground hog who popped out of his hole a few months ago, did not see his shadow (because the angry mob gathered around him was blocking the sun) and quickly sensed the winds of political change. He is now re-positioning for the coming storm.

Wed, 02/02/2011 - 15:48 | 928354 slewie the pi-rat
slewie the pi-rat's picture


good psi, CD.

unfortunately, or not, i guess, depending on perspective, bill gross's largest constituency may be the teachers and other public employees of californication, who are counting on cisco and pancho to provide the income and cash flow for their retirement.

here is a math example i might label "Underfunded Pensions":

gross and el-erian, cisco and pancho, are probably able to supply the future flow of pensioners with a flow of pensions, X.

the pensioners have been promised Y.

Y = 4X, where X and Y are in green stamps.


Wed, 02/02/2011 - 11:23 | 927294 nobita
nobita's picture

Where im from we have a saying. When the devil gets old he get religious. Meaning off course that evil men, when they get older, sometimes realize their past mistakes and strive to be good.

Men can change (at least i think so).

I feel like Gross "gets it" and that he is trying to influence the system from inside. This is after all where he is in a position of great power. His letter is very harsh on the FED, President and congress and I believe it contains a veiled threat to Bernanke regarding QE3.

disclaimer: im a pretty naive preson...


Wed, 02/02/2011 - 11:43 | 927371 Kayman
Kayman's picture

I think it is fair to say that Bill Gross always "got it".  After all, he clearly states that he road the wave of cheaper money (increasing bond prices) for some 30 years; all the while that the government faked inflation numbers.

Whether he is head-faking everyone is not clear; but he is ringing the bell about the abandonment of the U.S. debt market.

I guess, ultimately, if there are no private buyers for U.S. debt then the Bernanke's "costless" money printing could knock out a couple of trillion a month to rollover old debt and issue new.

I wouldn't want to be a Primary Dealer when the music stops.


Wed, 02/02/2011 - 09:33 | 926857 MarkTwainsMustache
MarkTwainsMustache's picture

Was that a Charlie Munger jab I sensed in there???

Wed, 02/02/2011 - 09:33 | 926859 bunkermeatheadp...
bunkermeatheadprogeny's picture

Why do banks rob the Fed? Because that's where the money is.

Wed, 02/02/2011 - 09:34 | 926862 Twindrives
Twindrives's picture

And we thought Obama was Satan.  Imposter?

Wed, 02/02/2011 - 09:36 | 926869 Tic tock
Tic tock's picture

The US is being destroyed via the Fed for the benefit of major financial firms. The government of the US is abetting this. The banks are devouring the largest economy in the world because their balance sheets are deficient. In the process they are taking down every other economy in the world. ...what is the land requirement for basic nutrional intake? Damn simple strategic number, where is it? Crops are on six month lags, that's high food prices, in a consumer crunch, which will last for probably a year - with real incomes not having moved in ten years and producer prices now rising fast, either we welcome deflation and people scrimp to get by, or the US Fed destroys the world economy as per its mandate to serve the NY banks. shouldn't be a difficult decision, and there should be a group of people who make the decision. We have a very real problem with who's in charge. In terms of the welfare of the global population, it may as well be Satan who is in charge.    

Wed, 02/02/2011 - 09:38 | 926873 Johnny Lawrence
Johnny Lawrence's picture

Well said.

Wed, 02/02/2011 - 11:14 | 927243 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Hear, hear!

Wed, 02/02/2011 - 09:44 | 926879 Johnny Lawrence
Johnny Lawrence's picture

"As a profession we have failed miserably at our primary function – the efficient and productive allocation of capital...."

I really like this line, but's how I feel on a daily basis.  I hate being in this industry.  And the problem is that most Americans are too ignorant to realize they're being raped.

Wed, 02/02/2011 - 18:14 | 928910 slewie the pi-rat
slewie the pi-rat's picture


not to mention, taped.

Wed, 02/02/2011 - 09:51 | 926913 snowball777
snowball777's picture

That's it Bill...waive everyone off bonds with your frantic orange cone flashlights.

Ben talks those yields talk em back up.

Here's what Bill probably looked like while writing this:

Thu, 02/03/2011 - 04:23 | 929748 slewie the pi-rat
slewie the pi-rat's picture

go ahead, snoball, make my day! nice!

Farriday, LA, is where Jimmy Swaggart grew up, along with his two first cousins, Jerry Lee Lewis, and Mickey Gilley (Gilley's/Pasadena, TX/Urban Cowboy/mechanical bull).  As far as i'm concerned, they are all fabulous musicians!

Jerry Lee's parents mortgaged the farm to buy him a piano; they sent him to Bible School in Texas, where he was kicked out for playing boogie woogie gospel in a church service!

Swaggart was concerned about Jerry Lee's soul, which led to a bit of a rift.

Hey, if my first cousin, once removed was as cute as Winona, who knows?

I fell in love with a 14 year old, once and married her myself...when i was 24...and she was, too, ok?  Great Balls of Fire!

Jerry Lee and Elvis were pretty tight, and with Carl Perkins and Johnny Cash, became Sam Phillpis' "Million Dollar Quartet", for Sam's Sun Records.  When somebody asked Elvis what he thought of Jerry Lee marrying his 13 y.o. cousin, Elvis said:  Why not?  They're in LOVE!

Elvis was about to get drafted and when he did, they shipped him to Germany, where he fell in love with a 14 y.o.!

Here's the Quartet doin "Just a Little Talk With Jesus".

YouTube - The Million Dollar Quartet, Elvis, Johhny Cash, Carl Perkins. Jerry Lee Lewis

I could listen to Carl Perkins all night!  As a matter of fact, I probably will...


Wed, 02/02/2011 - 10:22 | 927012 partimer1
partimer1's picture

Bernanke is the satan, and zero interest rate is moronic and stupid under any circumstances. if money has any value, the interest rate cannot be zero.  It robs the savers and retirees living on the fixed income, to compensate the reckless bankers who brought the system to its knee.   More, it causes food and energy prices to shoot up, causing more pain to those who got robbed.   Bernanke should be burned on the cross for causing so much misery in the society. 

Wed, 02/02/2011 - 10:27 | 927032 Deathtöngue
Deathtöngue's picture

Awesome! Let's instead let governments force their bondholders to take a major haircut. That'll solve everything.

Oh wait - Bill Gross wouldn't like that, would he?

Wed, 02/02/2011 - 10:28 | 927043 monopoly
monopoly's picture

No, I disagree, lately he has been telling it like it is. Yes, he is worth multi millions, yes, he milked the system, but maybe, just maybe some on Wall Street are beginning to see the carnage they have wrought.

That was a great story.

GM all.

Wed, 02/02/2011 - 10:52 | 927161 Antifederalist
Antifederalist's picture

They have seen the carnage all along, but it did not serve their interests to speak of it.  They are not stupid.  Just corrupt.

What this represents is an attempt to be on the right side of history and say, "i told you so."  The ego drive of these people will not allow them to just STFU, even when it is painfully obvious that that is what they should do.  That is what normal people do when they are exposed.

These people are liars and charlatans and do not even have the good sense to shut up when they clearly cannot help their own case.  Example: see Greenscam.  He still claims he did nothing wrong.  They should all take the Fifth amendment but their egos will not let them do it.  Like moths to a flame.  Burn baby burn.


Wed, 02/02/2011 - 11:09 | 927223 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Bill Gross is "the bond pimp" looking for a new batch of hoes!

Wed, 02/02/2011 - 10:35 | 927082 LePetomane
LePetomane's picture

"PIMCO, while Mammonesque, is a company to be proud of. I can say with confidence that there are very few clients who have not benefited from our investment management over the years."   -  Flim Flam Man

Wed, 02/02/2011 - 10:40 | 927108 John McCloy
John McCloy's picture

If Ron Paul can get him to appear before the commitee and spout the same dissent of the Fed and even advocate a full audit and disbanding than I may open my ears a little further.

Wed, 02/02/2011 - 10:42 | 927113 gigeze787
gigeze787's picture

"Megalomania is defined as: [1]

  1. A psychopathological condition characterized by delusional fantasies of wealth, power, or omnipotence.
  2. An obsession with grandiose or extravagant things or actions.

Historically it was used as an old name for narcissistic personality disorder..."

Wed, 02/02/2011 - 11:19 | 927275 ian807
ian807's picture

Every ecology produces parasites. Every economic system does too.

In nature, the parasites are either removed, or the host dies. It's still an open question as to how the USA and Euro economic  systems will go. Our immune system seems to have been co-opted in an HIV-like manner, to support the parasitic infection itself.

Wed, 02/02/2011 - 12:15 | 927536 Kayman
Kayman's picture


You are almost to the real question: Can parasites live off parasites (indefinitely)?

We shall see.

Wed, 02/02/2011 - 11:49 | 927401 palmereldritch
palmereldritch's picture

Bill just wants to have fun

Wed, 02/02/2011 - 11:58 | 927449 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

I can picture Madonna bouncing around singing that tune.  Catchy!

Wed, 02/02/2011 - 12:16 | 927541 Kayman
Kayman's picture

Uhh... Cindy Lauper

Wed, 02/02/2011 - 12:07 | 927495 gwar5
gwar5's picture

Negative interest rates much?

Billionaire Bill Gross pissed. Knows he's got worthless paper.

Wishes he was Jamie Dimon and part of the inner elite circle.

Where were any of these Mammons before?

Wed, 02/02/2011 - 14:50 | 928202 equity_momo
equity_momo's picture

Fuck you Gross

Wed, 02/02/2011 - 14:53 | 928214 Mad Mad Woman
Mad Mad Woman's picture

But, but I thought that Bill and Ben were BFF?!?! 

Wed, 02/02/2011 - 22:07 | 929614 Buck Johnson
Buck Johnson's picture

Hey didn't get religion.  What I say now and have said before is that Bill Gross is putting out their his alibi when this whole fiasco implodes.  He knows it and others know it, but had no choice.  It's like getting a kick in the groin area, you know it's coming and you can't stop it from happening but what you do is to delay the inevitable.

Wed, 02/02/2011 - 23:25 | 929829 PulauHantu29
PulauHantu29's picture

Another Lover's spat.

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