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Bring on the Conspiracy Theories!
There is a wonderful conspiracy theory propagated by Tea Partiers that has been making the rounds in the financial markets for the past several months. In a desperate attempt to salvage the November election, president Obama has ordered Fed governor Ben Bernanke to flood the system with $2 trillion of liquidity. This is the QEII you have been hearing so much about. The move will give the economy a much needed shot in the arm that will enable the Democrats to retain control of both houses of Congress. Two more years of Obamanomics will then follow.
The only problem with this theory is that it is complete hogwash. For a start, Ben Bernanke is a Republican originally appointed by President Bush. Then there is Fed independence to consider. The board of governors is well stocked with enough conservatives, like Richard Fisher (click here for my chat with him at http://www.madhedgefundtrader.com/june_25__2008.html ), to make such a politically inspired maneuver impossible. If the Fed weren’t set up this way, it would become a political football kicked back and forth with every election. Congress would order the stimulus machine to be stuck permanently in the “ON” position.
You also have to ask the question of whether QEII will make any difference at all to the economy. With banks desperately seeking to deleverage and unwilling to lend, the level of interest rates today is truly irrelevant. The 35 million homeowners with negative equity, about 25% of the total, certainly aren’t going to be refinancing anytime soon. Much of the drag on the economy springs from the sorry state of the real estate market (click here for “Years of Pain to Come In Residential Real Estate” at http://www.madhedgefundtrader.com/september-14-2010-2.html ), so there is little the Fed can do, unless it starts buying millions of houses and burning them down.
Personally, I think the American central bank is out of bullets, and that any such gestures would amount to pushing on a string. Believe me, I have been watching the Japanese do this for 20 years, to no effect. There is one thing the Fed does understand, and that is that any QEII implemented now would be highly inflationary down the road. This fits nicely with my (TBT) recommendations.
But hey, as I learned in my journalism days, never let the truth get in the way of a good story. My late editor at The Economist, the brilliant Peter Martin, taught me that belief will trump fact every time. Facts change, opinions don’t. That totally works for me, because this theory on the true motivations of the Fed is driving cash into hard assets at an unprecedented rate, commodities and companies that I have been pounding the table about for the past 18 months. I made that call because it dovetailed nicely with global macroeconomic trends which I see continuing for another decade. Most people get invited to dinners. I get invited to mines.
If the market wants to run the prices of my assets up for the wrong reasons, I say bring it on! The dollars I am making as a result are just as good at the bar.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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Monetary inflation and dollar devaluation is the path of least resistance and the best way forward for TPTB. Domestic debt levels and future obligations (welfare & pensions) versus assets are well past the point of no return. The government is bankrupt. The Wall Street banks are bankrupt. The bulk of the American people are either in debt up to their eyeballs, are entering the 'golden years' with little or no net worth, or incapable of working competitively vis-a-vis the world labor pool. The country is toast and nothing can save it. But dollar dilution will give the few in the know time to establish safe havens and secure tangible wealth before system breakdown and pandemonium. The DOW is a side-show to the coming pillaging the middle class and the diminishing wealth they still hold. Your best hope is to be out of paper and into tangibles. Keep it simple: food, water, shelter, guns, gold, silver.
Oh, good champagne might be a good barter item too, after canned spam.
Obama is a puppet, he probably gets lost in the White House! The real question, who is pulling the strings?
The politicians are reluctance to raise taxes to confiscate money from the middle class. So, the Fed will confiscate people's money through the printing of money and debasement of the currency to get it. Gird your loins all the way to the Halls of Valhalla.
Protect yourself with gold and PMs and don't let the pricks call you paranoid for doing it. It's not a conspiracy theory, it's a conspiracy fact.
MHFT-
A gratuitous poke at the Tea Partiers? Your San Francisco slip is showing.
Ot: Has anyone noticed that there is no a-la-carte menue for conspiracies? Once down the rabbit hole, there appears to be only a buffet.
Obama gives Bernanke orders, or the other way around? I think Bernanke calls the shots. The West is in an economic war with the East over the fate of fiat currency.
I don't think Obama has a clue, except when Ben tells him if they print lots of money they can steal it from the masses who were prudent enough to save it up over the years. Obama like!
Gird your loins.
Here is my conspiracy theory.
We've been leaning on China to devalue their currency for over two decades. There has been a lot of smart people starting in the 80s that warned what a major trade imbalance between China and the U.S. would do to the global market.
I think that in the late 90s the U.S. decided to take this 'downtown'.
We started devalueing our currency in 2000. But you can just come out and say that or just do it up front. You've got to make it look like it's part of something else. So....tech bubble....housing bubble....,
Remember Greenspan
an alcolyte of Rand until (seemingly) the late 90s.
I think we've been having a currency war for 10 years on the q.t.
Now others are getting on board.
But this is a case of the first to the bottom wins as devalued currency eventually translates into more exports.
Just sayin'
The US export growth industry threatens China like glaciers menace Miami. The phrase "translates into more exports" is an unreal concept. What is proposed that we would export in addition to the grain and few jobs left here?
Devaluing the dollar is all about fiat reserve currency in exchange for hard assets, until the asset providers go into dollar revulsion. That would be any year soon, given the pace of collapse in confidence and the value of the dollar.
Dang. That makes a lot of sense, Mr Pooft.
Then there is Fed independence to consider.
Is this a monkey typing random letters?
Tea partiers are very easy to pick on. They are wide ranging demographically, and are very upset people. When someone is upset, it can be easy to lose sight of one's first intention. I understand that if Barry is not proper than we should oust him. I also understand that entitlements are not only out of hand, but should never have been considered safe in such an environment that requires 7% growth. I think those that bash the Tea'ers should do more to remind them why they have joined the party; because the "Federal" Income Tax is unconstitutional.
"Congress would order the stimulus machine to be stuck permanently in the “ON” position."
MHFT, it is stuck in the on position; TARP. Greenspan had his bubbles, now BS has his. There is no left, no right, only wrong when it comes to the entitled class. Let BS Bernanke and any Replub Neo Keynesian eat cake once we close the gap, which we will. Look, who cares what their pedigrees are? I care what their policies are. BS says he does not know why gold is going up up up. That is the most ludicrous statement I have ever heard considering it is his job to manage the world's largest reserve.
Barry already wanted to demolish Detroit, who is to say this option is off the table?
They are out of bullets, but now they have arrows, and I think that is a metaphor for 'retreat', but they will try and light our "reserves" on fire, much the same way Iraq did to Kuwait.
And as far as opinions and facts go, little matters to what is real for economics nowadays. You may be correct that opinions drive resources, but at the end of it all, the fact that a "rebublican" neo-Keynsian toyed with debt levels never even thought possible will crush these dreams and shed light on the real. The truth is coming, and it cares not what pedigree anyone has, only who they are.
A conservative professor. lol This would be a first.
We have almost graduated from BIOB to BIOT. Blame it on the Teaparty will backfire on you though. Those of us in the Teaparty can't be persuaded or deceived into believing a lie about ourselves. You might want to pick on some one your own size!!!!!!
"For a start, Ben Bernanke is a Republican originally appointed by President Bush"
Doesn't matter, he is still a Keynesian. Republicans fuck up too.
Likewise, there is a wonderful conspiracy theory propagated by The Professional Left that has been making the rounds in the financial markets for the past several months. In a desperate attempt to sabotage the November election, Fed governor Ben Bernanke (R - DC) is dragging his feet in the lead up to the mid-terms.....
http://www.politico.com/news/stories/0810/41531.html
Right ... But who ever heard of a October Surprise in September. Politically speaking a Republican Congress and a Democrat President is the ideal environment for the FED to be truly independent (i.e no one to tell them anything). I think if anything they will saber-rattle in early Oct. and do nothing until after the election when the Market reacts to the election results.
Either way we will lose ... unless you guess right.
For a start, Ben Bernanke is a Republican originally appointed by President Bush.
There are Progressives in both parties and that is what Ben and GW are. AKA RINOS! So don't be slinging your bs at the tea parties.
He got reappointed so he doesn't have too. I don't think it is (Obama I think it is the wallstreet centric view that he is helping. Of course he isn't and should be crimes, crimes against humanity, and treason against the united states.
I couldn't help but notice that there was NO evidence presented of this "conspiracy"! As an active Tea Party participant, this is the first I've heard of it. Even the blogs I read haven't mentioned it!
If there is delusion, it's the delusion in this author's head!
That said, I still enjoy reading his blog! Great analysis!
Goldman warns regulation might drive it out of Europe
on FT http://www.ft.com/home/uk
Great! Let's try it here!
double post
LOL
This clown, I tell ya.
The Fed is a political machine just as much as the Presidency is. The Fed has to do what it thinks will keep politicians elected that are favorable to its own existence.
The Fed will do everything it can in order to keep the establishment candidates from being replaced by tea partiers who just might manage to get an audit rammed through - or even possibly shut the fed down entirely.
This notion that the Fed is an independent entity is so laughable that even a 10 year old can understand the politics involved.
hey Mad, generally I like your articles, except please note the Fed chooses the President of the US of A, not the other way around. Obama is their bitch and does what he is told, he doesn't tell them. What do you think they are doing in their various closed door meetings at the Bilderberg Group, talking about their favorite hookers? He is getting is orders from above, the elites. Or as I like to call them, those in-bred psychopaths.
You just stepped in in. You may know the economics and the math and numbers, but you know ZILCH about politics.
This is not a "red State/Blue State" argeument and courching in those terms is idiotic and pedistrian.
The FED RES cabal are GS alums. They serve the business community and do not care a thing for liberty, or "open markets". They want absolute mponey and power, and who is in the WH or control congress is irrelevant. All this criminal enterprise does is just buy the politicians and they do it every time there is a change.
THE ONLY THING DIFFERENT this time IS the TEA PARTY. They do not care fot GS or the rest, they are not "r" or "d", they are PATRIOTS and cannot be bought. That blew up in the GOP's face recently.
Get it straight, YOU DO NOT HAVE THE PERSPECTIVE to write such crap. This does belong to the Daaily Kos.
YOU IDIOTS that keep rapping and pissing on the Tea Prtry simply do not get it. They oppose this crap, and THEY ARE THE ONES PUSHING TO AUDIT AND ABOLISH THE FED!!!
My sentiments also.
They are the only ones who have (besides the Progressives, and Union Thugs, and Black Lib Theology crowd), who have actually got off their dead ass, and done more than TALK SHIT.
How easy it is to sit back and judge when all you have done is talk.
These folks put their money, and their time, and feet on their beliefs, which I might add, are the same as most here........
They at least tried, and are trying to keep America a Capitalist nation, and not a friggin Fascist state.
Exactly where we are being taken.
These are regular Joes,and Janes, and they are the backbone of America, and the small business owners, and the savers, IOW real,and their tired of getting the shaft just like we are.............
They/their kids, built America, and died for it,and are not ready to turn it over,to the Globalists.
+1
The Ron Paul libertarian wing of the "Tea Party" correctly identifies the threat to the economy and liberty from global militarism.
I have the impression most other Teabaggers do not make that critical connection, and are overly jingoist.
Teabaggers?...teabaggers??...now where did that term come from.
Ahhh yes...the socialist's who voted for Barry...ROTFLMAO.
Seriously, why is this guy posting at ZeroHedge?
Take it to the Daily Kos.
Daily Kos is too good for this (whatever your political views).
Maybe he could get a blog with MSNBC, or Faux News. Or I hear that Obummer's looking for a new economic advisor.
Considering originally the Tea Party movement was anti-tax, anti-state; then became more anti immigration (ironically, criminalization of something requires state and taxation, specially in the immigration area, where a bigger state and bigger taxation would be required), and now is just a caveat for religious zealots too. All this considered, anything can come from the Tea Party group, either Obama is a communist Mussolini lover and Satan worshipper born in Lesotho; to Global Warming being a hoax by Global Communism to install Hugo Chávez and Evo Morales in power, backed by disillusioned ex marxists (after the berlin wall fell) supported ideologically by Margaret Thatcher (and this last one is a real conspiracy theory as seen in that documentary "The Big Global Warming Swindle" or sumthing like that)...
I know, blame cannot be put in only one name, but damn, these Tea Partiers are taking all the numbers!
First of all, madhedge, conspiracy theories by definition require the action to develop under the surface. That’s not the case with the ocean of liquidity provided by the private bankers pretending to be a government entity.
And the use of terms Republican, Democrat and conservative in a discussion of Fed policy is hysterical. Kissinger is a Democrat? JP Morgan was a Republican? David Rockefeller is a conservative?
From a political standpoint the manipulation of the capital markets and the intervention in our economy by the Federal Reserve have two purposes:
And speaking of those wingnuts tea partiers who give the Establishment the giggles (scaring the established like never before), they are attacking Republican leaders as well as Democrats. Incidentally, a large number of tea party members are Democrats or Independents.
As for who orders whom, Obama is the appointed one; the decisions on financial policy come down from the banks through Bernanke and Geithner to Obama who gets his marching orders from them, not the other way around. It’s a joke to think that Obama could pick a treasury secretary or decide on any financial policy until he is told what to do. It’s safe to say that Obama has not made a single financial decision that was not made in advance by his masters.
of course, great stuff, JR +++
I wish we could vote in Big Bird, or Homer Simpson, or any other useless character that would illustrate the point clearly - "presidents" are figureheads, and exist to distract the people, or attract their ire - like a ventriloquist dummy, or a glove puppet, with the banker's hand up the. . . yeah.
and MHFT appears to be talkin' to hisself. . .
Good Post JR. +100000
I second that
So I'm hanging out just outside this Central Bankers retreat at the Grand Canyon just beyond 'Hermits Rest'. Damn, I feel so alive... dizzily giddy. The view so beautiful, I slip beyond the fence to snap a few pics with a smile on my face. Out of nowhere, a push from behind and suddenly I'm airborne. A sense of weightlessness. An open, sorrow fills me as I swim through memories of my mortality. I think of my kids, what I could have done different. I drift down into the abyss with the sound of laughter trailing behind.
An epic fall designed for those who learn too late.
'Rectifying' my reality as fast as I can...Hook Line and Sphincter
This piece is LOADED to the brim with emotional language.
This is a tactic used by journalists and politicians to stir the emotional pot which generates a ton of page views, comments, and gets people more entrenched in their dualist mindset.
Learn these tactics and this article says nothing.
Dem vs Rep, "tea party group", "conspiracy theorists", name calling, full of personal opinion, ad hominem attacks, grand-standing...all techniques to draw emotion from the reader.
+ 1 jumping frog
Thinking (loosely applied) like MHFT is the problem. It demonizes a legitimate group, "Tea Partiers" and creates a distraction away from the real problem: Democrats and Republicans. I am sick of folks like him not even beginning to accept criticism of W and Obama as being legitimate. It is okay to dis W, but you are a wingnut racist to criticize BO and his policies, even though they are exactly the same as W's. The "Mad" part of the moniker is dead on.
Check your assumptions, mhft. The elite above and beyond the puppet strings have their man and intend to keep him. Ditto if McCain had been the man. What ever it takes to keep the machine in perpetual motion mode and the economic proxy in a reasonable range.
I love this story. I don't care if it's not true. I want enough people to believe that it is true.
After the next elections the Dems will be cornered. It is amazing to think that they will be in that corner because of the Tea Party. But that is they way this will play out.
Think about this scenario:
11/3 The Dems get destroyed. Everything changes overnight.
11/4 The Fed meets and Bernanke gets his way. $2t in QE 2.
11/5 A new strong voice in Congress led by newly elected Tea Party folks and joined by other Republicans say; "Wait a minute. QE is an Obama plot." "We should investigate this matter right away". "In the mean time we are writing to Bernanke and telling him not to go forward until we review it."
11/6 The Fed caves to Congress and says it will back off.
11/7 The independence/credibility of the Fed would be laid waste.
11/8 Big celebration party in Times Square.
Okay. I know. It's just wishful thinking.....
11/3 AM Dems get destroyed PM nothing changes
11/4 AM Bernanke still has POMO, doesn't care what Republicans think, since they don't have the WH
11/7 The other than independent Fed now answers to their detractors. They were never independent.
11/8 Hedge Funds and the Vampire Squid take the market down, shorting equities, they break the Feds balance sheet
11/9 US Treasury offers to take the Feds damaged assets and shift them onto the deficit, but Congress revolts. Feds assets are marked to market, all assets plummet 50%. Hedge Funds and Vampire Squid come out on top after shorting the market.
11/10 Squid and Hedges finance their own political candidates. The two party system is replaced with the Party of Goldman.
11/11 whooops
ask yourself, what would W Bush do?
Yet another post trying to divert attention from what is really going on and confuse the sheeple.
Marc FAber summed up the current situation perfectly a while back when he said Hitler was a madman who wrote a book outlining what he was going to do,noone believed him,even after he had started invading western Europe.
Bernanke has also written many pieces on his favourite subject - the Great Depression- and has on many occasions told the press he doesn't fear deflation as the Fed posesses a printing press.
Now which part of "I'm going to print and print money until you are all in the poorhouse" don't you undestand?Republican/Democrat doesn't even come into it,the politicians are bought and paid for by banksters,the thought of the tail wagging the proverbial dog and politicians telling the Fed is preposterous.
Bernanke is a money printer pure and simple.
Why waste an article batting down straw men?
Spot on!
Republican or Democrat, they are working for the same masters. I get the feeling that the Mad hedge Fund Trader is working for the CIA. How's that for conspiracy?
Cool story bro..
the theories are always wrong. conspires exist everywhere. who is the mastermind?
Our expertise.
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