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Charles Plosser Speaks On The Fed's "Exit"

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Highlights from the just released speech by Philly Fed hawk Charles Plosser:

  • Fed's Plosser says would want to make explicit the Fed's commitment to a numerical inflation objective
  • Says important to communicate a systemic plan that describes where Fed is going, how it will get there
  • Says his proposed strategy would tie pace of asset sales to size of interest rate increases
  • Says his preferred exit strategy would raise rates, shrink balance sheet concurrently
  • Says failure to exit in timely manner will have serious consequences on inflation, economic stability in future
  • Says monetary policy will have to reverse course in the not too distant future
  • Says consumer spending continues to expand at reasonably robust rate
  • Says US economy seems to be on much firmer foundation
  • Says labor market conditions are improving

In other words, an attempt to return confusion over the fate of QE3. As for the Fed existing anything.... good luck. As part of his exit proposals, Plosser proposes two exit plans (12 and 18 months) both of which sees a dramatic reduction in reserves, a hike in IOER, and asset sell offs. Should the Fed indeed proceed to do this, the market will prolapse.

Full speech:

EXIT

Presented by Charles I. Plosser, President and Chief Executive Officer, Federal Reserve Bank of Philadelphia
Shadow Open Market Committee, March 25, 2011, New York, New York

(full pdf)

It is a pleasure to be here today with my old colleagues and friends. I spent the better part of 15 years as a member of the Shadow Open Market Committee External Link
and served as its co-chair with Anna Schwartz for part of that time. It
was a valuable experience and I learned a great deal from our
discussions and debates concerning policy.

When I accepted the position with the Federal Reserve Bank of
Philadelphia in 2006, some of my colleagues thought that I had gone over
to the dark side. I preferred to think of it as trying to help put the
lessons of modern macroeconomics and monetary theory to work in the
making of policy. That has turned out to be easier said than done for a
number of reasons, not the least of which is the onset of the greatest
financial crisis since the Great Depression. Some might think, based on
temporal ordering or a test of Granger causality, that it was my arrival
at the Fed that actually caused the crisis. Yet, we should be cautious
in drawing conclusions about causation from such evidence. Personally, I
prefer to think the crisis occurred despite my arrival at the Fed. But
that is a story for another day.

The financial crisis was, indeed, an extraordinary event, and the
Federal Reserve’s decisions to adopt nontraditional policies in an
attempt to stabilize financial markets and the real economy have taken
it far from the traditional and well-understood operating framework for
conducting monetary policy. Our traditional instrument of monetary
policy — the federal funds rate — has been near zero for more than two
years and is controlled within a range but not precisely. The Fed’s
balance sheet is nearly three times as large as it was before the
crisis, and it is heavily weighted toward long-term Treasuries and
mortgage-related assets.

Although recent global events have created some uncertainties, the
apparent strengthening of the U.S. economy suggests it is prudent for
policymakers to develop a strategy for the normalization of monetary
policy. Today I want to suggest such a strategy. As always, and perhaps
particularly so today, the views I express are my own and do not
necessarily represent those of the Federal Reserve System or my
colleagues on the Federal Open Market Committee.

Economic Outlook

Let me begin by noting that the economy has gained significant
strength and momentum since late last summer and seems to be on a much
firmer foundation going forward. Consumer spending continues to expand
at a reasonably robust pace, and business investment, particularly on
equipment and software, continues to support overall growth. Labor
market conditions are improving. Firms are adding to their payrolls,
which will result in continued modest declines in the unemployment rate.
The residential and commercial real estate sectors remain weak but
appear to have stabilized. Nevertheless, I do not believe that weakness
in these sectors will prevent a broader economic recovery. Indeed, the
nonresidential real estate sector is likely to improve as the overall
economy gains ground.

The tragic events in Japan and the potential for sharply higher oil
prices given the turmoil in the Middle East and North Africa pose some
risk to our recovery. Yet, I believe this risk is small and short term,
assuming Japan is able to stabilize its nuclear reactors and political
unrest in the Middle East does not dramatically disrupt Saudi Arabia,
the region’s largest oil producer.

If this forecast is broadly accurate, then monetary policy will
have to reverse course in the not-too-distant future and begin to remove
the massive amount of accommodation it has supplied to the economy.
Failure to do so in a timely manner could have serious consequences for
inflation and economic stability in the future. To avoid this outcome,
the Fed must confront at least two challenges. The first is selecting
the appropriate time to begin unwinding the accommodation. The second is
how to use the available tools to move monetary policy toward a more
neutral stance over time. Policymakers will have to consider other
important and broader issues as well, including the scope of central
bank responsibilities, the appropriate demarcation between monetary and
fiscal policies, and the moral hazard implications of our nontraditional
actions. But these are not my topic for today, as I have spoken on
these issues elsewhere.1
Nor will I be focusing on the choice of when to begin reversing course.
That, too, is a difficult issue, but not an unusual one.

My focus today will be on the design of an exit strategy. How do we
execute an exit from extraordinary accommodation and nontraditional
policies and move toward a more traditional operating framework for
monetary policy?

The Monetary Policy Operating Framework After Exit

In designing an effective exit strategy, we must start by deciding
what the operating framework should look like at the end of the process.
We must then articulate a systematic approach that will get us to that
framework in a reasonable time frame. The approach must be easily
communicated and thus transparent to the public and the markets, so that
they understand not just where we are headed but how we plan to get
there.

Of course, monetary policy actions should be dependent on economic
conditions, that is, state contingent, and the exit strategy should be
as well. While there is very little economic theory to guide systematic
policymaking using nontraditional tools, we nonetheless should not act
with complete discretion. I have frequently advocated a systematic
approach to policy and our exit strategy should be no different.2 Such a systematic approach reduces uncertainty by offering a degree of commitment by policymakers to the exit strategy.

So where do we want to go? My preferred operating framework for conducting monetary policy in the future has four elements.

First, monetary policy should operate using the federal funds rate
as its policy instrument. Because the Fed can now pay interest on
reserves, monetary policy could use the interest rate on reserves (IOR)
as its instrument, establishing a floor for rates and allow reserves to
be supplied in an elastic manner.3
However, targeting the federal funds rate is more familiar to both the
markets and policymakers than is an administered rate paid on reserves.
To make the funds rate the primary policy instrument, the target federal
funds rate would be set above the rate paid on reserves and below the
discount or primary credit rate that banks pay when they borrow from the
Fed. This operating framework is sometimes referred to as a corridor or
channel system and is used by a number of other central banks around
the world.4
I have argued elsewhere that our goal should be to operate with a
corridor system instead of a floor system, in part because it constrains
the size of the balance sheet while the floor system does not.5

The second element of the environment follows from the first. To
ensure that the funds rate constitutes a viable policy instrument and
thus is above the interest rate on reserves, the volume of reserves in
the banking system must shrink to the point where the demand for
reserves is consistent with the targeted funds rate. This will require a
significant reduction in the size of the Fed’s balance sheet, with
reserve balances falling by $1.4 trillion to $1.5 trillion to about $50
billion.

The third characteristic of my preferred operating environment has
to do with the composition of the Fed’s assets and in particular the
System Open Market Account, or SOMA, portfolio. I believe this portfolio
should consist predominantly of U.S. Treasury securities concentrated
in short-term issues, similar to its composition prior to the crisis. At
that time, about 90 percent of the SOMA assets were Treasuries, of
which about 35 percent were Treasury bills. Currently, only about 60
percent of the portfolio is in Treasuries, while around 40 percent is
housing-related assets, such as mortgage-backed securities (MBS).
Moreover, Treasury bills are less than 2 percent of the Treasury
securities in the portfolio. Thus, the exit plan must contemplate a
significant restructuring of the balance sheet in terms of its
composition and average maturity.

Fourth, my preferred operating environment would make explicit the
Fed’s commitment to a numerical inflation objective, a proposal I have
made many times.6
Numerical inflation objectives are fairly common among major central
banks around the world and many academics and students of central
banking regard adopting such an objective as best practice.7
I believe it is time for the Federal Reserve to adopt this best
practice and clearly announce a numerical inflation objective in support
of our dual mandate. This would be particularly valuable as we exit our
accommodative stance. Since our large balance sheet poses significant
risks for inflation down the road, an explicit commitment to a low and
stable inflation rate would help reassure the public that we will exit
in a way that is consistent with that goal. This would also help keep
expectations of inflation well anchored.

To summarize, my preferred operating environment would re-establish
the federal funds rate as the primary instrument of monetary policy;
shrink the balance sheet and reserves to levels that make the federal
funds rate an effective policy tool; and restructure the balance sheet
in terms of its composition and maturity structure. Adopting an explicit
inflation objective would contribute to the effectiveness of policy and
the policy framework and any plan for normalization.

A Proposed Exit Plan

Now that I have described where I think our policy framework should
be, the next step is to lay out an exit plan that takes us there. As I
argued at the outset, it is important to have a plan. The plan
must be communicated to the public and markets in a way that reduces
uncertainty, and it should explain how decisions will depend on economic
conditions, just like other monetary policy decisions.

Economists have recognized that any exit plan will use several
policy tools, including raising interest rates and shrinking the balance
sheet. Some would start with raising interest rates; some would begin
by shrinking the balance sheet; others would do both.

My proposed strategy involves raising rates and shrinking the
balance sheet concurrently and tying the pace of asset sales to the pace
and size of interest rate increases.8

The first element of the plan to exit and normalize policy would be
to move away from the zero bound and stop the reinvesting program and
allow securities to run off as they mature. Thus, we would raise the
interest paid on reserves from 25 basis points to 50 basis points and
seek to achieve a funds rate of 50 basis points rather than the current
range of 0 to 25 basis points.9
We would also announce that between each FOMC meeting, in addition to
allowing assets to run off as they mature or are prepaid, we would sell
an additional specified amount of assets. These “continuous sales,” plus
the natural run-off, imply that the balance sheet, and thus reserves,
would gradually shrink between each FOMC meeting on an ongoing basis.

The second element of the plan would be to announce that at each
subsequent meeting the FOMC will, as usual, evaluate incoming data to
determine if the interest rate on reserves and the funds rate should
rise or not. Monetary policy should be conditional on the state of the
economy and the outlook. If the funds rate and interest on excess
reserves do not change, the balance sheet would continue to shrink
slowly due to run-off and the continuous sales. On the other hand, if
the FOMC decides to raise rates by 25 basis points, it would
automatically trigger additional asset sales of a specified amount
during the intermeeting period. This approach makes the pace of asset
sales conditional on the state of the economy, just as the Fed’s
interest rate decisions are. If it were necessary to raise the interest
rate target more, say, by 50 basis points, because the economy was
improving faster and inflation expectations were rising, then the pace
of conditional sales would also be doubled during the intermeeting
period.10

The third element of the exit plan must address the composition of
the Fed’s portfolio. If we are to return to an all-Treasuries portfolio,
then asset sales, particularly in the early part of the program, must
be concentrated in MBS.

Examples of the Exit Strategy

What are the consequences of this strategy? In order to make the
proposal concrete, first, let’s assume that excess reserves need to
shrink by about $1.4 to $1.5 trillion in order to permit the federal
funds rate to be reliably above the interest rate paid on reserves.
Second, let’s assume that once asset purchases end and the practice of
reinvesting proceeds from maturing or prepaid assets stops, the balance
sheet will begin to contract by about $20 billion a month, or by about
$30 billion between FOMC meetings, which occur about every six weeks.
This will vary somewhat over time and with the level of interest rates,
but that will make little difference in the overall thrust of the plan.
Third, let’s consider continuous sales of $20 billion in assets between
each FOMC meeting. This pace of continuous sales plus the natural
run-off imply that the balance sheet, and thus reserves, would shrink by
about $50 billion between each FOMC meeting on an ongoing basis.

To illustrate my proposed exit strategy, I want to consider two examples.11
In the first example, assume after the initial rise to 50 basis points,
the path of policy involved raising the interest rate by 25 basis
points at each of the next eight meetings over the following year, and
suppose the pace of conditional sales was $125 billion. That is, for
each 25 basis point increase in the funds rate, we would sell an
additional $125 billion of assets. I note that this pace of conditional
sales, combined with the continuous sales and run-off, is similar to the
pace at which the Fed bought securities as the balance sheet expanded.

Then the funds rate and the interest rate on reserves would rise to
2.5 percent and the balance sheet would shrink by $1.45 trillion by the
end of a year, or eight FOMC meetings. Monetary policy would still be
accommodative, but the operating framework would be normalized. We would
have shrunk the amount of excess reserves in the banking system so that
the funds rate could once again be the policy instrument and the
balance sheet would no longer be an issue for policy.

In the second example, let’s suppose we wanted to normalize policy
in 18 months rather than a year. That would mean normalizing over twelve
FOMC meetings rather than eight. This would require conditional sales
of only $67 billion between meetings, but it would also mean that the
funds rate would become a viable instrument at 3.5 percent rather than
2.5 percent.12
These two examples illustrate how the pace of sales and the time it
takes to normalize policy involve trade-offs that must be faced.

Discussion

I recognize that any strategy has its disadvantages and this one,
no doubt, will attract its share of critics. Some will say that we
cannot shrink the balance sheet this rapidly without disrupting markets.
Yet the pace of sales in the first example is likely to be no more
rapid than the pace of asset purchases during the crisis, and in a
growing economy, the demand for duration and risk is likely to be
increasing and this will mitigate any potential for disruption.

Moreover, many advocates of the asset purchase programs have argued
that these programs mainly influenced long-term rates by changing the
amount of these assets in the hands of the public — the so-called stock
effect — and not through the flow or pace of purchases. This is why
announcing the total amount of purchases up-front was an important part
of the asset purchase programs.

According to this stock view, once the markets understand that the
FOMC has begun to normalize policy and that the Fed is shrinking its
portfolio and the volume of excess reserves, then the stock effect will
largely be incorporated into long rates and the pace of sales will have
only marginal effects. Thus, whether it is through expected higher
short-term rates or through the sale of longer-term securities, long
rates will and should rise during the tightening cycle.

My own view is that except for the period when markets were
severely impaired, early in the crisis, the asset purchase programs had,
at best, marginal effects on asset returns and economic activity. Given
that market functioning has returned to normal, I believe asset sales
are unlikely to have a significant impact as market participants’ demand
for risk and duration rise.

Others have suggested that we simply rely on raising interest rates
and allowing the balance sheet to decline only slowly over time through
the natural run-off of maturing securities. In my view, this
alternative has several drawbacks. No one knows how fast the Fed might
have to raise rates to restrain the huge volume of excess reserves from
flowing out of the banking system. Rates might have to rise very quickly
and in larger increments than otherwise to offset the accommodative
impact of the large balance sheet. This could prove quite disruptive,
yet failing to do so could risk much higher inflation levels. It also
means that it would take about five years before the funds rate would
become a feasible operating instrument. This approach also fails to
address the problem of the composition of the balance sheet, since, at
the end of the process, the SOMA portfolio would still remain heavily
invested in mortgage-backed securities. Another drawback of this
alternative is that while the Fed’s interest rate decisions would be
contingent on the state of the economy, decisions regarding the size and
composition of the balance sheet would not be.

Another, perhaps somewhat more appealing approach is to shrink the
balance sheet first through the sale of assets. This might be thought of
as the LIFO model — last in first out. The asset purchases came after
the policy rate reached the effective zero bound, so some argue that
assets should be sold first before raising the policy rates from the
zero bound. I think this is a somewhat risky strategy, because if the
pace of sales is not sufficiently aggressive, the policy rate may fall
far behind the curve to stave off higher inflation.

For these reasons, the approach that I have outlined involves
concurrent policy rate increases and asset sales whose pace depends on
the state of the economy. Of course, as my examples illustrate, this
approach can be modified by changing the numbers. You could make the
balance sheet shrink faster or slower and affect the timing of when
normalization is achieved, or you could increase the pace of continuous
sales and make the conditional sales smaller. But whatever pace we
decide on, I believe it is important that we articulate a systematic
approach to normalizing monetary policy. We must have a plan that we can
communicate to the markets that indicates where we are headed and how
we anticipate getting there.

Closing Thoughts

In summary, I believe that my proposed exit strategy has several
advantages. It can get us back to a “normal” operating environment in a
timely manner. It shrinks excess reserves sufficiently in a timely
manner after the process begins so that the federal funds rate can once
again be the primary policy instrument. It is a plan that can be easily
communicated in a way that the markets and the public can understand. By
tying sales to interest rate decisions, it allows the process for
selling assets to be conditional on economic outcomes in ways that are
familiar to market participants. This should provide a degree of comfort
to the markets and reduce uncertainty about the path of sales.

I believe that the challenges the FOMC faces as it exits from the
period of extraordinary accommodation and nontraditional policies can be
reduced if we communicate a systematic plan that describes where we are
headed and how we will get there. Such a plan would be strengthened if
the FOMC adopted an explicit numerical objective for inflation. Doing so
will help ensure that inflation expectations remain well anchored,
thereby reducing the risks of undesirable inflation outcomes as we
choreograph a graceful exit.

References

Berentsen, Aleksander, and Cyril Monnet. “Monetary Policy in a Channel System,” Journal of Monetary Economics (2008), 55(6), pp 1067-1080.

Dotsey, Michael. “A Review of Inflation Targeting in Developed Countries,” PDF Federal Reserve Bank of Philadelphia Business Review (Third Quarter 2006).

Kahn, George A. “Monetary Policy Under a Corridor Operating Framework,” PDF External Link Federal Reserve Bank of Kansas City Economic Review (Fourth Quarter 2010).

Martin, Antoine, and Cyril Monnet. “Monetary Policy Implementation Frameworks: A Comparative Analysis," Macroeconomic Dynamics, 15:S1 (forthcoming).

Plosser, Charles. “The Scope and Responsibilities of Monetary Policy,”
speech at the GIC 2011 Global Conference Series: Monetary Policy and
Central Banking in the Post-Crisis Environment, The Central Bank of
Chile, January 17, 2011.

Plosser, Charles. “Credible Commitments and Monetary Policy After the Crisis,” speech to the Swiss National Bank Monetary Policy Conference, September 24, 2010.

Plosser, Charles. “Sound Monetary Policy for Good Times and Bad,” speech to Merk Investments/Stanford SIEPR Panel, Stanford University, October 20, 2009b.

Plosser, Charles. “Ensuring Sound Monetary Policy in the Aftermath of Crisis,” speech to the U.S. Monetary Policy Forum, University of Chicago Booth School of Business, February 27, 2009c.

Plosser, Charles. “The Benefits of Systematic Monetary Policy,” speech to The National Association for Business Economics, Washington Economic Policy Conference, March 3, 2008.

Taylor, John. “An Exit Rule for Monetary Policy,” a paper
originally prepared for the House Committee on Financial Services
hearings on “Unwinding Emergency Federal Reserve Liquidity Programs and
Implications for Economic Recovery,” February 10, 2010. (Also published
as Discussion Paper 09-009 by the Stanford Institute for Economic Policy
Research and available at http://www-siepr.stanford.edu/repec/sip/09-009.pdf). PDF External Link

  • 1 See Plosser (2011), (2010), (2009a), (2009b).
  • 2 See Plosser (2008), (2009a), (2010).
  • 3
    It is possible to distinguish the interest rate paid on required
    reserves from the rate paid on excess reserves, but we can ignore that
    complication for my purposes here.
  • 4
    Other central banks implementing a corridor or channel system include
    the Bank of Canada, Bank of England, Bank of Japan, European Central
    Bank, Norges Bank, Reserve Bank of Australia, Reserve Bank of New
    Zealand, and the Swedish Riksbank. In the recent financial crisis, the
    ECB, Bank of Japan, Bank of England, Bank of Canada, and Norges Bank
    have moved to floor systems due to the expansion of their balance
    sheets. See Berentsen and Monnet (2008), Kahn (2010), and Antoine and
    Monnet (2011).
  • 5 See Plosser (2010a).
  • 6 See Plosser (2009a), (2009b), (2008).
  • 7
    Inflation targets have been adopted by numerous economic regimes,
    including Australia, England, Brazil, Canada, Chile, the Czech Republic,
    the European Central Bank, Hungary, Indonesia, Israel, Korea, Mexico,
    New Zealand, Norway, the Philippines, Poland, South Africa, Sweden, and
    Thailand. See Dotsey (2006).
  • 8 Taylor (2010) also suggests linking sales to interest rate decisions.
  • 9
    This may be difficult to achieve in the short term due to technical
    challenges, but we would learn about the challenges of hitting a target
    under a floor system.
  • 10
    This assumes a linear relationship between the size of the policy rate
    increase and the volume of sales. We could consider a nonlinear
    relationship, whereby doubling the size of the rate increase would
    entail less than a doubling in the volume of sales, but a drawback would
    be that we would not regain control over the funds rate target as an
    independent policy instrument until interest rates were at a higher
    level.
  • 11 See the Table.
  • 12 See the Table.
Exit Strategy Example 1: Normalization in 12 Months
 
FOMC MEETING
0
1
2
3
4
5
6
7
8
9
Funds Rate/IOR
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.50
Change in
Funds Rate/IOR
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0
Beginning of Period Total Reserves ($ bil.)
$1,500
$1,450
$1,275
$1,100
$925
$750
$575
$400
$225
$50
Asset Run-off ($ bil.)
$30
$30
$30
$30
$30
$30
$30
$30
$30
$0
Continuing Asset Sales ($ bil.)
$20
$20
$20
$20
$20
$20
$20
$20
$20
$0
Conditional Asset Sales ($ bil.)
$0
$125
$125
$125
$125
$125
$125
$125
$125
$0
Exit Strategy Example 2: Normalization in 18 Months
 
FOMC MEETING
0
1
2
3
4
5
6
7
8
9
10
11
12
13
Funds Rate/IOR
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.50
2.75
3.00
3.25
3.50
Change in
Funds Rate/IOR
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0
Beginning of Period Total Reserves ($ bil.)
$1,500
$1,450
$1,333
$1,216
$1,099
$982
$865
$748
$631
$514
$397
$280
$163
$46
Asset Run-off ($ bil.)
$30
$30
$30
$30
$30
$30
$30
$30
$30
$30
$30
$30
$30
$0
Continuing Asset Sales ($ bil.)
$20
$20
$20
$20
$20
$20
$20
$20
$20
$20
$20
$20
$20
$0
Conditional Asset Sales ($ bil.)
$0
$67
$67
$67
$67
$67
$67
$67
$67
$67
$67
$67
$67
$0
 


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Fri, 03/25/2011 - 12:24 | Link to Comment entendance
entendance's picture

<..there are no Bears left in any trade except for dollar Bears...>

http://www.entendance.com/forums/viewtopic.php?f=17&t=783&p=16224#p16224

Fri, 03/25/2011 - 12:42 | Link to Comment Harlequin001
Harlequin001's picture

Either Plosser doesn't know what he's doing or he's bullshitting.

I go for bullshitting...

We will have QE 3, 4 & 5 and more and absolutely zero hope of raising rates to any meaningful degree. That will be done for him by the market.

Then, enter the sovereign funds...

Fri, 03/25/2011 - 13:15 | Link to Comment G. Marx
G. Marx's picture

 

Here, let me translate this missive:

"These aren't the droids you're looking for. Move along."

Fri, 03/25/2011 - 13:51 | Link to Comment LowProfile
LowProfile's picture

...Should the Fed indeed proceed to do this, the market will prolapse.

...Like a rectum.

 

Fri, 03/25/2011 - 16:05 | Link to Comment MarketTruth
MarketTruth's picture

If the Fed raises rates their own balance sheets collapses due to the inability (legally) to cover their ASSets/liabilities.

Fri, 03/25/2011 - 13:18 | Link to Comment B9K9
B9K9's picture

Time: November, 1812

Place: Moscow

Scene: Napoleon addresses the troops, assuring them that France is "there to win".

Next day: Napoleon and general staff secretly & safely flee Russia while the Grande Armee subsequently suffers losses numbering over 300,000 casualties.

Moral of the lesson: Remember kids, in a plane crash, it's not only important for you to make it to the exit in time, it's also critical to make sure others are blocked or otherwise prevented from doing the same so as to increase your chances.

These kinds of rear-guard announcements are designed to lull the sheep. Don't be one of those caught off guard. Read the script - this drama has played out endless time before. Just because you don't control the game doesn't mean you can't play along @ home.

Learn it. Know it. Live it.

Fri, 03/25/2011 - 13:18 | Link to Comment 6 String
6 String's picture

He's bullshitting. All the Federal Reserve Monkeys are starting to drone on with the same fucking drumbeat.

Plosser, Lockhart, Fisher.....and, yes, EVEN BERNANK.

This is the Federal Reserve's hail mary at trying to maintain any ounce of integrity, folks. They are ALL saying there will be no QE 3. All of them.

....But why? Well, every Fed member knows, and Bernanke has tipped his hand how many times on this?, that Congress' out of control spending--of course thanks in large part to Greenspan, Paulson, Bernanke, etc.--will have to be fucking monetized.

And therefore, when they do announce QE3, the Federal Reserve will let themselves off the hook and being able to fully blame fiscal policy on why the great transfer of wealth continues, almost unabated.

Trust me, folks. This is what is happening.

Fri, 03/25/2011 - 17:10 | Link to Comment MrBoompi
MrBoompi's picture

Agreed.

I do think they might give us a taste of what life is like without QE. Then after the crash we'll all be begging for it like a crack whore.

Fri, 03/25/2011 - 23:10 | Link to Comment bluebare
bluebare's picture

Yes. STFD.  BTFD.  Do the double dip.

Fri, 03/25/2011 - 15:40 | Link to Comment Djirk
Djirk's picture

Plosser has been one of the few BOGs who is against the current freebasing of the US dollar. This seems like a reasonable plan, but I doubt the rest of the BO(o)Gers are behind him? Head fake?

Fri, 03/25/2011 - 12:43 | Link to Comment I Am The Unknow...
I Am The Unknown Comic's picture

hmmm what a coincidence...as you posted that the dollar began spiking. 

Speaking of coincidences: how timely of Plosser to release this when gold & silver are at highs with expiry on Monday.  What a puppet asshole....as in isn't it obvious whose hand is up his ass moving his mouth? 

Fri, 03/25/2011 - 13:03 | Link to Comment CPL
CPL's picture

The resource pile called Canada is going for an election against the minority government in power right now.  Should be announced in the hour or so.

Fri, 03/25/2011 - 13:03 | Link to Comment CPL
CPL's picture

Rectal Prolapses for ALL!!!

Fri, 03/25/2011 - 13:13 | Link to Comment oh_bama
oh_bama's picture

You guys can certainly talk about "exit" but remember:

  • THE ECONOMY NEEDS QE3~~
  • PEOPLE NEEDS QE3~~~
  • ONLY QE3 WITH DECENT SIZE CAN SAVE EVERYONE

SO JUST DO IT!! 

Fri, 03/25/2011 - 12:27 | Link to Comment pendragon
pendragon's picture

taxpayer loss will be bigger hiking rates prior to asset sales but at lease some common sense

Fri, 03/25/2011 - 12:47 | Link to Comment Harlequin001
Harlequin001's picture

pure fantasy...

Fri, 03/25/2011 - 12:25 | Link to Comment Gubbmint Cheese
Gubbmint Cheese's picture

market calling plosser's weak hand.

"I call you, and raise.."

Fri, 03/25/2011 - 12:35 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

He sure "says" a lot.

Come on Benny, make our notes worthless!

Fri, 03/25/2011 - 12:40 | Link to Comment assumptionblindness
assumptionblindness's picture

Absolutely true.  The markets don't give any credibility whatsoever to the Fed talking-down QE3 expectations. 

The Fed is boxed into a corner and the markets know it..."to infinity and beyond," shouted Ben to the printer operators.  I expect more "speeches" like Plosser's from other Fed Govenors over the next couple of months before the inevitable QE3 is announced.

Fri, 03/25/2011 - 13:13 | Link to Comment 1fortheroad
1fortheroad's picture

 Bernake, ROFLMAO

Fri, 03/25/2011 - 12:25 | Link to Comment Ray1968
Ray1968's picture

If QE EVER stops, this market is toast!

Fri, 03/25/2011 - 12:32 | Link to Comment TradingJoe
TradingJoe's picture

This "market" is toast anyways!!!

Fri, 03/25/2011 - 12:39 | Link to Comment clymer
clymer's picture

Funny how they talk of rate increases and spending cuts, while lobbing tomahawks by the hundreds in a new war (yes war - not "kinetic exercise")

 

We've always been at war with east Asia.

We've never been at war with east Asia.

Fri, 03/25/2011 - 12:50 | Link to Comment augie
augie's picture

yep.

peace is war,

war is peace.

Fri, 03/25/2011 - 14:12 | Link to Comment Republican Lackey
Republican Lackey's picture

It's about saving the Fed not the market. PM's are going down. Don't bet against the Fed.

Fri, 03/25/2011 - 12:28 | Link to Comment downwiththebanks
downwiththebanks's picture

Speaking of the Fed and exits:  goodbye Thomas Hoenig.

http://money.cnn.com/2011/03/25/news/economy/federal_reserve_thomas_hoen...

Fri, 03/25/2011 - 12:40 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

Start paddling bc here comes the DIP!

Fri, 03/25/2011 - 12:27 | Link to Comment firstdivision
firstdivision's picture

Currency in circulation went up a bit http://www.federalreserve.gov/releases/h41/Current/

Fri, 03/25/2011 - 12:28 | Link to Comment unwashedmass
unwashedmass's picture

laughable

they keep going we have old people eating cat food by the millions

they stop now, they destroy what little is left of people's retirement savings nationwide....

so, which batch of peasants is going to be decimated?

Fri, 03/25/2011 - 12:29 | Link to Comment SheepDog-One
SheepDog-One's picture

All.

Fri, 03/25/2011 - 12:38 | Link to Comment ronin12
ronin12's picture

cat food is getting expensive

Fri, 03/25/2011 - 13:39 | Link to Comment Zero Govt
Zero Govt's picture

Benny the Bean hasn't seen any economic disaster coming to date, Benny is as economically blind as a Bat (with ear muffs on!) ....so just imagine what his 'Fed Plan' is going to look like... Mr McGoo stars in Texas Chainsaw Massacre, he hasn't a chance of being a hero coz his track record is being a zero!!

Fri, 03/25/2011 - 12:28 | Link to Comment pendragon
pendragon's picture

at least we have one guy not voting for QE3....

Fri, 03/25/2011 - 12:42 | Link to Comment nope-1004
nope-1004's picture

I doubt it.  He's just out of the loop thus far and will be sat down and told straight up by Benocide:

"Listen, if we end QE, we're on the hook for all those retirement obligations.  We also will kill global confidence in our markets and be unable to control foreign governments if they drop us as a reserve currency.  So let's keep this QE thing going and what I'll do is siphon oodles of taxpayer printed toilet paper to JPM, GS, and HSBC so they can hold PM's at bay thereby fooling the sheeple into believing that there is no inflation."

Fri, 03/25/2011 - 12:26 | Link to Comment Cleanclog
Cleanclog's picture

"I recognize that any strategy has its disadvantages and this one, no doubt, will attract its share of critics. Some will say that we cannot shrink the balance sheet this rapidly without disrupting markets."

Go ahead and disrupt the markets.  It certainly wasn't a concern when y'all were expanding the Fed's balance sheet with extraordinary size and speed.

Fri, 03/25/2011 - 12:28 | Link to Comment buzzsaw99
buzzsaw99's picture

Another lying joo banker. :yawn:

Fri, 03/25/2011 - 12:29 | Link to Comment subqtaneous
subqtaneous's picture

The residential and commercial real estate sectors remain weak but appear to have stabilized.

 

"Dark side" indeed.

 

 


Fri, 03/25/2011 - 12:30 | Link to Comment SheepDog-One
SheepDog-One's picture

The Titanic also eventually 'stabilized'...didnt have much upside from then on though.

Fri, 03/25/2011 - 12:31 | Link to Comment Boilermaker
Boilermaker's picture

What?  There on a straight up moon shot.  Trust me, I get cornholed repeatedly as every sell of is met with a violent shove back up.  There are buyers galore, at any price, for the steaming pyramids of shit that are REITs.  SPG has some corn chunks in it so it commands a higher premium, naturally.

Fri, 03/25/2011 - 12:29 | Link to Comment Boilermaker
Boilermaker's picture

LMFAO....RRRRRRRRIIIIGGGGGHHHHHTTTTT.  <wink, wink>

Fri, 03/25/2011 - 12:29 | Link to Comment ExploitTheMarket
ExploitTheMarket's picture

And the EUR/USD slides...so nice of Goldman Sucks to tell their clients to go long. Goldman is a great contrarian indicator!

Fri, 03/25/2011 - 12:51 | Link to Comment iota
iota's picture

Goldman FX reccs are the ultimate contrarian indicator.

Fri, 03/25/2011 - 12:29 | Link to Comment firstdivision
firstdivision's picture

Wow, look at the lolar-dollar go.  Japan is sure happy.

Fri, 03/25/2011 - 12:31 | Link to Comment RobotTrader
RobotTrader's picture

Looks like a ferocious rotation out of gold stocks and into bank stocks

NEM, AEM, KGC getting bushwhacked again, while anxious mo-mo dippers are piling into America's "best of the best":  BBT, WFC, STI, etc...

Amazing, faith in paper is restored once again.

Fri, 03/25/2011 - 12:31 | Link to Comment SheepDog-One
SheepDog-One's picture

And theyre all going to die soon.

Fri, 03/25/2011 - 12:34 | Link to Comment Careless Whisper
Careless Whisper's picture

apparently banks rule:

Wells Fargo Plane Linked To CIA Mission In Libya

http://www.prisonplanet.com/the-n799ww-mystery-cia-linked-plane-left-lib...

 

Fri, 03/25/2011 - 12:36 | Link to Comment SheepDog-One
SheepDog-One's picture

The bankers start all the wars.

Fri, 03/25/2011 - 12:39 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

Politicians do too, with funding by banks and barons.

Fri, 03/25/2011 - 12:55 | Link to Comment plocequ1
plocequ1's picture

Paper is ok by me. My Liquor store only accepts Paper currency with pictures of Washington, Lincoln and Jackson. Not Max Keiser

Fri, 03/25/2011 - 12:56 | Link to Comment SheepDog-One
SheepDog-One's picture

My liquor store accepts silver and gold.

Sat, 03/26/2011 - 02:24 | Link to Comment edotabin
edotabin's picture

Just drink colloidal silver

Fri, 03/25/2011 - 12:31 | Link to Comment InconvenientCou...
InconvenientCounterParty's picture

They think they can put BB out in a press conference and deliver misdirection?

They are wrong again. He can't act.

Just give me audio and a close-up of his face and shoulders and I can front-run that POS.

Fri, 03/25/2011 - 12:32 | Link to Comment RobotTrader
RobotTrader's picture

Yep, and the top performing sector today?

Gaming.

Check out WYNN and LVS......

Fri, 03/25/2011 - 12:36 | Link to Comment Careless Whisper
Careless Whisper's picture

don't forget about TZOO

Fri, 03/25/2011 - 12:32 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

It seems the Fed whore is trying to convince us the FED doesn't have AIDS. Sorry, but I'll determine where the blood test is taken and I'll pay for it as well.

Fri, 03/25/2011 - 22:42 | Link to Comment BigDuke6
BigDuke6's picture

Thats a vivid analogy... and why should you pay? you didn't give it the sickness

Fri, 03/25/2011 - 12:31 | Link to Comment Quinvarius
Quinvarius's picture

Raising rates paid to banks to keep deposits at the Fed while raising interest rates on borrowing at the same time really doesn't do anything except screw the economy.  This guy is on crack.  The banks already are not loaning.  These guys are desperate to stop the Dollar slide.  Well.  I guess they should not have printed all that money.

Fri, 03/25/2011 - 12:34 | Link to Comment SheepDog-One
SheepDog-One's picture

Sure am glad I got out of all of this as soon as I saw the game was over and complete rigging policy was put in place. There is no safe place in any of it, all will be killed soon.

Fri, 03/25/2011 - 12:33 | Link to Comment TradingJoe
TradingJoe's picture

Charlie "Patana" Plosser, I say this but I do that! believe me! Honest now! Serious!

Com'on!

Fri, 03/25/2011 - 12:35 | Link to Comment rayban
rayban's picture

In my modest opinion there is very little chance of QE3 being announced/implemented in the near future. Today even one of the doves, Evans, has started to backtrack. We know about Fisher and Plosser. No wonder the $ is catching a serious bid, PMs are under pressure and stocks will follow soon.

Fri, 03/25/2011 - 12:43 | Link to Comment SheepDog-One
SheepDog-One's picture

Any serious hint at QE3 and we'd see the US Lollar at -70 overnite. They cant do it, end of the trail for the great FED warriors.

Fri, 03/25/2011 - 12:36 | Link to Comment Jason T
Jason T's picture

I recently read a Larry "human toll worse than economic toll, so we can be greatful for that" Kudlow piece where he sounded awefully down on his king dollar.  Contrarian play.  Am long UUP at 22.10.

Fri, 03/25/2011 - 12:34 | Link to Comment Savyindallas
Savyindallas's picture

QE3 not necessary. They've already done enough to destroy the country.

Fri, 03/25/2011 - 12:42 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Bingo!  Americans will be begging for a world currency soon enough.

Fri, 03/25/2011 - 12:38 | Link to Comment Sean7k
Sean7k's picture

Plosser is a tosser. 

Fri, 03/25/2011 - 12:42 | Link to Comment SheepDog-One
SheepDog-One's picture

'Exit strategy', LOL theres no exiting this...when its over the sign will be bullets whizzing into your windows from the street riots, food riots, bank runs, and it will come with no warning.

Fri, 03/25/2011 - 12:42 | Link to Comment LawsofPhysics
LawsofPhysics's picture

If it gets to this.  My guess is that people will be begging to exchange their sovereignty and liberty for a world currency before this happens.  I hope I am wrong but will hedge accordingly, just the same.

Fri, 03/25/2011 - 15:01 | Link to Comment youngman
youngman's picture

That is how the German hyperinflation stopped...they introduced a new currency.....backed by nothing....but the amazing thing was....the people accepted it...and it worked....really amazing actually...

Fri, 03/25/2011 - 12:41 | Link to Comment Sophist Economicus
Sophist Economicus's picture

I had a ewe with prolapse issues -- very disruptive during lambing season, she was a mess.   We had to sterilize her.   I wonder if this type of solution could apply to Bernanke?

Fri, 03/25/2011 - 12:46 | Link to Comment TruthInSunshine
TruthInSunshine's picture

People, people, Priceline.com is a 16 bagger now, nearing $500 a share, and that's all that matters.

I mean, if you did thorough, comprehensive and sound research, you should have known that is was worth $470 a share, back when it was at $29 a share, due to its incredible footprint, unique moat and proprietary model, and travel-ly goodness.

We all know that Vegas, the Bahamas, and Europe are overflowing with American & Japanese Tourists.

And Priceline.com employs like...what?...212 people?

What a sick, fucking joke. The level of manipulation in equity markets is at least as great, if not greater, now, than it was during the dot.com era.

Oh yeah, facebook is worth a trillion, too.

I'm sure some insiders are going to be absolutely leveraging up to the gills with short plays when they're tipped off, and they will make an absolute killing riding this turd of a market down.

For the rest, get your timing right by luck or skill, and this is one fat mofo that's going to deflate, and you'll reap massive dividends.

All the markets are as bizarre as a Fellini flick, right now.

Fri, 03/25/2011 - 12:46 | Link to Comment SheepDog-One
SheepDog-One's picture

This will all suddenly collapse right when no one is expecting it, complete and utter rug pull out.

Fri, 03/25/2011 - 13:28 | Link to Comment john39
john39's picture

all they have to do is stop the QE and it's song over.

Fri, 03/25/2011 - 15:00 | Link to Comment kaiserhoff
kaiserhoff's picture

Zero barriers to entry, and the margins in the travel industry,...wait, there are margins in the travel industry?

Fri, 03/25/2011 - 12:43 | Link to Comment jtmo3
jtmo3's picture

No one believes it, but as long as the US is the reserve currency, this death and despair shit just ain't happening. I've heard since qe1 that if they do it, the interest rates are gonna skyrocket, the dollar will tank, etc. I've seen very little of any of that and we're way past qe1. They'll qe for the foreseeable future, one way or another, and we might see modest increases in gas, oil and food. The US has too much leeway to manipulate the markets while everyone still relies on the dollar. Until it's not reserve anymore, we'll come out smelling good. And yes, the concept pisses me off.

Fri, 03/25/2011 - 12:59 | Link to Comment LawsofPhysics
LawsofPhysics's picture

I hope you are right, but Soros and friends are working against this outcome, to be sure.

Fri, 03/25/2011 - 12:54 | Link to Comment SheepDog-One
SheepDog-One's picture

Youve seen no dollar collapse since QE1? Maybe try Lasik.

Fri, 03/25/2011 - 13:02 | Link to Comment traderjoe
traderjoe's picture

Huh? No death and dispair? What do you call what's happening in MENA? No dollar collapse? How about oil from $35 to $105? An easy 2x in silver? What about the ags? Cotton? All the dire predictions are coming true - right before your eyes.

Fri, 03/25/2011 - 12:44 | Link to Comment faustian bargain
faustian bargain's picture

What is this 'sound monetary policy' he keeps mentioning? I didn't see anything in there about ending fiat currency.

Fri, 03/25/2011 - 12:45 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Huge raid on Silver and Gold NOW. BTFD!

Fri, 03/25/2011 - 12:46 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

But I BTFD yesterday!

Fri, 03/25/2011 - 12:56 | Link to Comment slaughterer
slaughterer's picture

This dip is already bought.  But don't worry, there will be another dip on Monday to buy too. 

Fri, 03/25/2011 - 13:01 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Both are headed back up like rockets. Looks like $36.99 kicked in the BTFD automatic buy buttons big time.

Fri, 03/25/2011 - 12:46 | Link to Comment cabernet
cabernet's picture

Wow, someone at the Fed talking about an exit strategy. Is this just an academic exercise or is the Fed really signaling we are no longer in a oneway market? Given Bernanke's commitment to inflate, it is hard to see him yield to the inflation hawks. There still is that little problem of the deficit. Who will buy the new issues when the Fed is selling the old one? How about market losses. Since the Fed now has a monster portfolio of longer duration assets, selling them at higher rates means capital losses. It's hard to see how the Fed exits gracefully, if at all.

www.TheAngryGrapes.com 

Fri, 03/25/2011 - 12:49 | Link to Comment SheepDog-One
SheepDog-One's picture

FED just stomping out wildfires here and there as the dollar was in great danger of plunging into the abyss, here comes FED murmurs of exit strategy...dollar catches a bid, PM's fall. All just BS.

Fri, 03/25/2011 - 12:48 | Link to Comment Infinite QE
Infinite QE's picture

QE3 is inevitable. All else is noise.

Fri, 03/25/2011 - 12:51 | Link to Comment centerline
centerline's picture

Yup.  Just timing, and disinformation to cover the tracks and move the blame around.  No QE = instant fail.

Fri, 03/25/2011 - 13:06 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Without a doubt, 100% correct. And gold? Richard Russell tells it like it is.

“In comparison, today's huge precious metal bull market is greeted with yawns, that is, if it is greeted at all. I've been calling the current gold/silver market the "great stealth bull market." Ask the average man or woman on the street what's happening to precious metals, and they'll give you a blank stare and maybe a "Duh." Ask them if they own any gold or silver, and they'll give you a sheepish "Nah."

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/3/25_Richard_Russell_-_Gold_To_Catch_Fire_%26_the_Public_Will_Notice.html

 

Fri, 03/25/2011 - 12:47 | Link to Comment vas deferens
vas deferens's picture

Nice try Charles Poser, you could push silver down .20.  Please come out with some better bullshit to push silver lower and I can buy more.

No more QE HA!! 

More like back door QE coming, the sheep will not see.

 

Fri, 03/25/2011 - 12:50 | Link to Comment SheepDog-One
SheepDog-One's picture

Yes, if anything, more QE will be quite similar to the last batch of 'No no this is not QE, this is called POMO, $9 billion per day', they wont come right out and announce another $800 billion in QE it will just be handed off under the table.

Fri, 03/25/2011 - 12:51 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

Backdoor financial rape, that is.

Fri, 03/25/2011 - 12:50 | Link to Comment apeakunderthehood
apeakunderthehood's picture

http://apeakunderthehood.blogspot.com/2011/03/is-bernanke-going-to-announce-fragrance.html

 


Is Bernanke Going to Announce a Fragrance Line?

 

Hope you enjoy

Fri, 03/25/2011 - 12:53 | Link to Comment gwar5
gwar5's picture

The Fed uses hot air as one of their biggest tools. 

 

 

 

Fri, 03/25/2011 - 12:57 | Link to Comment Eireann go Brach
Eireann go Brach's picture

Watched "The Inside Job" last night, we still have the same old figures on Wall St and in Congress up to their same old tricks. Obama is a fucking joke with his hope and change, the only thing that has changed is that Wall St has got richer and Main St is getting more shafted. They need to change Southparks "Kill Kenny" to "Kill Bernanke"

Fri, 03/25/2011 - 12:56 | Link to Comment buzzsaw99
buzzsaw99's picture

If they sell assets it will be to their friends on the cheap. If they allow bond yields to rise it will be so their corporate buddies can profit from the taxpayer with the cheap money they borrowed. They will never, ever raise short term rates to anything significant.

 

LIARS< THIEVES AND LIARS ALL

Fri, 03/25/2011 - 12:59 | Link to Comment Madcow
Madcow's picture

This is all part of the Fed's business model.

They'll need a massive wave of deflation first - so the bankers can foreclose on the nations homes, businesses, farms, city monuments and state parks.  

Once the bankers have captured 90% of the nations private property, they'll turn the inflation machine back on - and sell the assets to a new generation of buyers. 

The Feds loves this idea because it destroys state and local governments and consolidates power in Washington.

Very few people are believers now in cash USD.  When nominal stock prices and real estate prices are back to pre 1980 levels, you're going to wish you had saved cash money.  

 

Fri, 03/25/2011 - 13:02 | Link to Comment SheepDog-One
SheepDog-One's picture

Nah look at the big picture, WW3 is being ramped up as we speak! 

Fri, 03/25/2011 - 12:58 | Link to Comment SheepDog-One
SheepDog-One's picture

WHOA look at that dollar catch a big bid! All HFT hands on deck to support those stocks! Good luck!

Fri, 03/25/2011 - 13:00 | Link to Comment slaughterer
slaughterer's picture

First, there was TARP--a blatantly public bailout.

Then there was QE1--a little more secret.

Then QElite--even more tucked away from public view.

Then QE2--does Joe SixPack really understand how that works?

QE3, I guarantee, will take place in as secret and quiet a fashion as possible.  They might not even have to announce it. 

Fri, 03/25/2011 - 13:46 | Link to Comment TruthInSunshine
TruthInSunshine's picture

You forgot TARP & the 'Stimulus Bill.'

Fri, 03/25/2011 - 13:01 | Link to Comment camoes
camoes's picture

BTFD YOU M'FERS!!!

Fri, 03/25/2011 - 13:03 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Blythe is adding to her Silver shorts big time......She's putting that shiny new vault to good use. BTFD!

Fri, 03/25/2011 - 13:07 | Link to Comment penisouraus erecti
penisouraus erecti's picture

Right on time, shortly after noon..........

Fri, 03/25/2011 - 13:03 | Link to Comment Flore
Flore's picture

now we know why they dumped PM yesterday.. this had been leaked... frontrunners

Fri, 03/25/2011 - 13:05 | Link to Comment LostWages
LostWages's picture

The FED's only exit strategy will involve tar & feathers and a rope slung over a nearby tree.

Fri, 03/25/2011 - 13:07 | Link to Comment SheepDog-One
SheepDog-One's picture

All is WELL! Dollar up! Stocks magically up no more inverse correlation. Really all is WELL!!

Fri, 03/25/2011 - 13:06 | Link to Comment chumbawamba
chumbawamba's picture

Why did an F15 doing Mach 2 just fly over my house at about 10,000 feet?

I am Chumbawamba.n

Fri, 03/25/2011 - 13:11 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

The good news is that you heard it. If it had dropped something you never would have.

Just counting your chickens for you Chumba. :>)

Fri, 03/25/2011 - 13:18 | Link to Comment yakmerchant
yakmerchant's picture

Better question is how is the internet access in Libya?

Fri, 03/25/2011 - 13:20 | Link to Comment chumbawamba
chumbawamba's picture

Californya.

Fri, 03/25/2011 - 13:09 | Link to Comment ecuador mike
ecuador mike's picture

Correct me if I'm wrong, I'm not as up with this stuff as most of you here, but when EVERYONE is short the dollar and long the market, isn't that the time to go the other way?  Meaning a rally in the dollar, stocks drop, flight to safety of dollar and treasuries.  I think the FED is holding a ton of long term paper in Mortgages and 30 year stuff, no?  The market will take a big hit, but the Fed's stuff isn't due for a long time, so is it possible they do exit this, no QE3, then buy everything on the cheap in 2 or 3 years?  How did Volker do it? I don't know what the sentiment was back then about the FED, but they raised rates by alot no?  Appreciate the explanations you all have to this.  Thanks.

Fri, 03/25/2011 - 13:41 | Link to Comment vas deferens
vas deferens's picture

"EVERYONE is short the dollar"

Who is this everyone?? 

Long holders of the dollar are countries not people. China is net sellers of dollars and still hold hundreds of billions. Every country owns dollars (none are short dollars) and they are long trillions, do you think the countries around the world are looking to buy trillions more??  I would bet otherwise.

 

 

Fri, 03/25/2011 - 13:48 | Link to Comment ecuador mike
ecuador mike's picture

I'm under the impression that there is a large short position in the dollar by hedge funds and institutions, thats what I mean by everyone, and therefore it's ripe for a correction or reversal.  If the SHTF everywhere else in the world, no matter how much we print, won't the US be the "safe" (safer) play?  According to everyone here, there is NO way out at all, besides more printing, kicking the can.  What would be an alternative to this scenario?  I also agree that QE3 is the likely scenario, but can we walk through the other outcomes?  Countries have to invest somewhere, not in Japan, not in Euro, and China, net sellers, still have to keep us going as their exports demand it especailly now with problems in Japan and Euro market, no?

Fri, 03/25/2011 - 13:58 | Link to Comment rubearish10
rubearish10's picture

Just think of it as "borrowed money". At some point it has to be paid back. The trigger for the "call" is higher interest rates. That's all you need to know.

Fri, 03/25/2011 - 13:58 | Link to Comment rubearish10
rubearish10's picture

Just think of it as "borrowed money". At some point it has to be paid back. The trigger for the "call" is higher interest rates. That's all you need to know.

Fri, 03/25/2011 - 14:13 | Link to Comment vas deferens
vas deferens's picture

If you want to buy the dollar buy it.

If you think more QE is coming, do you feel that is bullish for the dollar?

Do you feel the US is going to pay its debts, if so how?

"According to everyone here, there is NO way out at all, besides more printing, kicking the can.  What would be an alternative to this scenario? "

 

Alternative would be to default on debt all are part.  This also would hurt the dollar, hence no way out.

Default is the better option but unlikely, short term pain better off long term. (See Iceland)

Print to kick the can down the road more likely. (See bank bailout)

 

 

Fri, 03/25/2011 - 14:41 | Link to Comment zaknick
zaknick's picture

Something to chew on Ecuador Mike

did you see the “leak” about some European HFs going not long the emini but 250% long? Risking about 50 billion that it’ll go higher. Some folks on ZH interpreted it as insiders getting advance word that QE3 is a go but I was wondering if maybe this wasn’t a setup. Why?

1. It has to be the banksters behind such a huge bet.
2. James Rickards explained on King World News that QE2 has lasting effects.
3. Cramer and Goldman Scum are “long” gold.

They see the pressure in the PM markets everytime reality seeps into the market; they slaxp it down and back up it comes. Geopolitically things are extremely tense with the 666 banksters attempting to overthrow Saud and they turning to the Russian and Chinese sphere of influence. I truly believe everybody wants to be rid of the doe-llar but are scared of their vengeance. That bomb going off in Moscows airport was the cocking of a strategic weapon: I can deliver a nuke by hand in your capital. That same day the Bank of Russia said it would buy 100 tons of gold from internal sources.

I also think it's not just Iran who wants nukes and they're going to get them.

I think their best case scenario involves geopolitical and/or euro/yen turmoil leading to dollar "strength" then stealth or blatant QE. Worse case they crash all and bring in SDR.

Fri, 03/25/2011 - 13:14 | Link to Comment proLiberty
proLiberty's picture

 

"Fed's Plosser says would want to make explicit the Fed's commitment to a numerical inflation objective"

 

Since inflating the currency is theft of private wealth by dilution, the only moral and legal target rate of inflation must be zero.

 


Fri, 03/25/2011 - 13:17 | Link to Comment lsbumblebee
lsbumblebee's picture

Nicely coordinated with Lockhart's "high bar" and the raid on the Comex to give the impression that we have a free market system.

http://finance.yahoo.com/news/Feds-Lockhart-sees-high-bar-rb-2831538669....

Fri, 03/25/2011 - 13:18 | Link to Comment kaiten
kaiten's picture

They need to talk up the dollar before QE3 announcement.

Fri, 03/25/2011 - 13:18 | Link to Comment ecuador mike
ecuador mike's picture

Is it also possible that the Chinese real estate bubble bursts or Germany says go fuck yourselves to the Euro, or the Nuclear accident is actually exposed for as bad as it is, or worse!  Would any of these things help to put demand in for dollars and treasuries, and aid the exit (if they aren't BS us this time)?  Possibly the FED could make some of the above happen to help them exit too.  Honestlty don't know the answers, and alot of what if's, but today anything goes from what I'm seeing.

Fri, 03/25/2011 - 13:20 | Link to Comment AR15AU
AR15AU's picture

The exit is ALWAYS 12 to 18 months away...  it has been for years.

Fri, 03/25/2011 - 13:21 | Link to Comment Atomizer
Atomizer's picture

Fed's Hoenig set to step down October 1

Fri, 03/25/2011 - 13:22 | Link to Comment divide_by_zero
divide_by_zero's picture
  • Says drugs are really kicking now
Fri, 03/25/2011 - 13:25 | Link to Comment oogs66
oogs66's picture

you missed the last quote

 

Plosser says that in spite of everything Plosser says he will vote however Ben tells him to

Fri, 03/25/2011 - 13:34 | Link to Comment mendigo
mendigo's picture

In his preamble - Economic Outlook - he states: "If this forecast is broadly accurate, then monetary policy will have to reverse course in the not-too-distant future"

So if you buy the his view of the state of the economy and world events, the rest of his speech may be worth reading. Otherwise, as you were... (and wipe that smile off your face)

Fri, 03/25/2011 - 13:39 | Link to Comment Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

The Fed doesn't even have to re-start QE in June,according to Jim Rickards,they can just keep rolling over the current purchases to date when they become due,this would mean an annual purchase of around $750bn would cover around 75% of the current government defecit.

So by a clever choice of words they are implying QE might be over but behind the scenes it actually isn't:

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/3/12_Jim_Rickards.html

Fri, 03/25/2011 - 13:47 | Link to Comment Dick Darlington
Dick Darlington's picture

Equities rise on speculations QE will continue 4ever. Equities rise when FED says will tighten policy. What does that tell abt the credibility of The Bernank... Lol!

Fri, 03/25/2011 - 15:40 | Link to Comment michigan independant
michigan independant's picture

In a Kingdom far far away a beast will give up its dead in 100 years. It was spawned in 1913 and on a long enough time line the survival rate drops to zero. After carnage and myopic platitudes in and of vanity to understand the Statist deseases it carries some will go with it to the pit unless the informed assure Liberty with a seal in the mind and not on it.   

Only then will the gatekeeper be in its duty to understand toes of clay and seal the book as instructed.

Fri, 03/25/2011 - 14:14 | Link to Comment Republican Lackey
Republican Lackey's picture

I say let's bet against the Fed! Buy Gold.

Fri, 03/25/2011 - 14:54 | Link to Comment glenlloyd
glenlloyd's picture

The words 'fed' and 'exit' should not be used in the same sentence, when it is you know it's just a fabrication designed to put the rubes at ease.

If the fed were to exit now the last 2+ years would be all for nothing. There is no recovery and there is no decline in unemployment, it's all been playing with the numbers. Banks are in no better position than when they were before the initial crisis except now they have tons of fed provided reserve cash. Exiting now would just accelerate the second leg down in the existing recession/depression.

They can talk the exit book all they want, never gonna happen. The minute the foundation starts to give way they'll be rushing back in with more free money.

Fri, 03/25/2011 - 17:19 | Link to Comment glenlloyd
glenlloyd's picture

dp

Fri, 03/25/2011 - 15:57 | Link to Comment Quinvarius
Quinvarius's picture

He wants to reduce the Fed balance sheet from 1.5-1.4 trillion (he isn't sure what it is) to 50 billion with his plan.  ROFLOL.  Tell ya what Plosser, put your plan into effect for a week and mark your Treasuries to market on Friday.  You'll be at 50 billion. 

Fri, 03/25/2011 - 18:26 | Link to Comment Lord Koos
Lord Koos's picture

"labor market conditions are improving"

Where, at Taco Bell?

Fri, 03/25/2011 - 20:41 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

Talk is cheap on the street...

They will continue to print because at this time any other choice means the end of the Fed...

If they stop printing and do not continue POMO under the radar real estate, equities, jobs, and expectations all head further south...

Heat on the Fed and Pols would be white hot...

Fri, 03/25/2011 - 21:07 | Link to Comment TwoShortPlanks
TwoShortPlanks's picture

Exit Plan...what...like getting the fuck out of a War Zone you just trashed?!

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