The Weekly Chart That Needs No Introduction Or Explanation

Tyler Durden's picture


(we'll present our traditional weekly Fed balance sheet update shortly - nothing pretty there either)

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IdiotInvestor2's picture

Oh so that's what is to be used to extrapolate SP500 value at a future date.

knukles's picture

Coefficient of correlation between M2 and S&P 500 has been running at some 88% during period since introduction of ZIRP, TARP, QE, etc.
Classic liquidity effect (whether is or not's another question for another time)

Lets Hang Parliament's picture

Do the symbols on these notes represent being between a rock and a hard place I wonder?

cranky-old-geezer's picture

"Classic liquidity effect ..."

It has nothing to do with liquidity.  Equity markets are low-volume / no-volume these days.

More like classic market-pumping effect ...combined with classic inflationary effect.

DavidC's picture

Excellent! That made me laugh!


Escapeclaws's picture

It seems like there's a very slight bend starting to occur around October. It's almost imperceptible.

asdasmos's picture

This is getting out hand fast.

Max Hunter's picture

Nah... I'm sure everything will be fine.. ;)

The Third Man's picture

Getting out of hand? That woodie is the result of a lot of stroking.

JW n FL's picture

if the erection lasts longer than 36 months... buy PM's, Guns and Food! Plus some physical solar / wind power and please dont forget a water source you control.

Rodent Freikorps's picture

My wife and I decided, if TSHTF, we are gonna steal a 60 foot yacht and just sail around the gulf, eat sea food and trade dried fish for coffee.

Could be worse.

HooliganLite's picture

That's a good plan but don't forget to take some hay for your rainbow-shitting uincorn.

Rodent Freikorps's picture

We already ate him. Think I should have gone with a forty footer?

HooliganLite's picture

I don't know.  That seems like an awfully big unicorn but I suppose you would have had leftovers.

The Franchise's picture

Does that thing last more than 4 hours?

Sam Clemons's picture

Is that an inverse real dollar value chart?

Spalding_Smailes's picture

But , but , but ..... 


What about " M2 " in China, the next reserve currency ...... Lol'


Another .... yawn.

asdasmos's picture

I am curious as to what you think about the FEDs holdings of US debt and how you would unwind it......

Sam Clemons's picture

Please, they never plan to sell it.  Just like most the other sh*t they bought using money created out of thin-air to bailout the wealthy elite and letting the rest of the world pay for it via higher prices. 

But they (the Fed) can't take losses.  They own the press and are un-auditable.  There isn't an exit plan.  The exit plan is to continue creating as much debt as possible.  It is already going asymptotic - that is the only way to keep the Ponzi scheme going as it needs more and more.

ZerOhead's picture

"There isn't an exit plan."

I can't understand how otherwise 'smart' people can't get this. We have gone way way beyond NEVER NEVER LAND. I for one do not even wish to know where the trillions in Fed Central Bank 'swaps' have gone. Probably Israel... or repatriated to wherever to join the $2.3 trillion missing pentagon dollars Rummy was talking about on 9/10.


asdasmos's picture


The Fed's reaction will be as predictable as ever.  

We already know that Chairman Bernanke exculpates the Fed for any blame in creating inflation either domestically or abroad. In fact, he refuses to even consider rising food and energy prices in his definition of inflation. Americans could be paying $50/pound for ground beef, but as long as their houses are still losing value, Bernanke doesn't see an inflation problem. Meanwhile, they're eating squirrel for protein while making payments on a mortgage twice as expensive as the house.


The truth is that Bernanke doesn't know what causes inflation, so he can't be expected to spot it, much less do something about it. Using the Fed's own history as a guide, Bernanke will view rising commodity prices as a threat to GDP growth and a sign of pending deflation. That's because the Fed is caught up in a 'Phillips curve' philosophy that only equates economic growth and prosperity with inflation. In short, Bernanke believes that slow growth and rising unemployment rates equate to deflation, despite plentiful contrary examples in history.


Since he believes rising commodity prices are deflationary and have nothing to do with his own loose monetary policy, the Fed is likely to expand its balance sheet to a greater degree. The fact that the Fed's massive money printing effort is the progenitor of global food riots completely escapes him. As more damage is done, the Fed will use the resulting contraction in GDP to justify a third round of quantitative easing - further harming the GDP.


Unfortunately, the vicious cycle of stagflation will grow more acute with each iteration of the Fed's love affair with counterfeiting. Countries that make the mistake of continuing to peg their currencies to the US dollar will suffer more inflation and more destabilization. Since it will be hardest for the US to ditch the dollar, our hopes are dimmer.


ZerOhead's picture


What a fool believes... he sees!

Spalding_Smailes's picture

Bernanke discusses plan to unwind Fed's balance sheet


............ " The traditional tools the Federal Reserve uses to conduct monetary policy areopen market operations, the discount rate, and reserve requirements.TheFederal Open Market Committee (FOMC) uses these tools to stabilize prices and promote economic growth and full employment. Over the course of a typical business cycle, the FOMC will adjust the federal funds rate, historically the primary policy tool, to achieve the Fed's dual mandate, thus promoting stable long-term economic growth. " .....................


............. " Jan. 10 (Bloomberg) -- Federal Reserve Vice Chairman Janet Yellen presented a possible timeline of about seven years before the Fed’s balance sheet is restored to normal levels, while saying the central bank’s asset purchases will end up creating 3 million jobs by 2012.

Yellen, speaking in Denver on Jan. 8, referred to a model created by Fed economists that assumes the central bank will complete its second round of large-scale Treasuries purchases within a year. The Fed’s balance sheet would stay “elevated” for two years before returning to a normal size over five years, she said, alluding to the economists’ research.

The timetable is “a reasonable proxy for what they might do,” said Allen Sinai, president and chief executive officer of Decision Economics Inc. in New York, who appeared on the same panel as Yellen.

Unwind Assets

Under the simulation, the Fed “renormalizes the size and composition of its security holdings within five years.” In order to achieve that path, the paper said, the Fed would unwind assets at a pace of about $80 billion per quarter through the middle of 2017." ....................


ZerOhead's picture

Under the simulation, the Fed “renormalizes the size and composition of its security holdings within five years.” In order to achieve that path, the paper said, the Fed would unwind assets at a pace of about $80 billion per quarter through the middle of 2017."

And baby Jesus is going to come back and restore manufacturing capacity and Mohamed will handle paying down the debt in 6 easy payments of @$1T.


The question was HOW.

Consider the effects of any withdrawl of liquidity from a fragile if not terminally gutshot economy.

You won't like the answers you find.


penisouraus erecti's picture

What, we're not the worlds largest manufacturer and running at full employment? Really?

ZerOhead's picture

10% of American jobs are in manufacturing. Some merely involve the assembly of imported (Chinese) parts. We outsourced our jobs to lower paid Chinese workers in exchange for the dream of a new high tech future with better jobs. Unfortunately things didn't work out quite as planned.

For comparison purposes German and Japanese manufacturing sectors employ between 20-25% of all jobs.

China is getting close to 50% (Or was anyway..)

Spalding_Smailes's picture

I have been talking about the booming manufacturing in Chicago since my first day on ZH. And the numbers back this up. ( After the fact )  

So QE2 is driving CAT, Starbux, McD's, Boeing ..... Lol'

Question. What's the GDP for the USA ? What's the GDP of China and the Eurozone together.... ?

ZerOhead's picture

Do your own homework will you.

By the way when you do... if you do... kindly take into consideration that the equivalency of a $5 Starbucks cup of Joe costs 25 cents in China. A $20 American haircut? Less than $1 most places in China...

And a reasonably priced $500 American hooker? Can't speak for China but in Thailand I hear they going for the price of a cup of Starbuck coffee.

Hey... why don't I sell you a freshly built $15 trillion dollar house for a $15 trillion dollar mortgage at .00000000000000000000000001%

Still affordable in monthly payment terms... but will have the effect of doubling the countries GDP!

Am I wrong?

Spalding_Smailes's picture


List of countries by GDP (PPP) per capita



USA - Per Capita - $ 47,123 ( rank #6 )

China - Per Capita - $ 7,500 ( rank #93 )

ZerOhead's picture

You still haven't answered my hypothetical question my friend.

You appear to be a mindless 'cut and paster'. Call your boss up and get somebody smarter to this site.

Or at least someone who uses less page space!


Spalding_Smailes's picture


You appear to be a mindless 'cut and paster'. Call your boss up and get somebody smarter to this site.

Or at least someone who uses less page space!



I did. Like most you change the subject with personal attacks. But alas, most ZHers will read my post " filled with facts " and learn something. But a doomer like yourself will not learn a thing, oh well.


What the next " reserve currency " ? Call up your boss, dad, whoever. Maybe have some fact before you post because you can rant about M2, QE 6, this & that all bullshit.


It's always hyperinflation is coming soon or the USA will lose it reserve status some day bla , bla, bla ... All hot air with no substance. Turn off glee and start reading ....

ZerOhead's picture

Convince me things will get better Spalding.. I really want to believe things will but you need to show me how.

The current path we are on leads only to ruin.

Sorry about the ad-hom... it was before you responded sans cut 'n paste.

Listen... If things are going to be just hunky dory I need to know. Just please don't tell me that QE is not an inflationary problem.

I have a brain. (However dysfunctional! :)

mtomato2's picture

Enter ZerOhead.  Possibly the most tolerant and civil poster on the site.


Hephasteus's picture

Of course he's tolerant and civil. He's so goddamn smart he can politely kick your ass.

StychoKiller's picture

It's the fundamentals, of course, that will determine how high the price ultimately goes. Show me a healthy dollar, show me no threat of inflation, show me a responsible government that stops printing money... Show me a repentant Iran and North Korea...Show me that the sovereign debt issues in Europe are resolved... Show me positive real interest rates... Show me that unemployment is plummeting, that bank closures have stopped, that real estate is recovering...


Contrast this with the exponential function and $14Trillion Govt Budget...who ya tryin' to fool, us or yourself?

JonNadler's picture

the GDP from 1980 to 2011 went up about 4.5 times


M2 went about 9 times


This is very bad for gold right AppalingSmells?

Spalding_Smailes's picture

The funny thing is Nader, the money printing in China would make Ben & Greenspan blush ....

Burnbright's picture

You realize they are peged to the dollar?

Spalding_Smailes's picture

Shit T, I turned you onto Pettis and said peg.


Funny with all your fantastic wisdom, you never reply when I talk about dollar denominated debt. Cat got your tongue or is it because I'm 100% right ...?


Gold bugs can't get around this issue. But you can keep talking about hyperinflation, soooooooooooome day thats the ticket, some day soon. Lol'

tmosley's picture

Actually, I just don't like replying to you because I don't like reading cut an paste BS.  I just plain don't read your posts.

Being so annoying people skip your posts doesn't make you "100% right".

The truth is, a person can only be truly proven "right" if he finds a way to monetize his predictions, and does so.  I have, and I have made a great deal of money.  You haven't.  You are stilling on failing dollars waiting for all the purchasing power in the world to flow to you even as you ignore the sum total of monetary history.  ONLY GOLD DEFLATES.  Paper inflates.  The deflates slightly, then HYPERINFLATES.

I don't care what a loser like you thinks.  Show me the money.  Until you do, you have nothing, and no-one should pay you any mind.  Don't expect further replies.

Sam Clemons's picture

I don't get how the debt-deflation guys don't understand that all that debt that is being created is being spent in the present driving prices up.  I also don't get how they refuse to grasp that all future costs have to be paid with more money from more debt.  Yes, they're right, there will be a ton more debt, but if we always pay it off with paper from issuing incrementally more debt, then there simply won't be debt deflation. 

How do people expect unfunded liabilities to be paid off? 

ColonelCooper's picture

So would China be Thelma to our Louise, or vice versa?  Winning the race to the bottom is a short lived victory.

mtomato2's picture


So nice to see you here on this delightful forum.  I hope you have had a smashing day, and that all is well in Cooper land.  (insert pix of flowers and bunnies.  And rainbows.)  Absolutely swell to see that your posts are...

DAMMIT!  There I go again!

Fuck you, Fuckball!

Was that better, ala FW from FL? :-D


Seriously:  Have a good'n


Rodent Freikorps's picture

But glorious. We're all gonna die anyway. Might as well be famous.

Pain is temporary.

Chicks dig scars.

Glory is forever.

cranky-old-geezer's picture

"... while saying the central bank’s asset purchases will end up creating 3 million jobs by 2012."

They haven't created one single job, and won't.

Remember, these are the people who didn't see the '08 financial crash coming, and have a 100% failure record on their predictions. They're wrong every single time.

Bob Sponge's picture

There might be some jobs created in the funeral/cremation business as more and more starving unemployed commit suicide, freeze to death, etc. Civil unrest may also add deaths.