Charting 2010, Part 2: Currency - Printing Money, FX Manipulation And Pricing Unleaded In Bits Of Bacon

Tyler Durden's picture

No summary of 2010, visual or otherwise, would be complete without an extensive overview of what pundits call Monetary Stimulus, quantitative easing or Large Scale Asset Purchases, and the peasantry calls, just as correctly (with a few footnotes), the printing of money. If there are two words that define what we had an absence and an abundance of in the past year, those would be jobs, and money. As some of the key jobs-related charts were presented yesterday, below, once again courtesy of BusinessWeek, are the main charts that among other things demonstrate the various currency manipulation playbooks, the price of gas in bacon and other products, the annotated strength of the dollar through time, and what is actually printed when the Fed does print money.

The first chart shows the progression of dollar strength (and weakness) with an annotation for contemporaneous global events. What is ironic is that while everyone realizes the world is still in a very week position, the core debate over who is weaker - Europe or the US, is sure to provide many hours of entertainment in 2011. And as a bonus, the man whose policies, together with those of Bernanke, are instrumental in just how weak the dollar gets, is presented in his key natural states: from lying just every so slightly, to lying a lot, to lying profusely to save his life, to lying at such a rate, it would make those whose pants are burning, blush with envy. And now you will know how to distinguish the four... 

The next chart deals with the actual money printing, but not in an deeply philosophical manner, one in which hours of debate are wasted over whether trillions in excess reserves are actually printed money (even though the last time someone acquired USTs, MBS, and soon Munis and ETFs, with pixie dust, the legal consequences were not all that palatable). Of the just over $300 billion in actual currency printed in 2010, the vast majority was in $100 bills, next up was $20s, followed by $5s, $10s, and lastly, singles. Not a single $50 bill was printed. Also noted: the amount of cash in corporate America. Of particular interest: GM has more than half of its market value, or $27.5 billion sitting in cash. Lastly, and this not come as a surprise to many, the money multiplier: the money supply divided by the monetary base, is at near record lows, courtesy of the $1 trillion in excess reserves.

Another popular meme in 2010 was pricing X in Y, most often the stock market in gold, in which basis it is still down for the year, as gold (not to mention silver), despite the short memory of many, is by and far the best performing asset class of 2010. Those who followed our advice in early 2010 to avoid stocks and to invest in gold, are ahead of most. The chart below takes a comic approach to this relative performance, showing how much the price of gas changed when priced in other "currencies."

Last, and probably most interesting, is the graphic presentation of the currency manipulator playbook: in a world in which Ben Bernanke knows very well he has little competition when it comes to doing as he chooses with the world's reserve currency (for now), other sovereigns are forced to come up with their unique responses. The playbook below shows all the various defensive tactics adopted so far. Luckily, few offensive plays have been established to date. We doubt that will be the status quo for a long time.

And as John Taylor and many others have pointed out, now that the fiscal "stimulus" of the payroll tax has been exhausted in a few short weeks courtesy of the jump in crude oil, and any further fiscal intervention not likely to occur unless Congress wants another incumbent bloodbath next time around, as Americans are tired of subsidizing banker lifestyles, expect to see many additions to the FX manipulation playbook, as the year progresses and monetary intervention continues to be the only direct way of making sure every new banker bonus year is a record one is via the Fed and its ongoing dollar printing-cum-debasement. That said, should the bankrupt European house of cards continue to wave a white flag of surrender every 3 months, the race to the bottom may not have a clear winner well after 2011 is also history.

All charts courtesy of BusinessWeek

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prophet's picture

is by and far the best performing asset class of 2010

Other than BHH, cotton,coffee, GDXJ, tin, Peru, .... full ETF list link 

Mr Lennon Hendrix's picture

If you liked silver in '10, you're gonna love it in '11!

Mr Lennon Hendrix's picture

It takes squiggly lines to detail currencie manipulation?  The Site does it one better, 'Race to the bottom, bitchez!'  When did ZH coin that term anyway?  '09?  I have been surprised all year that MSM uses the term now, and I am not usually surprised when the MSM copies ZH, but 'Race to the bottom' is such a righteous phrase.  I wonder how often Bernanke says it? 

Bernanke lies?  He and Gethner say, 'Its All About the Benjamins, baby'.   You know what happened to all the bills right?  They used them to light their cigars.

KickIce's picture

The bacon-o-meter never lies.

So where's the meatheads that claim there's no money printing?



Marley's picture

I've been watching the DJI's value decline based on Gold.  I didn't think about the DJI's value decline based on bacon.  Smells Good.

Oh regional Indian's picture

Took a lot of bright minds and good dose of humor to make these charts. I hope to see the whole series together, in paper. Definite hat-tip.

What I'd like to know is how come Timmay never got raked over the coals for his no-taxpaying gimmickry. The guy should be mime, not a tres Sec, given his range of expressions. Looks terribly constipated to me.

Maybe it's a side effect of using Benucks for toilet paper? It's probably a rough sub.


gwar5's picture

The Bernank problem: Baconomics indicates Baconflation.

New JPM shorts: Naked Bacon


Red Neck Repugnicant's picture

This article is as useful as elephantiasis of the scrotum on prom night. You can't present a chart about money printing without also showing money taken OUT of circulation, especially if you want to talk about inflation - and you know that!

In 2010, currency in circulation is little changed, while the monetary base has been less than 2009 for most of this year. 


Currency in circulation at the end of 2009:  $925 Billion

Currency in circulation at the end of 2010: $980 Billion


If you compare the rise in GDP for 2010 verses the currency change in circulation in the past year, you will find the numbers are commensurate with each other - nothing alarming, whatsoever.

If you want to really knock the socks of people, just take a look at the change in monetary base from 2007 to 2008, the last year of the George Bush presidency.  Now THAT'S an out-of-this-cosmos chart! (May the glory of God be with any President that had to absorb that chart.)   Since then, the monetary base has fluctuated a little up, a little down - it's just sort of bounced around for two years.  If I have 1 Trillion Big Macs in my basement, and I don't eat any of them, will I get fat?





Vampyroteuthis infernalis's picture

Good article. The winner at race-to-the bottom is about ready to cross the finish line, Europe as the EU. The situation there is just so dire there is no going back. Helicopter Ben and the ECB wanted a Merry Christmas before chaos. Just a few more months and it will blow wide.

trav7777's picture

we need total monetary reform.

Eliminate debt-backed money and move to production backed money.  Banks serve as utilities to discount real bills and serve as market makers for the futures to set ratios between commodities.  Producers and consumers participate only in futures markets, banks only serve to match counterparties.

Money as the "oil" in the economy's engine, is like electricity or water, and should be utilitized.

The public doesn't so much have an issue with the spending or printing, but that the fatcats who created the mess are being bailed out and continuing their lavish lifestyles while the rest of the economy crumbles.

Really, the Fed's policies help ONLY the banks and bankers and punish all others.  To the extent other corporations have real production or political cover, their *executives* benefit, with no pass-through to the wider labor base.

Ignorance is bliss's picture

Mainstream articles like these will push Joe SixPack into Gold and Silver. Joe knows it costs more for a 6 pack of Coors than it did just 2 weeks ago.

Red Neck Repugnicant's picture


we need total monetary reform.

To what, trav777? What exactly are you looking for? Those in power will always find a way to convert production based money into debt based money. The transformation was really quite clever if you think about it. 

All you guys that dream about ending the Fed fail to consider the alternative:  the exact same thing.  

If true unfettered, unabated capitalism were allowed to exist without the influence of a central bank, the exact same system that we have now would be created in due time.  In pure capitalism, all assets eventually move to the smartest and richest and most adapted - those individuals will, in turn, create a system to ensure and preserve their power and success, at the expense of anything and anyone. The most efficient way to accomplish that is to control the money, and the most efficient way for the wealthy to control the money is to create a central bank that exists outside the control of the voters. 

And when I refer to the smartest or most adapted, I'm not talking about some genius hunched over a desk trying to understand Fermat's Last Theorem, or someone training for a triathlon. I'm referring to those who - when the fabric of society nearly unravels - has access to all the life boats. As we all know, in September 2008, the structure of society as we know it nearly collapsed.  And what happened over the next two years?  The richest, smartest and most well adapted won, while everyone else searches for the remaining bread crumbs. In modern society, the Darwinian trophy holders are the rich banking elite; they have figured out a way to control all money and all politics - they are the smartest, most well adapted and the shrewdest in our society that we have had created for us - by them.    

If you take a small group of people with no food, no farms, no shelter and no monetary system, and put them on a new continent with nothing but a Constitution and a Bill of Rights, you will - given enough time - end up with a central bank and a totally perverse form of government that has twisted the laws of the land to serve the wealthy.  In a game of Monopoly, everyone starts at the same point;  three hours later, all assets belong to one person.  Pure capitalism is no different.  Don't confuse textbook capitalism with real world capitalism.  In the real world, textbook definitions don't matter 

In short, pure unfettered unabated capitalism will always lead to a plutocracy given enough time, and those at the top of society will twist and pervert the system to ensure their power and success. Debt based money was a fantastic discovery for the plutocrats, and when/if we ever have a restart, they will create it all over again. They will always throw out enough pieces of cheese to provide you with enough energy to return to the hamster wheel tomorrow. They control the wheel, the cage and all the pieces of cheese that you keep running for.  In one form or another and given enough time, pure capitalism will always lead to what we have today.  





SilverBaron's picture

So what you're saying is that you might as well give up because the corrupt will always rule?  You might as well not even try because they are going to win anyways? 

Are you a spineless coward, or one of the so called "smartest and richest".  Bobbie Fisher was the smartest, but was he the richest?  He who dies with the most toys wins right?  Can't beat em, might as well join em?  You may be intelligent, but wisdom eludes you.

Red Neck Repugnicant's picture

I do believe the point of my post flew over your head with such velocity that it created a massive low pressure center above your face, disrupting the blood-oxygen equilibrium in your brain and prompting you to write this inconceivably ignorant post.

If you want to continue posting here, I would suggest you go to fighter-pilot school and learn proper breathing techniques to deal with extremely adverse blood-brain conditions. 

SilverBaron's picture

"they have figured out a way to control all money and all politics - they are the smartest, most well adapted and the shrewdest in our society that we have had created for us - by them."

   Yea, it's called conspiracy and treason!  Will you still be calling them smart when they are hanging from the end of a rope?  "For what will it profit a man if he gains the whole world, and loses his soul?"

   I believe I captured the spirit of your post exactly.  Give up, don't try, evil always wins.  Don't hold anyone responsible for what has happened, because it was bound to happen.  It would have happened no matter what.  I'm glad Thomas Jefferson and Ben Franklin didn't think like you.  They didn't prescribe to your defeatist ideology.  Would you have preferred that they chose communism instead of capitalism.  Capitalism is not the problem.  The problem is the crimes of your so called "smartest", and the torries who are calling them smart instead of calling them tyrants.

honestann's picture

Yeah, right.  Central banks are as fundamental as hydrogen.  Give us a break.

What human kind desparately need is the ability to migrate into outer space.  Then let's see the predator class try to hunt them down and make them play their totally bogus fiat, fake, fraud, fiction, fantasy, fractional-reserve perversions.  Fact is, outer space is the answer for humanity, because the energy required to even begin to attempt to find and hunt down the producers is vastly more expensive than any bounty they could steal.  Or put more simply, space is BIG --- so astronomically much bigger than almost any human can grasp, that nobody can practically "rule".

The only answer to liberty lovers seems to be "another frontier", and the only truly viable frontier is outer space.  Oh, and remember, those two asteroids over there are mine.  Choose your own from the umpteen billion others covering the vast expanse of the solar system (or even just the asteroid belt).

Red Neck Repugnicant's picture

Central banks are as fundamental as hydrogen

I implied that central banks were the inevitable consequence of capitalism.  Over time, capitalism gradually shifts all assets to the wealthy like a neutron star.  Capitalism inevitably leads to a plutocracy, and a plutocracy will inevitably create a central bank (controlled by them) to preserve their power.  

Even in a total collapse and an opportunity to "restart" the system, you will find that all capitalistic societies will look remarkably similar to what we have today.  

It's like Monopoly - America's most famous game.      

RKDS's picture

The analogy to Monopoly is insightful and I have never thought of it that way before.  Now the question for me is why I always win at Monopoly but still have to work for a living.

bania's picture

Bacon Dollars. Store of Fat.

deagle44's picture

The rise in oil prices is a great way to force people to spend money.  This raises government revenue.  Basically its a stealth tax that they will use to provide more stimulus.  Rising oil prices are also a great way to control the amount of dollars in circulation.  High oil prices act as a sponge.

Nassim's picture

The rise in oil prices is the whole objective of the game. Greater oil earnings leads to more expenditure on US military hardware by Saudi Arabia and the Gulf States.

This used to be called the "Nixon Doctrine" - you put your money in US banks and treasury bills and then spend it on our military hardware and we will make sure that your cleptocratic elite is protected against external enemies.

deagle44's picture

I forgot about that part of the money flow.  It is explained in Confessions Of An Economic Hitman.  Good thing I have some LMT.  Might as well pick up some RTN and NOC also.

OldPhart's picture

We may have hope for a return to the American System.  Money issued debt free...though what the effects would be on the price of gold and silver is left for those more knowledgeable to explain.


rlouis's picture

Great charts, loved the Geitner alert levels - LOL!