• Tim Knight from...
    04/28/2016 - 00:27
    I was expecting a few boring candidate statements of the U.S. Senate - AKA the World's Most Exclusive Club - but, boy, was I wrong. Just take a look at some of these gems.
  • Tim Knight from...
    04/28/2016 - 00:27
    I was expecting a few boring candidate statements of the U.S. Senate - AKA the World's Most Exclusive Club - but, boy, was I wrong. Just take a look at some of these gems.

Charting The US Fiscal Catastrophe

Tyler Durden's picture

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 12/12/2010 - 15:36 | 800332 TheGreatPonzi
TheGreatPonzi's picture

I've never seen a precise and accurate answer to the following question.

What prevents a government to lend itself money through its central bank? In other words, why does the US Treasury continue to organize auctions on its debt, when everyone, from Bernanke to Red Neck Repugnicant, says QE is not inflationary?

I don't want an answer such as "it creates inflation". I know it is supposed to create inflation, but I've seen absolutely nobody - including top economists - managing to explain the actual mechanism leading to inflation.

As the money lended by the central bank is repaid, and thus destroyed, there should be no more inflation created than through international auctions, where the money used to purchase this debt has usually been created out of nowhere too thanks to the magic of fractional banking.

Sun, 12/12/2010 - 16:13 | 800361 zenon
zenon's picture

The money lent by the central bank is not destroyed. Unless you believe the gov. will start running surpluses.

Sun, 12/12/2010 - 16:14 | 800362 Sean7k
Sean7k's picture

The US treasury has lent itself money before. During the Civil War, Lincoln had the treasury issue "Greenbacks" which were used to pay northern debt and pay soldiers. These bills were in circulation until approx. 1995. They were debt without an interest payment. 

They suffered the same problem of inflation. Dollar inflation is a result of debasement of the currency. In this case, there was no specie to provide value to this currency. Consequently, it was dependent upon "The full faith..." clause. When this faith floundered or where people began to discount it's value, because banks would not redeem in specie, dollar inflation reared it's ugly head.

Enter the present day, the continued creation of monetary substitutes are valued against our reserve wealth. As this wealth continues to transfer out of country (emerging economy investments), hoarding (savings),  offshore accounts, etc. , as our production capabilities are hollowed out and intellectual property is diminished, the value of the dollars are reduced. 

The continued expansion of substitutes has a smaller and smaller specie redemption versus the supply of money being fabricated through QE. This debases the dollar and makes it less valuable when attempting to buy goods denominated in other assets. Thus, we experience dollar inflation. 

Hope this helps.

Sun, 12/12/2010 - 19:49 | 800630 slyhill
slyhill's picture

GP. So the question is: how does "our reserved weath" get valued?

Sun, 12/12/2010 - 20:23 | 800664 Thomas
Thomas's picture

It's not just faith. Supposedly the ancient Sumarians understood the debasement of currency. Certainly Romans learned it not just from their clipping and debasement of their metal coins but also from sending their slaves into the mines to get more gold; both caused caused inflation. There is a brilliant essay on inflation from the 13th century. Inflation is as old as money. It doesn't require a conscious loss of faith; it just happens.

A particularly poignant example of inflation is the game Monopoly. You start the game thinking $100 bills are worth something. By the end, everybody has malinfested in gobs of real estate, the only bills that matter are the $500 bills, and everybody starts blowing up to end the game. This all occurs simply because people relentlessly go around the board and collect $200 every time they pass go. Of course, the money all came from the friggin' banking system. 

Sun, 12/12/2010 - 21:31 | 800750 HungrySeagull
HungrySeagull's picture

Sometimes the surviving sharks.. er players emptied the bank in the Monopoly forcing one of two things to happen. Game ends or bank is kept on a ledger pad and repaid.


I have a feeling that the United States is keeping a one hell of a Ledger Pad.

Sun, 12/12/2010 - 23:36 | 800921 jakethesnake76
jakethesnake76's picture

Yep thats what i was gonna say 100 become dollars almost equivelent as 1dollars and you must keep track at the end cause bank is broke then what really matters is how much you have relative to the other players .

Sun, 12/12/2010 - 23:35 | 800919 Clancy
Clancy's picture

The ancient masters of currency manipulation were the Ptolemies.  Ptolemaic Egypt used worthless copper coins whose value was established by fiat.  It was illegal for any other coinage to be used inside Egypt and outsiders trading at Alexandria had to convert their gold and silver to worthless Egyptian currency first.


That and the fact that they used the rest of Egypt as a tax farm guaranteed that they were financially fuxored by the time Rome came banging on their door.

Mon, 12/13/2010 - 09:50 | 801302 goldfish1
goldfish1's picture

Talking about war as in the Afghanistan War, although

Sarah Palin in Haiti is Page One,

Nothing on this: Richard Holbrooke critically ill after heart surgery


Also, SFChronical has it in the "Business" section. http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/12/12/bloomberg137...

Black Swan?



Sun, 12/12/2010 - 16:18 | 800365 Red Neck Repugnicant
Red Neck Repugnicant's picture

tick tock

tick tock


It's not inflationary, at all.  Those bonds that the Fed purchased from the banks (QE2) were the same as cash to those banks, anyway.  If the banks had wanted to convert those bonds to cash and diffuse/lend it into the economy, they could have instantaneously

The money supply stays the exact same! And if the cash reserves that those banks hold at the Fed begin their inflationary push, the Fed can simply increase reserve requirements to stop that cash from diffusing into the system - in 15 minutes.

Hey!  I've got another question for everyone with less than 45 cans of green beans hidden under their porch...

When the Fed buys over a trillion in agencies, where does all the interest yield on those securities go?


Sun, 12/12/2010 - 16:41 | 800394 dnarby
dnarby's picture

The money supply stays the exact same!

Really?  I'm not convinced http://www.nowandfutures.com/key_stats.html

And if the cash reserves that those banks hold at the Fed begin their inflationary push, the Fed can simply increase reserve requirements to stop that cash from diffusing into the system - in 15 minutes.

And what do you think the banks will have to do to raise reserves?  They will have to SELL ASSETS.  Who's buying?  The Fed?


Sun, 12/12/2010 - 17:00 | 800424 Red Neck Repugnicant
Red Neck Repugnicant's picture

Well, I suppose the Fed could buy assets since it already does.  

Or the banks could simply borrow funds from each other to keep their reserves at required levels. 

Whatever path they choose, when reserve requirements are increased, less cash is being diffused into the system.  

But, to your point, the banks are sitting on mountains of cash.  It's just sitting there.  Doing nothing, except waiting for the economy to slowly turn and anxiously waiting for yield. And it's also waiting to be used against more write-downs, which will be taken at the appropriate time. 

As the economy turns, that cash begins to seep out into the system, finding better yield than treasuries.  When the Fed thinks that too much cash is pouring out, it can shut the spigots.

Don't fuck with the masters of the universe.  You'll loose, even with your ammo.

Another question:  If there are over $10 trillion in asset write downs still not accounted for, and the Fed pumps $2 Trillion into the system, is this indicative of an economy facing inflation or deflation? 

Sun, 12/12/2010 - 17:10 | 800445 pcrs
pcrs's picture

The government has created a huge amount of make work jobs out of thin air. These people are paid 'real' money, fresh from the FED. They will buy stuff with it and it will be deposited in a bank. This money is not directly stolen from productive tax slaves, but borrowed from the FED, who created it from thin air (indirectly stolen from the human resources). 

I can not imagine the gvt ever running surpluses to pay back debt. If history is guide debt will always increase. The dollar lost 95% of its purchasing power since 1913, something must have been inflating. They will move your income to a higher tax bracket.

Sun, 12/12/2010 - 17:26 | 800466 dnarby
dnarby's picture

Either he can't get it, or he does get it, and is intentionally obfuscating the issue.  Probably another Harry Wanger alias...

Sun, 12/12/2010 - 20:23 | 800665 WaterWings
WaterWings's picture

Cass Suntein's hotseat goombas.

Sun, 12/12/2010 - 23:45 | 800930 jakethesnake76
jakethesnake76's picture

Plain truth is money is labor whether that is used to buy a product or pay more labor, so if we lived in a big co-op and each labored and traded our currency whatever it was (doesn't matter) and some banker  whether Government or not just started making  money without coming over and trading you or me labor for it the he or it is STEALING no different than if some punk started making it in his basement. Tell me thats wrong ? 

Sun, 12/12/2010 - 18:10 | 800513 call me ahab
call me ahab's picture

"And it's also waiting to be used against more write-downs, which will be taken at the appropriate time."

the appropriate time???  When should that be?  Maybe all business should have the the luxury of altering accounting rules to stay solvent and then change them again-  when convenient (or in your words- at the appropriate time)-

what a buffoon 

Sun, 12/12/2010 - 18:40 | 800553 Red Neck Repugnicant
Red Neck Repugnicant's picture

the appropriate time???  When should that be?

It will be done gradually over time, so the entire banking system doesn't go instantly insolvent.

I'm not saying it's fair, nor comparable to real world business.

It just is what it is.  

Sun, 12/12/2010 - 19:16 | 800594 revenue_anticip...
revenue_anticipation_believer's picture

"Either he can't get it, or he does get it, and is intentionally obfuscating the issue.  Probably another Harry Wanger alias..."  

Red Neck, i think DOES get it...his comments have a depth of understanding, and breadth too...Agenda?


Not that definition.... enough on the Ad Hominem analysis, the question is MERIT...there is important value added, at a high standard worth pondering, rather than a mere knee jerk rejection of themessage and the messenger...

We need to have some Devils Advocates here on ZH, not a mere syncophant members of the choir..

Sun, 12/12/2010 - 20:02 | 800643 Calmyourself
Calmyourself's picture

Many of these troll commenters have patterns. TPTB are afoot, a nudge here and a nudge there..  The leftist press is very, very coordinated same phrasing same nudging into group compliance within existing paradigms or gradual movement into another.  Saw a throw away article in Slate about abandoning the $100 bill a few days back, preparing the sheep for a new pattern of compliance..

Sun, 12/12/2010 - 21:45 | 800768 Double down
Double down's picture

He is right.

The issue is: what does the position mean?

He describes the mechanics of the public-private obfuscation, the critique of which is one of ZHs' strength.  I for one think he is correct.

I have few questions given the mechanics of this slight of hand. 

What are the costs, and where are they / when will they be recognized?  Can they be deferred indefinitely or can capital controls (raising the reserve requirement of primary dealers) place a ceiling on the money multiplier once the economy truly recovers?

I think we have to consider the fact that printing money in this manner may not lead to sustained inflation and that the FED may in the end be the sole owner of all US liabilities.  We know what country has done that before. 

Through the continuum of realization that this is the destiny of the custodian of the reserve currency the real question becomes what positions do other other players assume? 

If US liabilities are realized to be merely an accounting plug this fossilizes the treasury debt markets.  Considering the alternatives that seems to be a an acceptable option for the American status quo. 

Given there is no unit of measure for trust nor for credibility I know what I am doing.




Sun, 12/12/2010 - 16:41 | 800396 IQ 145
IQ 145's picture

 If it's not inflationary, why is he doing it? Is he just going to do it until he needs glasses? He seems to think it is inflationary; that is what he has stated; maybe you should explain to him where he went wrong ?

Sun, 12/12/2010 - 17:06 | 800438 blunderdog
blunderdog's picture

Here's an oddball idea:

It's kinda like Reagan's approach of outspending the evil commie Russkie empire.  Pump so much money all over the planet that eventually, the other economies with any difficult-to-sever financial dependence on the dollar (thus the entire industrialized world and all the developing exporters) break first.

Then when other governments break under the strain of a dollar-driven global inflation, propose the "solution" of a new currency, maybe even gold-backed.

Sun, 12/12/2010 - 17:13 | 800450 pcrs
pcrs's picture

I think they print money for the same reason every other counterfeiter prints money: to spend what they have not earned

They just have more eloquent people to present it.

Sun, 12/12/2010 - 17:30 | 800470 IQ 145
IQ 145's picture

 Yup. That's why governments have these fiat systems; it's all very simple, really.

Sun, 12/12/2010 - 17:43 | 800486 blunderdog
blunderdog's picture

Nah, not buying that.  If the government itself were doing the printing, I'd agree.  But the Fed is made up of BANKS. The entire shadow-banking infrastructure only existed to protect the holders of vast amounts of money in the first place.

The owners of the banks had more money than anyone else on Earth.  I guess if you want to say they went on a crack binge and blew it all gambling and now need more, I see the case.  But I don't think it's sufficient explanation. 

I think the whole thing is a Hail Mary pass.  It's so crazy it just might work.

Sun, 12/12/2010 - 23:29 | 800907 flacon
flacon's picture

Politicians and bankers know they do not have what it takes to make it on their own merits, which is why they created such an obfuscated, elaborate scheme that keeps their pockets lined and the voters "happy" (by providing lots of "social programs for free"). 


Just look at Joe Biden, do you think he is even capable of holding a McDonalds job? Of course not. He's a total dunce. 

Mon, 12/13/2010 - 00:32 | 800988 Golden monkey
Golden monkey's picture

I'm far from being sure that Biden can even hold is cock up...

That's just another goldless headless chicken.

Sun, 12/12/2010 - 18:23 | 800527 breezer1
breezer1's picture

i agree. people will welcome global governance over destitution. those who don't will be called terrorists and dealt with accordingly. all hail the nwo.

Sun, 12/12/2010 - 18:30 | 800538 A Man without Q...
A Man without Qualities's picture

It doesn't actually sound that oddball.  The Fed has a big trump card, which is the reliance on short term Dollar funding, which they control both through interest rates and the desire to lend in the first place.  They flood the world with liquidity, generate inflation, then they withdraw it, causing massive defaults.   Then they go round buying up assets on the cheap.  It's the oldest trick in the book.

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."


Thomas Jefferson (attrib.)

Sun, 12/12/2010 - 19:33 | 800613 revenue_anticip...
revenue_anticipation_believer's picture

nothing odd ball about it....back in 1982, just as the South American bust, repudiation of debt payment to the THEN 7 big banks BANKRUPTED ALL THOSE BANKS in 1984....

it was just last year, one of the members of the 1984 Fed, now working for Nouma Japan, revealed just THAT, in 1984 the FED and those banks covered up the bankrupcy, re-funded the their reserves, and THAT debit to the fed wasnt paid off til 1991....

Meanwhile, the excess wealth effect did indeed finally 'break' the USSR, broke their military spending program, broke their ability/will to resist the physical breakup of the UNION into the various 'East Block' countries, including East Germany (the DDR, remember)...

yes, it HAS already been shown, that when 'panic waves' 'risk off' occurs, the flight is BACK TO THE USA DOLLAR...it has already been shown that China, Japan, others that have surplus funds from World Trade, they end up with DOLLARS....

and the excess DOLLARS, in China...just as in Japan 1988...the FEAR THAT THEY WILL YANK, will cash in....etc...never happened in 1988 by Japan, nor will happen by China 2010...

Yes, " when other governments break under the strain of a dollar-driven global inflation, propose the "solution" of a new currency, maybe even gold-backed....."    that currency of trade/commercial activities will be the USA dollar WORLD WIDE.

Money = DEBT,  now we All KNOW THAT!  and who has the absolute most debt = money....?? the USA...and who can control all the REST of the World money via debt swaps, etc 'notational amount $600 trillion'  and how much of the forex 3 trillion/day is effectively DOLLARS or dollar-tied, in actuality..





Sun, 12/12/2010 - 23:15 | 800890 Bolweevil
Bolweevil's picture

Nice work.

Mon, 12/13/2010 - 00:47 | 801001 blunderdog
blunderdog's picture

Ok, on the third reading, I'm beginning to follow.  I have some more digging to do.

Much obliged, sir.

Mon, 12/13/2010 - 08:40 | 801230 blindfaith
blindfaith's picture

all good points  revenue_anticip...
, but there is one point that is off.  "Meanwhile, the excess wealth effect did indeed finally 'break' the USSR" , what did the USSR in was $8.00 oil not excess wealth (or Ronald Reagan), but the lack of incoming profits from oil.  Oil sales kept much of their economy going and the $8.00 a barrel pulled the plug on everything.

Sun, 12/12/2010 - 17:01 | 800432 Everyman
Everyman's picture

Not quite asshole (RnR).

Look at the price of Gas, Milk, food, etc.  All that is "price inflation" and it PREcedes "dollar inflation/defaltion".  However you want to argue, the money is worth less, and it costs more to buy shit will shitty fiats.  Welcome to the new "this time it is different".

No matter what you call it, it is all the same: crooked, corrupt, contemptable and just palin wrong.

You are another asshole out there with no answers and just gets by on his blatant arrogance.  You offer nothing to the discussion at all except for mental instability.

Sun, 12/12/2010 - 17:07 | 800440 Red Neck Repugnicant
Red Neck Repugnicant's picture

If QE2 is inflationary, can you explain why the DXY has increased since QE2 commenced?

Increases in commodity prices is due to the dollar carry trade. 

Increases in gold/silver is due to worldwide currency paranoia and debasement (not just US$), fear, rumors, speculation and short squeezes.

Sun, 12/12/2010 - 17:26 | 800465 tmosley
tmosley's picture

You're on a real streak, aren't you?  Using the DXY to measure inflation is like using a fast melting stick of butter as a ruler.

Why EXACTLY is it that you think that the dollar carry trade came into existance?

Sun, 12/12/2010 - 17:27 | 800467 dnarby
dnarby's picture


Sun, 12/12/2010 - 17:49 | 800493 Red Neck Repugnicant
Red Neck Repugnicant's picture

Why EXACTLY is it that you think that the dollar carry trade came into existence?

Because our cost of money is near zero. 

Listen lady...

In the past 24 hours, I've put you on a rotisserie, smeared you with barbecue sauce, fired up the flames, and stuffed an apple in your mouth.

For you to continue questioning me from thread to thread is totally ridickerous. Quite frankly, I've never seen someone repeatedly fall on their face like you - you must be some sort of full-time masochist furiously typing away while your dominatrix runs to PetSmart to buy you food. 

There wasn't one part of that conversation about agencies, par and interest income that you got right, and yet you kept going, and going and going. 


I'll start answering your questions as soon as you explain why paying 2%-3% over par is a "guaranteed loss" of money.  And don't tell me that all those agencies are worthless, either.  If that was the case, I'd suggest you start buying default swaps on million dollar mansions in Newport, because PIMCO would be insolvent.    

Sun, 12/12/2010 - 18:09 | 800514 tmosley
tmosley's picture

Pfft.  Sure, you were right in everything you said, and I was wrong in everything I said, but only if you substitute your false perceptions about what I was saying.  Remember, when you didn't know the difference between price paid and current market price? 

The only way you "win" debates is by shoving words down other people's throats, and pretending like the comments and positions YOU ascribed to them really were theirs.

Also, you now seem to be under the impression that I am a female.  Again, this shows your extreme lack of reading comprehension.

Sun, 12/12/2010 - 18:34 | 800546 Red Neck Repugnicant
Red Neck Repugnicant's picture

Remember, when you didn't know the difference between price paid and current market price?

WTF are you talking about? 

Listen lady, I'm done with you.


Sun, 12/12/2010 - 18:40 | 800554 tmosley
tmosley's picture

Best find yourself another website then, Illiterate.

Sun, 12/12/2010 - 18:51 | 800572 Everyman
Everyman's picture

Csan you explain a 25% increase in Gasoline in one month???  How is that NOT inflation ass gas?

You are a disaster as a fiscal, monitery, or economic analust.  YOu have NO standing and your facts are like those of "the Bernake" and I really hope somebody romoves that asshole and others like him from our planet.  YOU included.


Ass gas.

Sun, 12/12/2010 - 19:11 | 800590 Red Neck Repugnicant
Red Neck Repugnicant's picture

Csan you explain a 25% increase in Gasoline in one month???

I'm not aware of gas increasing by 25% in one month. 

But that doesn't matter.

Just because the price of something rises, does not mean that it is inflation, or the fault of Bernanke or the policies of Obama. 

During the month of November, pumpkin pies increase in price.  During the month of February, roses increase in price. The market value of a one year old Toyota fluctuates all year long. Lots of things are seasonal, while other things are just responding to temporary supply/demand dynamics.     

Not every price increase is Bernanke's fault, even if the exact cause of the price fluctuation is unknown to you or me.

By the way, you're very angry and extremely emotional. Are you ok?


Sun, 12/12/2010 - 19:16 | 800596 tmosley
tmosley's picture

I see.  So December is suddenly the peak month for gas usage.  That's your excuse?

Why don't you get back to sucking Bernenke's dick?

Mon, 12/13/2010 - 00:15 | 800960 Bring the Gold
Bring the Gold's picture

Why don't you get back to sucking Bernenke's dick?


I see no evidence to suggest he ever stopped.

Sun, 12/12/2010 - 19:23 | 800600 Everyman
Everyman's picture

They are defninatly benny's fault if it is bacause of currency debasement.  ALL the charts are showing that, and that is the monster he has created and will engulf all.  The QE's don't matter anymore because you simply cannot keep printing money to pay for the previous debt.  Hell what we on here 3 or 4 or 5 bailouts now with all the QE's and POMOs?

It is currency debasement and morons like you don't get it.


Go tap dance in a box of broke glass you asswipe.

Sun, 12/12/2010 - 21:46 | 800770 Herd Redirectio...
Herd Redirection Committee's picture

There comes a time where you want to give someone the benefit of the doubt, and there comes a time where you just have to admit some people are paid Internet trolls.

Red Neck and Harry Wanger are paid internet trolls, disinformation providers, agents provocateur.  Hope they are paying you a lot to do a below average job!  Not to mention you are selling out humanity, congratulations. 

Red Neck, did you ever see 'They Live' where its explained "Most people just sell out right away"???  They were talking about you.


PsychoNews: Filtering through the Disinformation every day.

Sun, 12/12/2010 - 22:08 | 800793 Everyman
Everyman's picture

True, most do sell out right away.  "They Live" is one of my favorite flicks.

The sellout


The Revelation


We are now at the revelation of our finacial economic system. 
"They Want".



Mon, 12/13/2010 - 01:18 | 800989 G-R-U-N-T
G-R-U-N-T's picture

Hm...Sun glasses that see reality. I like his sarcasm "It figures it would be something like this"...a reaction that I would probably have.


Do NOT follow this link or you will be banned from the site!