This page has been archived and commenting is disabled.
Charting The US Fiscal Catastrophe
With little fanfare, the November budget deficit of $150.4 billion was reported, which happened to be the worst fiscal November in the history of the US, and just out of the top 10 of worst deficit months ever, including the traditionally weak seasonal months of December, April and September (indicatively, the worst deficit month was the February 2010 $221 billion). The deficit was a major surprise to all those who had expected a pick up in income tax revenues. And as the charts below demonstrate, while there was indeed a modest pick up in tax collections, it was nowhere near enough to offset the surge in government outlays (even with interest payments still at near record low levels). What was also not broadly appreciated is that the cumulative debt issuance over deficit funding has hit a new all time high of $1,735 billion since our October 2006 starting point (4 fiscal years ago). And what is a bigger concern, is that the debt issuance continues to remain at almost exactly 50% over the deficit. Additionally we know that courtesy of Obama's latest stimulus for the wealthy (and everyone else) the latest projection for the 2011 budget deficit will hit $1.5 trillion (after it was just $1.1 trillion a few months prior). What this means is that should the US Treasury continue to issue 50% more debt than total deficit needs, by the end of fiscal 2011, the US will have issued another roughly $2.25 trillion in net debt. Granted this is a rule of thumb. But what it means is that the $900 billion in notional (not market) value of bonds to be bought back by the Fed through June will be woefully insufficient, and that as a result we expect that Ben Bernanke will be forced to monetize another $1.2 trillion in debt to continue with his course of monetizing every dollar of deficit spending, as he has been doing since the advent of QE2. It also means that unless something dramatically changes, through October 31, 2011, total US debt will be $15.9 trillion, up from the $13.9 trillion as of the end of last month, and will mean that the debt ceiling will have to be raised not only once, but likely twice in the next 12 months. We are now truly a banana republic you can believe in.
Chart 1: Cumulative US Individual Income tax revenues and debt issuance. Since the failure of Lehman, through November 30, 2010, the US government has issued $3.8 trillion in debt, and collected $3.6 trillion in tax receipts. Uncle Sam continues to fund over 100% of every dollar received from taxes with his own credit card, which is somehow still stuck at an APR of about 2%.
Chart 2: The same as above, but also showing the cumulative differential between the two metrics. We fail to observe any green shoots, or any improvement in the cumulative delta.
Chart 3: While the debt to tax collection metric is deplorable, what is far more scarier, and has very profound implications for future US debt, is that the cumulative debt over deficit differential not only continues to rise, but has hit an all time high. Forgive us if we laugh in the faces of all those who claim that rising tax revenues are a certain indication of economic improvement. Nothing could be further from the truth: the only "improvement" is short-term economic stimulus (with an ever declining half life), purchased on Uncle Sam's credit card. Should the recent acceleration in interest rates higher persist, we expect that very soon the Uncle Sugar APR will no longer be quite as attractive as it has been during this period of drunken sailor borrowing.
And if you are not scared enough by the above figures, here is Bill Buckler of the Privateer fame's condemnation of what anyone with half a brain realizes is pure, unadulterated fiscal lunacy (dictated in no small part by the same people at Goldman who are now in charge of monetary policy as well):
Before fiscal 2008, the US Treasury had only run an official deficit above the $US 400 Billion level once - in 2004. In the three years between 1998 and 2000, the Treasury had even claimed to have run budget SURPLUSES, even thought its debt climbed throughout the period.
- In fiscal 2008 - the official Treasury deficit was $US 438 Billion
- Ten weeks into fiscal 2009 - the Fed cut its controlling rate to 0.00 - 0.25 percent
- In fiscal 2009 - the official Treasury deficit was $US 1.42 TRILLION
- In fiscal 2010 - the official Treasury deficit was $US 1.29 TRILLION
- White House projections for fiscal 2011 are for an official Treasury deficit of $US 1.5 TRILLION
In fiscal 2009 and early fiscal 2010, the Fed directly monetised an official $US 300 Billion of US Treasury debt. Between November 2010 and June 2011, the Fed plans to buy another $US 900 Billion worth. Nobody, including the Fed knows what will happen after that.
When looking at these figures, it is wise to remember that what is being “produced” here is the reserve currency of the world. This is why the US government has gotten away with this borrowing as long as they have. And it is also why the Fed has been able to accommodate them with non-existent official interest rates for as long as they have. But for how much longer?
That is the 64 quadrillion dollar question.
»
- 22787 reads
- Printer-friendly version
- Send to friend
- advertisements -
"The Federal Reserve Bank is not and has never been part of the US goverment. So it is impossible for the government to "lend itself" (1st use of possessive) money through "its" (2nd use of possessive) central bank. The government loaning to itself was implemented by 2 Presidents, Lincoln and Kennedy, both shot, of course."
I acknowledge that, but the FED still legally answers to the US government. Just because your politicians do not have the will to audit or abolish the FED does not mean the FED doesn't answer to the US government.
Secondly, most central banks are today private, but it was not the case until a recent time. The French central bank, for example, was public. And it was lending money to the French government until 1973.
"The "money" is not destroyed because the loan is never paid back. The US is in receivership and so the creditors are first in line for any payment. They then loan the US the same amount as the payment."
The debt is paid back. It's just replaced by more debt.
"The debt service cost on all these loans is massive. That service is never paid as well."
There would not be any debt service if this money was lended to the US gov at no interest rate by the FED.
Again, why would it create inflation?
I thought the government answers to the fed instead of vice versa .... at least that's how it all looks to me these days
If you consider "No" as answering to government then I agree with you. The who got what and how much didn't come out until two years after the fact. Also an answer of sorts I suppose?
"I've never seen a precise and accurate answer to the following question."
The answer is simple. The conduit through which new money created from thin air enters the economy is the paychecks of government dependents.
If you understand how FRB causes inflation to pool into asset classes through credit expansion, it is easy to see that it is WHAT THE NEW MONEY IS SPENT ON that recieves the inflation. Hence, housing prices rose radically in relationship to other goods/services within the economy. FRB pools into asset classes, causing asset bubbles, then deflates.
It is for this reason that FRB can never cause hyperinflation, because it inflates and deflates asset bubbles. It is always government monetization of the deficit that destroys currencies. The paper trail is as follows (simplified).
New money created from thin air, given to Uncle Sam, enters into food and energy through the paychecks of government workers.
There are three types of political systems:
Healthy: 100% of gov spending is payed for by taxes (wealth redistribution, not money creation).
Sick: Gov spending is payed for by taxes and borrowing - this is unsustainable (again wealth redistribution, not money creation).
Terminally Ill: Only a portion of gov spending comes from taxes or borrowing, the "deficit" is created from thin air. So in this type of political system, Joe Schmoe gov worker's wages are now part wealth redistribution, part new money created from thin air and become inflationary.
So who is Joe?
Joe is anyone who works for government or is dependent. Fed workers, the entire DOD, soldiers, sailors, post office workers, food stampers, welfarists, healthcare, social security. Any bailed out failed business models (GM, the banks) and their employees. After the states get bailed out (which they will), it is all state employees - teachers, politicials, secretaries, the DMV, cops, fire-fighters, anyone on unemployement.
All these dependents are the conduit through which new money created from thin air enters into the economy, mainly bidding up the price of food and energy.
Many people understand FRB and the boom/bust cycle, but they forget that the FED creates $s from thin air for two entities - banks AND government. People who are looking at all the new money created and wondering how it will ever enter the economy if banks aren't lending are looking at the wrong money conduit. Here is something to think about. Has bank lending EVER destroyed a currency? No, not EVER. How can a bank loan profitably in hyperinflation? It cannot. Therefore bank lending does not destroy currencies. It is always government monetization of the deficit.
Hyperinflation is a once in a currency's lifetime event. It is the death of both the currency and the political system which is issueing it. That is why American economists don't understand hyperinflation - because it hasn't happened in our country since the civil war, and before that the revolutionary war - both periods of major political change.
"I've seen absolutely nobody - including top economists - managing to explain the actual mechanism leading to inflation."
Very simply put, the mechanism is...
New $s created from thin air, enters into the economy through the wages of government employees and dependents. The US government is multiples larger than what the home economy can support from their productivity. Empires always are, and they always end badly.
"It is for this reason that FRB can never cause hyperinflation, because it inflates and deflates asset bubbles."
This is too hypothetical. You consider the US a closed system, which it isn't. Hyperinflation would happen overnight if the Chinese decided to dump all their bonds at whatever price they could get.
Yes, if the desire to hold the $ (demand) drops, then the $ is done. Hyperinflation is a psychological event of loss of confidence.
All that I did above was describe how monetizing the deficit is inflationary and drives up food and energy prices. As the spread between revenues (taxes and borrowing) and expenditures increases, it creates a sustained rate of inflation (stagflation) as the difference is monetized that enters into commodities through government wages. Once the rate of inflation becomes intolerable to holders of $s, money velocity increases as $ holders (includes bonds) increase the pace at which they trade $s for hard assets and stagflation then turns into hyperinflation. In other words, the rate of deficit monetization has a linear impact on price inflation because it is a linear rate of money creation. But hyperinflation is the response of $ holders to their perception of this debasement which causes a collapse in $ demand that is non-linear.
So the mechanism described above is merely to explain how the government can debase the dollar through deficit monetization even when banks aren't lending to business or individuals.
It is that mechanism that will continue to destroy the value of the dollar and cause price inflation regardless of whether there is any FRB credit expansion.
DD, can one of the main banks create a subsidiary which is a primary dealer and therefore make a magic money loan to it's subsidiary which purchases the Treasury's. These could be sold to the Fed and the loan repaid, injecting new money into the system. Not being knowlegeable in this area I pose the question.
Thanks
@ Greenhead: This is already happening. That is exactly what monetization of the deficit is. The FED creates $ from thin air, gives it to the primary dealers and other colluding foreign central banks, who then use that new money to buy treasuries. All the mechanisms are already in place and the process is well under way.
That was a thing of beauty. Thank you.
They would not
Ben would set the floor and send electronic-dollar-inflation-death to the banks forced to sell them.
And, he would thank them for providing cover for QE3.
+1000
"Joe is anyone who works for government or is dependent. Fed workers, the entire DOD, soldiers, sailors, post office workers, food stampers, welfarists, healthcare, social security. Any bailed out failed business models (GM, the banks) and their employees. After the states get bailed out (which they will), it is all state employees - teachers, politicials, secretaries, the DMV, cops, fire-fighters, anyone on unemployement."
and all non-government employee's are forced to compete for resources with all "government payees", therefore driving up the cost of virtually everything. as an example, government pays for certain "students" to attend institutions of higher learning. other students are forced to either borrow, or pay for their education. universities do not care from where the money comes, if the non-government students decline they just admit more government students. after several decades the cost to the non-gov student is astronomical. same for health care, same for homes, same for all asset classes.
there was an article here at zerohedge about how a "government subsidized" adult with a family of 3 receives the equivalent of 66k per year salary, and that didn't count any sort of ss disability. more than the average salary of a college graduate.
we are nearing the end of our "empire". very close to francisco's speech in atlas schrugged
@ stormsailor: Exactly! The size of the dependent class is absolutely stunning. It is amazing to me that so many are focused on the banks and consumer lending... The general thought process from even good economists seems to be... "Will the banks lend or won't they lend?" "Uh oh, some day in the distant future, the banks are going to start lending all that newly created money, and THEN we will have inflation."
They totally have their eye off of the ball, which is the massive infrastructure of government and gov dependents. That is the primary conduit for new money created from nothing to enter into the economy IMO. The scale of bureaucracy is so enourmous you could spend a lifetime contemplating it. USgov tax revenue has cratered. The second their ability to borrow gets pulled out from under them and they print the difference, the inflationary impact will be stunning.
John Williams from shadowstats.com says that if we have a collapse in the bond market, hyperinflation will happen within weeks. I believe we are witnessing the bond market collapse right now. It is just not totally transparent because the FED is stepping up to buy. This monetization will continue to grow larger in scale and by the time we start to see it on the shelves it will be too late.
dollar damocles, i noticed the curves start to flatten in the bond market last week. it seems as if this will go on forever, it has lasted decades longer than i ever thought possible.
we appear to have a simular opinion as to how the monetization is occuring, but i still haven't figured with any certainty how this will play out.
Well I think history tells us how it plays out. The million dollar question is just time. It will work until it doesn't. I'm curious to see how long it takes for the massive increases in commodity prices we have seen over the last few months reach the shelves and what that will do to psychology.
Is that you, Krugman?
The Fed's theory is -- as long as much slack exists in the economy -- low factory utilization, high unemployment -- printing money won't create inflation. Inflation would only happen if the economy had capacity constraints, and supply could not easily rise to meet the extra demand from all that printed money. Uncle Ben promises to pull back the printed cash when slack in the economy disappears (at which time, fortunately, the increase in economic activity will be generating more tax revenue, and the treasury will not need to borrow so much.) It's pure neo-Keynsian theory as overwhelmingly practiced by academic economists, and Ben be damned if its not working long after all the pissing skeptics at ZH said it could not work. It seems so easy, though the fishy smell remains.
Oh, yeah, we tend to hit capacity constraints in commodities well before any constraints in our alleged industrial base, so commodities soar even as wages and industrial prices stay soft. Too many dollars chasing too few barrels of oil, etc.
The danger is sliding into a Weimar / Zimbabwe scenario before the economy has picked up, because either:
-- foreigners stop accepting our currency, and we become desperate to shift our trading into another currency that holds value, so we can still buy oil, copper, artisanal cheeses, etc. from overseas.
-- people become so worried or skeptical about the future that they stop investing in production capacity and begin actively dis-investing, so that slack in the economy disappears not due to rising production, but due to abandoned, looted, and destroyed capacity. Then we see rapid inflation even though economic activity remains low, and tax revenues have not increased, and Krugman says to print and borrow even more, now is not the time for austerity.
Nothing can go wrong, except lots.
This is what happens when inflation of the money supply becomes deified. In search of profits before the cost of inflation can impact the "profit", the banks continue to transfer the existing wealth created during the last 100 years and beyond.
There is nothing more criminal than bankers. Serial killers are benevolent compared to JP Morgan and their like.
This seems literally true; as the Banks are acting as serial torturers, and serial life-ruiners; which seems clearly "worse" in some important sense, than serial killers.
Again, the lies can no longer be buried.
Joint External Debt Hub (JEDH)
http://devdata.worldbank.org/sdmx/jedh/jedh_home.html
ISDA
http://www.isdacdsmarketplace.com/exposures_and_activity/top_10_cds_positions
Club Of Rome and The Committee of 300
http://www.youtube.com/watch?v=fEu9GFJIw8g
Hate to sound like the grammar police. I am perfectly willing to overlook poor grammar on the web, since my usage is far from perfect, but the grammar in that last link on the Club of Rome is so poor it is quite impossible for me to take it seriously.
Your right. Poorly done. Not my video, just snagged something from my external drive. Content is the importance.
We are America and history and the law of finances and economics do not apply to US!
Sarcasm off
This is crazy we will have to raise the debt ceiling TWICE in the next tweleve months because of the tax cuts that everyone wants but do not have a plan where to find a way to pay it off. Both political parties are full of shit and will not do any large substantial cuts. Imagine 15.9 trillion by this time next year,this is outrageous! All I can say is I Tyler is there a chart with a post 2020 fiscal outlook? By 2020-2025 that could be the time period when we could be in a fiscal,currency crisis. The good thing is we still have time,however we better start now before it is too late.
according to my calandar the SHTF in 2012 . by 2020 WWIII is raging or wrapping up.
And we're all dead.
agreed. By 2020 many will be shadows imprinted on concrete.
This is crazy we will have to raise the debt ceiling TWICE in the next tweleve months because of the tax cuts that everyone wants but do not have a plan where to find a way to pay it off.
Tax cuts are not the problem. Governmental theft of half of every dollar I earn and its expenditure on services which I have neither requested nor require is the problem.
+ $55,000
well said
50%? You need to hire a CPA. Taxes are all part of the the show in the Age of the Printing Pre$$:
1) perceived "equal" redistribution of wealth
2) price controls
The debt will never be repaid. Only Pollyanna thinks so. How's Cass?
50%?
Social Security tax, Medicare tax, federal, state and local income taxes, municipal, county and school district real estate taxes, sales tax, utility taxes, sin taxes, etc.
How's Cass?
Weimar,
"This is crazy we will have to raise the debt ceiling TWICE in the next tweleve months because of the tax cuts that everyone wants but do not have a plan where to find a way to pay it off."
WHAT TAX CUTS??????
The ONLY TAX CUT is the Ostupid Plan to cut SS Taxes by 2%,STUPID MOVE.
Other than that, what TAX CUTS are you refering to?.
"But what it means is that the $900 billion in notional (not market) value of bonds to be bought back by the Fed through June will be woefully insufficient."
This is why (1) QE2 will not succeed; and (2) Bernanke will be forced to launch QE3 before the 2012 election, or face a market catastrophe.
I don't think there's any such thing as QE2 "succeeding"; you get a choice between the boilers blowing up or running into an iceberg; but success is not an option. IMO
Actually I agree with that. We're on a sinking ship, and while we may be able to delay the inevitablel for a while, we can't avoid the inevitable outcome.
Get ready for Chinese rulership, guys. The next governor of Texas will speak Mandarin.
Fiscal crisis by 2020? what planet are you on?
Like Obama will respond on this:
IT WAS BUSH WHO DID IT! IT WASN'T ME!!
AND IF WE GIVE ANOTHER 12 TRILLION EXTRA TO MY BANK BUDDIES, ALL WILL BE SOLVED!!
YES I CAN!!
I mean....
YES WE CAN...
Hope and change you can believe in...
The Centre for Research on Globalization presents Michel Chossudovsky: "More IMF 'Economic Medicine' Is Not the Solution"
http://www.youtube.com/watch?v=9Ej-HeSgFJk
The key comment is the Privateer's: all of this lunacy is temporarily possible because Bernanke is playing with the world's Monopoly money, and for now he's the only guy who can issue it. He's had cooperation from foreign central banks and the Directs, who keep buying about 1/2 the auction, so that's a good cover. The Fed is buying the other half through its monetization schemes. this avoids the unseemly spectacle of the Treasury simply issuing debt to the Fed, where it would disappear into the Black Hole of the Infinite Balance Sheet. That would look sketchy. Bernanke must titrate the monetization to make the whole thing look real, and for now the Indirects are giving him cover. If they begin to drop out, then Bernanke will have to rely on the PDs in his recycle-QE shell game, and then everyone is going to ask TD's question: why the added cost of using these PD middlemen? Ineed, why issue debt, when we can just issue money? In theory we're already there, of course, but it's not yet in the world's interest to insist on it too loudly. When it hits, thought, expect a large sign saying "Tilt" to appear over D.C.
"That is the 64 quadrillion dollar question." Yes, and it is rigged like the $64,000 Question TV game shows of 1950s.
http://en.wikipedia.org/wiki/The_$64,000_Question#Scandal
Our whole economy and financial system will be defined by that South Park (Importance of Saving Money) remark..
...AND IT'S GONE!
@TheGreatPonzi
I think the mechanism goes something like this:
USDs are created by the FED and hit the economy via US government expenses. But since the US runs a huge deficit against china these newly created USD leave the US. Think this is like a bucket with a bunch of holes in it, any new water poured into it will exit the bucket right away. The question is now - what does china do with all the USDs? I think to some degree they play hot potato with it - i.e. they buy all sorts of commos (and yes gold and silver as well). For every USD they keep they have to create the same amount of yuan (to keep the FX somewhat sable). But since china runs a surplus these yuan never leave the chinese system and create inflation there.
How does the inflation get back to the US? Since the US imports a lot of stuff (because of the deficit) the prices will go up (think oil or rare earths). When profit margins are squeezed to 0 then the price hikes will have to be passed through. So at the end it will not NOT be a wage/price spiral type inflation but a cost pushed inflation....
does this make sense to anyone!?
As much as any other theory being put out there.......
They just keep going and going and going like the Energizer Bunny until the day comes when people don't want dollars any longer. What worries me is the speed at which the end will occurr. Everyone seems to expect that it will be gradual. I have no such confidence.
lol, I thought it would have happened a couple years ago!
Armaments, universal debt and planned obsolescence - those are the three pillars of Western prosperity. - Aldous Huxley
Weapons Check, Debt -almost paid off, and planned Obsolenscne defeated by ditching chinese made walmart 10.00 coffee pot crap that burns out in 6 months for a proper coffee maker that stands up to wear and tear through the years.
I HOPE it is rapid! The worst thing that could happen is this takes decades to play out.
Rip the damn band-aid off!
Everybody will always want dollars.
SILVER DOLLARS THAT IS!
I just love those morgan dollars. The coolest coin ever minted.
Banana Republic? Oh Yeah?
Then how come bananas are still only $0.39/lbs? Answer me that, oh wise sages.
then you have not bought bananas in years, your just trying to sound informed....this is the kind of unreliable information that people read and then pass on because they don't know better or know otherwise.
Because; time flys like an arrow, but fruit flies like a banana.
the answer is in the banana smoothies!
6$ for a 15cl bottle!!!!
Many grocery prices have increased dramatically in the past few weeks, especially grain products.
Instead of raising taxes, the government will pass the burden to the taxpayers with price increases...
Once prices are out of reach.... the tax increases appear.
How those in power can continue to let this happen is beyond reason.... at some point the sheeples will react.
as illogicial as it feels, the US government deficit has never seemed to matter.
My best friend, a school teacher, was over last night. I have tried and tried to get everyone I know to see what is happening and for the most part they either don't or won't see it. My friend was at a McDonald's having lunch and reading his book when it occurred to him that there were strange conversations going on. After maybe 15 minutes, it finally struck him that at least 20 to 25% of the people there were homeless. Living in shelters, in cars, under the bridges, in hedges...homeless, they were homeless.
Blessed is the man who is not. Cursed is the man who made it happen.
As this situation expands, we all know full well that it will, at some point it will explode in civil unrest. Is this what the elite have been planning all along...martial law. 1934?
We are going fully into the century of change. How can the living standards of the Western world be radically reduced without unrest? The big boys are feathering their nest as they prepare to take us into a new kind of feudalism. In their minds breaking a few eggs is ok, after all they have to deal with the "surplus population". This is not even that much of a stretch. Many on here talk about peak energy. Well if one acknowledges that, and also sees oligarchs in charge, then it's not a stretch these oligarchs would want the mass man to cut back on consumption to save those resources for the oligarchs future use.
Ohhh shit.... I will stoke the bonfire... Somebody is surely getting a rope and gasoline...
You might get burned at the stake for using that kind of logical thinking!
Here is a "world model" (one of 6 or 7) from an air force study done long long ago that is called:
The Halfs and the Half-Naughts...
It illustrates exactly what you allude to, you might find it an interesting read... Even the entire study...
http://www.fas.org/spp/military/docops/usaf/2025/af/a-f.htm
It's funny how the Miltary, Rand, Etc... Have all been planning and gaming all this shit out for years while the ave Joe is working on making that car payment... I guess I led a privledged life, being exposed to all this shit from childhood... But I always stood slack jawed at how many people had no idea what was going on inside some of these think tanks... If they only knew... And they were intelligent enough to comprehend.
It's too evil for most to think about. Heard stories about great evil from childhood, but then a lot of my family was classified as refugees for a while. People vaguely know that evil exists but they blindly assume that it's not in charge and that someone/something will protect them. Most also cannot accept that for better or worse life is a competition. We are all competing for resources. In such a world it's no real surprise that those with access to the greatest amount of resources would seek to extend their lead and make sure they stay on top. It's pretty easy to win a race if no one else knows there is a race going on. They plot and plan and prepare, and the masses watch TV and eat their junk food. There are many studies. Saw one about predictions of food riots in the coming years, funny how the US has drawn down on it's food reserves and pursing a suicidal bio fuel plan.
Honestly I do not think the people knowing would make much of a difference. To have the knowledge and to understand it would break their reality. It would be to painful to walk into the light. The only way they can go into the light of knowledge is to be forced, and by then it will be far to late for them to act to save themselves.
+1
What can I say to that?
Good luck Brother, and Best Wishes!
After this whole thing is over, we are going to need rational people to lead what is left... I hope you are one of them!
Thanatos
The evil are natural predators. Assuring you everything is fine before the deathblow.
Battle Royale:
http://www.youtube.com/watch?v=urbgMrxCBWY
Shameful, great back and forth with you and Thanatos. Empathize with you both. Sucks being hip to these things until the time where it becomes helpful.
Sadly, while it sucked to be aware of these realities I think I prefered the times when I was not benefiting off this knowledge. The worse things get, the more having our worldview helps. It's a sad feeling to know what many on here know.
Most people I talk to about this stuff listen politely, nod and smile like I am a little crazy and go on with their day talking about sports and whatnot totally and purposefully ignorant of these issues.
Can you blame them? I came to the realization that most people cannot wake up, it would be to harmful psychologically. I learned something in undergrad, that most people my age were geared towards one thing, pleasure. All the girls I ran into and most of the guys just wanted to have a good time. The whole goal in life being "Be happy".
Well when you stare the devil in the eye and see the future, there is not a lot to be happy about. To see what is real would destroy their heart's wish. Even in the best of times it's necessary to endure pain to build something great, something that will last. It's their nature to seek these distractions to the very end. Their hearts desire is to chase a fleeting emotion. I look on them the same way I do substance addicts, more sympathy then disdain. They will destroy themselves, though in their inaction they may destroy us as well.
Really all we can do is look like a social outcast and put forth information. To most it will fall on deaf ears, but maybe after everything goes to hell they will remember who did this to them and be harder to lead into the next phase. Other then that take a little thanks in knowing what is going on and having the knowledge to prepare for it as best as we can.
Right, most men are mice, we have to be rats. Rats that are smart enough to find the holes and crevices that the PTB leave in their wake. Perhaps it is smarter to learn from the PTB and leave the mice in their stupor and find the crevices by ourselves, after all we won't all fit.
We have recieved some strange looks from time to time. Usually from people who are... rooted in a way of life that cycles around thier salaried management job, big house and no pain in food shopping or any want.
My trucking days out west in adverse weather and natural problems that presented themselves before me must have demanded from me a price of life or death or something in between. Having made it into a truckstop and having someone serve a nice dinner at Ft Bridger WY thanking God that the Ice on the mountain was not too bad YET and praying I can get out in the morning.
In the meantime, my entire family back home commuted to and from work, to and from play to and from routine appointments, mail call and absolutely no challenge or disruption to thier flow of life. I return home for rest and they ask me how it went and finally i just learned not to bother with the stories. It's just too out of thier world. So I stay with others of a like feather.
Maybe sitting on Sandstone mountain for three days in a drift while managing the fuel, rations and fluids as well as heat and a backup means to heat trying to outlast nature for the storm duration really is something that hammers you into a person capable of dealing with bad things that most people wont even think of until the power fails during a cold snap.
Today it's cold. Little Rock lost power here and there. The media reported that the people said it was terrible trying to live in a 30 degree bedroom under piles of blankets. And I look at my firewood, generator, space heaters and other alterneate means to heat should power fail (And it will...) Im ready for battle.
They were not.
Should I feel sorry for them?
You tell me.
No, but you should keep sharing your experience. No junk from me.
The article mentions the APR staying at 2%. This brings up what most strikes me about this current fiscal madness -- the parallels to the sub-prime crisis. Don't worry about the mortgage rate being adjustable, you can always refinance. (Nothing to worry about regarding current T-bonds, the government will somehow keep paying low rates forever.) Don't worry about how much you've borrowed on your home, the value of your house will always increase; you'll make a bundle. (Don't worry about the government's amount of debt; with an expanding economy, we'll just grow out of it!)
The same, damn song and dance routine. So soon after the sub-prime collapse, people are falling for it again. (Though not many ZHers!)
In the meantime betting against the markets has been suicide. What will be the signal that it's really time to be short or bail. Thus far being negative has brought nothing but heartache and losses. It just hasn't paid to argue against this market.
+1
Nobody knows that answer. Intervention is everywhere. If you're looking for a possible example, then look at municipal bonds. The Build America Bond program is supposedly going to be allowed to expire. Muni prices have plunged as a result.
The potential lesson? When the crutches are removed, the real market shows up.
For the stock market the equivalent would be QE being stopped, stimulus ending, mark-to-market accounting returning, and unemployment claim extensions being stopped.
For the housing market the equivalent was housing tax credits expiring, and now we see home prices dropping again.
So far we have 2 examples of crutches being removed, and 2 markets that drop as a result.
Very well put. I suspect that those two crutches will never be removed until there is turnover at the fed.
It's going to be a golden holiday season.
http://www.youtube.com/watch?v=oMlqn_Hjyi8
I tried to copy the Fed and Treasury routine with my Checking Account...
I was rich all afternoon yesterday! It was great! Then the FBI showed up...
I tried to point out that I was only doing what the government does. The 40 trillion check I depositied wasn't real money until I took it out of my account and spent it. Additionally, I was "lending" it to myself So I coudn't be charged with fraud... They said they were taking me back to Washington...
QE2 is already cracking the bond market. Then what? Bernank pulls the plug on stocks so everyone runs back to treasuries? Isn't that pretty much checkmate for US?
Where do commodities fit into your musical chairs?
I will cackle maniacally if/when the new congress has to passes two debt limit increases. If they aren't terminally stupid they will pass one really big one and got it carries, say go for 20 Trillion and hope it carries them though the 2012 election. Will be one hell of a rude awakening for the Tea Party crowd when the new congress critters act like the old one.
I'm thinking the Tea Party knows these guys are worms. They shouldn't be too surprised.
Nobody gets in or out of that DC whorehouse without getting overwhelmed by corruption, that is how business is done.
Hope springs eternal. Hope is what keeps this game going, the hope that the next guy will be different. I remember telling friends and classmates that Barry would just be another politician, politics as usual. Of course they swore up and down that I was wrong and I was being negative. The masses will always latch onto hope no matter what the evidence says.
And not everyone seems corrupted. There is one lone man out of Texas who is tilting at windmills. Of course by himself he can change nothing, just give an avenue to those that have ears to hear.
Amen on Ron Paul.
How that guy can keep going is a secret we need to bottle up and put in the water supply.
Ron Paul is one of the few men who will stand up for truth and liberty no matter the personal cost: http://www.lewrockwell.com/blog/lewrw/archives/72817.html
The man pulls no punches.
We finally agree on something. Or that last beer was all I needed to start seeing shit.
LOL
Turning on a dime is no problem for cognitive infiltrators.
The Tea Party reps are being set up right now by the rinos,they are placing them sacrificially at the head of committees.
That the RINOS know, will explode their heads,and the movement they came from, Paul has capitualted on doing away with the Fed, and an Audit of them.
Never thought I would see this day.
Dr. Paul has capitulated on that? Link please. I heard him do a recent interview and he brought it up again. He tilts at that windmill every Congress. Why would he change now? I did hear him say he expects the Fed to blow up and kill the dollar before an audit or more could take place, but that is nothing new. Even if by some act of God it slide by both houses and reconciliation it would face an auto veto by any President.
Doubtlessly the Tea Party people will be an epic disappointment. After all they will soon learn that they cannot cut from the entrenched interests so they will just keep rubber stamping the death spiral. The system cannot be fixed in the system.
DosZap, Shameful,
Two of my best virtual friends here at ZH.
Maybe the best easy to understand metric that says the end is VERY near is when Ron Paul and the Tea Party are stymied. Ron Paul and his like minded folks are our last chance. Since they don´t have much of a chance to save anything, I revert back to:
-- buy precious metals and guns & ammo
-- food, food production, water and water treatment
-- get or stay out of debt
-- don´t like the new Amerika? Figure out how to lay low or get out of Dodge.
Never know when it's going to blow up. They have shown an amazing ability to kick the can and a few landmarks have yet to be passed. For example, I expect a 401k seizure before the real fireworks kick off. Can't let the masses have any assets when the storm hits them. So I think there is time yet. After all I expect things to start getting really "strange" before a break. Like oil moving back up to $150ish despite economic slowdown. And/or a food price hike like in 08. Got to think signs will be there for those watching.
As to debt, I think debt is fine if it's manageable. I'm purposely going into debt. I think either there will be some sort of student loan bailout/forgiveness program so I'm loading up. After all will have MILLIONS of young voting age fighting age people with no money, no job, and huge debts. Moral Hazard for the big win! Even if it doesn't, lets me put my earned money in PMs which are going up more then my debt. And if PMs crash and the dollar soars then I keep my job and my debt is totally manageable. If the dollar crashes then I sell some PMs and pay it off.
Totally agree on the rest. Will be one hell of a wild ride.
Defaulted on student loans a long time ago. Still threatening to withhold tax refunds. Fuck it all and the IRS.
Internal Revenue Service. LOL. What the fuck does that mean?
ASYMMETRICAL ETHICS, BITCHES!!
Greenspan studied beside the master, Ayn Rand, then betrayed his teacher, his teacher later rebuked him, but it didn't matter, Greenspan had the power by then, and he abused the Rand doctrine, and every other document of trust people shared with him. Why do you think either Paul is above that?
So no libertarian can maintain a consistent worldview in their lifetime? So when is zombie Rothbard going to come back to take over the Fed?
Blaming a group for the actions of one who claims to be a member is rather bigoted. Tell me do you judge all groups by villains that come out of them? If Zimbabwe Ben claimed to be an Austrian can we then lame Austrians for his actions even though he acted completely contrary to their beliefs?
Explanation: 100 super-wealthy bankers in NY and about 600 government people in Washington are madly writing checks to each other that the other 300 million have to pay off.
Surprise? Get real.
And all this is a problem? Who cares, the NFL, DWTS, and WOW are just great so life is good.
One of these days the bond market will shift against the US and the whole world will shift into a MAJOR correction. I virtually guarantee a lot of people will be caught off guard and on the wrong side of the trade by the catastrophe.
tight stops! then you can sleep at night!
why am I in boldface?
Biggus Dickus in boldface? I'm sure there's a joke in there somewhere.
Its wrong to say USA has deficit, it exports more of the fancy paper than it imports doesn't it?
And its China who has a biggest deficit, Importing lots of the paper, while exporting relatively little of their own.
In today world where business producing the food or something similar is so difficult due to low margins, while just producing the paper and taking interest rate is so much easier, nothing makes sense.
We recently traded one of our children, who was the 'least' productive of our three assets, for some silver bullion.
good trade
Rumpelstiltskin has gone bimetallic? Who knew?
mark, perfect, just perfect, probably a better return. lolol
The Fed succeeded in saving the financial system, the Fed succeeded in inflating the stock market, the Fed wants inflation, and one way or another they will get it. They will worry about the side effects later, and I guarantee they have no plan.
Yes, yes, and no - they do have a plan.
On 60 minutes, there was a 2 minute segment where "The Bernank" said he can raise interest rates in 15 minutes.
See? Like I said, no haircuts and no defaults. Bailout of $70 trillion. Why? Middle class unemployment is low.
Germany Signals Support for Euro-Zone Members
By JACK EWING
Published: December 12, 2010Reprints
FRANKFURT — In a shift of tone that may signal more commitment to keep the euro zone in one piece, the German finance minister has ruled out the possibility that any country would ever be ejected from European monetary union, and said calls to restore the Deutsche mark were “unrealistic nostalgia.”
Enlarge This ImageVirginia Mayo/Associated Press
Wolfgang Schäuble, the German finance minister, has often taken a hard line toward the countries that have caused the financial crisis.
The comments by the finance minister, Wolfgang Schäuble, may indicate that Germany, Europe’s biggest economy, is becoming more willing to finance measures to ensure that countries like Greece and Ireland do not default on their debts. Fears that Germany’s enthusiasm for the euro is waning have contributed to turmoil in global financial markets in recent weeks, as investors increasingly factor in the risk that the euro zone could break up.
Borrowing costs have risen not only for the overly indebted countries, but for healthy countries like Germany as well.
European heads of government are to hold a summit meeting this week when they will to try to establish a permanent mechanism for dealing with debt crises. They are under pressure to convince financial markets that the euro is solid before global bond trading recovers from its December lull. Authorization for the current bailout mechanism, the European Financial Stability Facility, is to expire in 2013. The facility has €440 billion, or $582 billion at current exchange rates, with which to provide bailouts to troubled euro-zone member states.
Along with the German chancellor, Angela Merkel, Mr. Schäuble has often taken a hard line toward the countries that have caused the crisis. In March, he told the mass-market newspaper Bild that it should be possible to eject countries from monetary union that are not able to get their budgets under control.
Such statements seem to be a response to widespread popular resentment in Germany at having to bail out Greece and Ireland. German reluctance to agree to aid measures has slowed European decision making and contributed to nervousness in the financial markets.
But recently German leaders have been trying to reaffirm their commitment to the euro. Guido Westerwelle, the foreign minister, said last week that Germany was determined to defend the euro and “anybody who wants to destroy the euro will realize that he cannot succeed.”
Erik F. Nielsen, chief European economist at Goldman Sachs, wrote in a note Sunday, “Whatever skepticism one might have had, one cannot doubt the political commitment to the European project.”
During an interview with Bild published Sunday, Mr. Schäuble reversed his earlier position on countries quitting the euro zone. “Even if only a small country were to leave, the consequences would be unforeseeable,” he said.
Referring to the bankruptcy of the U.S. investment bank Lehman Brothers in 2008 that nearly caused a global financial collapse, Mr. Schäuble said, “Let us not make the same mistake twice.”
In contrast to his earlier statements, which seemed to play to popular opinion, Mr. Schäuble, during the Bild interview, emphasized the benefits that Germany enjoyed because of the euro.
He said it angered him when “people who know better” called for a return to the Deutsche mark.
“Anyone who looks at the development of the German economy knows that our international integration is greater than any other economy,” Mr. Schäuble said. “Without the euro our own currency would experience a rise in value with negative consequences for exports.”
Bild, aimed at working-class readers and offering a heavy dose of scandal and sex, is Germany’s most widely read newspaper. It has often helped inflame taxpayer resentment at having to rescue other countries. German politicians often speak to the newspaper when they want to convey a message to the population at large.
Economists point out that Germany is one of the main beneficiaries of the euro. The euro has deprived countries like Italy of the option of devaluing their currencies to obtain a price advantage on world markets. German growth has been among the fastest in Europe this year, and unemployment has been falling.
Mr. Schäuble reiterated that Germany was opposed to issuance of bonds backed by all euro members, saying that countries with weaker financial discipline should be required to pay higher interest rates. Mr. Schäuble said, however, that he was opposed to the idea “under the present structure of the euro area,” leaving open the possibility that new rules for the euro zone might lead Germany to change its position.
On Friday, Mrs. Merkel and President Nicolas Sarkozy of France rejected calls to introduce bonds collectively backed by euro-zone countries. Prime Minister Jean-Claude Juncker of Luxembourg, who is head of the group of euro-zone finance ministers, is among politicians who have called for such bonds to be considered as a means of deterring speculators and protecting the euro.
Mr. Schäuble told Bild that younger people might not appreciate how much the European Union and the euro have contributed to peace since World War II.
“We must not squander the historic opportunity of a common Europe,” he said.
Wheres the will to create the industries and jobs from these so called "Great Statesman".The absolute silence of anything meaningful just shows they are sat on the gravy train getting paid while the western nations are destroyed through years of poor leadership and management.Anyone can drift off to conferences and sign treaties,asset strip,print money or slash budgets,where is the leadership to start the rebuilding ? People need jobs and a future,nations need a common purpose,wealth creation and self respect,short term fixes are coming apart fast.We cannot carry on with the same old career politicians they have failed before,are failing now and for the future.
"We cannot carry on with the same old career politicians they have failed before,are failing now and for the future."
Same can be said of the world's paradigm of globally integrated economic system. And This is why things are locking up. There's no clear path to stimulate growth because there isn't any path. It's now becoming obvious to everyone that the party cannot continue. All the tricks that we've been carrying on (doesn't matter what actors are involved) will no longer work. The game's up for the wealthy who live off of usury (when one figures that 2/3 of the world's population lives on $3/day or less that pretty much means that those that are posting here are, comparatively, "wealthy"). That's It! They're scrambling trying to figure out where to hide, but it won't be possible. Make-work jobs are meaningless; jobs focusing on local production for local use (esp food) is where the forces are pushing us: whether we like this or not is irrelevant (nature is now in charge).
isnt >90% of the inflation producing currency created over years-decades in the fractional reserve banking system?
600b-900b is the size of the snowball before it rolls downhill.
and replacing defaulted loans with fresh cash, while not changing the currency supply, is inflationary since asset prices still reflect original loan bid up exorbitance...credit...and dont normalize.
"The main obstacle to a stable and just world order is the United States. George Soros
They are workin on fixin that
Whatever the conspiracy matters not. None can alter the course of nature, and nature says that growth and stability don't mix.
People are free to whip their most disliked idealoges... but when you're done you'll find that the problem still exists.
Well ARRA is 92% complete:
http://www.recovery.gov/Pages/default.aspx
The stability in net tax receipts and the small increase was due in large part to ARRA. ARRA is coming to an end very soon.
What will take its place?
Perhaps this is why the econmy could be unsustainable. Temporary stimulus is by definition unsustainable. The tax cut extensions and other programs are largely a continuation of what we had as a base for FY2010. Ben's QE will not fill the ARRA gap, or any gap, other than monetization of debt.
So will we see ARRA2 in about 2 months? perhaps could be sooner if just a front for more state bailouts.
----------
We have a stimulus economy now. When removal of stimulus effects start to be significant, the obvious political approach would be to extend stimulus. They will extend until they run off the cliff.
Mark Beck
What are you going to do? Move to Sweden and risk being blown up by a competent jihadi? Enjoy your debt. We will soon change it to servitude for the common good. Much more palatable. The administration is perfectly correct in saying they are not selling this well. They must have forgotten my book.
The conventional wisdom is that this will not be seriously inflationary. No one knows however how x amount of monetization will lead to y amount of inflation. That is the reason to watch all the indicators closely. However the indicators also respond to speculative sentiment. Bernanke plans to look through any inflationay data for quite a while. If money is being destroyed faster than it is being created then we may not have a problem with debt monetization for a long time if ever. If we are going to be the world currency we have to solve Triffin's dilemma and if we are going to have to run a deficit we might as well monetize as much of it as we can. The problem is that there is no good data so everybody gets to wank around as to what 150 billion means in November. Everybody yell out your opinion on which way it will go, inflation, deflation, or muddle through, and place your bets accordingly. Also be sure to use asswipe, redneck, and other epithets as you see fit, and junk accordingly. Game on!
From a very old movie:
"Crossing this here ferry is 5 dollar Union or 35 dollar confederate." which is it?
Hong Kong up 200 points. Looks like the "Great Economic Collapse" has been staved off for another day.
No rate increase out of China........risk on.
Get the Irish vote passed Wednesday and its risk on.
FOMC Tuesday and lots of POMO.
On vacation.
what's one day in a lifetime, to a robot?
'the privateer' , must have of global economic perspectives and then some. i've been a subscriber for years and highly recommend it.
And it will continue to all go according to plan. Until, one day, it doesn't.
Sincerely hope I'm not around when that day happens.
Nikolai Dmyitriyevich Kondratieff. "They" don't get what is slowly happening. Eventually it will be a train wreck. The hereditary ruling class; nobility... will be crying. The middle class will "burn" the streets.
Like, duh! :-)
Stop your whining and buy Google. The Feds got ya covered.
By the way, China is on fire. Goog to 9,000,000/share
http://www.businessinsider.com/shanghai-composite-surging-after-inflatio...
Thanks for posting this, Tyler. When I saw those figures from Treasury last Friday, I thought that this must surely be a major media story. But I only saw one story on the website of the WSJ. This article eloquently explains why I am convinced that a catastrophe is inevitable!
It varies from country to country, but here are the basics.
1. The Government is an entity that collects taxes and organises resources that in individual cannot. For example, an individual cannot build an interstate freeway, but a goverment can.
2. A central bank is a for-profit corporation that accepts 'deposits' or 'investments' from individuals, and lends that money to debtors on the basis of risk and return. One of the central banks' debtors is the Government, and the lending rate (interest), is indicative of the likelihood of the Government paying the money back.
This (in theory) prevents the Government from printing more money than it could ever collect in taxes. If the Government does that, the money supply increases relative to the wealth and trade requirements, and as those involved in trade become aware of the disparity, they put up their prices to 'absorb' the excess supply of 'money' (do your research on Zimbabwe to see a perfect modern case study of this).
To prevent the Government printing excess money (or, in the US system, promisory notes), the central bank is supposed to regulate the money supply through interest rates, which unfortunately is a blunt weapon that has unintended side effects (such as asset bubbles/deflation).
Because of one particular side effect of interest rate intervention, i.e. mortgage defaults, the Fed is intervening in Government intransigence in exactly the opposite direction that it normally would when the Government is heading towards a default (i.e. when the pace of debt issuance outpaces tax receipts), because IF the Fed did what it was supposed to be doing, there would be economic armageddon in the housing market when the Option-A's and ARMs reset over the next 2 years (if the 10Y yield hit 5%, the default rate could go as high as 50%).
The USUAL process by which one gets inflation is through inflating the money supply, but in this case the Fed is 'evaporating' the debt, which is pushing down fixed income yields and devaluing the currency.
Short answer: The Charade must continue.
Slightly longer answer: Other parties (i.e. other central banks) are still purchasing treasuries, just not at the same rate as they once were, and the Fed is making up the shortfall (i.e. they are transferring the toxic debt from one balance sheet to another).
Even longer answer: The largest group of people in history started retiring this year. The money they will use for their retirement is tied up primarily in equity markets:401ks, pension plans,mutuals etc (yes, I know their is a fixed income component, but it is usually a 20-30% weighting of the fund). If equity markets drop, Baby Boomers get mad, and when Baby Boomers throw a tantrum, everyone else has to take it in the A$$ to keep them happy. So the nice USG and the Fed, and GS and the rest of the sharks are using treasury purchases to drive down yields on TBills and other fixed income instruments to force investors into equity markets, and keep the whole Baby Boomer retirement ponzi scheme going.
One cannot create wealth from cloth though, and the overall effect of what the USG and Fed are doing is to devalue the USD, which in turn affects commodity prices (all commodities are priced in USD), which eventually has a knock on effect with manufacturers/retailers and eventually the price consumers pay for basic goods and services, specifically; gasoline, clothing (cotton) and food (industrial agriculture is cost sensitive to oil prices).
So QE is MOST DEFINITELY inflationary, but not in the traditional way. Traditionally inflation comes from an inflating money supply (relative to wealth and trade), but QE is doing something unique in history (debt evaporation), but the EFFECT is the same. Prices of basic goods and services increase (i.e. inflation).
Excellent commentary. Thanks for taking the time to post it!
You are complicating a simple matter. Individuals do build roads because they are contracted by gov't. Gov't is a parasitic middleman.
You post paragraph after paragraph and you fail to mention the nature of central banking.
Here ya go:
http://www.youtube.com/watch?v=-oeqZVTCFzg
Try again.
Actually I was simplifying a complex matter. Given your complete lack of understanding of The Social Contract, The Commonwealth, The Balance of Powers, Social Organisation, The Power Relationship it would probably be useless to 'try again' as you are probably a deluded Randian.
Government has always been a protection racket. Modern government differs only in the Balance of Powers between the Government (which represents violence), the Monetary System (which consists of investment and trade and which generates the wealth that is collected by the Government), and the Belief System (which until recently was wholly religious, but now incorporates social philosophy, 'patriotism' and other propaganda).
It is no special revelation that money is issued as debt. It is intended that way to balance the excess of Government with the greed of the debt issuers (the depositors of the central bank).
Sorry, what was your point?
LOL.
FAIL.
Wish I could have stopped you back at your attempted ad hominem.
The central bank is the problem. That is the problem with your paradigm.
I watched Austin Goolsbee (Obama economic advisor) on meet the press this morning. He stated that it was almost impossible to address the deficit while we are in a low growth environment and continued deficit spending was necessary. I thought this statement was odd and almost hypocritical based on what the Washington based IMF is advising debtor nations. The IMF is making all their loans contingent on austerity measures or in other words cutting spending. For example, it’s estimated Greece’s GDP will drop by 3 percent as a result of extreme deficit cutting and raising taxes. However, the IMF believes this is required to allow Greece to return to sound economic footing and long term health. Our country is by far the biggest contributor to the IMF which is ironic since we are borrowing the money to donate to the IMF to bail out other countries. Sounds like a classic Ponzi schemes.
BINGO!
Only our massive military and police state keeps reason at bay.
In a Ponzi, a level extracts wealth from the subsequent levels. The US is level 0 and extracts wealth from all the other levels.
Greece is in the middle m and extracts wealth from m+1 levels. (Remember when Paul commented on Greece joining the IMF effort to bail out the world?)
To know when the Ponzi start to shatter, people have to keep one eye on the base. Quite easy to determine as they dont send their debt to fund the IMF.
When they are out, the Ponzi will shake.
Also, true to the nature of Ponzi, plans to extract wealth get harsher and harsher when you go down the ladder.
There will be no austerity plan on the US. Greece and Ireland got midly harsh austerity plans. People at the base get the harshest version as it is where all the upper levels extract wealth from.
http://www.reuters.com/article/idUSTRE6BB1EN20101213?utm_source=feedburn...
A fairly honest article. Wouldn't get something like this from BOOMberg...
REDNECK:
"And it's also waiting to be used against more write-downs, which will be taken at the appropriate time. "
The appropriate time being never, then. The banks are INSOLVENT. Even you should realize this.
To answer your question: Deflation is the threat most people, including you probably, are worried about. The deflationary pressures of the credit crisis are still here with us. Benny will have to print a whole lot more to create inflation. Probably around 5-6 trillion more. But you see, credit creation is not, contrary to popular opinion, due to fed actions alone. Read some Steve Keen and open your eyes. This means that Bernankes assessment of '15 minute control' is not accurate.
Measures taken to combat this deflationary pressures are what many ZH readers worry about. I am worried about this too, as it appears to me that "the masters of the universe" very often don't have a fucking clue what they are doing and often act on political imperatives (i.e. we have to do something). I recommend you check out Ben Bernankes track record of predictions if you have doubts that he can make bad calls. As a consequence he can also fuck up on a grand scale.
Ben Bernanke is not the devil. Nor has he created this mess on his own. But his actions may have consequences that we may not see fully today. Will we see inflation spiral out of control in the future? Maybe not. Is Ben Bernanke 100% in control? Certainly not. What actually happens depends on the political will to print (if it stays there, the printing will continue and asset prices will rise, if it doesn't deflation will take hold again). The impact on the real economy from QE is questionable, e.g w reg to job creation. Instead of having a superficial debate on why here, I refer you to www.hussmanfunds.com. Feel free to post a rebuttal to Hussmans reasoning here, and show us why it works.
wrong as usual
if QE2 is not inflationary then why are the POMOs causing stocks and commods to go up in price over time. Aren't the banks using the POMO cash to speculate on stocks and commodities? Isn't that inflationary?