Doubling Down To (DXY) Zero: Has The Fed, In Its Stealthy Synthetic Bet To Keep Long-Term Yields Low, Become The Next AIG?

Tyler Durden's picture

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
The Real Fake Economy's picture

i've been saying this for years and people usually look at me funny when I tell them that the technology just wasn't there then. 

redpill's picture

One man's SheepDog is another man's Wolf.

Any time a meathead proclaims there are only 3 ways to live, it becomes evident that it is they that are the lamb being led to slaughter.


TruthInSunshine's picture

Tyler, I've never asked before and probably never will again, but this article is the best yet published on ZeroHedge (and quite possibly, anywhere else), so could we delete the bullshit rambling, War-And-Peace challenging expose on things not related to ANYTHING in this  MOST EXCELLENT article by cooter?



by CrazyCooter
on Sat, 04/16/2011 - 20:02


Most folks wouldn't understand the moniker. I think SheepDog-One has the same play.

I would venture a guess this would probably nail it down.





By LTC (RET) Dave Grossman, RAN

savagegoose's picture

i prefer the assholes , dicks and pussies speech.

TaxSlave's picture

Way to hijack the thread with frivolous bullshit.

All this poetic romanticizing about dogs does a pretty poor job of covering up the real issue:  What you're dealing with is weaponized human parasites.  And that's what the article is about. 

By the way, look who killed the most humans in history.  That's right, your god-damned slave-to-the-state sheepdogs.

theopco's picture

Actually the Sheepdogs don't protect the herd against wolves, the Rams do. The sheepdogs bring the herd home so that the Shepard can feast on their flesh without too much fuss.


Take your authoritarian garbage back to Stalingrad, Comrade.

whatsinaname's picture

Well the counterparties will be Bank of America & Citigroup, the proverbial lambs for slaughter that will be nationalized. And of course, they can take all the risk they want since MTM does not exist !!

velobabe's picture

i thought perhaps cheeks wrote this article. i couldn't understand nor interested in any of it's content. just sayin†

Alexandre Stavisky's picture


The merchants of the earth shall weep and mourn over her; for no man buyeth their merchandise any more.  And the fruits that thy soul lusted after are departed from thee, and all things which were dainty and goodly are departed from thee, and thou shalt find them no more at all.

The merchants of these things, which were made rich by her, shall stand afar off for the fear of her torment, weeping and wailing,

And saying, Alas, alas that great city, that was clothed in fine linen, and purple, and scarlet, and decked with gold, and precious stones, and pearls!

For in ONE HOUR so great riches is come to nought

for thy merchants were the great men of the earth; for by thy sorceries were all nations deceived.--Revelations


Despite the warning death knell of October 2008, investing dogs will return to their vomit until the ultimate dislocation where men will be parted from their riches and expectations of riches IN ONE HOUR.

ZeroMargin's picture

Yen Cross please log out of Zero Hedge and post your comment in Zero Brains

ZeroMargin's picture

Yen Cross please log out of Zero Hedge and goto Zero Brains

Yen Cross's picture

All auctions. 2's 5's 7's 10's ect...

cossack55's picture

Amazing how the goofs in the FED think they run the freakin world. Up jumped the monkey is gonna slap these bitchezz down, soon I hope. Could be EMP solar flare, ignition of the entire ring of fire (developing), 9.4 EQ somewhere important, hurricane (see NOAA projections), Icelandic volcanism, exporting Icelandic libertarianism, The Kingdom going down, terror (cia) events, etc.,etc.  The sooner the bloody better.

magpie's picture

Chinese Volcker ? EuroÜberBernank ?

flattrader's picture

The above is what makes ZH worth reading.

Now, if it were only a NO screaming at the rain, psycho-babble, pointless fear mongering ZONE.

Good work Tyler(s).

The Aviator's picture

Which means the taxpayers will bail out the Fed, just like AIG.
Take out your taxpayer frustrations on The Bernank..

Play Punt The Bernank!

Yen Cross's picture

That was awesome! (Punt the Bernanke) A game needs to be created around that. It needs a rugby slant. No helmets!

TruthInSunshine's picture
by The Aviator
on Sat, 04/16/2011 - 16:54

Which means the taxpayers will bail out the Fed, just like AIG.
Take out your taxpayer frustrations on The Bernank..

Play Punt The Bernank!


No they won't.

If even 5% of the positions spoken of are real (Federal Reserve selling derivatives on Treasuries), they will get taken on the wrong side of the trade sooner or later, and the U.S. taxpayer won't have the bones to make good on the Fed's All-Time-Greatest-Brain-Fart.

You think U.S. taxpayers are insolvent now? Buddy, the U.S. Government has to spend 1.44 for every dollar it takes in to pay for SNAP (foodstamp), Medicare, Social Security, Militatry-Industrial Payola, Interest on the National Debt - NOW.

Wait until we see the figure in 2020, Obama & Boehner's Unicorns & Skittles Bullshit on 'deficit' reduction notwithstanding.

One last thing - it's not just the USD. In the fantastically ugly pageant about to unfold, maybe 2% of national fiat will thrive, while the rest will crash and burn in epic flame piles.


The only chance the U.S. and other high level deficit-to-GDP profilerator nations have to save their fiat from epic fail is to LITERALLY cut spending in ranges from 25% to 50%, and that's just not going to happen excepting maybe all out nuclear war or a massive comet impacting the Pacific Ocean soon.

Yen Cross's picture

Hey give the guy a chance! Are they doing BooB Jobs or replacing LEFT NUTS?

ZeroPower's picture

This will take some time to digest... so let's see, AIG was a counterparty to Lehman's CDSs, and the Fed bailed them out thanks to GS having the other side of the trade.

Who will bail out the Fed when the next Lehman comes along with even more exposure to other entities? Just how much can Bernanks helicopter drop?

equity_momo's picture

Gold gets revalued to 7k ,give or take a few k, and taxpayers suck on higher taxes and a generally worse standard of living. Seriously , when do you honestly expect a critical mass of morons to work out whats going to say "no mas"   ?

 We're done , put a fork in us.  Prepare accordingly and dont expect society to ever do the right thing.

Dejean Splicer's picture

The day that gold gets 'revalued' is the day the Fed goes poof, is the day that the vacuum caused by the lack of FED brings the neo-con slim out of the woodwork trying to slither into the vacuum so AIPAC can finally have complete control of the reins.

Gold, a suckers bet. Find your store of wealth elsewhere.

CrazyCooter's picture

So ... you logic is that the "American Israel Public Affairs Committee" will take over and therefore gold is foolish?

I think history will tend to disagree with you in the end.

Oh, and you are an idiot.



Dejean Splicer's picture

Why are the gold bugs such an emotional group?

Whoever grabs the reins will have a very captive audience, (sheep-dog-one told me so). A new plastic currency will flourish and the NWO Dream will replace the American dream.

Get it? Hope so. Fiat is here to stay. This is not my wish, rather the happenings of a captured populous.

Much love to you CrazyCooter.

Bringin It's picture

I have news for you.  You're one step behind the dance.  AIPAC et. al.  already took over.

sun tzu's picture

why are paperbugs so emotional and stupid?

45north's picture

well at least I don't wear a paper bag over my head


great article "Doubling Down to Zero"


makes me think that the FED has adopted a belief in the Messiah, a belief that's puts an absolute trust in the Lord, a belief that is proclaimed from the roof tops.  I had expected a more secular tone.

mojine's picture

"Populous" is an adjective. The word you want is "populace".

TruthInSunshine's picture

Unless something drastic changes on an global basis, with heavily indebted developed nations exponentionally increasing deficit spending and debt levels (with a few exceptions such as in the case where domestic populations are dying off at a rate of 2-1 for newly born or more, which is quite exceedingly rare), gold will be fairly priced in the 28,000 to 52,000 USD per ounce range within a decade.

Will gold get that high, or will it crash? It's anyone's guess based on unforeseeable events.

Do you feel like a prophet?

Lots of things can prop gold to astonomical levels or crash it. The roadside of history is littered with examples.

wisefool's picture

with heavily indebted developed nations exponentionally increasing deficit spending and debt levels

Nations are in debt to exactly who? I garentee that mumar and prince william are singing willie neslon songs tonight with some QE2 towells wrapped around thier heads like a proper sultan. The Japan ituation shows that they ow debt to themselves.


Yen Cross's picture

Do you understand why PBOC is allowing the YUAN to appreciate?

carbonmutant's picture

 Not much choice in the face of a falling dollar.

If this continues the parasitic Yuan may have to find a new host.

Yen Cross's picture

China is an Export economy. A soft Yuan works well when commodities are cheap. Commodites are priced in USD. Chinas input costs are reduced,(with a stronger yuan) and they can tighten internal demand at the same time. This allows the banking system to opt out of  raising short term rates, which drives demand from off shore for the higher interest on investment. They( PBOC) can also adjust reserve requirements from lenders, but that just fudge packs everything. Remember 3t is useless when it's not spendable.

High Plains Drifter's picture

they want a middle class in china but the middle class here is being destroyed. is it possible that every family in china will one day, live the american chinese dream or will they too have to be asleep to acquire it.....?

Yen Cross's picture

You know I respect you. A middle Ghost class in China?

Diogenes's picture

Everyone knows the US abandoned its working class years ago and the Chinese are the new American working class. What they did not realise was that the middle class would soon follow, then the upper class.

Just like when Japan took over the electronics, motorcycle, car, and other manufacturing industries. The US said let them have those grubby factories, we will have the nice clean banks and insurance companies. But in a few years the biggest banks and insurance companies were Japanese because they had all the money.

SWRichmond's picture

Ben will be the fall guy.  Someone will get rich off of this, but it won't be Ben. 

The goldbugs have always speculated that, when it was time for the fiat regime to die, all of the bad debt would be stuffed into one bank and that bank would be allowed to fail.  The final "Good Bank / Bad Bank" event.  I've always hoped it would be JPM.  I Still doubt it would be the Fed, unless the aftergame was to blame it on the Fed's inability to manage the entire globe and use that as an excuse to bring in "World Bank 1.0."  I can't envision a scenario where the central banking model is allowed to die.

Then again, the tax payers will take the hit for the fall of the Fed anyway...

carbonmutant's picture

You guys are responding too fast.

I was trying to edit the post.

equity_momo's picture

SW ,  the Fed could fail and die and World_Bank_1.0 could still be created , no? Seems like an obvious logic given the political system we have......past failure has never been a hindrance to idiots reinventing themselves.   Afterall , JPM et al own the Fed : kill yourself or kill your first born? I suspect Wall St are going to go all King Herod on the Fed. How ironic.

newworldorder's picture

We are all focused on what the FED does and how it does it that we forget what the FED is.

The FED can not fail. They are the "martians from outer space" that are credibly able to backstop all other central banks and by extension the worlds financial system. If not space aliens "Benny and the Jets" qualifies as the the ultimate man behind the curtain - "the great oz."

Without the FED planetary financial life as we know it simply stops. For that reason only - World financial leaders have accepted it for what it is and will not speak against it or pursue its dissolution.

steve from virginia's picture

Interesting article with enough backup info to give it credibility.

It sez the Fed is insolvent, like nobody suspects.

It also doesn't matter since the Fed can act with impunity. It doesn't now because the usual central banking games are more or less working. By selling puts the Fed appears to operate within a circumscribed set of rules which it made up in the first place. If it gets into hot water it will change the rules. Keep in mind, most of Bernanke's put buyers are likely overseas, dependent upon him for liquidity 'when needed' (now?). It's a comfortable situation for the Fed; its clients will keep their mouths shut about their losing interest rate trades b/c the alternative is oblivion for them.

This is more deflation risk being offloaded. Bennie has been renting inflation to China and deflation to ??? Germany? Their banks suck and nobody would know about any excess risk they might carry 'off the books'.

This derivatives story is not new: it followed Larry Summers into the Clinton ambit and John Hussman has written about it periodically. I suspect a lot of so- called finance innovations have been sponsored by the Fed or pimped by them. The Fed cheats, get over it, already!

One thing to keep in mind: if the Bernank wasn't pouring reserves into the banking system we would all be suffering from accelerating deflation. Long rates would be super low ... 'Who will Care?' when business activity falls off the cliff and stock markets probe the depths toward zero.

Be careful of what you wish for: deflation renders Bernank's problems insignificant; the Fed's cries of pain unheard behind the generalized cacaphony of collapsing finance. And this will indeed happen there is no other way around it b/c the energy necessary to propel industrial growth/debt service has already been lost forever out of idiots' tailpipes in their mindless orbit of the world's 7-Elevens.

Make money trading or drive a car, that is the choice.

Dan Alter's picture

The Fed personnel are not "martians from outer space", but just another group of 'John Laws' (1718-1720 France and the Mississippi bubble) who think they can kite checks. Law had a fast horse and died in Italy. Bernanke does not have a fast horse or anywhere to go.

My God, they are selling puts on their own 30 year paper, and they actually say in a paper that if the rest of us find out, there will be hell to pay. How could they think that us finding out would be an if, not an absolute certainty. What's a few tens of trillions between friends. 

Greedy and stupid is as stupid and greedy does.