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Goldman Fires The Second Shot Across The QE3 Bow: "Successful Fiscal Consolidation Needs Monetary Policy Help"
Yesterday, when we presented the Bloomberg interview of Princeton economist and former Fed vice chairman Alan Blinder, we speculated that his statement that "more easing is necessary" was the first shot across the QE3 bow. Today, Goldman's Sven Jari Stehn has fired the second one in a paper just released titled: "Fiscal Adjustment without Fed Easing: A Tall Order" in which he basically takes our conclusion from the Blinder interview to the next level. As Blinder said previously, in order to improve the once again deteriorating labor picture, more fiscal stimulus would be necessary. That, however, is impossible, especially in a Congress where everyone is now promising $4 trillion of deficit cuts over the next few years. The only difference is how this cutting will be achieved: republicans want spending cuts, while democrats are demanding tax hikes for the richest. While neither approach will work in the US without the shock of a bond-crash induced austerity, Goldman conducts an thought experiment in which it evaluates the effectiveness of a tax-based and a spending-based fiscal consolidation. While finding that on average spending based deficit reduction is more effective, it only truly works in parallel with assistance from monetary policy: be it an interest rate decrease (impossible due to ZIRP) or further Large Scale Asset Purchase (QE) program. In other words, the only thing that can prevent an economic contraction in the next 2 years of semi-austerity, will be more monetary easing.
Furthermore, Goldman also openly admits that in either fiscal case, the drag on economic growth will be substantial. "A number of studies have shown that adjustments focused primarily on spending cuts (“spending-based consolidations”) tend to be notably more successful at delivering such large consolidations than revenue-based ones. Building on work done by the IMF, we identify two reasons for this difference. First, spending-based consolidations are usually more persistent, as they are often combined with structural reforms. Second, spending cuts tend to be less damaging for growth than tax increases...A key factor behind this difference in success, however, is the response of monetary policy. While spending-based adjustments are typically accompanied by monetary easing, tax-based ones often see monetary tightening. Using a counterfactual experiment which “shuts down” the interest rate response, we show that the difference in growth damage between spending and tax-based adjustments narrows sharply..With the funds rate close to zero, our analysis implies that both spending and tax-based consolidations are likely to act as a significant drag on growth. Nonetheless, spending-based adjustments might still be the lesser of two evils, particularly if combined with entitlement reform and fiscal rules that come with a strong enforcement mechanism." Translation: the economy will slow materially regardless, but without monetary easing it will crash. Next up: cue an enjoinder by the New Jersey installment of the Ivy League, and the balance of Wall Street, all of whom realize that their bonuses are suddenly at steak.
We said yesterday that "we believe that with this the opening salvo for more cash demands, which will be met with staunch opposition in D.C., thereby kicking the ball back to the Fed (which already is doing everything in its power to deflate all commodities as rapidly as possible - a trend which will sooner or alter engulf risk assets as well) the only alternative is monetary. Aka more quantitative easing. And when that becomes apparent, and when Goldman's Jan Hatzius is firmly on board, the full court press for another round of easing can begin." Well, Goldman just got on board. Look for the cries for more monetary intervention courtesy of a Congress which can't make up its mind about a debt ceiling hike for 4 months to escalate over the next 2-3 months as the economic reality turns aggressively south. At that point the Chairman will be faced with a daily barrage of "experts" who are screaming "deflation... or printing." We have a guess which one Ben will chose.
From Sven Jari Stehn of Goldman Sachs
I. Fiscal Adjustment without Fed Easing: A Tall Order
The US needs a very large fiscal consolidation as we expect a primary (ex-interest) deficit of 7.7% of GDP this year. Stabilizing the debt stock eventually requires the primary budget to be close to balance. Although some of this deficit is cyclical, the structural deficit (defined here as the primary deficit adjusted for the cycle and one-off accounting changes) currently stands at 6% of GDP. Moreover, this is the very minimum adjustment needed as stabilizing the debt stock at current levels—or even returning the debt ratio to pre-crisis ratios—would require a much larger fiscal consolidation.
Ingredients for a Successful Consolidation
A number of studies—going back to Alberto Alesina and Roberto Perotti in 1995—have identified factors that determine the “success” of a fiscal consolidation, which is typically defined as a sizable and lasting reduction of the deficit or debt ratio.
The key result of these studies is that spending-based consolidations tend to be much more successful than revenue-based ones. There are two suggested reasons for this result. First, these studies argue that spendingbased consolidations are usually more persistent because they are often accompanied by structural reforms. Also, spending-based adjustments tend to be politically more difficult and thus signal stronger commitment to continued fiscal consolidation than tax increases. Second, these studies find that spendingbased adjustments are less detrimental to growth—and indeed can boost growth. The better growth outcome eases the consolidation burden both directly (through higher tax revenues) and indirectly (because it makes it easier to sustain the adjustment).
Recent work by the IMF, however, suggests that these conclusions should be re-examined. First, the IMF has shown that all consolidations—whether spending or revenue-based—tend to act as a drag on growth when we look at intended consolidations (or consolidation efforts) directly instead of the resulting changes to the structural deficit. In particular, the IMF argues that existing studies “stack the deck” against finding significant adverse growth effects. By using the cyclically-adjusted budget deficit to identify fiscal consolidations, the earlier studies include episodes that were not genuine periods of adjustment but rather one-off accounting changes. Moreover, even when such one-offs are removed, the change in the structural budget deficit is often a poor proxy for deliberate changes in fiscal policy because it fails to detect attempted fiscal adjustments that result in sharp downturns and are therefore reversed quickly. Second, the IMF study suggests that monetary policy plays an important role in shaping the consequences of fiscal adjustment. Specifically, spending-based adjustments have a less detrimental growth effect than tax-based adjustments because they are, on average, accompanied by monetary easing while tax-based adjustments usually see monetary tightening. This suggests that the success of a consolidation in reducing the deficit or debt ratio might depend importantly on the monetary policy response.
Finally, the new IMF dataset allows us to explore to what extent intended adjustments actually result in expost improvements in the fiscal situation. That is, the dataset enables us to take into account that a consolidation attempt might have been so badly designed or implemented that
Spending Adjustments Are More Successful...
In an initial look at the IMF data, we organize the dataset into consolidation episodes. Specifically, we define a consolidation period as one in which policymakers intend to consolidate by at least 1% of GDP in the first and last periods. This definition produces 29 episodes of consolidation.
We then split these episodes into the five consolidations that produced the largest and smallest improvements in the primary balance. Exhibit 1 shows how effort and success vary across those two groups. Exhibit 2 lists details of these episodes. The two exhibits offer a number of interesting insights.
First, the required US adjustment is comparable only to the largest three consolidations in the dataset. Only Denmark starting in 1984, Sweden in 1993 and Ireland in 1982 have achieved consolidations in excess of 9% of GDP. Moreover, the most successful efforts were much more persistent than the unsuccessful ones (6 years on average versus 1 year).
Second, there is notable slippage between the adjustment effort and the actual improvement in the primary balance. During the least successful consolidations, the average adjustment effort (an average 1.5% of GDP) resulted in no improvement in the primary balance (Exhibit 1). But even for successful consolidations, the average adjustment effort (13.1% of GDP) was quite a bit larger than the reduction in the primary deficit (8.9% of GDP). One source of slippage is that the consolidation effort is only partially passed through into improvements in the structural deficit—most likely because some consolidation efforts were aborted before the fiscal outlook actually improved (e.g. Japan in 1997).
Another reason for slippage is the effect of the consolidation effort on growth, as discussed below.
Second, the exhibits confirm earlier studies that successful consolidations rely much more on spending reductions (around 72% of the adjustment) than unsuccessful ones (37%).
Finally, we see that the most successful consolidations, on average, saw no decline in growth while the least successful ones experienced a sharp 2.7 percentage point (pt) drop. At the same time, however, the top adjustments were accompanied by notably more monetary easing than the failures. During successful consolidations policy rates fell, on average, by 5.5pts while they only declined by 1.1pts during the least successful consolidations.
… Mostly Due to Monetary Policy
Given this very different response of monetary policy, we now explore the extent to which this drives the differences in success. To do so, we estimate a statistical model for the 15 countries between 1980 and 2009 that explains the joint dynamics of the IMF’s measure of intended consolidations, real GDP, the primary balance and the monetary policy rate. Once estimated, we use the model to trace out the effects of an intended consolidation on growth, the primary balance and the policy rate. To distinguish between the effects of spending and tax-based consolidations we estimate two additional models and plot the results alongside the average consolidation.
Exhibit 3 shows how the primary balance, on average, responds to an intended fiscal consolidation. Consistent with the evidence above, our estimates imply that a 1% of GDP consolidation effort typically improves the primary budget by only half that amount. Moreover, Exhibit 3 confirms that spending-based adjustments tend to be notably more successful in raising the budget surplus than tax-based ones. The reason is twofold. First, spending-based consolidation efforts tend to be sustained for longer than tax-based ones. Specifically, a 1% of GDP spending adjustment effort is usually followed by an additional spending cut effort of 0.4% in the year after, while a comparable revenue adjustment is only followed up with another 0.1% of GDP tax raise. As a result, spending-based adjustments raise the structural balance by almost twice as much after five years than tax-based adjustments (not shown).
Second, spending-based adjustments are less damaging for growth (Exhibit 4). Consistent with the IMF study we find that a 1% of GDP consolidation effort, on average, reduces real GDP by around ½% after two years. The composition of the adjustment, however, matters crucially: the GDP hit is much larger for tax-based consolidations (around 1½%) than spending-based ones (¼%).
A notable difference between spending and tax-based adjustments, however, is the response of monetary policy (Exhibit 5). The former are accompanied by monetary easing, while tax-based adjustments typically see monetary tightening in the first year (followed by some easing in the second year). The IMF shows that the initial monetary tightening is driven by interest rate hikes in response to indirect tax increases. A likely explanation is that central banks are worried about second-round inflation effects from increases in indirect taxes.
Consolidating Without Monetary Policy
Taken at face value, these results suggest that spending cuts are an overwhelmingly more attractive option than tax increases: they tend to be more persistent and less damaging to growth (although they don’t raise growth as suggested by some previous studies). Applying this conclusion to the required US adjustment, however, would be naïve because the above results likely overstate the success that can be expected from spending-based adjustments relative to tax-based ones in the current environment. With the funds rate close to the zero lower bound, a spendingbased adjustment could not be accompanied by monetary easing unless the Fed decided to adopt another asset purchase program (which we think is highly unlikely). Moreover, the Fed would most likely see through any indirect tax increases—were they to occur—and probably not raise interest rates in response to a revenue-based consolidation.
In a counterfactual analysis we therefore attempt to “shut down” the interest rate response to get a better sense of the implications of the choices the US currently faces. Such an experiment is fraught with difficulty as it requires an estimate of how changes in the policy rate affect output and the budget deficit. To obtain such an estimate we proceed in two steps. First, we use quarterly data to estimate the effect of shocks to monetary policy on growth and the primary pioneered by David and Christina Romer. Second, we transform these estimates into annual data and apply them to the cross-country results above to construct the “no monetary policy” scenario. Given these steps, the uncertainty surrounding the resulting simulation is substantial. Moreover, allowing no monetary policy response is an extreme assumption as Fed officials could adopt additional unconventional policy steps to support a spending-based adjustment if they chose to do so.
With this in mind, Exhibits 6 and 7 suggest that the difference in success between spending and tax-based adjustments is less pronounced when there is no monetary policy response. In particular, the hit to GDP is now more similar during the first two years, at 1-1½% for tax and spending-based adjustments. After the second year, however, spending-based adjustments are still quite a bit less damaging to growth. As a result, the achieved improvement in the primary balance is now also more similar across spending and tax-based adjustments during the first two years. A 1% of GDP consolidation effort now improves the primary deficit ratio by half that amount after two years regardless of the composition. Spending adjustments, however, remain more effective at reducing the deficit persistently.
Spending Cuts are No Panacea, but Necessary
Our analysis implies that even spending-based adjustments are likely to be challenging in the current environment. This is because without a monetary response, both spending and tax-based consolidations are likely to act as a sizable drag on growth.
That said, our analysis suggests that spending-based adjustments are nonetheless likely to be the lesser of two evils. First, the difference in growth damage between spending and tax-based consolidations narrows sharply without monetary policy but remains noticeable three or more years after the start of the adjustment. Second, spending adjustments tend to lead to more persistent deficit reductions than tax increases. This is probably because such consolidations often involve entitlement reform and not just one-off reductions in discretionary outlays. More broadly, this highlights the desirability of multiyear fiscal rules that come with a strong enforcement mechanism.
Meanwhile, barring another round of asset purchases, the best the Fed can do is keep monetary policy on hold to cushion the growth drag from the fiscal consolidation—independently of whether it comes through adjustments in spending, revenue or both. As a result, the looming fiscal adjustment should reasonably be expected to see policy rates—and probably longer-term rates too—at lower than normal levels for an extended period.
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Nice juxtaposition, that went from this to this
The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth becomes the greatest enemy of the State.-- Dr. Joseph Goebbels, Nazi Propaganda Minister
Strange how such statements directly follow each other out of nowhere, right after the market was "helped" to tank...... surely a coincidence and not the product of coordination. No conspiracy to see here.
It's the same thing as when a heroin addict suddenly realizes how painful it is that they decided to quit and that they must go on every minute of every day without heroin until they die.
I know how to save money. They could find the leader of the afghanistan army and kill him. Then he'll suicide bomb other afghanistans.
I mean we killed bin laden and just yesterday alqaeda went and blew up 80 pakistanis. If we can get afghanistan all revengeful like that we could win the war.
Cut the government spending by 50% AT LEAST
We need a MASSIVE deflationary episode to get back to organic growth. The fact is, printing money, and borrowing beyond our ability to produce is not sustainable.
I don't know how else to say it.
Can anyone make a point for infinite borrowing, and infinite money printing being a viable alternative?
I can (should i make this my election campaign slogan?):
1. I can kick the can and get out of dodge when the consequences kick in.
2. Money in the usual sense, does not apply to me.
3. Modern economics say it's the numbers that matter, not the practical consequences.
4. It's easier.
5. If i would do it, i will get lynched or assassinated. So, better let that happen to my successors.
Or in short, if you're an <long series of evil words here> it makes sense, similiar to being an asshole makes sense if you like being an asshole. You're assuming they want to be <long series of good words here>. They don't.
"The fact is, printing money, and borrowing beyond our ability to produce is not sustainable."
Sure it is, if you can continue to steal from the productive.
the next stimulus/qe will surprise very few at zh.
Missing Link nailed it last post. Game, Set, Match, and for .gov someone will be dinner. Do not fight fiat's history. Hits "flesh" are already started in house at the USDA albeit slowly. The Beast's minions are chewing its fingernails on who looks tasty. As the taxpayer are being exterminated the Leviathan's agents will thrash and devour any in its path. It has no soul until it finds it since capital is firmly sidelined as Junior Senators convey stop picking winners and loser's. Easy money, or Structural survival. Choose.
If they have room to consolidate, so be since revision to the mean is reality anyway.
Who will blink first on this monster come fall in the cradle of morality? http://af.reuters.com/article/investingNews/idAFJOE74A0JI20110511
Preparation must be in order.
http://www.worldbank.org/foodcrisis/bankinitiatives.htm
Nothing is new under the sun and we will survive!
Listen to The Mighty Sparrow's blast:
http://www.youtube.com/watch?v=hVsYlv9Plog&feature=related
Now ain't dem purddy bankster words....
Fuck Off you pieces of trash Goldmanites.
The world would be better off without each and every one of you's.
Fuck the Banker....
Vote with your trash...and turn it to cash(gold and silver)
Fuck you Rothschilds agents.
Wall Street's bankster can't bear the thought that their suggar daddy is going to stop fertilizing their money tree, and that their Pollyanna party is going to come to screeching halt.
Blinder said previously, in order to improve the once again deteriorating labor picture, more fiscal stimulus would be necessary.
And this Guy/creature of the Rothschilds,is educated...???
You dipshit go cry on twitter. Post something that adds useful information to the article or an interesting trade idea or shut the hell up.
I fear for Ron Paul's life.
I don't. The reason being is that he has had a long and apparently fruitful life, and he can rest without a guilty conscience. Sure, it is possible that he may be murdered, but I find it unlikely. And, even if he was, his entire purpose and goal of spreading ideas (liberty, Austrianism, and personal accountability) has been a great success. Sure, his son worried me during his campaign, but since his election he has shown that he is very much influenced by his father. Ron is quite old, but his son is quite young. While they may be able to pull an old "heart attack" ruse on the public with Ron, I don't think that they can bring out the old "Kennedy brothers" concept out in today's world (esp. not with the internet and cellphone cameras everywhere).
I think that Ron will be ok, even if he does get elected (remember, people thought that Obama wouldn't live to see a year in his term). The reason being is that by killing him, the government would only reach its demise all that much sooner. They know this, I know this, and everybody else knows this. The best that they can do is attempt to marginalize him in the press (which, they will be doing in spades). But, I don't think that it will work this time. Sure, I love Ron, and he helped to introduce me to liberty, the constitution, and Austrian economics when I was a young sailor in the Nav. But, I think that it will more be his message of liberty that we remember, rather than actually winning any election (presidential or congressional).
But, that is all that he hoped for in the first place, to spread the ideas of liberty. In that, he has been a beaming success.
oh, please. the guy's got a snowball's chance in a supernova of making an effectual difference in any policy of significance.
What has changed since he was appointed chair of the financial subcommittee?
all bark, no bite.
Policy is quite different from the perception of the public, don't you think?
The Major banks sure need some fresh cash if they are to continue to support half of the Treasurie market and also pay off their faulty loans, and if they do not get it, then they can always crash the markets. Who will blame Blankfein/Dimon when people can blame Bernanke? Bankers are business people, and the mystic surrounding the Federal Reserve is that it is a n institution made to benefit the people of the country where the money is facilitated. If he does not give them what they want, and that is easy money, he will find out the difference between economics and finannce. Economics is a psuedo-science that is practiced only in theory, whereas finance is the mafioso way of making a buck. Then if Bernanke does not do as he is told, Krugman will say, 'I told you we needed more money.' So we do another round of QE and everyone is happy.
Everyone except the 25% unemployed, who have found out the hard way that you can not print jobs, but what do they matter? The unemployed do not contribute to campaigns. The unemployed don't even vote. Let them have their food stamps so to have their cake! Quantitative easing or bust!
I should tell you that economics accounts for the "mafioso" way of financial markets. While finance has become a great proportion of our current society, only economics can describe the consequences of such. Personally, I don't think of Krugman as an economist, I think of him as an asshole with "intellistensia" clout and a big platform (the NYT). In any case, it is clear that he doesn't understand economics, and that the science has been suffering due to his influence.
Don't discount an entire science of reason due to the unreasoned influence of the current propriety. Logic is the "science of sciences" for a reason. And, it most certainly isn't due to some asshole that has a soapbox to stand on. Anything that ends in "ics" or "ology" tends to be a science, and they only have those descriptive endings in their name because they hail from the science of logic ("logy", or "ic"). Since human reason is what defines all human action and thought, you cannot discount the sciences of such.
I understand that logic stands alone. The study of eco-nom-ics is silly, as it accounts for nothing ecological. Nothing. Put the earth on a pedestal, and then write a new, um, science. And by the way, this is the reason that Nobel does not honor ecomics as a science, because it is not. At least, not yet.
The economy is a human construct (just as anything else in human perception), and thus must necessarily be of human reason. The study of human reason (logic and epistemology) is all that is required to understand how humans interact with each other, as well as the physical constructs that surround them, and make use of.
Economics is not the study of physical things, rather it is the study of the logical implications of human interaction with those physical things (and, other people), and the reasoned deductions of such. You say that economics is not a science, but what is science but human perception of the physical world that surrounds us?
What science is not based in human perception? Does there exist any science in the truly objective sphere? No, I say that all science is the result of our reason and our perception, and economics is not any different in this context.
By the way, economics is a science, it belongs to the many social sciences (maybe you've heard of them). From my observations, I don't think that the Nobel Prize is the final word in human perception of the world (even though the prize for economics is explicate in naming it the "Prize in Economic Sciences"). But, hey. Maybe, when they said "sciences" they really meant to say "arts".
"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance."
— -Murray N. Rothbard
Economics understands all people to be rational and fails to account for reasonable labor costs and finite resources. Fail.
The rational market theory isn't shared by all economic schools of thought. For instance, Austrians do not subscribe to the belief that all people are rational, but merely that all actions are rational to the actor in question because all action is merely a means to an end. A good example is suicide. While it may seem irrational to anybody else, it was most certainly the rational course of action for the one committing the act (since the ends sought are one's own death). Also, all schools of economic thought (other than the scientific socialists) see all goods as scarce and finite; where you get the idea that they don't account for this is beyond me. Ignorance maybe? In fact, almost all price/value theory is based upon the fact that all goods are scarce and all resources are finite; if this weren't true then goods would not have value, and thus there would be no price.
As far as reasonable labor costs, that is obviously a subjective topic, of which economics also accounts for. The cost or price of labor is merely that agreed upon between the employer and the employee through negotiation. Obviously, the demand for specialized labor and the supply thereof will have an effect on where the supply and demand curves intersect, but that is only to be expected. For instance, this intersect probably will not be in the 6 figure salary territory for a store clerk, because a store clerks marginal productivity does not command such a salary.
Economics is what is called a value-free science. In other words, it merely describes the mechanisms of human economic activity, it does not have anything to say about the rightness or wrongness of these activities, whether a price is just or unjust, whether one action is more preferable than another action, etc. It merely describes the mechanisms, correlations, and causal factors of human activity, cooperation, and use of scarce resources. Any economist that speaks with regard to what is right, wrong, what should be done or what shouldn't, is no longer engaging in the science of economics, rather he is merely giving you his own subjective opinion.
Just a word of advice, if you are going to engage in debate about a topic, it often helps if you actually know what you're talking about. Because, otherwise you just look foolish.
Sadly I agree, We are adding some expansion on what we do but it does not add head count, down stream of it unsure on capacity. Reciprocity in Free Trade Agreements is for the risk model permissible for the agents allowed up the rung or expand the terms of contract.
The propaganda planners do their best to complicate the economic picture; but the scenario is nothing more than a transfer of money – from the private sector to Wall Street and Socialism. Conditions in the country are much worse for the sound money people, small businesses, housing, the unemployed and the true middle class. And it is creating a big political problem.
Bernanke is not just kicking the can down the road; to continue this print-at-will policy with ZIRP, with things as bad as they are, may mean we are looking at insolvency.There is no recovery; the country is in deep malaise.
When government-connected and Goldman economists say we need to do this or that, by “we” they mean you; they’ve done the heavy thinking on the matter and all that you have to do is pay.
What’s going to happen? This growing political problem in the private sector means Bernanke is running out of time. Bernanke’s experimental plan to create winners and losers, with complete protection from the politicians and total access to the Treasury – running wars, billions in deficits, bailouts for Wall Street corruption, off-shoring American wealth – is crashing and burning.
Bernanke’s modus operandi is to “print and give” to the big chain stores, the giant corporations, the “too big to fails," the socialist central planners. When the Fed rings the bell, there’s GE, GM…all standing there with plans on how the stimulus is going to help them; and Obama’s there with his government employees, and teachers and the Mexicans and the wind power and military/industrial complex… and always, the banker is there, just as in the game Monopoly, on the receiving and delivering ends for a huge chunk of all the stimulus for Wall Street
In short, Bernanke is printing to keep Wall Street up to make it look as if the economy is in recovery. He can’t hold it. They don’t have value coming in and they are choosing to reward themselves and all the other ambulance chasers and non-producers with bank plunder.
The people have one choice: the Federal Reserve Bank or their country.
Mr. Blinder, you never got back to me. Do you have a committee working on PR spin & lies to address this issue?
Goldman is toast, these idiots will find out that their usefulness to front the agenda has expired. The war on banking control will be spun as liberation to fight terrorism/bank fraud/employee bonus checks. Mark my words. Goldman will be connected to a well known ME group sponsoring terrorism. LOL, God's work strangely will have new meaning. You voted for this regime in office, we warned you. Meanwhile Lloyd Blankfein, lay on your back and begin your autofellatio therapy session. Obama has you scheduled for 3 times a day for 120 days.
Repost:
by Atomizer
on Thu, 05/12/2011 - 23:11
#1270654
Hello Alan Blinder,
I was lucky to dodge the Bear Stearns/Lehman Brother debacle. At that point in my life, decided never trust any dip shit to advise me on how to invest my hard earned money.
Many of us already know the agenda, don't kid yourself as being a mastermind who diverted an upcoming financial disaster. You're a dime a dozen on TeeVee.
Mr Blinder.. what happens when your investors decide to close their account? That's right, they want to cash out and receive a check in the sum of what you told the holder they held in assets?
Perhaps you should visit Mr. Madoff, he will explain how quickly your reserves will deplete.
On your statement regarding the importance of QE3, frankly your system is bankrupt. Printing more money to cover the folks exiting the ponzi will have sever blow back for you & future taxpayer obligations.
Mr. Blinder, isn't this illegal monetary concept the very reason why we arrested Bernie Madoff?
Please share your thoughts amongst the Zerohedge viewers
The real economic truth is buried under a massive mudslide of Fed propaganda.
“The lesson of Socrates was that wisdom begins when a man finds out that he does not know what he thinks he knows… Socrates had died sooner than yield an inch to men who asked no more of him than he should hold his tongue.” – Francis MacDonald Cornford, The Republic of Plato (Introduction)
Socrates, IMHO, would salute you, Atomizer. +100
I wouldn't look to Socrates for any economic truths, maybe the Scholastics, or Salamanca. But, certainly not Socrates. Even Aristotle almost found some economic truths, but was far too simple-minded to have taken his own pronouncements to their logical conclusions. It would take another thousand and a half years of zig-zagging through the realm of reason before even the idea of interest was substantiated in the minds of men (and, thus economic thought).
The Greeks were good at some things, but when it came to nations and economics, they were completely retarded (can't really blame them, it was 400-300 BC).
You've got this all wrong. It's not that they were stupid on the subject. It's that "finance" couldn't exist in a world in which all work was a first-order function of solar-energy inputs.
The problem wasn't theoretical. It was purely practical.
Lending money at any significant interest rate couldn't work because people couldn't generate enough return to make the vig.
(We're falling back to that state, by the way, so the day in the sun for the banksters is coming to an end.)
Venice was the first to recognize that the burgeoning populations/economies of the West required financing to buy salt/pepper (to preserve meat), grain and silk from the East's spice and silk routes. And also the same to pay for their warrior knights sent to Holy Land to defend their colonies. They made out big, they even took the big prize : Constantinople. Blame it all on the Venetians...the capitalist monetary trail!
Capitalism has been around in some form or another over the whole of human history; it just mutates or bloats bubbleliciously and is then quenched by political manipulations, to reappear in other forms and at the interstices of cultures. Before the Venetians, there were the Amalfians, the Frisian, Syrian & Jewish traders of the early Middle Ages in Europe.
And one of the Greek philosophers did make a fortune as an olive oil speculator, but it sure wasn't Aristotle.
/thread
Put this entire thread in a time capsule.
All the above responses prove Socrates’ point. You do not know what you think you know; Socrates was talking about you.
As Dilbert has explained, I admire your ability to provide in-depth analyses and answers to a question that was never asked. In this case, Socrates was not addressing a profit and loss statement or money printing in the Greek economy, or capitalism versus socialism. He was merely suggesting that wisdom begins when men finally discover that their facts at hand may not be true after all.
But he was killed because he refused to be silent - on all issues.
What else should we expect from the Great Vampire Squid whose greed knows no bounds...
Greedy m'fers!
growth in guillotine sales perhaps? i'm for that growth !
.
http://www.youtube.com/watch?v=pzhJBWIZxjw&feature=youtube_gdata
.
silver, rock me baby
.
they always harp on the growth meme when they want to
steal something ( money / land / culture ..etc.) ..
check it out, it's historically true, perhaps a universal
principle. now i should read what they have to say?
but, they are sick, i don't know on this one, it's a
toss up.
Well let's see....
Inflation is profitable for TPTB and hammers the middle and lower classes.
Deflation is good for middle/lower classes and savers and destroys the TBTF crime syndicate.
Which one do you think is going to happen?
Both, as the Oligarchy always wins...first inflate..then deflate...then reflate...the circle turns and they stay on top...even though they fight amongst themselves. Being an Oligarch has its risks! The only real risk to them is a social change which entails paradigm change..like A WW or a prolonged economic collapse and social revolution...
I do not understand why you get upset over these morons advising that we should be selling our gold. Sure, we have a strong rally in the dollar. We always have strong ralliesin the dollar, but they never last. Yes, I have cut back on miners, for now. But still buy gold and silver on every dump. If you are doing this for three months, then just get out and go somewhere else. None of this bothers me, ok some of the idiots here are pathetic, but they are the minority. We know what lies ahead. Patience and 0 margin.
Look what is in charge and tell me to buy dollars.
Ready, Fire, Aim. Oh shit, blew it again. QE3 Ha, I am on to QE11.
Well said. Enjoy video.
http://www.youtube.com/user/TheIPud#p/u/1/Q1KhY-9wwxo
haha, wow.
Ah yes, the "ticker guy" Karl Denninger (of whom the publisher of the video that you linked to most notoriously hates). From what I understand, he (Karl) is a "greenbacker" who thinks that if only we can take the fiat printing power away from the Fed and give it to the Treasury, that life will be a Utopia. Gotta love those neocons and their kooky plans. Don't know much about iPud, but from what I have seen thus far he seems cool to me.
we need to be clear concerning time. and money.
and money in relation to time. in there is the
main conflict between hard money and fiat currency.
pms are what they are and they are that by virtue of
there physical properties in relation to the miliue
of oxidation and deterioration of influences. the
universe itself has brought them into being, men just
find them, harvest the element and package the element.
fiat is a psychologically manufactured, sustained by
marketing, idea. and its quality is temporally founded
unlike pms which have qualities that are founded in the
senses and physical properties of those isolated and
suitably applied elements and properties. they are
pleasant and useful and in their way precious.
.
greenspan is not dead. hang the imf .. out in the sun.
to dry.
virtual numbers are infinite, metals are not. growth
is sometimes cancerous and or viral. watch out for
those who call for viral cancerous growth. i never
trust them myself.
Mmmmm... Huh? English please.
<sarc on>
Are there, like, bugs crawling at your skin dude. Because, like, if they are dude, I like totally sympathize. I mean, really dude. I just eat a mushroom cap and the entire world just makes sense. But, only in my mind, not yours. My mind is my mind, and your mind is yours; they can never coalesce in spirituality, you know. Like snowballs and ant-hills, they can never be one.
Hey, are you trying to understand my mind, dude? Because, if you are, that just really IS NOT cool, man. <sarc off>
dude on...
not really.
dude off.
and then stuff happened and we all
went to heaven in a little row boat.
clap hands. clap hands.
not to worry, we can all still stop
on the red and go on the green, man.
ps.
i had this horrible thought that the soul
of man is a whore. on one level there is black
and white, and on the the next they are opposed,
but still black and white, then on the next level
there is not black or white. as in if man has a god
and one soul and the self is to join / marry that
soul does not that make god a whore? but then i gave
up on that line of fornication and left my senses.
thank you. f english and all those who slave under it.
some day we will live without the consent of the king
and it will be ok. maybe not? and who cares
These are some of the most intelligent of all of us, as such iniminity and subsidy should be granted post haste lest their industrial companies not make payroll due to a seizure in the financial markets.
Ford had it right... pay your workers a wage enough to purchase your product. The financial engineers have it, in spite of their mathematical models, preciley wrong.
Myopia Rules
It's like they are all standing around in a circle watching The Bernank beat kittens to death and their only suggestion is to get him more kittens.
Bad kitty!!! Bad, bad, bad, Kitty!
Now drink your milk <purrrh>
Damn! Who woulda thunk that "kitten sadism" would be the impetus to explain our entire monetary policy? It's friggin' genius.
Charles Darwin "survival of the fitist". This will only get worse until they step out of the way and let economic darwinism run its course. Ultimately it will happen regardless of their efforts. You can not mess with mother nature and expect a good outcome. Cease and desist.
FU, and your social-darwinism. Darwin, as far as I know, didn't know shit about economics, or man's reason.
You're looking toward the wrong science in order to understand human reason and action. Trying to apply Darwin to the market is like attempting to apply religion to geography. They are entirely different mechanisms of action, and of science (human reason). Maybe epicycles are more your cup of tea... Because, it is quite clear that you have not read Darwin, and are instead applying your own "gloss" upon the limited knowledge that you do hold.
Read Darwin, then get back to us. Afterwards, I guarantee that you will not think that his work has anything to do with markets or human reason/action. Go ahead, give it a try (books don't have cooties).
Mr jaffi, you unfortunately missed the point. There are laws of economics like laws of nature and the fed has been trying to get around these laws to serve their own (elite). I simply was implying that there is a natural order in nature and economics and when they become imbalanced they will do what needs to be done to rectify those imbalances naturaly as apposed to tinkering with it. By the way this tinkering is only for the good of those who were weak and should have already died.
I will not converse with you again. You are attempting to insult me. Also sir, I have read couple of books in my day.
do you often talk to yourself to reprimand you instinctive outbursts?
jaffi, Dude take the eye patch off and recognize that "Darwinism" is used as a metaphor for the natural order of things in the feckin' Galapagos and in economics.
Your underpants are way too tight.
You have hijacked this thread.
I have read your posts and realize that you will not understand that this hijack is impolite.
What you have to say is important. Nuclear important.
Could you please go save the world on the correct thread you fucking asshole?
Sorry to be off topic but for some reason the Fukushima news is going crazy this evening. Asahi Shimbun weighs in with these two gems:
TEPCO concealed radiation data before explosion at No. 3 reactorTokyo Electric Power Co. concealed data showing spikes in radiation levels at the Fukushima No. 1 nuclear power plant in March, one day before a hydrogen explosion injured seven workers.
http://www.asahi.com/english/TKY201105130370.html
Accurate data destroys optimistic TEPCO assessment, hampers cooling planhttp://www.asahi.com/english/TKY201105130192.html
It's going crazy because there is a confirmed meltdown, of which it is known that it started about 2-3 weeks ago. Governments lie, and Fuku is only a display of that. The news is going crazy because they are attempting to cover up the fact that the government of Japan knew about this, but did not tell their citizens.
Yes, when governments are caught in a lie, it tends to cause a "stir".
I can't believe we were given false information.
Are you telling me we were misled?
I just can't believe it...it can't be true.
Can you point to me a period of history when a government (any government) did not lie?
That's the real question.
Of course, I know that you're being sarcastic, but my question really does take some thought to put it into perspective. Personally, having read a great deal of human history, I cannot think of one single instance in which the government DID NOT lie.
Pretty sad, really.
I just want Jim to post up-to-date information. He is solid in his posts and I want his analysis on the situation.
Jim? Give us the worse case scenario....
Is it OK to replace 'government' with 'uberelite corporate thugs' in your posts? Thought experiment in progress....
Can you give us your "worse case" scenario on Fukushima?
Just a nutshell version. There is a very wide range of potential consequences. It does seem like they keep rolling snake eyes. It still looks like the vast majority of the 'bad stuff' (strontium/cesium) that HAS to migrate out of damaged fuel rods--think tiny gas bubbles seeping through ceramic--is being bound to water. That's going out to sea bit by bit. Currents there are irregular but will move toward Tokyo presently. They should be looking for that but there is no sign that they are yet.
Airborne may be worse than we thought a while ago, given the exposed fuel rods and continuing hot storage pools (all the steam you see in the videos--hot tubs just shy of boiling much of the time). So those animations from the helpful Austrians are actually a decent look at the pattern, if not the intensity. Kind of sucks to bulldoze the playground soil and then have to do it again....
For the best radiation data the US DoE has gotten it kind of together:
http://blog.energy.gov/content/situation-japan/
They say there has been no measureable ground deposition of cesium since March 19. Hmmm. So maybe the exposed core rods are all melted into the water, and the pool vapor is no big deal. It just leaves more in the water.
It's terrible for the local area and I do not think Tokyo is in the clear. But we are still talking 'statistical cancer' at this point. As always, a dirty smoke fire is the real alarm bell for Tokyo. Japan cannot take a big fallout hit to the northern Kanto Plain (Tokyo water supply/largest buildable-arable plain in the nation).
The stuff that worries me is all kind of probabilistic: we do not know the actual configurations of any of the cores. You could say things like hey, it hasn't obviously burned or gone critical or geysered the water table yet, so it won't...but really there's no way to know. There are leaks and cracks and holes in everything. They have no explanation for where the water is or isn't.
Worse case is losing things in sequence. One core or pool 'blows it big time' whether that is a fire, a big hole/collapse in a pool, a meltdown causing a steam eruption, or who knows what. They have to leave the scene and a day later, another one goes....then another....
There are almost a million fuel rods on that site. Ponder that. I am going to bed (I think about scary stuff all the time so I sleep good).
At least you're honest. Thanks for your opinion.
Sleep tight...
scale this up to reality as they are...
http://www.kiddofspeed.com/chapter1.html
sobering reality it truly is.
Peace.
Jim, have you checked out Arnie's new video (13 May) on Energy News? I see there was a 6.2 hit 35kms off shore tonite. Is bldg 4 still standing?
thanks Jim
As far as I know, a corporation is a government sanctioned entity. So, the replacement of corporation in lieu of government is entirely cogent in my book (they are interchangeable in modern parlance). After all, aren't most smaller governments merely incorporated entities of a larger government (an entity created by a collective)? Government, in the realm of today's law is necessarily equal to or greater than the status of a corporation. The only difference is that those who fall within its influence and boundaries do not do so by voluntary action, rather they are coerced by force (or, conditioned by birth).
In either case, it is clear that both the corporation and a government are not necessarily sanctioned entities of the collective. They must necessarily involve the creation or an entity above and beyond the individual, and have acquired privileges of which a single individual cannot attain himself. In this philosophical sense, both the corporation and the State are super-human. And, they are in fact looked upon as such (almost sounds like Münster in collectivist form).
Everybody likes their team, and if their team wins, they go out in the streets and hail to their team. This activity, while enjoyable, does nothing to increase their own relative satisfaction, and does nothing to improve the utility of those around them (it is a waste). All it does is make them feel a fleeting joy, of which will be forgotten in the near future. Sure, I have a team that I root for, but it has no divisiveness in its nature, nor does it seek the demise of the opposition. My team is mankind itself. Competition is quite important, but it has nothing to do with a team, but rather it has to do with individuals seeking to provide a better and more sought-after product for consumption. After all, the entire reason for production is in order to consume.
The division of labor, the structure of capital, and the interaction between peoples and nations is the only thing that will increase the well-being and quality of life of man. Governments only seek to take their piece of that productive pie. Some government is ok, no government is preferred. But, a large centralized government is, and has always been, a brick on the back of humanity. It never lets the harmonization of markets to proceed, and what it does allow, it takes a portion of the proceeds. It serves no other purpose but to live upon the backs of those that are productive, those that innovate and increase the state of man in the world.
With the State's power comes privileges to those close to the State. This must necessarily involve immunity from particular rules, or the implementation of rules that only those of "economies of scale" can absorb. Thus, reducing competition and accountability through limited liability.
If you ask me, in today's world, the corporation and the government are one in the same. Those that rule are put into positions of power by the favorited corporations, and those that are favorited are put into positions of corporate power. Government and corporations are the same entity in my mind, there is no difference. Each protects the other, and each backs (or, bails out) the other. It is nothing more than the glad-handing of one entity of the other, and all of those involved enjoy the fruits of their efforts (at the detriment of society).
It is not a difficult dynamic to observe, it is right before your eyes. The office of President only pays $250k or something close to that, yet its campaign yields a number close to $1 billion (some say the next election will surpass that benchmark). Most Representatives and Senators come into office with no substantial wealth, yet they leave with millions, and often head up the companies that put them into office. There is no coincidence in this matter, it is now and today a fact.
The government, and their privileges bestowed upon favorable business-entities, is nothing more than the power and coercion of government force bestowing the emoluments of power and wealth upon those that are most associated with those in government power. Today, each and every one of us merely exists to make our rulers (and, those who put them there) quite rich and content.
This has been going on for too long, and those that rule (as well as those who put them there) are without recourse. They have taken far too much for far too long, and there is nothing left. Well, when there is nothing left, when the economy is no longer the powerhouse of production that it used to be, the powers that be have no choice but to dig deep and try to "gut" the society. They think that they can pull it off, but they forget that Americans are a feisty bunch; we take a lot, but when we are pushed we strike hard. We do not like to be screwed, and we take it quite personally.
Sure, you may not be one of those that is POd, but it is becoming quite clear that you are falling into the minority, that enough people have lost their homes, their jobs, their entire ways of life, and they are pissed off. There is simply nothing like a couple of million pissed off Americans to ruin your day. And, that is what we are looking at today. Even more important is that those Americans that are pissed off are looking at our founding documents in order to find answers.
If one realizes that their entire government is operating illegally, chances are that they will blame their government for all that ails them. Guess what, we are seeing that, and it is only the beginning.
Thanks for the long winded analysis Dick Tracy.
Go take another hit of acid, clown.
BTW, Clown. It wan't an analysis, it was a response to another comment. Which clearly shows that you simply, and tragically, are nothing more than a clown (on acid, nonetheless).
I take it that you're not much of a reader.
Incorrect monosyllabic moron. You are long winded and obvious. Indeed if it was a response the reader was asleep after the 1st paragraph. Good Sominex ad thopugh. hehe.
Why does it not surprise me that your response would include at least one reference to some trendy chemical amusement aid? BTW, did you have to seek solace in a thesaurus in order to "up" your vocabulary? I know that such words did not just come popping out of your juggalo head, that's for certain.
*note- you seem to have contradicted yourself. First you called me "long-winded", then you called me "monosyllabic" (then again, long-winded). So, which is it, do a drone on for hours, or do I make it short and brief? Or, do I merely speak in vowels (a,e,i,o,u) like a chanting monk? Apparently, you have not been quite clear in this, and I am quite sure that even you don't know what the hell you really meant (not surprising in the least), and probably just thought you were being "intelligent".
I guess that your thesaurus led you astray. Eh? Maybe it was a google search... (CV, VC, CCCVCCC, etc). In either case, you're using words that you apparently have no solid grasp upon with regard to their meaning. Sure, it may impress your juggalo friends, but it doesn't fly here. I don't mean to be a pedant, but one should at least be cogent.
Oh, by the way, it is faux pas, not "thopugh" (whatever the hell "thopugh"means in your head). Plus, you're trying to mix both Latin "ad" and French "faux pas", which only displays your ignorance. Choose one or the other, Latin or French, and then stick with it. Don't try to intersperse the two together and think that you are clever; especially if you don't even know what their meaning is (or, how to spell the phrases).
should read without the fed buying assets we may get poorer.
The language these fucks use makes my blood boil.
They're all PhDs in Advanced Propaganda Studies...
The bigger the lie, the more elaborate the cover up.
The need for austerity is plain. The public even the uneducated mob has awareness of the injustice of the coming poverty, while the elite bankers & rich profit, the elite pols profit and they all live the life of anti austerity..
Justice is weeping as the guilty leadership of the banks - Fed - Sec - and congress escape the legal system and claw back of stolen assets.
this realization of the basic unfairness of a system corrupted, sits at the dark heart of America..no recovery is possible while Justice is mocked and corrupted.
No recovery! no matter how much QE how many plans to reduce debt and spending for none of it addresses the sickness killing the spirit of the people: we see the injustice we drink it we breath it the MSM lies and distractions only manifest it as they try to avoid or hide it.
NO Economic recovery with out justice for those who raped the people..tyranny comes when the people see no other way.
The republicans belive in all our wars just dont want to pay for them... should tell you all you need to know
.
jesus may forgive man... but he wont pay your bills, infact the democrats wont pay your bills for that matter... but the US flag looks prime come spring
CORUSCANT — Obi-Wan Kenobi, the mastermind of some of the most devastating attacks on the Galactic Empire and the most hunted man in the galaxy, was killed in a firefight with Imperial forces near Alderaan, Darth Vader announced on Sunday. In a late-night appearance in the East Room of the Imperial Palace, Lord Vader declared that “justice has been done” as he disclosed that agents of the Imperial Army and stormtroopers of the 501st Legion had finally cornered Kenobi, one of the leaders of the Jedi rebellion, who had eluded the Empire for nearly two decades. Imperial officials said Kenobi resisted and was cut down by Lord Vader's own lightsaber. He was later dumped out of an airlock.
Same as with the silly 'are they going to raise rates' discussion cause you know they won't. If they don’t do a QE3 the economy will implode imediately and they know it.
Kyle Bass Rips John Paulson and Seth Klarman
The end-game is getting near. Better start protecting your wealth. The only question is, how.
Here's my logic:
If politicians are in power, it eventually means austerity and deflation > Cash is king.
If banksters are in power, it eventually means unlimited money printing and high inflation > Gold is king.
Got gold?
So how many kilos of freshly dumped metals did GS suck up in the last round of margin hikes?
eye for an eye looks like a real event in Iran
sentenced to be blinded in both eyes with five drops of sulfuric acid
justification for mutilation by a second wrong somehow righting the first is just sick.
the ultimate fiscal policy to create less wealth sapping drag on the private (employment creating) economy is to shut down Govt. Just think what a huge boost to employment and consumer markets if we kept our money in our wallets instead of it being siphoned into that corrupt clown show in Washington
...is this wise policy option/direction on the table yet?
..do turkeys, and Goldman Sucks, vote for Christmas
Ease, manipulate, stimulate....here comes QE3
All this talk about fiscal spending and monetary easing... I haven't heard them throw a number out there yet. They need this number to be large enough to get them through the 2012 election. There is absolutely a connection here. The Fed is only ever managing their printing machine to devalue the currency in a "controlled" manner. Bernanke told Congress this week that even discussing not raising the debt ceiling could cause a collapse. Get that? Talking about not spending trillions of more money is dangerous.
They've stepped up their game here. Next QE will be over $2trillion. It has to be. The biggest issue of the 2012 campaign will be gasoline prices and Obama and his merry band of thug retards will propose price caps on everything.
qe 3 is here already in the form of currency manipulation, it will fail no matter how many qe's then the trouble really begins
qe 3 is here already in the form of currency manipulation, it will fail no matter how many qe's then the trouble really begins
whatever happened to cutting taxes equalling job creation? I think it is far too late, we're too deep in debt for it to matter now. Maybe America is not too big to fail.
Stiler, lower taxes do equate to job creation. When you have a president that doubles discretionary spending his first few days in office, well that tends to erode confidence in the business community.
Get a rope!
Who's worried about fiscal adjustment, when our Timmah is on the case? From Business Week:
http://www.businessweek.com/news/2011-05-13/medicare-social-security-funds-expiring-sooner-u-s-says.html
HA HA HA -- Obamacare 'extended the life of Medicare,' such that it now runs out of money five years sooner than last year.
Timmah-nomics to the rescue! What, me worry?
This report is a wonderfully-crafted complicated bamboozlement to describe simple theft.
It's in PhD terms.
Deflation bitchez!
The metals may make one more exhaustive run at prior highs but I'll be dumping them then. Rosenberg will be right again, we're looking more and more like Japanamerica.
During the sinking of the Titanic, many people traded in their life vests when offered better cabin quarters. Those that waited and timed it right, got beautiful suites for their exchange.
I was in a hotel across the freeway from the beach in San Diego. The sign in the bathroom asked patrons to please conserve water, as if it was in short supply. This defied logic. The real issue was that the government-run water supply monopoly didn't want to invest the capital to supply all the water that customers wanted to buy.
Likewise, when a Keynesian insists that government must print more air-backed money because there is a shortage, he has twisted logic and distorted facts. He is really saying that, for the rate of interest he is willing to pay, not enough people are willing to lend in the marketplace. This goes to the heart of Keynes' theory: that people are poor because they cannot borrow cheaply, and the only way for money to be cheap is for government to flood the market with enough supply to drive the price down from “dear” to “affordable”.
Just as with drinkable water in a free market, there can never be a shortage of money when the price is free to respond to market conditions.
Moreover, the price of money is indeed an important signal to all the players in the economy. When it costs very little to borrow, people tend to grow careless about how much they are willing to borrow and what projects they seek funding for. And the biggest borrower is government, who is now borrowing roughly 50% of every dollar it spends, and who now must actively suppress interest rates so its debt service costs do not become unaffordable.
But the wealth that the money represents that government borrows to fund its many projects must come from somewhere. There may be a large amount of wealth being held in the form of dollars, but it is finite at any given time. And from the moment before the Federal Reserve Corporation prints a trillion dollars the amount of wealth to the moment after that money is used to pay wages and buy things, the amount of wealth is unchanged. The only thing that happened is that there are instantly more dollars. Thus the dollar price of everything rises, sometimes quickly in the case of gasoline and gold and sometimes slowly, as in the case of lease rates for office space. And those in charge of printing the trillion are willfully clueless as to why prices keep going up as they attempt to “stimulate” the economy with more money, when what they should be doing is removing every roadblock to people creating more wealth.
But these money printers are so conflicted about private wealth, for they really want to seize private wealth so they can be busy solving social problems and increasing their power over the rest of us by buying influence and friends. And they do this with our wealth, for these people cannot create any wealth of their own. These money printers are running the grandest scheme of theft in all human history, and we are voting to keep them in office, screwing us day and night. Happily, more and more people are waking up to the scam, and fewer and fewer people are able to defend the scam. One way or the other, the Great Keynesian Experiment will come to an end. And since every central bank on earth is part of it, may God help us all when the scam finally fails.
"Grandest scheme of theft in all human history" is a great way to describe all of the machinations involved in "managing the economy"
+1... More QE, Printing, Deficits....
Group think! everything is sooo predictable.
since these 'shots' are in favor of QE, wouldn't it be a shot from the bow and not across it?
Two weeks does not necessarily a difference make, BUT
starting a month ago there was a two week period where something different happened at the FED. Instead of typing up more bank reserves to pay for QE, and fund cover the Treasury's checking account which was getting really low, over $80 bn was transferred from bank reserves into the checking account. This nicely topped up the Treasury's checking account, but it reduced the amount of newly available bank reserves that could, via FED Funds market could be used as fuel for stock and commodity speculation.
Shortly thereafter, the commodity market took a swoon. Even the stock market had a few down days.
One can't necessarily conclude a causal link, but the coincidence is there.
My speculation is that the debt limit ceiling forced the Treasury to look elsewhere for money it could write checks on. That somewhere else was the $1.5 trillion in bank reserves. But the piling on of new bank reserves are the fuel (via, again, Fed Funds lending and borrowing) for stock and commodity price support. And it is not just the overall amount of bank reserves that serves this purpose, but the growth thereof. So if the growth in bank reserves stops, the fuel is taken away.
Again, two weeks is not enough to prove the theory and coincidence is not necessarily causation, but it is some evidence.
He's gonna let it fall. It serves three purposes.
1. Predictable profitability for the elites with puts/shorts, etc.
2. Vaporizes bubble money in a way nothing else can. Allows those "connected" to get long again thereby gaining the last possible grab for the largest share of the publics wealth
3. Guarantees complete public support for returning with more ink for the now very much appreciated QE3 etc.
we have summer 2008esque in the markets enough to induce fear which equates to ransom enough for the bastards!!!!
that said, i just can't fathom how QE3+ will be pulled off.!?
Just watch that Goldman share price...
...calls for QE3 will grow louder the lower it goes...