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Guest Post: Fed-Covert Money Printing Alert

Tyler Durden's picture




 

Submitted by reader Don

General

This note contains an update on where Fed printing stands, how much is left, what the pace of purchases is, and when the program will stop. It also updates the Fed's balance sheet, and its inflationary impact. This update houses some very important developments, due to actions at the US Treasury in coordination with the Fed.

Needless to say, Fed monetization programs have been a huge source of liquidity for the marketplace. It remains to be seen what will happen when this program is over, but it seems fair to say that liquidity will dramatically contract.

Conclusions

There are a few main conclusions from this analysis:

  1. Treasury program: The $300B Treasury program is now basically over (source).
  2. Agency/MBS program: The $1.425 Agency/MBS program is about $1.18T finished, while purchases continue at a slightly slackened pace of approximately $90B per month. At this rate, the program will be effectively over and done with by the middle of February 2010. This has clear liquidity implications for the marketplace come that time.
  3. SFP reduction and $268B of net printing the past 2 months: The "SFP", a program through which the US Treasury issued debt for the Fed to spend to blunt the inflationary impact of Fed balance sheet expansion, has led to tremendous money printing the past 2 months. Since 9/23/09, we've seen the SFP reduced by $185B and Fed Assets *increased* by $83B. In effect, then, the past 2 months have witnessed $268B worth of net printing of money by the Federal Reserve, without so much as a peep from the MSM (source).
  4. Real economy printing flat: It is true that the amount of money that has worked its way into the Real Economy (net of excess reserves and SFP) has remained flat (source). However this is due to the fact that banks now have $1,046B of excess reserves deposited back at the Fed, on which they are earning a risk free return of 25 bps. More free money for the banks guys!

In summary, the past 2 months have witnessed a huge amount of money printing, and a dramatic increase in the risk free profits the banks are getting. Is anybody watching this? Does nobody care? With a sleight of hand, the Fed has effectively cheapened the value of our money considerably. The equivalent of a hat trick has allowed the Fed to monetize almost $300B of Treasury debt in the past 2 months.

As noted in "Our Deficits - A Clear and Present Danger" (HBA 11/18/09), the US has a very considerable debt issuance problem in 2010 and thereafter. Trying to covertly print money at the Fed is apparently the solution our Administration has come up with.

Foreign central banks, are you watching this? Does this make anyone a little nervous? We have a hole at the bottom of our "ship". The hole is still there. What's next?

Fed Monetization Programs

Below is a graph of Securities Held Outright by the Fed:

  • We can see the Treasury program is essentially over and done with.
  • We can see the Agency/MBS program continues apace, at a slightly slackened rate.

This is a graph of total Agency and Treasury purchases as of 9/9/09, from a 9/15/09 WSJ article (WSJ 9/15/09)

Some figures:

  • Old utilization and rate of buying. The Agency program had gone through approximately $930B of the $1.45T capacity from March to September 2009, or about $155B per month.
  • Incremental purchases. The Fed bought an additional $250B of Agencies b/w 9/9/09 and 11/18/09.
  • New utilization and rate of buying. This suggests they have satisfied $1.18T of their Agency program, at a rate of approximately $90B per month the past few months. The pace has slackened a bit.
  • Projected program end, triangulation. At a $90B / month pace, this program will hit its $1.425T capacity by 2/7/2010. This syncs up nicely with the 11/4/09 FOMC statement (FRB) which states an anticipated program end by Q1 2010 and a further slackening of pace in the coming months.

In other words, 2 months from now, things could get awfully interesting...

Fed Balance Sheet, Real Economic Printing, and Inflationary Effects

Below is a graph of Fed Assets, Excess Reserves, and the Treasury's SFP funding:

Below is a graph of total Fed Printing, and the amount of printing that has entered the real economy net of the increase in Excess Reserves and SFP funding:

Declining SFP: We are seeing what was described in a 9/17/09 WSJ article titled "Treasury to Shrink Financing Program" (source). This was the description of the Supplementary Financing Program or 'SFP' by the US Treasury, ironically on 9/17/08 (source).

SFP description: The SFP was supposed to blunt the inflationary impact of actions the Fed needed to take by having the US Treasury sell government securities which it then gives to the Fed to spend, instead of simply having the Fed print all of that money out of thin air.

WSJ description of SFP unwind: As noted in the article, the SFP was getting unwound to help the US Treasury plug its deficit:

The Treasury Department is expected to begin winding down a temporary program created at the height of the financial crisis to address a new problem -- the government's rapidly expanding debt.

According to people familiar with the matter, the step is being taken to help the Treasury avoid hitting the $12.1 trillion debt ceiling that was expected to be reached by mid-October. The decision could also be controversial, since the program was put in place to help blunt any inflationary impact from emergency actions taken by the Federal Reserve.

Fed B/S grew while SFP shrank - money printing. One would think, then, that this implies the Fed too is unwinding programs to scale itself down accordingly. Nope. In actuality, they have been *increasing* the size of their balance sheet. What we have seen since 9/23/09 is a reduction in the SFP from $200B to $15B, while the Fed has done nothing but increase Fed Assets from $2,125B to $2,208B. In other words, the SFP went down by $185B, while Fed Assets went up by $83B. In effect, the past 2 months have witnessed $268B worth of net printing of money by the Federal Reserve, without so much as a peep from the MSM.

It is true that the amount of money that has worked its way into the Real Economy has remained flat. However this is due to the fact that banks now have $1,046B of excess reserves deposited back at the Fed, on which they are earning a risk free return of 25 bps.

The past 2 months have witnessed a huge amount of money printing, and a dramatic increase in the risk free profits the banks are getting. Is anybody watching this? Does nobody care? With a sleight of hand, the Fed has effectively cheapened the value of our money considerably. The equivalent of a hat trick has allowed the Fed to monetize almost $300B of Treasury debt in the past 2 months.

Foreign central banks, are you watching this?

Data sources

  • This is a table showing a breakdown of bank reserves into categories, including Excess reserves. This is the weekly version of those data points.
  • This is an overview of the Fed's assets. The rightmost column, "Total factors supplying reserve funds", is the total size of the Fed Balance Sheet.
  • This is a table showing the Fed's funding sources weekly, starting December 18 2002. It shows the Supplementary Financing Program.
  • Securities held outright - FRB

 

 

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Sat, 11/21/2009 - 13:28 | 138209 deadhead
deadhead's picture

Thanks much for the summary Don!

I have just this morning contacted both of my US Senators (Schumer, Gillibrand) asking them to vote against the Bernanke reappointment, support Audit the Fed, as well as for them to join those calling for Secretary Geithner's resignation.

I hope others do the same. An email and follow up phone call is the best approach in my view.  The more noise they receive on this matter, the more likely that they will be forced to pay attention.

Sat, 11/21/2009 - 21:17 | 138461 Anonymous
Anonymous's picture

i contacted my congressshits when his appointment
to chief financial terrorist was announced by
kenyan born barry soetoro some months ago....

Sun, 11/22/2009 - 01:20 | 138571 knukles
knukles's picture

And oh whoopoliedoop, enter Laurence Summers as Mucketie muck of the Great Monetary Temple in the sky, a academic  schooled in fiscal policy, deluxe.  And to be overseen even bigger time by Barney, Timmy, Chris, Nancy and the Messiah.

Damned if we do, damned if we don't. 

Don't cry for me Zimbabawe...

Sat, 11/21/2009 - 13:36 | 138214 You Cant Handle...
You Cant Handle the Truth's picture

Excellent work Don.  

Sat, 11/21/2009 - 14:38 | 138238 Assetman
Assetman's picture

I concur... this is very good work, Don.

Do you think the Fed will end MBS purchases when the authorization runs out?  Or are we looking at a new program in 2010?

Sat, 11/21/2009 - 17:35 | 138332 Cognitive Dissonance
Cognitive Dissonance's picture

Since the Fed, Treasury and the White House have all unequivocally declared that "failure" is not an option (what exactly is failure?) it seems to me these programs will continue endlessly and even escalate (either covertly, overtly or both) until they succeed or there is a total collapse. I'll let you define "succeed" because it's certainly open to interpretation.

While we all seem to understand that this strategy will never bring us back to "normal" (which for our purposes will be defined as the world as viewed during the middle aughts or 2003-2007) what economic state will this bring us too?

There are too many variables involved to make any sensible predictions, particularly considering my favorite saying, the always popular "desperate men do desperate things". But I would suggest we study other extremely complex highly engineered devices that subsequently failed for more insight.

Personally I believe we all willingly participate to some extent or another in the false hope that utter collapse won't happen simply because any alternative view is too horrible to entertain. 

The two space shuttle "disasters" are for me particularly enlightening because they involved a potent mix of technical wizardry, deliberate and focused blindness, hubris and the ultimate killer, group think combined with peer pressure.

I just spent 4 hours re-reading some articles about the (first shuttle) Columbia "accident" and what was clearly obvious in hindsight was anything but obvious leading up to the accident. Most everyone felt they had a good grasp of the engineering issues and probabilities of disaster and it was felt those were very small. While there was a minority view to the contrary, the consensus was no problem, full speed ahead. I suspect the Fed and friends feel the same way today.

http://space.about.com/cs/spaceshuttles/a/columbiapage.htm

http://space.about.com/cs/challenger/a/challenger.htm

http://www.matscieng.sunysb.edu/disaster/

http://www.csulb.edu/library/subj/engineering/case_studies.html

 

Sat, 11/21/2009 - 17:47 | 138339 Anonymous
Anonymous's picture

Debt has exceeded economy wide carrying capacity. Defaults in residential and commercial real estate are largest variables which will make overleveraged banks insolvent. The excess debt has been assumed by sovereign government that exchange impairments for much higher than market value with Treasuries. These bailouts and backstops are compounded by much higher federal expenditures for counter-depression responses. This add'l welfare, backstopping, interest payments, crashing tax revenue, exponentially increasing retirement and healthcare obligations surmount any potential to pay for them. The last several decades of unceasing growth has stopped. It is crashing and cannot be resumed, only dampened by monetary and fiscal responses.

Borrowing needs of the USA surpass any potential of all the world (at highest participation) to fund. Only monetization can fill the shortage gap. Monetization dilutes the currency for the world to see. Raising interest rates to subdue monetization must crash equity markets and sovereign debt markets worldwide, leading necessarily to further crashes in real estate and corporate markets.

Therefore the options which have the ultimate same outcome are: (a) Monetization to correct arrears due to deficit spending (b) Raise interest rates to increase demand for debt issuance which draws crowds to Treasuries and crashes everything else.

Strong currency, destroyed markets. Weak currency, feeble reinflation and market support.

BUT. China!
China may have lost confidence in the USA. Loss of faith in its leadership and ability to correct its financial position of peril. Loss of faith in the integrity of US lead metals market because of counterfeiting.

If that loss of confidence has fused with a belief of being double crossed, and China wishes its revenge and to secure as much recoverable value from their rapidly corroding relationship....
They will gather precious metals in earnest. They will dump their dollars which will join with the existing money supply to destroy the US currency. The gold management team which uses primary dealer commercial banks to hold short positions on Gold will be forced to cover at terrific losses driving the price astronomically.

Remember that these banks are so weakened at present that only fantasy accounting (allowed by rule changes) and having tacit backing of full faith and credit keep them from rolling over. They are well over 25:1 leveraged not including their disastrous forays into CDS derivatives.

Outcome? Potentially the collapse of US dollar and economy. The worst global depression on record. Complete meltdown of credit, banking, and currency relationships. End of globalism.

Sat, 11/21/2009 - 18:07 | 138351 Assetman
Assetman's picture

Comments from both of you (anon and Cognitive Dissonance) are very much appreicated.

Sat, 11/21/2009 - 18:26 | 138359 JR
JR's picture


Interesting comment in the current Barron’s Letter to the Editor column from David Edler: “We need to be able to make things, otherwise we will be overtaken by countries that do, while they laugh at us trying to sell insurance to each other.”  Case in Point, the following article:

http://www.laosnews.net/story/566607

Chinese financial institutions may buy US banks

Cash-rich Chinese banks have been scouring the world for investment targets.

Chinese and US regulators have started to negotiate on how to allow Chinese financial institutions to buy into small and medium-sized banks in the United States.

A pact may be decided between the US and Chinese governments after Chinese bankers complained it had been difficult for them to set up branches or invest in banks in US, partly due to strict approval processes for financial deals.

Industrial and Commercial Bank of China is now the world's biggest bank by market value, while Citigroup Inc in the US, is now only worth as much as a second-rung commercial bank in China.

Chinese investment bankers and financial advisers may be invited to look at several potential investments in US banks, especially those that are mostly in financial trouble.

A Sino-U.S. Memorandum of Understanding to encourage Chinese banks to invest in US lenders is being formulated by the Obama administration, which has found it needs more capital to take over troubled lenders.

Sat, 11/21/2009 - 19:16 | 138386 Orly
Orly's picture

Hmmm.  Reminds me of the Japanese in the '80's buying 30 Rock.

Looks like the Chinese "miracle" economy is topping here.

Sun, 11/22/2009 - 03:33 | 138599 Anonymous
Anonymous's picture

You should be thankful we didn't have economists running NASA, otherwise instead of raining dollar bills over our heads, Ben the chopper would have satellites falling over our heads every other day. imho, we must be really crazy to entrust our children's future in the hands of economists.

Sat, 11/21/2009 - 17:59 | 138344 Anonymous
Anonymous's picture

Diseases desperate grown, by desperate appliance are relieved, Or not at all.

Check kiting has run its course. Creditors view in full fury the irremediable insolvency of their debtors. They are about to proceed by over and covert means to strip him of any value to satisfy incompletely his obligations.

Even a caveman can see the inevitable and imminent collapse.

Sat, 11/21/2009 - 13:55 | 138221 SilverIsKing
SilverIsKing's picture

Awesome work Don.  Thank you.  This analysis is another shining example of how valuable Zero Hedge, with all of its contributors, truly is.

Sat, 11/21/2009 - 16:04 | 138274 Enkidu
Enkidu's picture

Agreed - the site is awesome and the contributor articles - as well as in-house work.

Sat, 11/21/2009 - 14:02 | 138224 AnonymousMonetarist
AnonymousMonetarist's picture

The truths you hold to be most dear are lies told to you by liars : credit-default swaps were the problem before they weren't the problem

 

You're beautiful more beautiful than me
You're honorable more honorable than me
Loyal to the Bank of America

It's a sign of the times

Enemy sighted, enemy met, I'm addressing the realpolitik
Look who bought the myth'
-REM

'Am I supposed to be a man, am I supposed to say, "It's OK, I don't mind, I don't mind"? Well, I mind! I mind big time!' -Wayne Campbell 

'Did you ever see that "Twilight Zone" where the guy signed a contract and they cut out his tongue and put it in a jar and it wouldn't die, it just grew and pulsated and gave birth to baby tongues?' -Garth Alger

WSJ Editorial
November 20, 2009

TARP Inspector General Neil Barofsky keeps committing flagrant acts of political transparency, which if nothing else ought to inform the debate going forward over financial reform. In his latest bombshell, the IG discloses that the New York Federal Reserve did not believe that AIG's credit-default swap (CDS) counterparties posed a systemic financial risk.

(Ex-Squeeze me? -AM)

For the last year, the entire Beltway theory of the financial panic has been based on the claim that the "opaque," unregulated CDS market had forced the Fed to take over AIG and pay off its counterparties, lest the system collapse. Yet we now learn from Mr. Barofsky that saving the counterparties was not the reason for the bailout.

In the fall of 2008 the New York Fed drove a baby-soft bargain with AIG's credit-default-swap counterparties. The Fed's taxpayer-funded vehicle, Maiden Lane III, bought out the counterparties' mortgage-backed securities at 100 cents on the dollar, effectively canceling out the CDS contracts. This was miles above what those assets could have fetched in the market at that time, if they could have been sold at all.

The New York Fed president at the time was none other than Timothy Geithner, the current Treasury Secretary, and Mr. Geithner now tells Mr. Barofsky that in deciding to make the counterparties whole, "the financial condition of the counterparties was not a relevant factor."

(Baking Powder? -AM

In April we noted in these columns that Goldman Sachs, a major AIG counterparty, would certainly have suffered from an AIG failure. And in his latest report, Mr. Barofsky comes to the same conclusion. But if Mr. Geithner now says the AIG bailout wasn't driven by a need to rescue CDS counterparties, then what was the point? Why pay Goldman and even foreign banks like Societe Generale billions of tax dollars to make them whole?

Both Treasury and the Fed say they think it would have been inappropriate for the government to muscle counterparties to accept haircuts, though the New York Fed tried to persuade them to accept less than par. Regulators say that having taxpayers buy out the counterparties improved AIG's liquidity position, but why was it important to keep AIG liquid if not to protect some class of creditors?

Yesterday, Mr. Geithner introduced a new explanation, which is that AIG might not have been able to pay claims to its insurance policy holders: "AIG was providing a range of insurance products to households across the country. And if AIG had defaulted, you would have seen a downgrade leading to the liquidation and failure of a set of insurance contracts that touched Americans across this country and, of course, savers around the world."

(Crickets chirping .-AM)

Yet, if there is one thing that all observers seemed to agree on last year, it was that AIG's money to pay policyholders was segregated and safe inside the regulated insurance subsidiaries. If the real systemic danger was the condition of these highly regulated subsidiaries—where there was no CDS trading—then the Beltway narrative implodes.

(I think I am going to hurl. -AM)

Interestingly, in Treasury's official response to the Barofsky report, Assistant Secretary Herbert Allison explains why the department acted to prevent an AIG bankruptcy. He mentions the "global scope of AIG, its importance to the American retirement system, and its presence in the commercial paper and other financial markets." He does not mention CDS.

'Well, you know what you can do with your show? You can take a flying... 
[a passing jet liner mutes out most of what he says] 
...till the handle breaks off and you have to get a doctor to pull it out again!
' -Garth Alger

Sat, 11/21/2009 - 16:00 | 138272 D.O.D.
D.O.D.'s picture

+10

Sat, 11/21/2009 - 14:05 | 138227 Anonymous
Anonymous's picture

Exactly. Geithner formally requested that Congress raise the $12.1 trillion statutory debt limit in August, saying that it could be breached as early as mid-October. There would have been no health care debate in the House if the Senate was debating increasing the debt limit. This is why the Senate needs to vote on the health care bill pronto because right after that vote, we run out of every trick to keep the debt limit under $12.1T

Sat, 11/21/2009 - 14:23 | 138233 Rainman
Rainman's picture

Bingo. The debt limit is like the crazy aunt living in the basement. All the Dems know she lives down there, but nobody wants to talk about her....especially since she's a distraction to the healthcare lovefest going on above ground.

Sat, 11/21/2009 - 16:49 | 138300 Anonymous
Anonymous's picture

Note for you foaming at the mouth Republicans that love to dig on those evil tax and spend Republocrats.

I seem to recall a borrow and spend fiesta that lasted a good eight years under GWB. New figurehead, same policy.

Sat, 11/21/2009 - 18:18 | 138357 Anonymous
Anonymous's picture

So, what's your point? Democrats should get health care through because Republicans should shut up and sulk in the corner to avoid being seen as hypocrites.

Sat, 11/21/2009 - 18:29 | 138360 Anonymous
Anonymous's picture

Yep. This is both a Rep & Dem problem. ALL politicians lie & do what is politically expedient to stay in power.

But if you think what the idiot Reps did under W was ANYWHERE near what O & this crowd of thieves are doing to MY UNBORN GRANDCHILDREN'S future, you are either intellectually dishonest or you just ain't paying attention.

Check it out in graphic form straight from the CBO.

http://perotcharts.com/images/deficit/budgetdeficit15-640.png

Sat, 11/21/2009 - 21:24 | 138464 Anonymous
Anonymous's picture

a gigantic fuck you, nancy

amerika has taxed and spent since hoover-roosevelt....
it has not stopped once regardless of party....

the only party is to rape tax payers and citizens....

Sat, 11/21/2009 - 14:09 | 138228 duckweed
duckweed's picture

it won't end with without a revolution.

Sat, 11/21/2009 - 16:48 | 138299 Hephasteus
Hephasteus's picture

Good thing one is scheduled.

Sat, 11/21/2009 - 19:27 | 138391 Anonymous
Anonymous's picture

"Meet the new boss. Same as the old boss."

Sun, 11/22/2009 - 19:54 | 138861 Hephasteus
Hephasteus's picture

Unless of course the necessary conciousness is created to completely destroy bossing technology.

Sat, 11/21/2009 - 14:18 | 138230 Rainman
Rainman's picture

After reading this, I am now desperately trying to change my vote to " OVER " on the spot price of gold.

Nicely done summary, Don.

Sat, 11/21/2009 - 14:38 | 138237 Anonymous
Anonymous's picture

Could be higher than 2000.

Sat, 11/21/2009 - 14:24 | 138234 Kayman
Kayman's picture

Solution:   President Obama has a national television address telling the American people that he was tricked by Hank Paulson last fall (Hank wanting to save Goldman) into believing that the New York money cartel needed to be saved first- a mere $700 billion for Hank's friends.

And Obama apologizes for bringing Goldman's men into his cabinet and he has decided to fire Geithner and Summers forewith. He will ask Helicopter Ben to resign. He will ask for clemency for Dubya and forgiveness for Greenspan.

And after being slapped upside the head during his China trip our president has reached the inescapable conclusion that unless there is true two-way trade with any and all nations, that American markets will be closed to one-way streeters, and currency manipulators.

 President Obama has decided to fund the weakened regional banks and withdraw all current and future support of the New York cartel starting with  Goldman.  And an independent investigation of commercial and criminal conflicts of interest that have defrauded the American people, will immediately be launched against the New York cartel.

In a Lincolnesque statement our President will tell the American people that he and they have been the victims of the big lie perpetrated by a crowd of self-appointed gluttonous money changers that have perversely turned JFK's beseechment in to " ask not what you can do for your country, ask what you can do to manipulate and steal from your country".

And finally, President Obama tells the American people the simple but solid truth that  there is no free lunch- that you cannot borrow yourself in to prosperity. That we are in a hell of a mess brought on by hollowing out the American economy by gutting out the American middle class manufacturing jobs (the very basis of America's previous solid economy).  American jobs will be created by repatriating "outsourced' jobs lost to one-way streeters and currency manipulators.

I have a dream....sigh.... is there an uncorrupted leader out there ?

Sat, 11/21/2009 - 14:33 | 138235 Anonymous
Anonymous's picture

History shows that, with very rare exceptions that tend to be overemphasized in retrospect, those with supreme power in a society will let that society burn down rather than give up their power. I think Obama would be assassinated before he could give that speech. Not that I believe for a moment he'd want to give it in the first place.

Sat, 11/21/2009 - 19:32 | 138397 Anonymous
Anonymous's picture

"Those with supreme power in a society will let that society burn down rather than give up their power."

If anything, that's a complete, total understantment.

The was a Roman Emperor who made a deal with the Barbarians to let them in, if they would dispose of his enemies.

I'd say that those in power will not stop at anything, and I mean anything, including actively destroying society, rather than give up power.

That is the lesson from history. We either need to learn it, or repeat it until the lesson sinks in.

Sun, 11/22/2009 - 00:25 | 138558 slick
slick's picture

The sad fact is that people in power do not look back at history because they only live in the present and as to the future they don't give a damn because they will not live in it!

Sat, 11/21/2009 - 14:42 | 138239 Daedal
Daedal's picture

That's what he should have done on the first day in office. He had 90% approval rating, and the prior administration was hated. He could've easily blamed the prior administration and correct the imbalance (painful as that would have been). Instead, he still blamed the administration, but then proceeded to extentuate the failed policies at an exponential degree - cheap credit, bailouts, more stimulus, escalating another war, etc. He even re-appointed Bernanke. The only 'change' was an enhancement of the same tried and true failed policies. Obama continues to dig a hole -- now using a bulldozer instead of a shovel.

Sat, 11/21/2009 - 14:48 | 138242 Rainman
Rainman's picture

Proof that the banksters had all their bases covered. Obama was guzzling those campaign contributions. That " CHANGE " theme had a nice ring to it. Big Bucks to the Boyz and small Change for the sheeple. 

Sat, 11/21/2009 - 15:55 | 138270 Daedal
Daedal's picture

Good point. I think that will be the impetus for real change; when people realize that when Geitner says "no one cares more about the health of our economy more than me", that it doesn't mean shit when he's restraining you while Bernanke pilfers your pockets for loose change. Our government has been reduced to a gang of merry men prancing around the virtues of quantitative easing and the redistribution of material goods and services. It's time to dethrone the prince of theives.

Sat, 11/21/2009 - 16:17 | 138280 D.O.D.
D.O.D.'s picture

Does anyone else find it quite odd, that a junior senator like obama received all that national air time, even prior to the primary race beginning.  I remember the first story I saw run about him; "Who is the brash young senator ready to shake up the DNC?", and he was running across a parking lot, with a local news camera man following him, and he challenged another contender to a debate, and I was thinking to myself, who the hell is this?!? Of course this "random" act of boldness made it to national news.

Air time is no accident, and everyone knows; even bad press is good press when you are an unknown. 

No, obama was hand picked, the campaign strategy meticulously designed to make him appear as the under-dog, a fantastic Hollywood story.  Other than budwieser and football, what do Americans love more then an under-dog saves the day story.  Unfortunately, here in the real world, the story goes on long after the "happily ever-after"

obama is nothing more than a puppet in a show, and until America decides they want to know who the real puppeteer is (I think most of us here already know...), Americans will continue to be mesmerized by the shadows on the cave wall, and will kill anyone who calls the performance a deception.

Sat, 11/21/2009 - 17:19 | 138321 SilverIsKing
SilverIsKing's picture

+1000

Sat, 11/21/2009 - 19:23 | 138389 Orly
Orly's picture

Obviously, it goes much deeper and much further than that, DOD.  And it is all coming to a head.  The fourth turning is upon us.

These next ten years are going to be something else.

Sat, 11/21/2009 - 22:10 | 138485 geopol
geopol's picture

These next ten years are going to be something else.

 

Let me foist upon you a grim analysis::: Forget ten years,,,10-24 Months..

 

Gold

Silver

Ammo

Good open Soil

Water

300 Cords wood

10,000 gallon fiberglass tank buried filled with diesel

Just to begin with!!

 

We won't make two years sorry to report

Sat, 11/21/2009 - 19:30 | 138395 Anonymous
Anonymous's picture

The Manchurian candidate?

Sat, 11/21/2009 - 21:00 | 138454 D.O.D.
D.O.D.'s picture

Technically they are all (...ok mostly...) Manchurian candidates.

Sat, 11/21/2009 - 21:30 | 138466 Anonymous
Anonymous's picture

barry was selected c. 1991 to be president....it
was "ommon" knowledge in russia....his
time at u of chicago is the telltale sign that
he was a rockefeller selection....

and why would an "exemplary" student like
barry have every single record of his sealed up
like a witch's hole? for the same types of
reasons that the fed wants its records sealed
to all....there is more there than his cia operations
in pakistan and his kenyan birth......

soetoro is a rockefellerite through and through....

Sat, 11/21/2009 - 23:00 | 138512 D.O.D.
D.O.D.'s picture

+100 troy ozs of Gold!!!

Sat, 11/21/2009 - 21:53 | 138476 Mad Max
Mad Max's picture

+1 Sextillion (Pengo) Fiatscos

Obama is the most obvious puppet in american presidential history (his predecessor might have been 2nd).  The sooner people realize this, the sooner useful things can be done.

Sat, 11/21/2009 - 23:55 | 138541 Burnbright
Burnbright's picture

D.O.D,

I like the Socrates reference. Actually I think that was the first proper use of his analogy, I didn't really get it till you just used it now.

Sun, 11/22/2009 - 16:22 | 138791 D.O.D.
D.O.D.'s picture

WOW! That's a very nice complement, thank you!

However, the Allegory of the Cave is written in Socratic Dialogue, where Socrates is the main character, and is part of a collection called the Republic [The title of the Republic in Greek, politeía, literally means the order or character of a political community, i.e., its constitution or regime type. -WIKI], which was written by Plato.  A little confusing I know, as Socrates is the main character in the work.

Sun, 11/22/2009 - 15:57 | 138782 Anonymous
Anonymous's picture

"Air time is no accident." Obama got coverage on all the majors, good coverage. It reminded me of the rise of GWB, the man we supposedly wanted to have a beer with. I can hardly wait for the next puppet show. Will the public fall for it again, or will it even matter?

Sat, 11/21/2009 - 19:29 | 138394 agrotera
agrotera's picture

Awesome Kayman! 

I didn't vote for Obama, but after his election, i prayed that my vote was wrong.  And for three weeks after his inauguration, he paused about "what to do about the economy" and he and Geithner stayed closed mouth--until one week when they came out and declared FULL SUPPORT OF THE PAULSON BERNAKE PLAN...that was the week that China gave a stern warning to our country about protecting their treasury investment and the UN declared that it would recommend to the world to move away from the dollar as the worlds reserve currency...no coincidence on these statements happening right after Obama reveals he is a puppet to the privately held federal reserve machine that runs our country.

And, when all is said and done, a country's currency is a reflection of it's INTEGRITY, and the day that Obama announced that he would back the paulson/bernake plan was the day he became accomplice to the crimes committed on all of us, and the world knows this, there is no keeping it under wraps. 

You are right, if Obama became honest and stood with honest actionable moves to put down the evil machine that is in place, we could possibly have honest hope for our country's integrity and currency to have value again.

Obama needs to ask Patrick Byrne to be his economic and integrity advisor.

Sat, 11/21/2009 - 21:34 | 138468 Anonymous
Anonymous's picture

when a country's currency and borders are dissolute
so is the nation....

amerika is sick and in irremedial decline although
it will act like a cornered bear by use of its
grotesquely over-sized military and 1500 foreign
military bases....

Sun, 11/22/2009 - 13:32 | 138704 laughing_swordfish
laughing_swordfish's picture

Obumbler turn on his paymasters like that?

Not bloody likely.

However, this is precisely the speech I can see President Ron Paul making on inauguration day 2013.

Paul/Grayson 2012.

 

Sat, 11/21/2009 - 14:43 | 138241 buzzsaw99
buzzsaw99's picture

Foreign central banks, are you watching this?

Do you still have trouble acknowledging the fact that they are all in cahoots together? One dies, they all die. You aren't telling them anything they don't already know. They're all doing it.

Sat, 11/21/2009 - 14:57 | 138244 heatbarrier
heatbarrier's picture

 

Buiter, FT, proposing auditing the ECB,

"A comprehensive independent audit of the Fed’s use of what is, in the final analysis, public money and therefore tax payers’ money is long overdue.  This is a major victory for democracy and the public’s right to know what those to whom certain public functions have been delegated and entrusted have been doing with the taxpayers’ money.

What’s good for the Fed and for American democracy is equally important for the European Central Bank and European democracy or for the Bank of England and British democracy.  It is time for a detailed and comprehensive independent audit of the ECB’s financial transactions since the beginning of the crisis.  This should include a close examination of the precise terms and conditions, including valuations of illiquid collateral, on which liquidity support, including enhanced (credit) liquidity support has been made available to the Euro Area banks by the NCBs of the Eurosystem."

http://blogs.ft.com/maverecon/2009/11/auditing-the-central-bank-a-jolly-...

 

Sat, 11/21/2009 - 19:25 | 138390 Orly
Orly's picture

Second domino...

 

Rock on!

Sat, 11/21/2009 - 15:12 | 138253 Anonymous
Anonymous's picture

Look, this is not that complicated. The data as to what the FED is doing is in plain sight. Simply look at bank excess reserves at the end of each week and you will see that they have grown at over 40% since August. This means that the FED has purchased from the domestic banks their GSE securities and who knows what else and has blown up its own balance sheet in the process. Then simply ask yourself, where did the FED obtain the funds to make such purchases? It simply printed them of course.

Watch what they do, not what they say.

Sat, 11/21/2009 - 15:14 | 138254 chumbawamba
chumbawamba's picture

Haha, we are so fucked.

I am Chumbawamba.

Sat, 11/21/2009 - 15:33 | 138255 delacroix
delacroix's picture

air force one gets shot down, alledgedly by iran, extend and pretend. obama is useless when the sheeple will no longer believe what he says. he's expendable  great false flag scenario, and so easy to accomplish. I can just imagine michelle and the girls on TV asking the american people to crush the evil villains  rahm won't be on the plane, china is warned they could have been fingered for the deed, but instead we'll share the iranian oil and gas. israel gets a pass on gaza and west bank, because they were right about those iranian psycopaths. russia aknowledges our criminal gang is bigger than theirs. the rest of the world is either kissing ass or lays low, hoping the bully doesn't look at them.

Sat, 11/21/2009 - 17:14 | 138315 maff
maff's picture

I like the way you paint the picture, delaX. The central theme is so powerful you just KNOW they are thinking it, somewhere.

Sat, 11/21/2009 - 18:03 | 138348 D.O.D.
D.O.D.'s picture

"...rahm won't be on the plane..."

ok, that really did send shivers down my spine, makes perfect sense....

Sat, 11/21/2009 - 21:55 | 138477 Mad Max
Mad Max's picture

Possible, but awfully conspiratorial.

We should pass a law that Rahm can never be more than 3 feet away from Obama.

Sat, 11/21/2009 - 15:29 | 138258 RobotTrader
RobotTrader's picture

Gold is saying that Quant Sleaze Round #2 is forthcoming:

Retails stocks stuck at 52-week highs.  Failure of the OIH to hold the 50-day means oil prices are probably headed lower and Joe Six is going to get another break at the gas pump.

Health care going wild, strongest sector so far YTD:

Short rates at 1% - 2% virtually assures that the ARM resets coming up this year will actually lower mortgage payments by 25% or so, 30-yr. mortgage rates at or near record lows, therefore the real estate remains one of the strongest sectors:

 

 

Sat, 11/21/2009 - 15:42 | 138261 SilverIsKing
SilverIsKing's picture

I love models.  Thanks.

Sat, 11/21/2009 - 16:26 | 138289 Careless Whisper
Careless Whisper's picture

me loves em too. especially the ones on the big billboards.

http://www.pollsb.com/photos/o/309416-calvin_klein_threesome_billboard_new_york.jpg

 

Sat, 11/21/2009 - 17:19 | 138322 maff
maff's picture

Yeah, they are foxy. A week with one of them I could handle. Hot. Sweaty. But... would you really want to share 10 years of your life with one of these bimbos? 

Sat, 11/21/2009 - 17:22 | 138326 SilverIsKing
SilverIsKing's picture

How about 10 years if you could get a new one each year during that span?  Oh, and regarding the CK ad, lose the guys.

Sat, 11/21/2009 - 20:54 | 138450 Careless Whisper
Careless Whisper's picture

they're the best part.

Sat, 11/21/2009 - 15:54 | 138262 MeTarzanUjane
MeTarzanUjane's picture

If you guys are not understanding this I don't know what to tell you.

Myself and my partner have a seat on the USDX exchange and we've been buying gold since 2006 when the obvious flags were being waved in our faces(I know we were late to the party but we fully expect to see gold trade to the $4500 level) and we will be holding long after that.

The point is right now it's not too late. Check eBay for 'American eagle gold coin' and see how many bids there are for each coin. A lot of bids on all coins. If you do not have any, at least get a few coins as a backup plan.

I'll never forget the day that Frank(my partner) and I came to the revelation that the FED and US Treasury we colluding to drive the dollar deep into the mud. To this day we are still buying coins.

Geithner and Bernanke are not going to give any signals for the collapse. It's just going to happen. In the blink of an eye. Do you remember when Paulson came out and told the American people that they needed $750 Billion TODAY or the entire Economy would collapse? The US dollar collapse will be like that, no notice, no warnings. One day your credit cards will stop working and by that evening the entire global financial system will be in THE Death Spiral.

All of my colleges on the floor know this. We all start and end the day with great expectations of "The Event".

If you have not read this it is a MUST READ! Really a must read. It may take 10 minutes to read but DO READ IT.

http://johngaltfla.com/blog3/2009/11/18/the-day-the-dollar-died/

http://www.kitco.com/ind/willie/nov182009.html

I know this video violates Marla's fight club #5 rule(minute 1:42) but this explains everything for you who have a sense of humor. Without further ado from the Columbia Business School.
http://www.youtube.com/watch?v=ipJTqCbETog
(FROM The Columbia BUSINESS School no less! Wake up and listen)

Sorry, I'm outraged!

Keep up the great work ZH.

Sat, 11/21/2009 - 16:03 | 138273 AnonymousMonetarist
AnonymousMonetarist's picture

By the toss of a coin or the flight of an arrow?

Sat, 11/21/2009 - 16:36 | 138295 Anonymous
Anonymous's picture

Count your blessings.

Thanks Tarzan for the info. Ebay looks like a good marketplace to judge what's really happening with real consumers.

Sat, 11/21/2009 - 17:03 | 138308 MeTarzanUjane
MeTarzanUjane's picture

By flight of an arrow. Although the FED appears to be a bumbling group of halfwits, they are more lethal that any special forces division of the US military complex.

They reality is that my partner and I go to work each and every day fearing that we are going to be caught in the cascade. It's not only us but we facilitate many trades in this pit. Our clients are going to get caught and they are going to blame us. Last month we stopped trading our own money and only trade for our clients.

I know it's a slippery slope but we're all on it.

Sat, 11/21/2009 - 17:50 | 138340 AnonymousMonetarist
AnonymousMonetarist's picture

To be mindful is a discontinuous process.

Sat, 11/21/2009 - 18:11 | 138352 Rollerball
Rollerball's picture

+ A Trillion

Sat, 11/21/2009 - 19:39 | 138400 Anonymous
Anonymous's picture

So, did either you or the Columbia Business School see the collapse last September coming? Contrary to what you're saying, yes, there was plenty of warning coming. I followed it, and managed to make a profit while everyone was whining about their 401Ks.

Forgive me, but I'll follow the advice of those who saw it coming. And stay away from gold for right now.

Sat, 11/21/2009 - 15:47 | 138264 Anonymous
Anonymous's picture

Obama is a hand-servant to the elite. He will bankrupt this country and steal trillions for his elitist friends. There is no way out -- only death and destruction ahead of us. Pray to God for forgiveness and mercy.

Sat, 11/21/2009 - 18:19 | 138358 Rollerball
Rollerball's picture

Amen.  It was obvious "Uncle Tom" was owned when he voted to give the telecoms immunity for spying.  Ticket prices for the subway train below to escape the coming Armageddon circa 12/12/12 are going up. 

Sat, 11/21/2009 - 15:47 | 138267 Anonymous
Anonymous's picture

Robo, pretty girls and all, you are so wrong. ARM reset rates will not be tied to short rates, but rather to a significant "premium" over long rates. Also, I don't look for QE 2 as that would cause the dollar to tumble even further and cause the price of oil and other imported commodities to skyrocket, thus depriving ol' Joe sixpack of his "break at the pump". Nothing will get the populace stirred up more than the price of gasoline at more than $3.50 per gallon, especially with 10+ % unemployment.

Sat, 11/21/2009 - 17:23 | 138327 Zombie Investor
Zombie Investor's picture

The lower interest rates are not going to help the Alt-A recasts.  Also, the prime mortgage "strategic defaults" are probably not driven by interest rates, but by the loss in home values.  The homeowners aren't defaulting because they can't make the payments, they are defaulting because they are so far underwater.

Sun, 11/22/2009 - 21:49 | 138901 Anonymous
Anonymous's picture

Bingo!

Sat, 11/21/2009 - 15:54 | 138269 Howard_Beale
Howard_Beale's picture

Nice work Don. At ZH, we collectively want Timmay, BB, and Summers out. Who do we want to replace these idiots? They have to be realistic candidates that could survive vetting (I know, I know--Tim couldn't fill out a tax form and still got in).

Let's come up with the ZH Dream Team for Treasury, Fed Chairman, and Director of the Economic Council. Volcker is an obvious choice for Fed Chairman but he is 82--but he still has my vote. Anyone else care to put up a nomination?

Sat, 11/21/2009 - 16:21 | 138285 D.O.D.
D.O.D.'s picture

Treasury - Tyler Durden

Fed Chairman - Marla Singer

Director of the Economic Council - Project Mayhem

Sat, 11/21/2009 - 16:36 | 138294 Howard_Beale
Howard_Beale's picture

Well that's more than 3 people, according to Tyler. Seriously, we can complain all we want about the current gang but if we can't come up with replacements then how do we get it together to make some noise?

Sat, 11/21/2009 - 18:28 | 138355 D.O.D.
D.O.D.'s picture

I hear you Howard, and I think what you are implying is that we have to create a new system.

I wonder how the Founding Fathers were chosen...[rhetorical]

Unfortunately it has been stated here on ZH, on more than one occasion, that it is usually the corrupt who will sieze power in a mass panic.  So the most important thing is:

A) Don't Panic.

B) Don't Follow the opportunists who arise when panic hits. (that might be tougher than it sounds)

C) A complete evaluation of the entire democratic and corporate system.

D) Never forget how America reached the tragedy she is currently in.

Once a new system has been established and a power structure outlined, only then can we concern ourselves with who should be in power.

Until such time; it is what it is.  Every man for himself.

Sat, 11/21/2009 - 19:47 | 138412 Howard_Beale
Howard_Beale's picture

I agree...every man and woman for themselves.

Sat, 11/21/2009 - 20:08 | 138413 Howard_Beale
Howard_Beale's picture

-del- double post

Sat, 11/21/2009 - 19:57 | 138420 Orly
Orly's picture

"I wonder how the Founding Fathers were chosen...[rhetorical]"

 

Exactly right, again, DOD.  When the time comes, Nature has a way of bringing the right people to the right place at the right time.

Sat, 11/21/2009 - 20:58 | 138452 Careless Whisper
Careless Whisper's picture

@DOD    dewd, the plan is to end the fed and replace it with dollars backed by gold and silver. no need for a fed chairman. marla can be attorney general.

Sat, 11/21/2009 - 21:06 | 138455 D.O.D.
D.O.D.'s picture

Well let's call a cat, a cat. Marla is, and always will be, the Queen Bee.

=]

Sat, 11/21/2009 - 22:34 | 138499 geopol
geopol's picture

Those folks are all finance, we need someone to enforce their agenda..

Department of Defense.........................D.O.D.

What the hell, you have the temperament for it.

 

 

Sat, 11/21/2009 - 23:12 | 138519 D.O.D.
D.O.D.'s picture

Do Or Die baby! 4 LIFE!

Say what you want, but don't ever ask me to live a lie!

WestSIYYYDE!!!

Sat, 11/21/2009 - 23:41 | 138532 D.O.D.
D.O.D.'s picture

http://www.youtube.com/watch?v=5j2F4VcBmeo

just fyi, I would NEVER order a code red...

I would do it myself...

Sat, 11/21/2009 - 17:13 | 138314 Howard_Beale
Howard_Beale's picture

Very funny!

Sat, 11/21/2009 - 18:55 | 138376 D.O.D.
D.O.D.'s picture

+10!

Sat, 11/21/2009 - 19:51 | 138415 Anonymous
Anonymous's picture

William Black. Too bad William White isn't an American (that would cool - Black & White... Two Dollar Bills).

Sat, 11/21/2009 - 22:34 | 138500 chindit13
chindit13's picture

Fed:  Paul Volcker

Treasury:  Paul Tudor Jones

Council of Economic Advisors:  Simon Johnson

FDIC:  William Black

Cell # 666 at Guantanamo (unlike current inmates, this only after due process):   Waiting List......cannot violate The Fifth Rule by namedropping

 

Sat, 11/21/2009 - 23:27 | 138526 dondonsurvelo
dondonsurvelo's picture

The only person that needs to be replaced when those three are tossed is the Secretary of the Treasury.  We don't need the Fed or economic advisers.

Sun, 11/22/2009 - 13:44 | 138712 laughing_swordfish
laughing_swordfish's picture

All ZH Economic Dream Team:

Treasury - Tyler Durden

Fed - Chumbawamba

CEA Chairman - Cheeky Bastard

SEC Chairman - RobotTrader

FDIC Chairman - Marla Singer

 

Sat, 11/21/2009 - 16:05 | 138275 Anonymous
Anonymous's picture

Simon Johnson.

Sat, 11/21/2009 - 21:06 | 138388 heatbarrier
heatbarrier's picture

Simon Johnson would be a great choice. No chance in hell, though. As long as it's not Stan Fischer, Darth Vader himself, I would take anyone, John B. Taylor?  John Buller Taylor?

http://en.wikipedia.org/wiki/Stanley_Fischer

Sat, 11/21/2009 - 23:58 | 138543 JamesBrrando
JamesBrrando's picture

good grief!

who isnt Jewish in the banking system?

Sat, 11/21/2009 - 16:19 | 138282 Prophet of Wise
Prophet of Wise's picture

Excellent hard-hitting financial journalism Don!

Foreign central banks, are you watching this?
America will soon learn our beloved Fed and all CB's around the horn are all borne of the same Idumean blood. Our great national pride; our infamous beloved Dollar $ of Midas will soon be engulfed in flames along with the Pound Sterling and our nations and our sovereignty will evaporate as the dew of hermon. There will be nothing but blood in the streets. And from then shall come a great emancipator who will offer unity, peace, stability in our great time of suffering and need. And his name will still be "little known." But he will be proferred as an "impressive," "clever" and "calm" man having experienced and as a budget hard-liner delivered his own people from the ravages of profilgate debt. And he will extend that hand and offer his "moderate" and "fair minded" rebukes to our shamed lifeless leaders and as duly expected our peoples will likewise extend their hands to have them bound permanently in the shroud of his newfound system of global unity, global security, global prosperity and global peace. What else should we expect from such a modest, soft spoken, unassuming a man as this. What have we to fear from such a man as this? What have we to fear from such a system when our own "system" lay dying in ash heaps all around us? How could we fear this man whose fondness and love for penning Haiku and poetry have inspired his great works. What fear can be found in such a man as makes annual pilgrimmage retreats to the ancient monastery of Affligem Abbey? Oh please dismiss his brief occasion to have worked for this same raccous bunch in his own nation's central bank. What's a poor Jesuit educated economist to do for a living? Afterall, there's not much a market for a philosophy degree in Brussels is there? It's good time fellowcraft to read his six work treatise on all things poltic and economic to get a glimpse in to what awaits you with baited breath. Halcombe's fear raiseth the hair on the neck but the fear which is to come raiseth the hair on the soul.   

Sat, 11/21/2009 - 16:22 | 138286 D.O.D.
D.O.D.'s picture

that's a LOT of bold, and it hurts my eyes, can't read....

Sat, 11/21/2009 - 17:40 | 138334 JR
JR's picture

All you need to know about Herman Van Rompuy’s election as first permanent president of the European Union is contained in this quote from yesterday’s press conference.  Citing the way world leaders have begun to deal with crisis, Van Rompuy said:  “2009 is also the first year of global governance with the establishment of the G-20 in the middle of a financial crisis.”

The words “global governance” identifies this president as a player. No one who is going to take on the establishment would have said that.  

Citing further the “urgent matter”of “the environmental and energy challenges we face and the aspirations we have for greater security and justice for all our fellow citizens,” Van Rompuy said: “The climate conference in Copenhagen, is another step towards global management of our planet.”

In short, there will be no trouble with the established rules of the Federal Reserve and its IMF/World Bank arm.  Finances and energy? Goldman can live and grow with that.

Sat, 11/21/2009 - 18:31 | 138362 Rollerball
Rollerball's picture

Beautiful insight.

Sat, 11/21/2009 - 19:55 | 138419 Anonymous
Anonymous's picture

Good luck with that. Copenhagen is going to have all it can handle dealing with the fraud exposed in the 61Mb hack posting of the Climate Research Unit at East Anglia. Much of the BS surrounding the IPCCs conclusions has been laid bare. Haven't you heard?

Sat, 11/21/2009 - 16:26 | 138287 SDRII
SDRII's picture

I have not seen a concise explanation of what the Fed is doing with the P&I from these securities - are they "burning" it or simply redeploying the P&I? Even though $ amount is rather immaterial, any insights appreciated

Sat, 11/21/2009 - 16:22 | 138288 D.O.D.
D.O.D.'s picture

Great read Don, thanks for taking the time to share!

Sat, 11/21/2009 - 17:16 | 138317 Anonymous
Anonymous's picture

Well what if the fed removes the 25 basis point risk free rate of return its paying to the banks?

Sat, 11/21/2009 - 17:22 | 138325 JR
JR's picture

You say, Don, “In summary, the past 2 months have witnessed a huge amount of money printing, and a dramatic increase in the risk free profits the banks are getting. Is anybody watching this?” And ask, “Does nobody care?”

The economy, one way or another, is being destroyed by the flood of fiat money.

And, yes, people care. Most are struggling to find ways to escape the destruction of their savings.  But most exits have been shut to them.  And the Fed obfuscates the meaning of everything it does with so many trick lies in the use of words and phrases with technical meanings so different from what they imply that the average victim is taken totally unaware of what’s happening to him, punch drunk from repeated hits of inflation and then deflation, founded on fraud and knavery.

The Fed’s most important method for the creation of fiat money is the purchase and sale of securities on the open market. Under the obfuscation, it’s not complicated. But by the time that this and those other trick lies are boiled down to an alphabet soup of QE, SFP, MBS, CDS, FOMC, TARP, TAF, TSLF, repos, PDs, PDCF, GSEs... without “ID,” the average citizen gives up in desperation, and the banker cabal wins again.  As was intended.

But one thing the average John Q. Citizen does understand is prices, even if he doesn’t understand Fed “inflation.”  IMO, declining consumer confidence is based on the realization that prices are higher, spending power is weaker and job security is in danger. 

As Nouriel Roubini said this past week in an email to RGE clients where he argued against putting “too much confidence in this year’s strong equity rally” for a V-Shaped recovery: “80% of the population reacts to home prices, not equity prices.” And he forecasts that home prices will fall further.”

And guess who’s right, the Fed/government “deflation” lies, or JQC?

JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS - COMMENTARY NUMBER 259 - November 18, 2009 says, Using the 1980's BLS measure (before gimmicks) inflation rose to about 7.1% (7.13% for those using the extra digit) in October, versus 6.1% in September.

 “Mortgages are paid with paychecks, not percentage point increases in GDP.” Jay Brinkmann, economist with The Mortgage Bankers Association (MBA).

P.S. Thanks for the "Money Printing Alert."

Sat, 11/21/2009 - 17:53 | 138341 The Rogue Trader
The Rogue Trader's picture

Great work Don...will they let us visit you in Gitmo?

Sat, 11/21/2009 - 17:53 | 138342 The Rogue Trader
The Rogue Trader's picture

Great work Don...will they let us visit you in Gitmo?

Sat, 11/21/2009 - 18:35 | 138364 delacroix
delacroix's picture

real assets, physical land, commodities, businesses, gold, these are what are being purchased, with monies, soon to be worth a lot less. and those who managed to hang on to something, will end up selling to survive, as the opportunity to prosper is being destroyed for those not part of the clique. in the great depression, 60% of the farmland went to the banks. it will be worse this time. will the banks end up with 60% of real property? at this point, it looks possible. thats a lot of wealth transfer. would you be infuriated if someone molested your child? these soulless demons are molesting your whole family, your whole community, your whole country, your whole world, and its future.  GET IT?

Sat, 11/21/2009 - 18:46 | 138370 JR
JR's picture

excellent, and frightening!

Sat, 11/21/2009 - 18:41 | 138367 JamesBrrando
JamesBrrando's picture

everyone is buying gold

everyone is shorting the usd

 

someone is going to get roasted b/c "everyone cant win"

95% lose

5% win

Sat, 11/21/2009 - 18:51 | 138374 Anonymous
Anonymous's picture

"For he to-day that sheds his blood with me
Shall be my brother; be he ne'er so vile,
This day shall gentle his condition;
And gentlemen in Wall Street now-a-bed
Shall think themselves accurs'd they were not here,
And hold their manhoods cheap whiles any speaks
That fought with us upon Thaler Destruction day."

In a war there are those that prevail and those who are crushed and left defenseless.

Side with strength, side with integrity, side with conviction.

Traders are cowards to numbers. Gold must prevail.

Sat, 11/21/2009 - 21:05 | 138457 Anonymous
Anonymous's picture

Bingo! It amazes me how one-sided all the commenters are on this subject. When the reality of deflation sets in, there will be a significant pullback on gold (albeit temporary, pending corporate defaults) and a dollar rally that not even Bernanke can halt.

Sat, 11/21/2009 - 23:01 | 138513 Anonymous
Anonymous's picture

But when that dollar rally happens it will only be short and temporary. The last thing that Bernanke can do is raise interest rates right now because it would trigger a explosion in the bond market, and a cataclysmic failure of interest rate derivatives for the smart money who counted on Bens promise to not raise IR's until 2012.

We are not going to see further deflation beyond this point in the US.

Sat, 11/21/2009 - 23:50 | 138538 Mad Max
Mad Max's picture

According to Mish, gold does well in deflation:

http://globaleconomicanalysis.blogspot.com/2007/02/is-gold-inflation-hed...

Sat, 11/21/2009 - 22:21 | 138489 Mad Max
Mad Max's picture

A modest number of individuals, plus some central banks and a few hedge funds, are buying gold.  Most major institutional investors are not.  Some traders are shorting the USD; again not 95% of the investing world, probably more like 5%.

Sat, 11/21/2009 - 22:45 | 138507 Anonymous
Anonymous's picture

Funny I heard the IMF is selling hundreds of metric tons to sovereign wealth funds. And the IMF in return is buying Treasuries with the proceeds of the gold trades. This is done in a last ditch effort to prop up the bond market because it's so sick.

If buyers get roasted it may be in 2013 if the FED/Treasury can create a miracle out of this shitstorm, but before then the slope is upward. Straight up.

Or do you really thing everything is going to be better by the end of 2009 after the stellar Christmas buying bonanza?

Sat, 11/21/2009 - 20:23 | 138434 Anonymous
Anonymous's picture

If there is a collaspe, GS/JPM executives will be the first to leave the country to oversee their massive gold holdings. It is likely their large cash bonuses are being used to buy gold holdings outside the USA. If there is a economic collaspe, all guns and gold must be turned in to the IRS in return for 100 year 1% bonds. Also all retirement funds will be converted to long term US bonds. See there is a solution to our economic problems. The West becomes the East and the East becomes the West.

Sat, 11/21/2009 - 23:52 | 138540 Mad Max
Mad Max's picture

This sounds like a bad knockoff of an Alex Jones show.  There may be bits of truth in it, but mostly in the one million monkeys on typewriters way.

Sat, 11/21/2009 - 21:05 | 138456 max2205
max2205's picture

Soooooo, I am long OR short 100,000 oz of gold at $2,500. Obamarama decides to cease , again, gold ownership. BHO will pay 900 per oz by next Tuesday and all CME NYMEX TRADES WILL CLEAR OUT.

Who wins?

Sat, 11/21/2009 - 22:20 | 138488 Mad Max
Mad Max's picture

It's not going to happen.  Too many influential interests are in gold and couldn't be exempted.  Also it would be nearly certain to trigger a revolt.

We're so close to Zimbabwe's path it's not funny.

Sat, 11/21/2009 - 22:55 | 138510 delacroix
delacroix's picture

I fully expect an abrupt dollar rise, equities fall, gold fall, panicked treasury buying, gold sell off, to immediately be reversed, once the treasuries have been sold, and the gold has been scooped up. the market will be goosed, just to make it look like theres still a place to realize a gain. inflation and taxes will make the investment lose a little less than treasuries.  JEEZ when did I turn into such a pessimist? Oh yeah, and all the shorts get smoked once again

Sat, 11/21/2009 - 22:33 | 138497 Anonymous
Anonymous's picture

BHO can only seize that which is willingly allowed to be seized. Is he going to toss every home on that forsaken North American continent? He presumes law abidance, after the governed have suffered the contravention of their will, when they have been wearied by moral hazard, and by erosion in the rule of law. No, if he thinks he can determine price on precious metals, he should consult the stronger economies of the world for them to meet it.

Otherwise, arbitrage baby. Duck, and run. Black market, minus its customary nick, and I'll take global market price.

BHO DOES determine through his flying monkeys the value of the USD. Less is decidedly more in his eyes. We'll get the less, he'll take the more.

Sat, 11/21/2009 - 21:39 | 138470 Anonymous
Anonymous's picture

Obama said today in his weekly address that americans should spend less and save more. What this can't be!!!

http://www.whitehouse.gov/blog/2009/11/20/weekly-address-traveling-abroa...

Sat, 11/21/2009 - 21:56 | 138478 Anonymous
Anonymous's picture

Everyone buying gold? The vast majority of savvy business people I know dont buy gold and advise against its purchase. And that makes me feel good about buying gold and platinum.

Sat, 11/21/2009 - 22:33 | 138498 Anonymous
Anonymous's picture

It is absolutely scary to see all that money printing going on.

It makes every dollar anyone holds, worth MUCH less than it was, and without the official 'warning" of higher inflation - yet!

admin
http://invetrics.com

Sun, 11/22/2009 - 02:25 | 138588 faustian bargain
faustian bargain's picture

This post and the comments are freaking me out a little. Especially that 'Day the Dollar Died' story.

Sun, 11/22/2009 - 06:10 | 138618 Gordon_Gekko
Gordon_Gekko's picture

YAWN...tell me something I don't know.

Sun, 11/22/2009 - 11:39 | 138670 Ned Zeppelin
Ned Zeppelin's picture

The real question is, given these forecasts, what do the Powers That Be Do to reinstate the dollar as the preminent  global reserve currency? Roll through the scenarios and figure it out.  Failed Treasury auction? This will not be allowed to happen. End of Agency MBS purchases? Will not happen.  The day the dollar died? Will not be allowed. Geithner out? Why not, but does it change anything? Of course not.  What is their next move, ladies and gentlemen?

It all comes down to raw power, and that is military power. Gold survives only as long as it can be protected from theft. You don't need anything else but really big guns, and lots of 'em, if you want to rule the roost, as much fun as this "rule of law" experiment has been for the past couple hundred years.  New world order, my ass.  If the game is no longer working for the US, the rules of the game will be changed by force.   Reset the whole tamale. Global jubilee (for the US) at gunpoint.  Mark it down. That is the way any collapse plays out, not the US meekly showing up at the IMF begging for food.  Won't happen, people.

Sun, 11/22/2009 - 15:55 | 138779 Kayman
Kayman's picture

First: Thank you, Tyler and Don for enlightening us with your wisdom and monetary detective work.

Second: Ned Zep.     Rome had the largest, and best-equipped army for centuries, but Rome rotted from the inside

To keep in power the corrupt leaders at the top, fed Roman citizens  a steady diet of bread and circuses, until the Roman people could no longer feed and clothe themselves (notice our addiction to inferior Chinese crap sold by Wallmart- Live Better by putting your own citizens out of work?)

Rome was divided into the West (Rome itself) and the East (Constantinople), creating divisions within the Empire. Can you hear the Dems and the Republicans bickering over who gets the most money from their masters in the New York cartel ? And to hell with the voters who elected them.

Rome made deals with its former enemies, slowing but not stopping the rot and the decline.  Our President went begging to Communist China (really just another Fascist state), where he was offered help writing joint public platitudes and was otherwise told to go take a hike.  What an embarassment (yet the best indication of the decline of America) to have the President grovelling to our enemies.

 Without Obama having the fortitude to stop all Chinese imports into the U.S. (can't do that since he has nailed himself to the "let's pretend we have free trade" cross) he is powerless. Obama and Helicopter Ben are now burning the kitchen cabinets to keep the steam up in the boilers for the last brief run.

Too late, Rome called its armies back home (many were rented mercenaries)only to find they had foreign enemies and the Roman people to keep at bay

Our politicians should fear the return of the military from Iraq and Afghanistan.  This army will see the corruption they have witnessed abroad is alive right here.

So... the U.S. will not be showing up at the IMF or World Bank (they are controlled by the same New York/Washington Cartel anyway). 

And as Roman leaders became corrupt, the Roman people became despondent and Rome debased its currency to pay its debts.

 I think I hear Nero (Washington) fiddling with the GS cartel fiddling in the background.  For now the american middle class is on a slow boil, but all bets are off if that pot boils over.

 

 

Sun, 11/22/2009 - 18:55 | 138846 Anonymous
Anonymous's picture

Have any of you thought about the scenario wherein the Obama adminstration stops spending 500,000,000 on Medicare and adds a $1,000,000,000 in new medical taxes? And he does this 4 years prior to any new health care spending. This could make him look like a deficit hawk, while driving us further into depression. If the new tax revenues are used to pay down the debt, and retire some of that recently printed money, we could avoid the hyper-inflation scenario.

Mon, 11/23/2009 - 02:09 | 139100 Anonymous
Anonymous's picture

Anonymous 138339 near the top said....

" If that loss of confidence has fused with a belief of being double crossed, and China wishes its revenge and to secure as much recoverable value from their rapidly corroding relationship....
They will gather precious metals in earnest. They will dump their dollars which will join with the existing money supply to destroy the US currency. "

With that in mind chew on some of these tasty morsels of info....

"China now #1 producer of gold."
http://www.marketwatch.com/story/china-now-worlds-largest-gold-producer-...

"China Ramps Up Gold Reserves"
http://www.marketwatch.com/story/chinas-gold-buy-raises-eyebrows-for-rig...

"The Charts Don't Lie...China #1"
http://www.goldsheetlinks.com/production.htm

"Most Gold ETF's Held in HSBC (Hong Kong and Shanghai Banking Corporation) Vaults in London"
http://seekingalpha.com/article/128092-where-does-the-gold-etf-get-its-gold

"HSBC One Of Four Banks That "Fixes" Price of Gold"
http://ezinearticles.com/?Gold-Price-and-the-Bank-of-England&id=3056331

Now, if that was a tasty appetizer, how about the main course......

"We Have Officially Reached Peak Gold"
http://www.telegraph.co.uk/finance/newsbysector/industry/mining/6546579/...

And....
http://www.washingtonsblog.com/2009/10/gold-big-picture.html

And....
http://www.goldsheetlinks.com/production.htm

Which means China may want to price in a floor on Gold....

"China Buying Dips In Gold Price To Establish Partial Reserve Currency On Doubts of American Dollar"
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100000821/ch...

And....
http://dailyreckoning.com/a-floor-beneath-the-gold-price/

All of this could explain these rather delicious info deserts.....

"Gold To Never Drop Below $1000/oz."
http://www.bloomberg.com/apps/news?pid=20603037&sid=az6qQ8ZuXg9M

"Gold at $2000/oz. By End Of The Year"
http://seekingalpha.com/article/124697-greg-mccoach-will-gold-be-at-2-00...

And finally here is an after-dinner mint in the form of a question.....

"How High Should The Price of Gold Be To Equal The World's GDP?"

Well....The World's GDP in terms of nominal currency is @ $56 Trillion.
http://en.wikipedia.org/wiki/World_economy

And the estimated amount of Gold ever produced in @ 10 billion ounces.
http://money.howstuffworks.com/question213.htm

Then it is a simple amount of math....
$56 Trillion / 10 Billion Ounces = $5,600/oz

Well....there isn't 10 Billion ounces at the present moment. Gold is more rare than that and according to everyone in the know is getting rarer. And scarcity makes commodities that are wanted by a large number of people go up in price. And a large number of people, particularly in China, want Gold as a hedge against a U.S. Dollar that isn't worth as much and is more uncomfortable than a roll of Charmin.

Now.....does $2000/oz sound unreasonable anymore......how about $5,600?

Good Morning everyone! Bon Apetit!

Mon, 11/23/2009 - 08:55 | 139205 whydtinogo
whydtinogo's picture

Interesting new piece from Ned Davis. "

Given that 81% of Reserve Bank credit consists of securities, what would happen if interest rates rise by 100 bp next year? Since these securities are considered temporary holdings, they should be treated as “available for sale” and thus subject to mark-to-market accounting. Under these rules,


 

we estimate that the value of the Fed’s bond portfolio would shrink by roughly $75 billion. Such a loss would wipe out the Fed’s capital and would effectively drain reserves. Would the Fed then seek TARP funds to replenish this deficiency?"

All's well in wonderland!

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