Guest Post: A Global Tsunami, Courtesy Of The Fed

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Mon, 04/04/2011 - 13:09 | 1133033 TruthInSunshine
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Go ahead and file the above headline and underlying denial by The Bernank's minions under LULZ or #losing.

First they ignore you, then they laugh at you, then they fight you, then you win.”

 

-- Mahatma Gandhi

 

Let me also take the opportunity to use the Nikkei as a prime example of BOJ interventionism running rampant to support the index now, only to find every measure of interjectionism currently undertaken met by two or more steps of reality taking over at some point later (and what could possibly go wrong?; just chart the Nikkei from 1989 to present). And this is what really causes cataclysmic events, much to The Bernank's chagrin.

Mon, 04/04/2011 - 13:23 | 1133140 disabledvet
disabledvet's picture

not bad for a country lawyer.  Gandi that is.  And i see Japan as "at risk of splitting in two" if this "pathology" continues.

Mon, 04/04/2011 - 14:13 | 1133418 Herd Redirectio...
Herd Redirection Committee's picture

We all know how this ends.  It ends with the death of the US dollar.  They want it SO bad, and they are going to get it.

As usual, the folly of man, we don't know what we want.  The public is complicit in all of this, but no one will react until the collapse is under way.   Aah, the wonders of herd behavior.

Check out the latest from the Capital Research Institute "Don't Trust the Frontmen":

http://www.capitalresearchinstitute.org

At the forefront is the issue of world reserve currency, as the global economic system hinges on it. China sees the Fed printing money, and in general making the rules up as it goes along, and of course, they want to be able to do the same. Who wouldn’t want to be able to print their own money, and make up the rules as they go along??? Unfortunately, that is no basis for a global economic system, as it would quickly degenerate into a world awash with dozens of useless and devalued fiat currencies. No one would use another’s paper currency, knowing it to be intrinsically worthless, and so trade would be very difficult. Doesn’t this seem eerily similar to the world we currently live in? The solution would be for someone to come along and decides to make their paper redeemable in gold, at a fixed rate. As long as gold was redeemable at that rate, confidence, honesty, and trust would be restored...

Mon, 04/04/2011 - 14:59 | 1133668 dizzyfingers
dizzyfingers's picture

It also seems eerily similar to the one we had in the 50s and early 60s, with trade tariffs, labor strikes/murders/bombings, etc.

Has there really been something else in between then and now, or does it just seem to be all the same?

Mon, 04/04/2011 - 15:42 | 1133930 Maniac Researcher
Maniac Researcher's picture

What Herd has linked to [capital research institute] is not analysis. It is simply another rant filled with ad hominem attacks and straw men - sprinkled prodigiously with all-caps derisions. That and it is simply just another goldbug's blog.

Just like "capital research institute," this comment is true to the ZH ethos - whatever is making your life difficult at the moment becomes the biggest problem in the world.

...so a bunch of affluent, mostly white, mostly male, mostly American investors are losing money in a world dominated by corporate finance organizations who don't play fair. Thus, their solution becomes a simplistic and symbolic attempt to rein in the chaos they perceive in their own lives: buying precious metals. Then -- and here is the fun part -- they decide to project this problem/solution construct as *the* pressing issue in the world.

Unfortunately for Herd, "captial research" bloggers, and the rest of the ZH crowd, their own narrow, lazily-constructed view of history - the one that hinges primarily on personal experience rather than empirical research - informs their opinion.

Mon, 04/04/2011 - 15:55 | 1133988 Maniac Researcher
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Note: before your little fingers start typing away saying, "HA! Maniac Researcher just created a strawman out of ZH!" - I'd like to cite the context for every one of my comments as evidence that yes, in fact, the ZH crowd *is* in fact, intellectually narrow and lazy. Sorry, but a wider world exists beyond your embittered complaints of Federal Reserve conspiracy theories.

I love the coming response though - it's become such a stock signifier of internet fools everywhere - the "accuse the person who is calling me out on my bullshit of the same thing" method is quite popular on Zero Hedge.

You're the same people who honk at the person they've just cut off in traffic after almost causing an accident.

Anyway..

I just thought I'd jump on and tell you and your friends to go to hell. You *are* the tormentors you lambaste: the bigoted, the selfish, the embittered armchair losers. The banksters you claim to hate are just more powerful versions of yourself.

You couldn't care less about the impoverished, those stricken by disaster, or the historically screwed-over populations. So why pretend to play activist? I'll answer that -- because you need to validate your petty, vicious little life. You only see disaster and apocalypse because it provides you an escape from your impotence. I pity you and all the other ZHers - the foolish regulars and the new Stormfront add-ons. You've got nothing but your misdirected anger. It clouds what little analytical ability you have developed in each of your narrow experiences. Thus, you're simply talking to yourselves because you can imagine few options to improve your lives and/or the world. Feel free to pass on the message and have a nice day.

 

Mon, 04/04/2011 - 18:58 | 1134788 Landrew
Landrew's picture

Pardon me, you didn't say anything yet again. So what is your point? You don't like what the community has to say? If so, why come here other than to be part of the community that you hate. Strange, you attack as though you said something worth responding to.

 Usually, some one has at least one point in their debate, however at this point I will respond with

he who asserts must prove! You lose and I will now do a victory dance!

Mon, 04/04/2011 - 19:22 | 1134850 Maniac Researcher
Maniac Researcher's picture

let's unpack Landrew's statement now --

A) I did say something and I believe it came through loud and clear: Zerohedge is rife with hypocrisy. You cannot scream for justice while deriding others.

B) I was part of your community for the last two years. I started posting many months ago because I noticed a [steep] downward trend in the quality of commentary.

C) Repeating the falsehood [In this case that I don't have a point] doesn't make it true.

D) Feel free to feel like you've "won." Narrow-minded thoughts tend to boil down to winning and losing in order to protect themselves from the inherent complexity of the world. Hug that winning feeling, little Landrew - let it bring you comfort on those cold nights when things seem less black and white...and careful not piss yourself during your victory dance.

Mon, 04/04/2011 - 20:46 | 1135129 Imminent Crucible
Mon, 04/04/2011 - 21:20 | 1135254 Maniac Researcher
Maniac Researcher's picture

A conspiracy around every corner! So pray tell, what company do you think I work for - this ought to be good...

Mon, 04/04/2011 - 20:22 | 1135052 Herd Redirectio...
Herd Redirection Committee's picture

This is for Maniac:  Do you find yourself projecting much?  The analysis has been done, the system is corrupt, now is the time to inform people.  If using emotion drives home the point more so than logical arguments, then ask is it effective at reaching a new audience, or not?

"world dominated by corporate finance organizations who don't play fair"

The world is run by people, not 'finance organizations'.  There are two sets of rules in the world.  That is a big problem.  Trying to make a better world for my grandchildren (and by extension, all of humanity) is my only goal, please don't project motives onto me.

Mon, 04/04/2011 - 21:26 | 1135263 Maniac Researcher
Maniac Researcher's picture

Right...and you've chosen to "inform" people on a forum that is filled with victim-blaming hate mongering. That's sure to end well.

And since you are currently apologizing for it - I *will* project that conclusion on to your motivations.

Mon, 04/04/2011 - 21:50 | 1135350 Herd Redirectio...
Herd Redirection Committee's picture

What are you doing right now exactly?  Trying to do an ad hominem attack on the entire ZH community? 

There IS some groupthink on ZeroHedge, and there IS also influence from paid posters.  That is to be expected on any sizable forum.  To imply that the forum is then effectively useless is not only a logical fallacy, but a direct insult directed at everyone here who is trying to raise awareness, have intelligent discourse. 

It is possible you are just here seeking attention, so that would not have occurred to you.

Tue, 04/05/2011 - 04:39 | 1135905 Maniac Researcher
Maniac Researcher's picture

Right...ZH has utility in the same way a peace rally is sure to go over well when someone is raped in the crowd.

Actually, I'm here to call bullshit on the assumption that Zerohedge is somehow useful commentary without the inclusion of the bile-filled morons who babble their incoherent conspiracy theories every day. Oh yeah, that and Tyler has been screaming the sky is falling for *years*. When someone can't stop screaming fire in a crowded room, eventually you do want to punch the son of a bitch.

Let me ask you a couple of questions Herd, since we're on the topic of Zerohedge's so-called 'merits' -- how do you manage to overlook the bigotry when you read this blog? Do you think of puppies? Perhaps a small grinning aryan child? Question two: when the collapse fails to come on each predicted date, do you feel pangs of disappointment? Do you pine for food riots, arson, and looting? Feel free to let out your best apocalypse fantasy. All the ZH fans are listening in, lathering it up. They'll climax at your lush imagery of food lines and the killing of innocent passerbys. Let it fly, Herd.

Mon, 04/04/2011 - 19:39 | 1134907 StychoKiller
StychoKiller's picture

You couldn't care less about the impoverished, those stricken by disaster, or the historically screwed-over populations. So why pretend to play activist? I'll answer that -- because you need to validate your petty, vicious little life. You only see disaster and apocalypse because it provides you an escape from your impotence.

 

Put yer muny where your mouth is, alleviate some suffering:

http://www.worldvision.org,

then find some smaller paint brushes.

Mon, 04/04/2011 - 20:01 | 1134986 Maniac Researcher
Maniac Researcher's picture

Yes, Stycho. Feel free to repeat your lame solution. I've already pointed out why worldvision is a poor choice for a charity. Aside from being fraudulent to the point where even Oxfam is deriding them, since when is a Fundie charity the only option for activism? You have a pretty narrow conception of such things.

How about putting your time where your mouth is? Try digging through mounds of corporate memos for years on end in order to nail white collar criminals and then call me back, Stycho. You know nothing about the institutions you whine about. In fact, you know less than nothing - at least if you knew you know nothing that would be something. I think that void was probably filled with rosy images of Jesus giving bread to Africans.

You've still got nothing. And you have nothing on me. I'll keep the brushes, thanks - I'll make better use of them than you will.

Mon, 04/04/2011 - 16:12 | 1134070 Thomas
Thomas's picture

I told Dudley to his face he had an inflation problem. He laughed (knowingly, IMO).

Mon, 04/04/2011 - 14:04 | 1133370 Hugh G Rection
Hugh G Rection's picture

Whats the over/under on the Fed's demise? I dont think they celebrate 100 yrs of oppression.

Mon, 04/04/2011 - 14:59 | 1133646 dizzyfingers
dizzyfingers's picture

Are the Chinese buying commodities?

Mon, 04/04/2011 - 13:06 | 1133046 Rusty Shorts
Rusty Shorts's picture

Exactly. Which is why most people I know think they can ignore the math and everything will be okay. They fight the very idea that there is a real decline in quality of life, that it is permanent, and that it will continue to deteriorate.  "Apres moi, le deluge." Everyone else will get screwed but not me, I got mine.

It's a tsunami. Previous paradigms no longer apply.
Teevee, junkfood-addled Amerika could not withstand a currency collapse. The Black Plague made human capital valuable again - in modern application we have tens of millions on the gov't teat with no recovery.
http://www.martinarmstrong.org/files/Are-We-Running-Out-of-Other-People-...

All those 99-weekers waiting for jobs. What jobs? Doing what? The service economy is a fiat lie and our infrastructure is based on a constant flow of cheap oil.
Mortgage? WTF for? Prices are artificially high because of 1) shadow inventory 2) who can say they will be employed in their profession to make payments for 30 years anymore - no man is an island.

Stay nimble. Stay quick. This is no time for white picket fences. Going back to the sad, miserable, drugged-up state of our Nation it ain't a stretch to imagine that the Mandarin speakers are planning to make use of their raw (war) materials and spouse-less young men for "real estate acquisition". Hasn't anyone read a history book around here? The Chi-Coms have openly spoken of how they deserve North America. This kind of scenario isn't discussed because it is the worst-case scenario outside of nuc-bio-chem warfare, and then subsequent invasion.

"Oh, but China needs us and we need them." Bullshit. Everyone is buying time. The Chinese aren't stupid and they know they aren't getting their money back. Some finance guy over there said US bonds are not safe medium and long. In other words "We are trying to buy as much time as possible to acquire tangible assets that matter!"
All the survivalists from the 70's were wrong because they didn't understand the "Nixon" trick/effect of taking us off the gold standard and taking paper money to its extreme utility. It would have been better to face this shitstorm back then. Back when Americans were still eating meals that had real nutrition, no obesity epidemic, actual human interaction, strong infrastructure with less bureaucracy. Today it's all bloated beyond recognition.

When the Fed finally makes a move that has a visible and real effect on Amerika even rationing of supplies won't keep the interurban areas content. We are at the brink of a f.u.n.d.a.m.e.n.t.a.l. shift. Be far away from the millions that require a weekly check for their very survival. Do you think the owners of the Fed care if millions starve?

 

 - ZH comment

Mon, 04/04/2011 - 13:12 | 1133076 samsara
samsara's picture

Dead on as usual Rusty.

We are at the brink of a f.u.n.d.a.m.e.n.t.a.l. shift. Be far away from the millions that require a weekly check for their very survival

Mon, 04/04/2011 - 13:56 | 1133314 billhilly
billhilly's picture

Excellent comments Rusty!  Thanks.

Mon, 04/04/2011 - 14:32 | 1133541 ColonelCooper
ColonelCooper's picture

If there was such a thing as a "Thunderous Applause" button on this site, I'd be pushing it.  Thanks, Rusty.

Mon, 04/04/2011 - 15:01 | 1133699 dizzyfingers
dizzyfingers's picture

All frighteningly true. No exit. No place to go. No way to "prepare".

Mon, 04/04/2011 - 13:08 | 1133054 Ancona
Ancona's picture

If the Fed stops QE, then who will buy our bonds? With Japan in a position of needing huge sums of cash, their hoard of treasuries might just be on the market soon, requiring further monetization.

It looks to me like we're terminally fucked.

Got gold and silver? You are going to need them in very short order.

Mon, 04/04/2011 - 13:39 | 1133219 alexanderstollznow
alexanderstollznow's picture

when the Fed stops QE, the buyers will be the same people who have been buying UST for some years, but the Treasury will be paying a higher interest rate.  the whole purpose of QE is to lower interest rates further out along the curve, beyond where Fed Funds has any affect.  in this overall regard and purpose, QE is no different to OMO to affect the Fed Funds rate. 

as regards Japan, i must say i think it is a very silly notion to look at the cost of the tsunami, and assume that the Japanese gov will just write a cheque for that amount.  in any case, given that Japan is a prolific JGB seller, i would reckon they would just sell more of their own, rather than start selling UST.

Mon, 04/04/2011 - 13:38 | 1133225 alexanderstollznow
alexanderstollznow's picture

when the Fed stops QE, the buyers will be the same people who have been buying UST for some years, but the Treasury will be paying a higher interest rate.  the whole purpose of QE is to lower interest rates further out along the curve, beyond where Fed Funds has any affect.  in this overall regard and purpose, QE is no different to OMO to affect the Fed Funds rate. 

as regards Japan, i must say i think it is a very silly notion to look at the cost of the tsunami, and assume that the Japanese gov will just write a cheque for that amount.  in any case, given that Japan is a prolific JGB seller, i would reckon they would just sell more of their own, rather than start selling UST.

Mon, 04/04/2011 - 13:41 | 1133230 alexanderstollznow
alexanderstollznow's picture

when the Fed stops QE, the buyers will be the same people who have been buying UST for some years, but the Treasury will be paying a higher interest rate. the whole purpose of QE is to lower interest rates further out along the curve, beyond where Fed Funds has any affect. in this overall regard and purpose, QE is no different to OMO to affect the Fed Funds rate.

as regards Japan, i must say i think it is a very silly notion to look at the cost of the tsunami, and assume that the Japanese gov will just write a cheque for that amount. in any case, given that Japan is a prolific JGB seller, i would reckon they would just sell more of their own, rather than start selling UST.

Mon, 04/04/2011 - 15:29 | 1133841 HubbleBubbleBen...
HubbleBubbleBenLovesTrouble's picture

Problem with too much money in the system, is that you will only get rid of it, when it becomes more expensive. Which is exactly what happens when the Bernank stops buying toilet paper. While the paper will get flushed away, price of money will go up, which will impact our leveraged friends in HF's, which will eventually pull the plug out of the markets, and let's everything fall like a tombstone. QE only postponed D-day...which will come...eventually

Mon, 04/04/2011 - 13:11 | 1133069 raya123
raya123's picture

Buy SDS and DOG.

Mon, 04/04/2011 - 15:09 | 1133735 HubbleBubbleBen...
HubbleBubbleBenLovesTrouble's picture

Buy GUN and DOG

Mon, 04/04/2011 - 13:14 | 1133098 SwingForce
SwingForce's picture


Federal Reserve's Mandate 2011 The first & foremost objective of The Fed is to pump as much money into The Banks as it possibly can. That is the ONLY objective. Once you see this, then failure to prosecute fraud, the phony irritation that the banks aren't lending or lowering interest rates to customers, all this becomes clear. The Fed doesn't care what China does, they care that we pay our old higher-rate mortgage, and our higher-rate credit cards, because that helps The Banks. And bail out The Municipalities? Not on your life, they are not banks. Understand that The Fed is a private corporation owned by The Banks, so why do charity work for The Taxpayers? The Benbernanke has only 1 clear mandate, for as long as he's able to get away with it.

Mon, 04/04/2011 - 13:31 | 1133172 alexanderstollznow
alexanderstollznow's picture

perhaps you could outline exactly how QE 'pumps money into the banks'?

Mon, 04/04/2011 - 14:30 | 1133524 ColonelCooper
ColonelCooper's picture

Are you being serious, or sarcastic?

Mon, 04/04/2011 - 15:06 | 1133709 dizzyfingers
dizzyfingers's picture

Can't understand why he's still above ground.

Mon, 04/04/2011 - 13:19 | 1133103 ak_khanna
ak_khanna's picture

 

There are only three final outcomes to debt :

Repayment
Default
Part repayment part default

The FED is trying to solve the problems of excessive debt and leverage by taking on more debt and encouraging additional leverage through their bankster buddies. The ponzi scheme can only go on till the US has someone willing to lend it the money to pay the previous debts. The game stops when the cost of borrowing becomes exceptionally high or there is a shortage of lenders willing to lend.

 Madoff  Multiplied

http://www.marketoracle.co.uk/Article24581.html

 

Mon, 04/04/2011 - 14:21 | 1133450 ivana
ivana's picture

There's one more way out of debt combined with others stated and that one is available only to FED.

Destroy lenders. Destroy competition. Remain as "last bank standing"

Mon, 04/04/2011 - 13:18 | 1133112 TruthInSunshine
TruthInSunshine's picture

Bernie Madoff says:

Bernank's gonna get his shit pushed in, fo sho!

Mon, 04/04/2011 - 13:19 | 1133119 JollyRoger
JollyRoger's picture

"The monetary base has gone up by some 300% since the start of the crisis."

 

Quick correction:

The monetary base has increased 200%, not 300%.

Mon, 04/04/2011 - 13:20 | 1133129 bania
bania's picture

I'm sticking with the theory the Fed will officially announce the end of QE, but will continue in stealth to monetize debt through the annuities on their massive balance sheet.  Therefore, unofficially, QE in Perpetuity.

(and when the official announcement comes ending QE, this should be a great time to load up on PMs)

 

Mon, 04/04/2011 - 13:40 | 1133224 poopyjim
poopyjim's picture

+1 This is what I think will happen as well. Even if they actually stop QE, it will be a great buying opportunity for PMs because they will capitulate eventually and turn back to the printing press. Without QE, the Ponzi collapse hastens.

Mon, 04/04/2011 - 13:24 | 1133138 Rogerwilco
Rogerwilco's picture

Aren't we forgetting something? There are over $10T sitting in various pension, 401K, and IRA accounts. That piece of driftwood must look quite tempting to Messrs. Geithner and Bernanke as they flail about in the stormy seas.

Mon, 04/04/2011 - 15:14 | 1133755 pslater
pslater's picture

The Administration has been 'taking' public comments on this for more than 18 months.  Make the only allowable 'investments' in ALL retirement accounts TIPS or a new Series R (for 'retirement') Treasury note.  Bingo, just like that, all retirement assets go to the govt.

Ever heard BHO mention that "...people's retirement shouldn't be subjected to the volatility of the stock market"?  Far better that they should have inflation protected bonds....oh, wait, who caclulates the inflation rate? /sarc off

Tue, 04/05/2011 - 08:59 | 1136251 MrSteve
MrSteve's picture

Some market observers have suggested taking al. your money out of government controlled retirement accounts. Pay penalties if that is required; in order to avoid a change in rules which effectively confiscates your account balance. One of those observers is Robert Prechter, who is one of the unloved (mostly) here on ZH.

Mon, 04/04/2011 - 13:25 | 1133145 ruffian
ruffian's picture

IMHO Martinson is wrong....Fed will not choose rising rates and imploding risk assets. The fed will destroy this country by further fiat debasment via QE whatever # we're on.

Mon, 04/04/2011 - 13:33 | 1133182 TruthInSunshine
TruthInSunshine's picture

At some point, the Fed doesn't get to choose.

As for the theory that a rollover of the Fed's balance sheet can maintain QE in anything remotely close to its current force, the math says it's not possible, and rates are already rising despite full-fledged QE policy for some time now.

Once this not-so-virtuous circle for the Bernank really takes hold, the Fed's balance sheet literally implodes.

What is the Fed going to do? Hold to maturity? Half their balance sheet (almost) is treasuries bought near record low yields.

Maybe an exogenous event like an asteroid hitting the earth will allow them to unload their treasuries for a profit.

Mon, 04/04/2011 - 14:23 | 1133480 ivana
ivana's picture

Not hold to maturity. Buyback at huge discount from distressed lenders begging for some cash

Mon, 04/04/2011 - 14:05 | 1133365 Hearst
Hearst's picture

Ruffian I agree with you.  Additionally, historically, this is what all countries have done.  It is much harder this time because with the internet 'inflation expectations' can circulate the globe in seconds.

 

I have a few thousand saved if the end of QE is announced, but I'm not holding my breath for it.

Mon, 04/04/2011 - 13:25 | 1133149 disabledvet
disabledvet's picture

I agree with TD.  QE 3 already here.  "Answer" is reverse repo.  "QE is politics by another means."  Move along....

Mon, 04/04/2011 - 14:19 | 1133466 DosZap
DosZap's picture

DIS,

 

Of course its here, and its staying.

There is NO way the Fed can stop QE.

IF they did, we have two scenarios.

Default and or Bankruptcy outright.

Either way in the end it will be one or the other.

As soon as the American people start getting $0.10 worth of goods for $1.00, and no raises to compensate...........

We go HyperInflation............0-100 in a nano second.

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