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Guest Post: QE Is The End Of America As We Know It

Tyler Durden's picture


Submitted by The Paper Empire

QE is the End of America as We Know It

Each time we begin to approach the end of an announced QE
period, the nervous jitters of financial markets start to set in. Will
Bernanke continue with QE(n+1) or won’t he? Now it’s true that
professional traders live and die by their ability to front run rumor
and perception, but for long term investors who fret over such
decisions, it demonstrates a fundamental lack of understanding of what
QE really is. To put it succinctly, QE is an economic deal with the
Devil. Once it is begun in earnest there can be no turning back. It
must be played to its ultimate conclusion.

In Bernanke’s 2009 interview on
60 Minutes, he suffered a momentary lapse into honesty and stated that
Quantitative Easing was effectively money printing. So why then the
complicated euphemism of Quantitative Easing? Because that is what
modern central banking sponsored economics is all about – the
intentional obfuscation of otherwise simple economic principles to cause
the eyes of normal people to glaze over. Once accomplished, the
central bankers (and their financial community brethren) are able to
pursue policies that greatly benefit themselves but are devastating to
everyone else.

Long term investors who worry about whether QE will continue clearly recognize the fact that everything is now correlated to the Fed’s balance sheet.
What they don’t understand is how QE is related to the larger economic
cycle and its mission of preventing economic recessions.

Keeping the tent inflated

Sometimes physical analogies are the most helpful in understanding
complex relationships. Let’s think of the economy as a large inflated
tent. The extent of the tent’s inflation is the health of the economy.
Under normal economic conditions the tent is fully inflated. In the
course of time, events take place that cause the need for a correction
to the economic system. New technology can come along which obsoletes
old industries, bad investments and debt must be liquidated etc. When
this happens a free market economy will correct itself. Capital tied up
in failed industries will be reallocated and invested in new
businesses. New jobs will ultimately be created and people will go back
to work. Of course this reorganization takes place over time and this
is what a recession is – a healing process for the economy. In our tent
we can think of this as a tear that forms in the fabric. While this
hole is being repaired, air escapes and the tent begins to sag a little.
The extent of the drooping is the extent of the recession. Once
fixed, the tent and the economy go back to normal.

QE is a wholly different method of keeping the tent propped up. It
does not repair the hole, but rather attempts to keep the tent inflated
by pumping more air in than is escaping through the hole. This is the
new money being created and pushed into the economy to offset the credit
destruction in the banking system. This is a dynamic process that must
be maintained. The catch is that the hole doesn’t just stay a fixed
size. The tear begins to lengthen allowing greater amounts of air to
escape. The economic tent begins to sag until the volume of air being
pumped in is increased to overcome the outflow. This is why QE can
never end. To stop now, with such a large hole, would result in a
severe and frightening recession. The tent would lose a tremendous
amount of air in the time it takes to make such an extensive repair.

This process continues until eventually the hole is so large that the
tent collapses around the massive flow of pumping air. This is the
ultimate fate of money printing as policy – a currency crisis – the
endless flow of new money loses purchasing power faster than it can be
created. We are left with an inflationary depression in which savings
are decimated and the standard of living of most Americans is
dramatically lowered.

QE is economic central planning

When an institution such as the Federal Reserve is allowed to create
as much money as it wants and do with it whatever it pleases, without
any oversight or transparency, then the free market and its self
correcting mechanisms no longer exist. How can capital from failed
business and banks be reallocated to more efficient uses when these
institutions are bailed out and not allowed to fail? Prices and
interest rates are the nervous system of a free market economy. They
are the feedback mechanisms that direct all of the individual
participants to behave in the most productive and efficient manner.
There can no free market when prices and interest rates are de-linked
from supply and demand. We are now a centrally planned economy run by
our central bank.

But here’s the really insidious part of QE that almost no one in the
general public understands: A free society cannot exist independent of
free markets. There is a disequilibrium that occurs between the two and
over time one will win out over the other. And so here we are, stuck in
a decaying economic system that prevents resources from being used in
their most efficient manner. We simply can no longer compete with freer
markets in other parts of the globe. We are saddled with the weight of
central economic planning much like the old Soviet Union was. There
will be no recovery and no rush of new jobs created. We will live under
the burden of a burgeoning Federal government that operates completely
independent of the will of its citizens. It is now beholden only the
money manufacturers at the Federal Reserve and will spend money as fast
as Bernanke can add zeros to its account.

The problems we are experiencing have been a long time in the making.
They began in earnest in 1913 with the formation of the Federal
Reserve. It’s taken several generations for the Federal government and
its central bank to usurp the world’s monetary system and as such few
have noticed. But what’s different now is that we have hit the knee in
the curve, the point at which events start to accelerate dramatically as
we approach the end of the line. Those who understand QE realize that
America as we knew it is already gone. Over the next decade the rest of
America will become painfully aware of that fact as well.


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Mon, 03/21/2011 - 07:50 | 1081055 FoieGras
FoieGras's picture

Japan started their QE campaign in the early parts of last decade. 10 years later their currency is stronger than before. How does the "QE = currency collapse" theory explain that?

Mon, 03/21/2011 - 07:59 | 1081065 TradingJoe
TradingJoe's picture

Many "Interventions"!

Mon, 03/21/2011 - 09:13 | 1081152 Harlequin001
Harlequin001's picture

It doesn't. They just printed upwards of 15 trillion yen and the yen didn't devalue. All this bullshit about a yen carry unwind, didn't anyone get the memo, there is no need to sell ANY yen assets because they just created 15 trillion brand new yen. Why sell assets at a loss?

The simple truth is that the forex markets are a sham, have been for many years. If the markets don't devalue the yen then Japan has an additional 15 trillion to go foraging for commodities and foodstuffs in international markets. That's increasing demand for all food products with higher food prices being paid by those poor bastards in the Caribbean that grow bananas for example, and anyone else who had nothing to do with the idiocy of building nuclear reactors on a seismic fault, but they'll starve just the same so that Japan can fund its restructure because they don't get paid in yen, or dollars or any other currency that is rapidly being printed.

If we don't get back to a gold based Fx system soon then these people will starve by the million and these riots, revolutions and insurrections will be coming to a state near you soon. Very soon. If anyone's going to die it should be the morons who build reactors in earthquake zones and then irradiate my kids from half way round the world.

The forex markets work by international agreements between governments to foment economic growth. They have nothing to do with fair value of a currency, which is why if you aren't a member of the clique that sets the exchange rate bands you get to pay higher prices as increasing quantities of currency at increasing rates start competing for goods needed by your own people. You get the riots whilst they get the food...

Mon, 03/21/2011 - 09:32 | 1081369 proLiberty
proLiberty's picture

"They just printed upwards of 15 trillion yen and the yen didn't devalue."


This is 'co-inflation'.  If the major central banks all inflate at roughly the same rate, their FX cross will remain the same but the nominal price of real assets like commodities will rise.

Mon, 03/21/2011 - 09:40 | 1081417 centerline
centerline's picture

I'd wager it actually works against them.  Debt saturation.  The system can't take any more.

Mon, 03/21/2011 - 10:10 | 1081531 ronin12
ronin12's picture

Just think what will happen if there is a "one world currency".

Mon, 03/21/2011 - 10:50 | 1081715 duo
duo's picture

I think gold priced in yen appreciated quite a bit in the last 20 years.

Mon, 03/21/2011 - 14:56 | 1082581 Jack Sheet
Jack Sheet's picture

Exactly. That is the point. As Doug Casey so beautifully put it, ALL paper currencies are circulating around the drain, just with different speeds and trajectories.

Mon, 03/21/2011 - 15:14 | 1082602 Zero Govt
Zero Govt's picture

Harlequin  -   agree with everything you said, except, "The forex markets work by international agreements between governments to foment economic growth.." Firstly a nations currency may be 'printed' by their central banks but that's all they do control. Once it's out there they have no control whatsoever (Forex markets are too big to direct as every CB trying to control their exchange rates has been humiliated and ripped to shreds in every attempt).

Regards Govt "formenting economic growth" that is absolute and complete bollocks. The economy and international trade is entirely a private preserve/enterprise. The windbags of Govt have no influence where their economy is going, who the economy trades with and absolutely zero to do with growth. If you can give me one example of a politician encouraging growth I'll eat my sofa! Govt consumes growth, it has never produced growth in its Centuries of wealth destroying existence.

Govt follows the economy. Every Govt is a herd of nodding donkeys led by the nose on where businessmen and the economic winds blow these useless windbags (always has been, always will be)


Mon, 03/21/2011 - 23:55 | 1084774 Harlequin001
Harlequin001's picture

Zero, I said they do it to foment growth. I didn't say it worked, and no I can't give you one example of any politician encouraging growth in anything other than military spending.

For what it's worth I do agree with your comments and I can see no way that it won't all fail miserably but until it does we have Japan printing yen and every other central bank of any worth buying it to stop an interest rate pop and a currency fail.

'Forex markets are too big to direct as every CB trying to control their exchange rates has been humiliated and ripped to shreds in every attempt...'

The BOJ seems to have done okay managing its currency for the last 30 years or so, so did many other Asian ones through the currency pegs, and yes I agree before you say it that they all ultimately failed, as we said they would, but there can be no denying that they did manipulate markets despite the forex traders for a considerable time. In the meantime prices are rising for others who do not have access to this new cash or the food that is purchased with it.

Not for much longer. No happy endings here, especially if you are poor and don't have access to central bank cash...

Mon, 03/21/2011 - 08:02 | 1081075 ArkansasAngie
ArkansasAngie's picture

The carry trade

Mon, 03/21/2011 - 08:12 | 1081088 Djirk
Djirk's picture

I am no FOREX expert, but one reason you can not compare the US and Japan's lost decade is the the Japanese corporations and consumers historically had a mucher higher savings rate than the US consumers and corporation. Therefore a much more stable capital footing than the US currently enjoys.



Mon, 03/21/2011 - 08:47 | 1081190 Thomas
Thomas's picture

The other reason is that Japan has two lost decades and may be heading for a third.

Mon, 03/21/2011 - 08:23 | 1081111 Buckaroo Banzai
Buckaroo Banzai's picture

Simple. The Japanese people save huge amounts of money even at .2%

Mon, 03/21/2011 - 08:55 | 1081171 Widowmaker
Widowmaker's picture

Excellent point.  The US has lost (gave away) all savings to the dogs of incorporation colluding with promises of government.

Is it really any secret that civilizations like Iran (Persia) have been stockpiling gold?  

What the US measures in mere decades other cultures measure in centuries - a lesson pissed on and torn from the pages of history by the boomer/corporate generation. 

Boomers sacrificed sustainability of the entire American culture for themselves, if even through complacency.   Although it started in 1913, the accelerated shortcut occurred in 1963 when corrupt government steamrolled the public for private gain and truth died.   It has only gotten worse, and the real joke is that there are no more answers now than ever along the way.

Heads back in the sand while truth and wealth are replaced with lies and empty government promises.

Mon, 03/21/2011 - 10:56 | 1081752 duo
duo's picture

Interesting.  You can draw all the lines you want on a map, but civilizations are what they are. 

The US is quickly approaching a country without a civilization (or multiple civilizations at odds with each other).  Japan is both a civilization AND a country.  Iran, if it were to shed some peripherial areas, could be in the same boat as Japan.


Mon, 03/21/2011 - 08:50 | 1081202 Doubleguns
Doubleguns's picture

All of Japans debt is owned by Japanese and Japans corporations. They did not sell thier debt to China and other places around the world. They simply sold it to themselves which keeps their currencys strong. Their currency is so strong since is has not fallen as far as the rest of the currencys but it has fallen in relation to gold. All currencys have fallen off the clift, some just fall slower than others.  



Mon, 03/21/2011 - 09:20 | 1081323 off-the-record
off-the-record's picture

I think all of you can be right. However, I am not american and there are two questions that I wonder: If QEn goes on depreciating the dollar, how will the american society react when  emerging countries really start to buy american corporations? It reminds me Greenspan´s warning about proteccionism. And ... Do you think lawmakers could/will stop Bernanke´s QEn? Thank you.

Mon, 03/21/2011 - 14:44 | 1082518 Hacksaw
Hacksaw's picture

While you have a legit concern, the real question is, what will be the reaction of America when they realize that organizations like the Chamber of Commerce are using money raised from foreign companies, some state owned, to lobby, run information campaigns for candidates, and otherwise influence governance in the U.S.? What happens when America fully fathoms the implications of such actions?

Tue, 03/22/2011 - 08:24 | 1085336 Absinthe Minded
Absinthe Minded's picture

Like George Soros backing Obama.

Mon, 03/21/2011 - 15:22 | 1082739 Diogenes
Diogenes's picture

This already happened in the 80s when the Japanese bought Rockefeller Center, golf course etc.

There was  a lot of moaning and chewing in the press but the public didn't give a damn.

Eventually the Japanese sold a lot of these "gems" at a loss.

Mon, 03/21/2011 - 09:34 | 1081378 three chord sloth
three chord sloth's picture

Currency strength/weakness is a relative function, not an absolute. When your currency strengthens it doesn't necessarily mean you're doing something right or good, it can simply mean you're doing less wrong or bad than the nations your currency is trading against.

Mon, 03/21/2011 - 09:33 | 1081381 Slim
Slim's picture

Similar to the recent US efforts what you have with Japan is a large increase in M1 and similar aggregates but no transference through velocity/multiplier out into M3 where that currency is put to use.  They are pushing on a string.  The only thing that has been done with the Yen is exogenous speculation via carry trade and assorted plays using their leverage. 


This is exactly what has happened with the USD in generating massive M1 increases to offset the crushing blow to velocity which is killing (and continues to kill) M3.  For what it's worth we still have no nearly filled that hole and speculators are out with cheap money again driving up asset prices in liquid markets and illiquid also (via government constrained supply i.e. taxpayer funded banks extending crap loans to avoid taking pocession, increasing market suppy, and selling a property producing a less than desirable market comparable).

Mon, 03/21/2011 - 10:13 | 1081559 kaiten
kaiten's picture

Let me guess. Deflation?

I mean:

inflation = currency depreciates

deflation = currency appreciates

Mon, 03/21/2011 - 16:57 | 1083206 pslater
pslater's picture

95% of their debt is owned by their own citizens.  This creates perpetual demand for the currency - until it doesn't.  The demographics of Japan's population (a shrinking and aging population with no meaningful immigration) means that the baby boom generation, which have been net buyers of JGB's for decades, are now becoming net sellers.  Lower demand for bonds plus record debt levels = higher interest rates.  As usual, the timing is uncertain but the outcome is not.

Mon, 03/21/2011 - 17:00 | 1083222 naughtius maximus
naughtius maximus's picture

I'm awaiting the answer, Foie. Hmm

Mon, 03/21/2011 - 07:54 | 1081059 ft65
ft65's picture

The snake eating it's tail!

Mon, 03/21/2011 - 09:00 | 1081237 BigJim
BigJim's picture

The problem with using such analogies is that the author(s) never prove that the situations are analogous.

Why is the economy like a tent? Why does allowing the tent to deflate (a recession) somehow fix the tear, but pumping more air in does not? Why does the tear get bigger?

I'm not disagreeing with the general thesis (misallocation of resources due to artificially cheap credit money leads to increasing economic inefficiencies) and conclusion (dollar collapse), however I find analogies like the one written here seductive... but ultimately a bit hollow.

Mon, 03/21/2011 - 09:57 | 1081478 GoinFawr
GoinFawr's picture

Full of hot air?

Mon, 03/21/2011 - 10:20 | 1081599 Slim
Slim's picture

It's a solid and well articulated point.  Analogies are powerful tools in that they set they establish a comparable framework.  Not refering to the anology in this article but I've seen relatively intelligent people be given an analogy and suddenly abandon any/all critical thought on a subject.  Interestingly the particular analogy I'm refering to was dead-wrong and not only had zero scientific support but was categorically disproven many times.  It was extremely hard to convince anyone to break that mindset once established and a number would defend into absurdity.


If I was looking to influence a group of people and sway them, the first thing I would do would be to frame an analogy with the second some kind of short/saying making everything seem black/white even if there was no base in that. 



Mon, 03/21/2011 - 11:56 | 1081955 tired1
tired1's picture

Perhaps comparson to livng organsms would be more appropriate.

Mon, 03/21/2011 - 07:55 | 1081060 breezer1
breezer1's picture

what is there to add here?

Mon, 03/21/2011 - 07:58 | 1081063 westboundnup
westboundnup's picture

Aren't we 2 years and change into the so called "recovery"?   

Mon, 03/21/2011 - 08:58 | 1081225 Harlequin001
Harlequin001's picture

Its like having a credit card, when you hit your limit, (and I mean the one where you spend all your money on repayments) you aren't going to suddenly start spending again because someone offers you another loan you can't repay. This is a long term bust, its hardly started and it MUST result in higher take home pay so that people can borrow more and re inflate prices. Inflation is a requirement if this money printing exercise is to succeed.

It is unfortunate that the higher rates that must inevitably result will bust everyone who is in debt long before this effect is ever witnessed leading to a total failure of the US, UK and European economies.

It will become clear by then that China and every other debt holder are no better off than any other Madoff investor sitting on a pile of defaulted paper.

Mon, 03/21/2011 - 08:14 | 1081089 John Law Lives
John Law Lives's picture

Are you here to bash the site?

Mon, 03/21/2011 - 08:54 | 1081220 DavidC
DavidC's picture

Fear mongering or giving the facts rather than a bullish sub set of them?

Give me realism over delusion any day.


Mon, 03/21/2011 - 09:03 | 1081245 Harlequin001
Harlequin001's picture

Yeah, the sky is blue, which makes me wonder why I'm making so much money from gold and silver and not from real estate...

Perhaps there might be a cloud on the horizon.

Still some of us will plan ahead and some of you will get caught in the rain...

Life's tough.

Mon, 03/21/2011 - 08:02 | 1081071 Yen Cross
Yen Cross's picture


Mon, 03/21/2011 - 08:02 | 1081072 primefool
primefool's picture

there is no "money" - not any more. What we have are electronic numbers - accessible with the right codes which enables humans in society to prosper or die . If your access is ever switched off ( "sorry sir your credit card was turned down", "to access your checking account please re-enter your password" etc) .

Those in power want ALL transations to be electronic - then they can lean back in their Laz-Boys with a large flat screen TV and a game paddle and decide who lives and who dies - just for sport.

Mon, 03/21/2011 - 09:03 | 1081255 Harlequin001
Harlequin001's picture

and make a dollar for every transaction you carry out...Riiiiiiight.

Who's money is it anyway?

Mon, 03/21/2011 - 08:01 | 1081073 dwdollar
dwdollar's picture

"QE(n+1)"  LOL...

That made my morning.

Mon, 03/21/2011 - 08:02 | 1081076 falak pema
falak pema's picture

Central planning in a country where the "central bank" belongs to the private sector. Strange capitalist mix, in this case its public sector led by their corrupt surrogate noses by the private kleptocracy, in moving to a totalitarian style regime/economy. In China it's the same BUT it's the central government who LEADS and the private sector who follows in their oligarchic power mix. Subtle difference in central planning..."modelomics".

Mon, 03/21/2011 - 08:11 | 1081080 Widowmaker
Widowmaker's picture

Oil speculation already ended America as it was known.

Force delivery on contracts and gas would be near $2.25/gallon or less and QE would be much less necessary if at all.

One big heist on America including food and medical care too.  It's time to break up the corporations and enforce the law.  Paybacks will be a bitch.

Mon, 03/21/2011 - 08:19 | 1081098 Yen Cross
Yen Cross's picture

She was an epiphany. Does any woman on this site dispute a Black Widow?

Mon, 03/21/2011 - 08:20 | 1081104 Yen Cross
Yen Cross's picture

A brown recluse looser!

Mon, 03/21/2011 - 08:27 | 1081120 CH1
CH1's picture

"Enforce the law" no longer works. The banksters own the people who write the law. (As well as those who enforce it.)

It costs $20-200 million to become a Senator. Where do you think all that money comes from? And are we to fantasize that it comes with no strings attached?

Mon, 03/21/2011 - 08:37 | 1081148 cossack55
cossack55's picture

If I am not mistaken and I will research this, the only two entities that are exampt from ALL insider trading laws is the US Senate and the Supreme Court.

Mon, 03/21/2011 - 09:03 | 1081241 Widowmaker
Widowmaker's picture

The law exists in each person.   The choice to steal or not has nothing to do with bankers.

Incorporation provides the legal catalyst for immunity to every individual therein, and the laws of people don't apply (corporation's can't kill).

This is the method, and until individual accountability occurs for crimes of corporations the door is wide open by design.

In the US, government is incorporated.  No truth, no transparency and all about money instead of people.

Mon, 03/21/2011 - 09:15 | 1081303 Harlequin001
Harlequin001's picture

absolutely spot on...

Mon, 03/21/2011 - 09:55 | 1081473 CH1
CH1's picture

You are talking about the common law... more or less based upon natural law.

I'm with you 100% on that part, but, really, let go of the corporation thing. Sure, they can be used badly, but immunity (by the common law) is restricted. Willful intent voids it, and everyone doing biz with a corp KNOWS it's a corp. Limited liability is declared in advance.

I agree with a lot of your intent, but you're turning a single, small villain into the one great villain. That is an error.

Mon, 03/21/2011 - 08:12 | 1081085 overmedicatedun...
overmedicatedundersexed's picture

remember GW Bush said."America is not a place it's an Idea." 

For a president to say that ,one, then understands that the very top of us gov is not here to serve the people of these 50 states (57 if you are Obuma).

The elite Gov, as I used to call it," the Shadow gov "- is the  here to serve the "Idea of America "..if you live in these 50 states you better understand the Central Fed gov is not about you.

It's spreading the Idea of America to the if only I could understand what that "Idea" is you know the meaning of IS.

Mon, 03/21/2011 - 08:18 | 1081093 Widowmaker
Widowmaker's picture

Remember ALL Bush's tell nothing but lies.

Hell has a special place for that faggot from Richestan you speak of.

Mon, 03/21/2011 - 08:36 | 1081150 Yen Cross
Yen Cross's picture

Junk! and I love a woman!

Mon, 03/21/2011 - 08:19 | 1081100 squexx
squexx's picture

They're giving you a number and taking away your name.......

Mon, 03/21/2011 - 08:29 | 1081129 johnQpublic
johnQpublic's picture

i am not a number

i am a free man....

Mon, 03/21/2011 - 09:11 | 1081280 eddiebe
eddiebe's picture

It's your fantasy.

Mon, 03/21/2011 - 10:03 | 1081504 falak pema
falak pema's picture

more like a dickacy...

Mon, 03/21/2011 - 08:57 | 1081229 NumberNone
NumberNone's picture

What a concept! 

Mon, 03/21/2011 - 08:26 | 1081119 overmedicatedun...
overmedicatedundersexed's picture

The results of the Idea can be seen in any of the problems we face..for example oil/energy.

the fed gov has restricted all forms of readily available energy solutions thru regulation and law.

the result is a weak  state economies dependent on imports of energy..

why is that? to any objective observer the role the fed gov has played in our rapid decline is obvious..the insidious bating of people to devide into Green vs pro oil/coal/nuke and on and on in every important aspect of our nation

economic policy seen by most as self destructive..another area poor vs rich

the unending wars ..well what to do if I cannot understand the reasons simple solutions are time and time again discarded for the like of obvious wrong policy.

What is the Idea GW was talking about may know I do not.

Mon, 03/21/2011 - 09:58 | 1081480 CH1
CH1's picture

The "Idea of America" was self-sovereignty.

What Bush meant, I don't care.

Mon, 03/21/2011 - 08:16 | 1081095 Trillax
Trillax's picture

First, LOL at "Will Bernanke continue with QE(n+1) or won’t he?". That made the morning coffee launch through the sinuses; I can always count on ZH for a good coffee rocket first thing in the morning -- if it were any more true, I'd be crying instead of laughing.

There really isn't any options at this point that Ben will even contemplate rathen than printing.  He knows that if he does not the 'ball of string' will unwind even faster, and his golf buddies will use USMC 'soap in a sock' treatment rather than playful ass-snapping with a towel and the occasional, "Keep it up Benny boy."

So no, he'll print -- and the pace will probably increase faster than the snot out of a third graders nose at recess in the winter.

Mon, 03/21/2011 - 08:35 | 1081141 Yen Cross
Yen Cross's picture

A blood spot would work! I stuck up for you!

Mon, 03/21/2011 - 09:23 | 1081341 eddiebe
eddiebe's picture

Agreed, more Q.E.. But that's not where it ends. Here is an idea of the scenario following( not my idea, but it is plausible and makes most sense to me.):

As the fiat currencies and along with them sovereign bonds and the U.S.$  especiallybecome less and less credible, gold will rise more and more and will be allowed to rise. At the same time interest rates will be allowed to rise til they reach say 15%. When gold and interest rates are high enough to suit the bankers, they will announce that in the interest of a stable reserve currency, it is necessary to link back to that tried and true anchor: Gold.

 The beauty of this scam is that the bankers then get an easy interest payment and the fractional reserve scam gets to re-boot at the same time, while a lot of bad debt has been inflated away meanwhile.


Mon, 03/21/2011 - 08:19 | 1081105 Dan The Man
Dan The Man's picture

The Amerika as you knew it, ended on August 15, 1971

Mon, 03/21/2011 - 09:37 | 1081393 SWRichmond
Mon, 03/21/2011 - 10:05 | 1081513 falak pema
falak pema's picture

Of my boyhood on 22 november 1963...with Aldous Huxley...brave new world.

Mon, 03/21/2011 - 08:21 | 1081110 Yen Cross
Yen Cross's picture

Remember It will getspotty. 37 five alpha.

Mon, 03/21/2011 - 08:26 | 1081125 cheesewizz
cheesewizz's picture

Sorry a bit off topic but a clasic....

BOSTON – An order of Roman Catholic nuns has sued the Boston Archdiocese and Cardinal Sean O'Malley after years of failed efforts to withdraw from a church-run pension fund.

The Daughters of St. Paul have asked the Supreme Judicial Court to order pension plan trustees to provide them with a full accounting of the nuns' portion of the fund, or to rule that the nuns were technically never part of the church-run plan and order the archdiocese to reimburse the nuns' contributions.

The funds at stake are not for the nuns, but for the retirement of lay employees of their publishing house.

A lawyer for nuns tells The Boston Globe the order went to court as a last resort.

An archdiocese spokesman says the church is confident the suit can be res

Mon, 03/21/2011 - 08:31 | 1081132 johnQpublic
johnQpublic's picture

kill 'em all and let god sort it out?

Mon, 03/21/2011 - 08:46 | 1081175 repete
repete's picture

nun in the morning, nun in the afternoon, and nun at night!

Mon, 03/21/2011 - 10:05 | 1081517 falak pema
falak pema's picture

It really is time to make them all pregnant!

Mon, 03/21/2011 - 08:31 | 1081136 thepigman
thepigman's picture

There will be no QE3. Tough cookies
if you're depending on it to hold
this mess up.

Mon, 03/21/2011 - 09:20 | 1081327 Harlequin001
Harlequin001's picture

There will be more QE until prices start to rise. As long as no body is paying for this it will continue because it is the path of least short term pain.

Which means we have a long way to go...

and much to print.

Mon, 03/21/2011 - 10:34 | 1081657 GreenSideUp
GreenSideUp's picture

Say what?  Until prices rise?  Prices for what?  

From where I sit, the prices of just about everything have gone through the roof.  Homes being the exception.  Oh yeah, and ipads, lol.

Mon, 03/21/2011 - 08:33 | 1081138 Yen Cross
Yen Cross's picture

You people never cease to entertain.

Mon, 03/21/2011 - 08:37 | 1081147 thepigman
thepigman's picture

Just don't get bagged as the banksters
and hedge funds holding this giant
mess are getting out. The economy has
barely had any real growth for 10 years

Mon, 03/21/2011 - 08:38 | 1081155 thepigman
thepigman's picture

Ramp it up overnight and sell it to the morons who think it's real. The American way.

Mon, 03/21/2011 - 08:38 | 1081151 Harlequin001
Harlequin001's picture


Mon, 03/21/2011 - 08:41 | 1081160 Yen Cross
Yen Cross's picture


Mon, 03/21/2011 - 08:38 | 1081156 Yen Cross
Yen Cross's picture

I'm just looking for perfection. Then the bag will be removed!

Mon, 03/21/2011 - 08:40 | 1081162 blindman
blindman's picture
F*CK the FED! (***) March 21st, 2011 by maxkeiser


they have accelerated the passage of time and shortened the attention

span.  fortunately they have created a condition with only a few

possible outcomes.  but those are all bad.

Mon, 03/21/2011 - 10:11 | 1081539 falak pema
falak pema's picture

Ask Benocide to take you on his William Banzai safari, chasing bare butted girls in thongs... and thonging floating Qe-to-infinity greenbacks. It'll save you from moaning and groaning in unthonged, unhinged reality.

Mon, 03/21/2011 - 08:43 | 1081163 IcarusOnFire
IcarusOnFire's picture

Right on the money.  Simple, easy to grasp article for Joe Six Pack.  Should be on the front page of every paper in the country.



Mon, 03/21/2011 - 08:48 | 1081195 X. Kurt OSis
X. Kurt OSis's picture

"publicly subsidized! privately profitable!"
that's the anthem of the upper-tier (the puppeteer untouchable). we focus a moment, nod in approval and bury our head in the bar-codes of these neo-colonials
while our former nemesis: the romance of the nation-state,
now plays fund-raiser for a new brand of power-concentrate.
try again, but now we're confused-

what is "class-war"?
is this class war?
yes, this is class war.

and i'm just a kid- i can't believe that i gotta worry about this kind of shit!
what a stupid world! yeah, this is just beautiful...

(we're): 1) born 2) hired 3) disposed!
where that job lands, everybody knows
and you can tell by the smile on the ceo's
that the environmental restraints are about to go.
you can bet that laws will be set to ensure the benefit of unrestrictive labor-laws
(all kept in place by displaced government death squads).

they own us.
produce us.
consume us.

can you fucking believe? what a stupid world.
fuck this bullshit display of class-loyalties.
the media and "our" leaders wrap it all up in a flag-
their fucking shit-rag. hooray!

-Propaghandi, "And we thought nation-states were a bad idea"

Mon, 03/21/2011 - 09:31 | 1081374 eddiebe
eddiebe's picture

Yep it sucks, so now what?

Mon, 03/21/2011 - 08:52 | 1081206 Northeaster
Northeaster's picture

IIRC, there was a post/article that basically stated QE went up in smoke with gas prices. Looking at the charts, gas is still over $100/bbl., is that the amount which renders QE pointless?

Mon, 03/21/2011 - 09:02 | 1081243 steve from virginia
steve from virginia's picture

On and on, no resolution to the inflation/deflation arguments.

No mention of the debt, the blue whale in the room, only talk of currencies as if these matter more than the debt bubble that refuses to go away.

And go away it shall as it cannot be paid off or serviced today and it certainly cannot be paid off or serviced tomorrow. Regardless of what central banks can do, they cannot create value. They cannot 'print' paying customers or crude oil. As the availability of crude declines, the ability to service/pay off debt diminishes. This reality is the noose that tightens around the necks of central bankers.

As for currency; what do the rich do?

The rich hold most of the world's currencies. When they fear there is a chance of diminution of their hoards, there will be no more reserves created. The wealthy own the central banks and control the central bankers. Their 'long game' is to create currency revuslsion so they wind up with it all. 'Bernanke hammering' the dollar is part of this strategy. It acknowledges the reality of the deleveraging- to- come.

Reserves are the child of deflation as there is more gain to holding money than to using it to fund business output. In credit expansions reserves vanish as all funds are lent to willing borrowers which fuels the expansions. When markets and business entities become saturated with unserviceable debt there are few investment opportunities that offer a return so currencies are held as reserves.

QE does not add currency into circulation, it is a 'maturity' swap into bank reserves. It's a bailout for banks, in other words.

Moral hazard and ZIRP is behind the rise in asset prices. Market participants are able to lend as and are doing so believing the taxpayers will cover any losses. Lending into a debt- saturated environment is beyond risky, it is blatantly self- destructive.

If there was inflation there would be demand for short- term credit and the Fed would 'raise' the funds rate. This rate is now .15% which indicates no demand for credit and near zero inflation. QE feeds a liquidity trap: see the IS- LM model.

Ours is a balance sheet recession built onto an energy crisis. Deleveraging is inevitable; actions of central bankers seek to postpone it and have been successful to date. But adding credit is becoming counterproductive; credit ricocheting through asset markets increases asset prices which are input costs to those who borrow. We are past the point of diminishing returns on credit.

The end game approaches and deleveraging looms. Hundreds of trillion$ in debt will be unpaid and lenders will be swallowed into the vortex including central banks.

There is nothing that can be done, the only issue is the timing.

The smart money is already out of the markets, I'd start looking toward the exits before they get too crowded. The run on the yen carry last week is indicative of the panic to come.

Mon, 03/21/2011 - 09:36 | 1081383 eddiebe
eddiebe's picture

'The smart money is already out of the markets, '

How do you know that?

 Where do you think the smart money is?

Mon, 03/21/2011 - 09:51 | 1081447 bigredmachine
bigredmachine's picture

in china, all u got is debt

Mon, 03/21/2011 - 09:37 | 1081387 overmedicatedun...
overmedicatedundersexed's picture

steve enjoyed your post..who can argue against it?? but if I may pick one thread and give it a yank..the whole premise of our economy and gov revolves around TBTF..remove that support and things really do change..only a hitler type leader who can overthrow the current elite banksters and crony capitalists could do it so it is a hobsons extend and pretend is the word of the day.

Mon, 03/21/2011 - 09:48 | 1081441 SWRichmond
SWRichmond's picture

By your reasoning there would never be a reserve currency shift.  Please inform the British.

Mon, 03/21/2011 - 10:44 | 1081690 bigredmachine
bigredmachine's picture

u must be one of ali baba's 40 thieves, cuz readers here cant string two sentences togethers. was that 2.


Mon, 03/21/2011 - 09:02 | 1081249 lynnybee
lynnybee's picture

JIM SINCLAIR :    print to infinity , that's his story & I'm going with his story ! ........ keep stacking.

Mon, 03/21/2011 - 09:04 | 1081260 baldtaco
baldtaco's picture

This a perfect article for people who want to understand whats happening around them. Lets try to spread the word. People need to moblize into groups soon before the big bang.

.223 h2o Auo

Mon, 03/21/2011 - 09:07 | 1081272 baby_BLYTHE
baby_BLYTHE's picture

Futures are up like a rocket this morning!

You cannot make this shit up, WHAT A F**KING JOKE!

Take back your government,

Revolt America!

Mon, 03/21/2011 - 09:29 | 1081356 Harlequin001
Harlequin001's picture

So you take control of America and you stop printing money. What happens next? China keeps printing money and like Japan, the forex markets don't devalue it.

Result: China becomes an economic powerhouse and kicks the shit out of America with new arms it paid for with printed money and keeps raising prices by buying more commodities with greater quantities of more valuable money. The solution doesn't appear to be that simple anymore...

Mon, 03/21/2011 - 09:39 | 1081396 eddiebe
eddiebe's picture

What are you smoking?

So you take control of America'

How do you propose to do that?

Try to make sense please.

Tue, 03/22/2011 - 00:01 | 1084786 Harlequin001
Harlequin001's picture

what do you think 'take back your government' means...

Mon, 03/21/2011 - 10:57 | 1081730 baby_BLYTHE
baby_BLYTHE's picture

So therefore your solution is to do NOTHING?

Continue to allow the rape and pillage until the dollar collapses into worthlessness?

The lives of Americans are being screwed with by these TBTFs and Money printers at the Federal Reserve!

A dollar collapse will be a chaotic event that would upset the lives of every American, unlike yhe Deflationary alternative.

Have you ZHers really come around on the Bernank, the FED and QE? Guilty pleasure? Speak ill about it in public, but behind close doors BTFD and masturbate to your FED masters enslaving the remainder of the greater American public?

I hope I am wrong about you folks!

  • END THE FED put the money power to congress. 0% credit for internal improvements, infustructure and high technology projects. ZERO free money to any bankers.
  • Seize ILL Gotten Gains from TBTF to pay down the debt
  • Wallstreet sales tax (make them pay for the Depression they created)
Tue, 03/22/2011 - 00:05 | 1084792 Harlequin001
Harlequin001's picture

There's a lot more to this than just America. Whilst the US has been the main driver the problem is now far more wide ranging.

Everyone is now printing money. If the US stops, how do you intend to stop everyone else? A solution is no longer in America's hands.

Gold is the only way.


Mon, 03/21/2011 - 09:46 | 1081433 X. Kurt OSis
X. Kurt OSis's picture

I'll post some more song lyrics:


"GUILTY! is what our graves will read

No year, no family


To stop the murder of

People just like us."

- Rise Against, "State of the Union"

Mon, 03/21/2011 - 10:56 | 1081749 baby_BLYTHE
baby_BLYTHE's picture

before my time... such a great way to start my morning, along with ZH and a warm cup of java ;)

Mon, 03/21/2011 - 11:48 | 1081933 X. Kurt OSis
X. Kurt OSis's picture

Oh why did Henry Rollins have to sell out...

Black Flag was awesome.  Those were good days.




Mon, 03/21/2011 - 10:13 | 1081553 falak pema
falak pema's picture

take a ride on a hot rocket baby B.

Mon, 03/21/2011 - 09:18 | 1081313 proLiberty
proLiberty's picture

Inflating the currency is theft of wealth by dilution.  Lest people think that the US is particularly bad for doing this, all the major central banks print money.  They even coordinate their efforts with winks and nods, and swaps as well.  Thus, the monetary base can be greatly expanded yet the FX cross does not change very much.  The issue is not so much the potential collapse of the dollar, it is the collapse of fiat money in general, which is every currency in use.

Fiat money coupled with a tax on incomes that includes taxing nominal gains from the sale of assets whose prices go up solely due to government monetary policy, is the grandest scheme of theft by government in all of human history.


Mon, 03/21/2011 - 09:40 | 1081410 eddiebe
eddiebe's picture

Agreed. Any ideas where and how this resolves?

Mon, 03/21/2011 - 09:53 | 1081458 bigredmachine
bigredmachine's picture

blah blah.   get in now doofusses. borrow if u have to


Mon, 03/21/2011 - 10:08 | 1081534 DispenzPez
DispenzPez's picture

The control of the populace through means at one's disposal (QEeeez in this case) seem to boil down to one overriding theme with no apparent solution.  Enter "The African Veldt Concept": A pride of only 15 lions can control the movement of 1000+/- (i.e. a proportionately large number for any zoologists looking to contend) wildebeest.  The predator/prey, obscene power/obscene profit relationship has not and probably will not ever be eradicated from human existence.  It can be argued: Unionization tried and largely failed 'cause the predator/prey relationship was reversed, a small government constitution was enacted and then bastardized through time for power and profit, the destructive consequences of Roman fiat and thirst for conquest killed a society etc., etc., etc.  Attempting to put a stop to this now, requires what would be considered extreme measures and idealism seemingly unfit and impractical for consumption.  For example:  All employees change their W4 withholding to 8 exemptions and then when (Son of) Uncle Sam calls on Apr. 15 the ones who are picked off are bailed out by those who aren't picked off.  But not very often does the about-to-be disemboweled wildebeest get help from his mates, grazing continues unaffected.  But it is interesting to watch it play itself out over and over again in perpetuity.  Possible solution 2: Live based upon exacting values/principles (as opposed to let me find that gray area squirm where 1+1= anything but 2), ahh but that takes discipline and commitment to those values/principles.  Two cornerstones that crumble under the weight of ambiguity, self-gratification, self-idolatry and denial.  Maybe The Veldt is meant to be and an unequivocal part of life itself?  Maybe not: Ripley to Burke: "At least you don't see them screwing each other over for a percentage".

Mon, 03/21/2011 - 10:18 | 1081582 falak pema
falak pema's picture

Opt out of copping out and opt in to copulation up to infinity. That reminds me of californication in the sixties. I saw a photo of Joan Baez recently. She's on tour again and looking terrific. Yeah, I say yeah to the icon of the sixties. Even though I prefer Angelina bare for desert.

Mon, 03/21/2011 - 10:19 | 1081586 tony bonn
tony bonn's picture

"Once accomplished, the central bankers (and their financial community brethren) are able to pursue policies that greatly benefit themselves but are devastating to everyone else. "

the sacking of rome in 410 by the barbarians was a signal event in roman history....although rome by then was vastly de-populated from its 1st century zenith, that too was a result of plague and debasement of the currency which decimated the economy.....

the cycles spoken of are not natural economic occurences...they occur because of central planning and fractional reserve economy built on such principles is built upon quicksand.....

the barbarian banksters have plundered rome....there is nothing left...the only remaining act is the collapse of the empire....that event may not be recognized for some time after its passing but the grapes of wrath will be trampled....

Mon, 03/21/2011 - 11:18 | 1081829 TruthInSunshine
TruthInSunshine's picture

The Federal Reserve Bank spent or pledged over 12 trillion dollars (with the bill soon to be passed off to the American Taxpayers) and all we got was one of the most manipulated, short-lived (wait for it to breath its last gasp) and damaging (oh how many markets have been distorted and perverted) asset class bubbles in history (followed by abject pain) and these damn tshirts (made from pre-crash highs on cotton, cotton).

Mon, 03/21/2011 - 11:32 | 1081877 Downtoolong
Downtoolong's picture

… the central bankers (and their financial community brethren) are able to pursue policies that greatly benefit themselves but are devastating to everyone else.

Agreed. This is the Fed’s underlying purpose, and the outcome is not only predictable but demonstrated by experience:

-        In the last ten years, most small investors have earned a negative real rate of return while Wall Street banks and their proprietary trading divisions and hedge funds have consistently earned (stripped from the broader investment community) record trading profits.

-        The current yield on principle protected investments (CD’s, Money Markets, etc.) is below 0.5%, and likely to stay that way for some time.

-        Of the thousands of funds, stocks, bonds, and other investment products available to small investors, not one guarantees future purchasing power of your money after inflation and taxes. Think about that for a moment, and then wonder why the experts are so confused by the fact that so few of the little people save.

So for those who don’t like the tent analogy above, try this one:  If retail investment opportunities for small investors were cars, the best of them would be a Yugo.

Mon, 03/21/2011 - 11:44 | 1081919 eri
eri's picture
Home sales fell 9.6 pct. in February



That's not too bad.


Party on Garth

Mon, 03/21/2011 - 12:37 | 1082065 jmc8888
jmc8888's picture


Glass-Steagall will wipe out the fraud

No need to cut or print for fraudulent debt.

In fact if we hadn't gotten off the gold standard, then weakened G-S, then weakened it again -See Savings and Loan Scandal, then outright repealed it, we wouldn't be here.

If we were to put it back in place, full 1933 standard, it would wipe out all the fraud in the system.  MBS, RMBS, faulty derivatives, all forms of QE and their treasury debt, etc.  Oh yeah, AND allow state debt to be taken up federally like Hamilton did.

We don't need to say...go to the end.  We don't need to print.  We don't need to cut.

Cancel the fraud via Glass-Steagall



Mon, 03/21/2011 - 13:52 | 1082396 StychoKiller
StychoKiller's picture

Well, either "Git'r done" or stop posting solutions without supplying the process to implement it!

Mon, 03/21/2011 - 14:39 | 1082529 sbenard
sbenard's picture

From John Mauldin's weekend newsletter, in which his inside-the-Fed source says that QE3 is on its way. His source (see below) says that the Fed will choose to risk much MORE inflation rather than let the economy slip into malaise and continued high unemployment. Most ZHers will see the extreme risk in this, especially at at time of surging inflation news in just the past week:

I come to the end of the letter with a brief note on a very worrisome conversation I had yesterday with Martin Barnes, editor of the esteemed Bank Credit Analyst. Martin is one of the people I call when I want to know what the Fed might do. I guess I was looking for assurance that the Fed would not do QE3. I did not get it.
“Look, John” (insert Scottish brogue as I paraphrase), “if the Fed sees the economy rolling over into recession they will put their mandate for employment ahead of their mandate for stable prices.”
“But that would mean higher inflation in the face of a slow economy.”
“And?” he shot back. “That would just be the price of trying to increase employment, in their minds.”
“But at some point you have to bring out your inner Volker!” I intoned. “What about the future?”
The conversation continued, but I never got my warm and fuzzy assurances. For the record, another round of QE, unless there is a true liquidity crisis (and the last QE did not qualify!), would be a disaster, at least from the cheap seats where I sit. There are all sorts of inflationary and stagflationary consequences, none of which I like.

Mon, 03/21/2011 - 14:41 | 1082538 deepsouthdoug
deepsouthdoug's picture

It's a bankster planned economy.  Not your classic central planned economy.

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