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Guest Post: So is Everyone Printing Money? (Short And Sweet)

Tyler Durden's picture




 

From James Vinall

Henry Morganthau Jr., said in 1939:

Never in the history of the world has there been a situation so bad that the government can’t make it worse

So is Everyone Printing Money?

Greenspan started this calamitous monetary expansion to bail out US Inc and banks from the tech wreck in 2000,as revealed in the chart of the price of gold  below.  Bernanke continued the stimulus and Darling/Osbourne, Trichet et had no choice but to follow.

The Japanese has had thrown vast amounts of stimulus money at the economy since 1990 to little or no effect and all they got was more debt (sounds like Henry Morganthau Jr.)

Here is a chart of 6 major equity market crashes caused by overburdening debt, starting 6 years before the ultimate market peak and the aftermath.  In 1931, the DJI bottomed out at 10% of its peak value as there was no meaningful stimulus package and it took 25 years to make a new high.  The NASDAQ bottomed at 23% of its peak value in 2003 and remains under 60% of its ultimate.  Japan saw massive stimulus in 1992 supporting the market at 40% of its ultimate, but when that stimulus ran out 8years later the markets fell to 20%.  The Chinese since 2007, seem the be following the Japanese path of smoothing a decline.

Japan has found out the perils of a long term zero interest rate policy means the banks have no incentive to assume credit risk and lend to each other or anyone else, so they trade their own book.  The performance of the FTSE 100 and S&P500 suggest the true extent of the banks continuing to use cheap government money to trade bonds and equities.   Japan knows what happens when the “extend and pretend” gravy train stops rolling.

Equities should continue to rise while government stimulus money can find no other home. This is why politicians are irked at bankers bonuses, because they wouldn’t be making fat profits without cheap government money raised at the expense of the tax payers.  All tangible assets, commodities (metals, energy, agricultural) and rare artifacts are likely continue rising until growth is undermined.  The threat of rampant inflation and civil unrest will eventually cause the US, UK, Eurozone, Japan and China to rethink stimulus packages.

We are in bubble caused by politicians across the world trying spend their way out of debt.  It hasn’t worked before and it won’t work this time either.

The problem we have is not knowing when the bubble will burst.

 

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Fri, 02/25/2011 - 12:00 | 996975 ak_khanna
ak_khanna's picture

The politician­s around the world are nothing more than auction items which can be sold to the highest bidder. They will do whatever they can for the lobbyist paying them the maximum amount of money or votes, be it the unions, the banksters, the richest corporatio­ns or individual­s. They are in the power seat to extract maximum advantage for themselves in the small time frame they occupy the seat of power.

The rest of the population is least of their concerns. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.

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

Fri, 02/25/2011 - 13:10 | 997215 Herd Redirectio...
Herd Redirection Committee's picture

They are completely paid off.  Of that, there can be no doubt.

I followed your link, and must say I disagree with this prediction (the rest were really good):

"There will be a rush to buy US Dollars as safe haven. The problems of US are well documented and observed. There will be major financial problems emerging from economies like U.K., Japan, Eurozone countries, Middle East etc. which will come out suddenly and dwarf the ones in the US."

USD will likely lose reserve currency status.  Will it be in 2011?  My feeling is, the process will continue.

Check out the Capital Research Institute and their latest "The Elephant in the Room":

http://www.capitalresearchinstitute.org

"We have all heard the expression at one time or another.  An uncomfortable fact that every one is (at least dimly) aware of, yet is not spoken of.  When discussing the global economy, the turmoil and the unrest the world is experiencing the elephant in the room is undoubtedly the Federal Reserve.   The Fed (and other central banks) have unleashed the most recent spate of food inflation on the world through their ZIRP (zero interest rate policy) and use of ‘quantitative easing’ (which simply put, is money printing).

Money that would have been kept in savings accounts has been withdrawn (because it earns no interest) and invested largely in stocks, and commodities. On top of that, more money has been conjured into existence, without an increase in real economic activity to accompany it, leaving a larger amount of money chasing the same pile of goods and services. The result, obviously, is a loss of purchasing power, as each newly conjured dollar buys less than the one before it.

Ben Bernanke has come out and attempted to justify his actions, but what has been lost in all his posturing? That the criticism of his policies are legitimate!"

Fri, 02/25/2011 - 17:41 | 998027 asdasmos
asdasmos's picture

Mr. Faber says they are......

Marc Faber McAlvany Interview 23 February 2011.

 - http://www.youtube.com/watch?v=3uEbhPuoTx0

Fri, 02/25/2011 - 12:03 | 996981 props2009
Fri, 02/25/2011 - 12:06 | 996985 johnQpublic
johnQpublic's picture

so is everyone printing money?

yes

yes indeed they are

i doubt the politicians are angry about the bonuses though...trickle down economy dontcha know

Fri, 02/25/2011 - 14:43 | 997480 viahj
viahj's picture

dontcha mean campaign contributions?

Fri, 02/25/2011 - 12:06 | 996987 koeleköpke
koeleköpke's picture

for the believers and non-believers to read: when money dies, the nightmare of the Weimer hyper-inflation, Adam Fergusson, 

 

Wholy shit the Bernank has studied that issue, f*ck

Fri, 02/25/2011 - 12:08 | 996992 John Wilmot
John Wilmot's picture

I lost you here:

"In 1931, the DJI bottomed out at 10% of its peak value as there was no meaningful stimulus package and it took 25 years to make a new high."

The market and broader economy took 25 years to recover precisely because of the massive stimulus. Look at the national debt under FDR, the legions of acronym-agencies created, the devaluation of the dollar (30's version of QE). 

Fri, 02/25/2011 - 12:10 | 996993 Weisbrot
Weisbrot's picture

When can we print our own personal fiat? oh yes, it was called sub-prime and we all know how good that turned out.

Fri, 02/25/2011 - 12:08 | 996996 Rodent Freikorps
Rodent Freikorps's picture

You'd almost think there was a plan to destroy all the fiats simultaneously.

Fri, 02/25/2011 - 13:21 | 997264 Herd Redirectio...
Herd Redirection Committee's picture

Yep.  And it would present an opportunity to replace the USD as world reserve currency (it has worked well, but the 'handlers' knew it couldn't last forever, and that a transition would be needed).

Whether it is the "backed by air" SDR or Bancor, if the IMF, BIS or Fed have anything to do with it, it should be disqualified by default.

Currency backed by hard assets will be forced to return.  For stability, its weighting is likely to be quite high in gold, the one commodity which is not consumed, and thus has the most stable supply.

Fri, 02/25/2011 - 12:09 | 996997 PulauHantu29
PulauHantu29's picture

The CEO of JPM, TARP Baby Jamie Dimon, just took home a $17 Million diollar Bonus for the quarter.

...pretty sweet deal and no one there to stop them.

Fri, 02/25/2011 - 12:09 | 996998 sabra1
sabra1's picture

BEIJING: Bank of India has become the first Indian bank to offer trade settlement facility between the rupee and the Chinese RMB from Hong Kong. This follows intense persuasion by the China Banking Regulatory Commission, which is trying to gain acceptance of the RMB as an international currency.

Read more: Bank of India becomes first to offer trade settlement in yuan - The Times of India http://timesofindia.indiatimes...

Fri, 02/25/2011 - 13:29 | 997291 shortus cynicus
shortus cynicus's picture

but if they abandon FRNs, how do they pay for most precious and critical products on the earth: iToys and tBills ?

Fri, 02/25/2011 - 12:09 | 997001 ISEEIT
ISEEIT's picture

It fucking amazes me that so many people go along with this delusion. Any half-wit with an Internet connection can spot the "farcism" at play globally. Government has proven itself to be predatory and unsustainable.

Free markets; REAL free markets are the answer. Will they eliminate the difficulties of being human?

FUCK NO.

Would you really want such a dull and bland existence anyway?

Life is hard.

EMBRACE it.

Fri, 02/25/2011 - 13:18 | 997252 AnAnonymous
AnAnonymous's picture

Life is hard.

EMBRACE it.

 

If so, why not move to places where life is hard?

Fri, 02/25/2011 - 13:21 | 997266 Rodent Freikorps
Rodent Freikorps's picture

They are overpopulated?

Fri, 02/25/2011 - 12:10 | 997003 Clint Liquor
Clint Liquor's picture

The Governments around the World are doing the best they can for the People.

 

That's the really scary part.

Fri, 02/25/2011 - 12:16 | 997013 arkady
arkady's picture

I disagree with the premise of this entire post.  Bankers are not getting fat and rich off politician stimulus money, they are getting rich and fat from Bernanke money.   Those two are very different.  The first batch of moneys goes to random investments around the country, fills insider pockets, pays off old favors and then saves/creates some jobs at a cost of 200k per job (latest figure).  That money gets added to the national debt and passed off to the grand children to take care of later while raising our interest rates now. 

 

The second batch is funny money digitized by Ben in exchange for useless securities.  None of this money is ever brought out in the open, 95% of Americans have no idea about it and it is even more damaging than the first batch because it just makes everyone poorer as prices rise across the board.  Ben did have an original intent of credit expansions, but banks did not bite and now he is using a chunk of that money to gobble up some yummy T-bills while proudly announcing that he is not printing money to do so!  He is right, because he printed it last time.  Sweet.

Fri, 02/25/2011 - 12:22 | 997037 vas deferens
vas deferens's picture

Print money until the poor can't buy water and the old can't afford heat.  The wealthy hold hard assets and wealth transfer will continue until there is no middle class in the US and the world.  You either have hard assets or you don't, paper money is useful when you run out of shit tickets.

Fri, 02/25/2011 - 12:23 | 997041 Tense INDIAN
Tense INDIAN's picture

Even Pringting Money wont help stock markets sometimes ::

 

http://markettechnicals-jonak.blogspot.com/

Fri, 02/25/2011 - 12:24 | 997043 AldoHux_IV
AldoHux_IV's picture

The bubble bursts when people all over the world aren't willing to take this bullshit from these assbackward economic policies and centrally planned economic genocide-- when the revolution reaches around the world and ends this madness once and for all.  Time is irrelevant compared to getting people to see the truth.

Fri, 02/25/2011 - 12:32 | 997051 AbandonShip
AbandonShip's picture

I got the solution.... Bankers' bonuses should be normalized (divided by) the M2 Money Supply level.    So this year those useless vampire squids would be earning 1 loaf of bread and a gallon of gas like everyone else.

Fri, 02/25/2011 - 12:27 | 997053 THE DORK OF CORK
THE DORK OF CORK's picture

They are trying to stimulate consumption growth rather then real growth - the underlying capital stock is still decaying - they cannot have another 1980s as the wealth is not there to take.

Fri, 02/25/2011 - 12:34 | 997089 Rodent Freikorps
Rodent Freikorps's picture

Seems all the energy is going to exporting the remaining wealth from West to East.

At least the US will starve last. So we have that going for us.

Fri, 02/25/2011 - 12:39 | 997110 THE DORK OF CORK
THE DORK OF CORK's picture

During the second world war Ireland was a big net exporter of Food to Britain but we still needed to go hungry to pay for coal.

 In a world without the dollar reserve currency how or what are you going to pay for oil ?

Fri, 02/25/2011 - 12:44 | 997131 Rodent Freikorps
Rodent Freikorps's picture

Lead, depleted uranium.

I am not an optimist. We could withdraw from the global game and simply make the Americas our new possessions. We are the big boys, and the proles would rather we conquer Venezuela than go without.

We could soak up oil from Venezuela, Brazil, Mexico and Canada. Who could stop us?

Fri, 02/25/2011 - 13:51 | 997346 THE DORK OF CORK
THE DORK OF CORK's picture

You will have to pay your soldiers from your internal resourses rather then the worlds at present - good luck.

Fri, 02/25/2011 - 15:01 | 997522 Rodent Freikorps
Rodent Freikorps's picture

Soldiers have the peace of mind of knowing their families will be fed first, while they are away.

Fri, 02/25/2011 - 16:00 | 997689 pvzh
pvzh's picture

And, why do not soldiers have a peace of mind now? If you are going on conquering, why limiting yourself to western hemisphere would improve anything?

Fri, 02/25/2011 - 16:25 | 997784 Rodent Freikorps
Rodent Freikorps's picture

It is far, far easier to secure resources close to home. No other Navy needs to be considered. Supply lines are much shorter.

Spheres of influence time.

Fri, 02/25/2011 - 16:45 | 997851 pvzh
pvzh's picture

Canada and to a degree Mexico might work, but anything else not so much.

Supplying troops in Venezuela will be done through Navy anyway, and, if you moving anything by ocean, Venezuela, Iraq, or New Zealand make not much difference anyway. Besides, do you think Venezuela would be any different from Iraq? Granted it will be "victory" (dictator captured-executed, people "freed", and oil "liberated"), but will the oil flow in sufficient quantities to justify it? My guess, highly unlikely.

Fri, 02/25/2011 - 16:53 | 997875 Rodent Freikorps
Rodent Freikorps's picture

I think Venezuela would react well to a carrot and stick approach. Their production is already falling due to Chavez's cronyism.

We could own all the offshore platforms without the slightest worry about the population.

Fri, 02/25/2011 - 17:35 | 997986 pvzh
pvzh's picture

We could own all the offshore platforms without the slightest worry about the population

It might work in this particular case (i.e., no need to control territory, plus shoot any approaching boat in sight), provided nobody supplies guerrillas with rocket launchers / mortars / hand cannons. However, many things need to be mined/harvested on land. These situations would require either good-old colonial empire approach (have not seen it implemented successfully by US in 100 years) or population removal approach (could not be implemented by US until robotics advances far enough).

There are two main problems in my opinion with your suggested approach

(1) why do not soldiers have a piece of mind now? (Tentative answer: people in charge do not want to share enough "loot" with foot soldiers -- despising "socialism")

(2) US have not learnt to be a colonial power in a proper manner.

US blew their chances to learn from older powers when US attempted to cross Britain / France after WWI, and after WWII when US did their part in helping out anti-colonial movements. US is a "democracy", its corner stone is "US constitution" which is about anti-colonial movement, so until US becomes something else (e.g., monarchy) difficulty in handling colonies will persist.

Besides, old colonial powers will not help out (they are pissed and US has nothing to offer now) and will do everything sabotage wise to hamper US colonial efforts (did I mention that old colonial powers are pissed?).

Fri, 02/25/2011 - 17:52 | 998063 Rodent Freikorps
Rodent Freikorps's picture

I was assuming a SHTF environment. Otherwise the US would never pursue such and option. In that event, feeding your family would be a significant consideration.

It is never hard to find locals who will oppress their countrymen for much the same reasons as they've always done.

Fri, 02/25/2011 - 12:30 | 997078 gwar5
gwar5's picture

Are we Greece, Japan, or Greecepan?

Fri, 02/25/2011 - 12:37 | 997095 Sean7k
Sean7k's picture

This isn't a bubble, it's a huge fart that hasn't exited the colon- but it will. Look, this is easy, it is wealth transfer through dollar, yen, etc inflation. seems like everything is better for the top 5%, until it isn't. 

Labor is costing less and labor is a big factor. Rents are less and capital is almost free. The only ones suffering are the 95% that have no way to hedge themselves. 

This 95% are complacent. They will whine and complain, but if you give them a dividend and socialize the cost, they will allow you to take almost everything they have. They will be reduced to tenant producers and compliant to police powers.

This is how a command market works. All the propaganda value of free markets- good and bad, and the crushing power of the state to enslave you. Twitter away you cattle, the wolves will continue to collect their bonuses from the weak in the herd. They will be good parasites and ensure their host's survival.

Fri, 02/25/2011 - 13:10 | 997220 GoinFawr
GoinFawr's picture

... though not too lively of a survival. They like you torpid if you're kinda smart, and muscular and short-tempered if you're kinda dumb. Most of all they want the kinda dumb and kinda smart to be constantly miffed at one another over perceived slights they constantly amplify to keep you squabbling over the scraps that they can't quite keep on their richly spread table.

IE This means you.

Fri, 02/25/2011 - 12:44 | 997127 Ari Gold
Ari Gold's picture

With everyone playing the same game, absolute QE seems less important - relative QE is what we need to see...

Fri, 02/25/2011 - 12:57 | 997172 SilverRhino
SilverRhino's picture

Everyone is printing money.  

Interesting development.   APMEX has just broken out ALL of their prices into Cash/Check/Wire and CC brackets.   I think the general populace is starting to catch on.

 

Fri, 02/25/2011 - 12:58 | 997173 Corduroy
Corduroy's picture

So all of the Central Wnkers got together (on behalf of the global elite) and solidified their own millenium agreement to inflate their respective money supplies in line with each other for as long as it takes to usher in a single global currency unit....

We are now ten years into this process, and time has run out to effect the expected result in a constructive way, due to inaction by some Governments, and unintended consequences of changes in technology and society.

At this juncture we all face the reality of flation and increasing unemployment, or warflation, this is a given.

I might be blinkered but I see only two possible outcomes.

1) Single Global Currency

2) Extreme Reversion from Globalisation to Nationalism

I would not wish for option 1)

 

Fri, 02/25/2011 - 13:54 | 997350 sgorem
sgorem's picture

Exactly Corduroy. Excellent observation & thought process.

Fri, 02/25/2011 - 13:05 | 997201 ISEEIT
ISEEIT's picture

It's war or status Que bust.

History says war.

I pray not (and don't fucking junk me for praying asshole).

Fri, 02/25/2011 - 13:26 | 997282 Bastiat
Bastiat's picture

Would be quite a picture to add those 6 charts together!

Fri, 02/25/2011 - 13:36 | 997314 Webz
Webz's picture

Money is cheap when you print it out of thin air....

Fri, 02/25/2011 - 13:39 | 997322 Stuck on Zero
Stuck on Zero's picture

If Henry Morganthau Jr., said:

"Never in the history of the world has there been a situation so bad that the government can’t make it worse."

Then I say:

"Government incompetence is a great coverup for corruption."

 

Fri, 02/25/2011 - 13:54 | 997348 luk427
luk427's picture

     Look at 1980 on M3 charts when gold hit 800.00 and silver $50. I think gold and silver still have a huge upside to get to those levels today.

Fri, 02/25/2011 - 13:59 | 997359 bobzibub
bobzibub's picture

Does Canada not count?  Waaaaahhhhh!

M3:

1,013,484(2006) 1,123,753(2007) 1,258,436 (2008) 1,303,136(2009) 1,369,445(2010)

http://www40.statcan.ca/l01/cst01/econ07-eng.htm

 

 

Fri, 02/25/2011 - 15:17 | 997558 JW n FL
JW n FL's picture

Thank God U.S. Marines now have the right to go in and quell the people of Canada, on the whim of someone elected of course.

Fri, 02/25/2011 - 14:07 | 997375 malek
malek's picture

The guys name is Henry Morgenthau, Jr., and he was the stupid who proposed to make post-WWII Germany an agricultural-only state. (Maybe with that he wanted to disprove his own thesis mentioned above?)

Fri, 02/25/2011 - 14:07 | 997376 JimboJammer
JimboJammer's picture

S & P  down-grades  US  Gov.  Debt..(  bonds )

and  still  the  stock  market  is  OK....?

Why...?   the  TV  says  nothing  about  this...

Why..?  it  is  huge  news....

Fri, 02/25/2011 - 14:37 | 997461 proLiberty
proLiberty's picture

Short answer: yes, every central bank in the world is printing money and not a single unit  of it is backed by anything except air.   It is co-inflation, and when coupled with a tax on nominal incomes, it is the grandest scheme of theft in human history.

 

 

Fri, 02/25/2011 - 15:04 | 997528 glenlloyd
glenlloyd's picture

Well the problem is not necessarily that we won't know when it will end, it's really that we don't know what the magnitude of the destruction will be when we get to the end, that's the worst part of it.

 

Fri, 02/25/2011 - 18:19 | 998140 spanish inquisition
spanish inquisition's picture

This is bad news indeed, if you take a look at the chart you will see the US is LOSING the money printing race to China. As a world leader in all things, a loss in this column will lead to communism all over the globe. It is time to put the whip to Ben and get the presses running. Only by destroying the world can we save it for freedom and democracy!

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