Jim Grant Says All The Things That Ben Bernanke Avoided During His Press Conference, And Much More

Tyler Durden's picture

Considering the only soundbite that was relevant from Ben Bernanke's 45 minute 2:15pm oratory was that "we don't have a precise read on why this slower pace of growth is persisting" America, and the entire civilized world, could have done just as well without it. Instead, we should have listened to Jim Grant, who once again correctly identifies all the things that the Fed chairman should have said (Bernanke certainly focused on the other side): "What we are not going to get is a concession that QE2 has achieved its unintended consequences, namely a lower dollar exchange rate, a higher gold price meaning weaker confidence in the dollar, slower economic growth and a higher measured rate of inflation. Those are some of the things that have come out of this experiment and let us call it by its name money printing...How do we know that this 30% gain in the Russell and 20% gain in Dow since the Chairman spoke in August, how are we to know these are real values. The prices are up, but are people who are buying these stocks on the back of the Fed, are they doing something wise from an investment point of view, and if the market is too high because the Fed has put it there, what does the Fed do when the market comes down, which opens the fate for QE3." And on a far more important topic which we will soon hear much more of, namely extensive US money market exposure in Europe, which will be completely locked up if, pardon, when there is a major liquidity run in Europe snagging American money market liquidity: "The money market mutual funds have nothing to do in this country cause rates are zero, go to Europe. So money market mutual funds investors are taking quite ponderable risks for about a 0% return, these funds are yielding a few basis points only. But to get those few basis point, these funds are crossing the Atlantic right smack dab in the middle of the European banking crisis. This is a prime example of the unintended consequences of this massive intervention by our central bank." Indeed, this is just one simple example of the massive clusterfuck, which certainly does not need Greece's $5 billion notional in CDS, to make the Lehman liquidity freeze seems like a little melting ice cube. And since everyone now agrees that Greece will default, and it is only a matter of time, all the trillions in dollars in the shadow and open banking systems that we have been exposing for years now, will suddenly be locked up in the forms of 1 and 0 in computers belonging to institutions that are no longer operational. And most unfortunately, the man in charge of it all, has a quivering lip problem.

Much more in the entire must watch interview with Bloomberg's Margaret Brennan:

As to what a lock up of money markets would mean, here is an oldie from 2009 in which Paul Kanjorski explains how close we came when money market funds broke the buck:

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goldencross10's picture

Clusterfuck good word choice, but yes, Bernanke needs to grow a pair and mention

the issues currently at hand, i do believe we are in for quite an armageddon of problems

once "money printing pt 2" is over.

Shell Game's picture

Sadly, BB 'growing a pair' will never happen, that will be left up to The People to do, most of whom's are still ascended..

THE DORK OF CORK's picture

What does growing a pair got to do with this problem ?

This baby took 40 years to grow - Daddy Ben cannot beat the shit out of his son now.

His son is a monster.......and Granddaddy Alan will enjoy the spectacle from the comfort of his armchair.

You are dealing with a deeply dysfunctional family with no state services to call on when the going gets tough.

Malinvestment Mel grew up into a Cruel Bastard - they should never have fed him so much oil but it seemed easier at the time.

 

Shell Game's picture

What does growing a pair got to do with this problem ?

As I said, Ben won't and I agree, it's moot.  No, it's the ambivalent, oblivious public who will have to grow a pair with the mess that's coming..

THE DORK OF CORK's picture

In my more charitable moments I like to think that Ben & Alan do not see the economy as a physical unit.

They walk down the street and see $$$ coming out of doors and going down sinks.

They will not entertain the quality of investment & consumption , just the quanity - perhaps because they cannot measure such forces so therefore in their eyes it does not exist.

They are broken glass Keynesian's in that regard - also they have a quantum view on inflation as if it were a Schrodinger cat like phenomena.

Real core wealth creation comes from technological change - since the American military industrial complex has degraded from a late 1950s / early 60s strategic nuclear doctrine to a more colonial operation the stimulus operations have feed consumption & policing to a larger & larger extent - this is a net energy negative operation that needs the blood of others to survive.

 

TruthInSunshine's picture

Starve Wall Street.

Crush The very private 'Federal' Reserve 'Bank' -

 

How the Nation's Only State-Owned Bank Became the Envy of Wall Street

| Fri Mar. 27, 2009 6:33 PM PDT

The Bank of North Dakota is the only state-owned bank in America—what Republicans might call an idiosyncratic bastion of socialism. It also earned a record profit last year even as its private-sector corollaries lost billions. To be sure, it owes some of its unusual success to North Dakota’s well-insulated economy, which is heavy on agricultural staples and light on housing speculation. But that hasn’t stopped out-of-state politicos from beating a path to chilly Bismarck in search of advice. Could opening state-owned banks across America get us out of the financial crisis? It certainly might help, says Ellen Brown, author of the book, Web of Debt, who writes that the Bank of North Dakota, with its $4 billion under management, has avoided the credit freeze by “creating its own credit, leading the nation in establishing state economic sovereignty.” Mother Jones spoke with the Bank of North Dakota’s president, Eric Hardmeyer...

Rick64's picture

 A dangerous precedent to the FED if this is example is followed in other states. It has several advantages over the present banking establishments, and instead of being backed by FDIC the state backs all deposits which seems to help them make better financial decisions.

Temporalist's picture

+100 Thanks for the link.

 

 

TruthInSunshine's picture
by Rick64
on Thu, 06/23/2011 - 00:10
#1393816

 

 A dangerous precedent to the FED if this is example is followed in other states. It has several advantages over the present banking establishments, and instead of being backed by FDIC the state backs all deposits which seems to help them make better financial decisions.

Exactly, which is why Ben Bernanke or his handler junked me.

If more Americans realized the truth you speak, the Federal Reserve would already have been toast, maybe for good this time.

The Central Banksters of the London Central Bank mode DETEST this truth being announced publicly.

dolly madison's picture

"A dangerous precedent to the FED if this is example is followed in other states."

Last I heard, 9 more states are working on setting up state banks.

Baptiste Say's picture

It's hard not for a ND bank to make a profit, when it's borrowing at 0% to loan out at 2, 3, 4% to farmers who have no problem paying due to record food prices.

 

 

Rick64's picture
 Its not hard for any bank to make a profit if they don't overleverage or invest in risky investments (derivitives) in hopes of making record profits. BND has a different set of objectives, they actually want to grow their economy by helping their communities.
Shell Game's picture

Indeed, Keynesians like to think of us as their resource, no more and no less, to be managed and kept in dynamic equilibrium with their system. 

Back to the cojones.  I rarely hear folks mention that for the same number of decades we consented to those who governed us and their methods.  We paid our taxes and gave our consent. We voted them in and gave our consent.  We enjoyed the bull ride up toward an artificial prosperity, believing we all were entitled to the glam.  Even when rips in the matrix first appears in the late '90s, still we voted them in and paid them our taxes.  We still had our fun enjoying the unbelievable prosperity we saw rising around us.  I really do believe we have the government we deserve, unless and until we grow balls and demand otherwise.

Spirit Of Truth's picture

When there's nightly angry protests with pitchforks and torches outside Fed buildings around the country, then the PhD regime will flee their ivory towers and a true solution can be had.  As it stands, people who think money is the source of value in the economy are running the system into the ground while enriching their Wizard of Oz benefactors in the background:

http://thespiritoftruth.blogspot.com/2010/11/and-god-will-wipe-away-every-tear-from.html

JMHO.

Greeny's picture

It's never going to be over. Pyramid must

stay afloat. "Crossing the Atlantic on the middle of

European crisis" Dude is on drugs.. Every Large player on

Earth have crisis in that matter.. Like US doesn't have one?

Or maybe Japan? Greece is just small POS. California

has 6 times bigger GDP than Greece.

lieutenantjohnchard's picture

terrible faux post. remember, as greeny, you'v told the zh community that english isn't your first language. writing things like "dude is on drugs" is a dead giveaway you're a poseur, and a bad one too.

Prometheus418's picture

*edit* 

Comment removed due to misreading the first time through.  Yep, you're caught out, Greeny.

DoChenRollingBearing's picture

Lt. J. C.,

I always liked that word "poseur".

Two Towers AU AG's picture

The Armageddon of problems will really start the day.. China or Russia say the following when buying the US debt.

You trust in God, We trust in Collaterals... Show us the Gold to see the money.. 

RobotTrader's picture

Meanwhile, clamoring for AAA-rated, Gilt-edged, Uncle Gorilla Notes continues based on the fear trade.

Looks like the 90-day T-Bill will be zero percent by tomorrow morning.  Short rates are now the same as 2008 levels.

Who would have thought that the "unintended consequences" of a hockey-sticked Fed balance sheet and deficits growing exponentially would have resulted in a mad panic into U.S. Dollars and Treasuries??

Looks like the Fed is not printing fast enough.

Re-Discovery's picture

Print or don't print.  It doesn't matter.  Enough printing has already happened.

This won't end until . . .

Gold = Dow. 

 

PY-129-20's picture

You mean like: "To print or not to print: That is the question!"

Well, I am sorry, but BB isn't like Hamlet...

It always ends like this:

http://www.youtube.com/watch?v=WWaLxFIVX1s

Printfaster's picture

"To print or not to print: That is the question!"

Not even close.

The answer alwys is:  Print Faster.

 

carbonmutant's picture

"...extensive US money market exposure in Europe, which will be completely locked up if, pardon, when there is a major liquidity run in Europe snagging American money market liquidity"

"... since everyone now agrees that Greece will default"

What's the best way to Threaten a Greek Politician?

Rynak's picture

Let's see:

The ruling party is already finished if it goes forwards. Reminder: 80% of the population are against what it is doing. If they go through with it, the damage to the party will make the suicide of the SPD in germany look like peanuts.... they will be literarily obliterated.

So, appealing to party voter share, is no option.

They could smear all the politicians..... that may work. But doing it in an even wider scale, than is now the case, runs high risk of detection.... and with the current mood in society, it will demand heads to roll.

That leaves us with threats of economic sanctions, sabotage and so on. This probably has the highest chance to work... not because the threats are dangerous (many of them would paradoxically actually HELP greece), but because in their illusionary world of economics, they will seem catastrophic. So, you know - the usual stuff: THE WORLD WILL END IF YOU DO NOT DO WHAT WE SAY!

carbonmutant's picture

At the end of the day everybody who votes with G-Pap is going to get a piece.

And once they get get their FY money there is no downside risk.

The people in Syntagma Square need to find some downside risk for the members of Parliament who sell their country into slavery.

bugs_'s picture

oh i wish i was the chairman of the feeeeh ed

that is what i'd truely like to beee eeee  eeee

'cause if i were the chairman of the feeeeeh eed

everyone would be in love with meeeeeeee

 

Translational Lift's picture

And most unfortunately, the man in charge of it all, has a quivering lip problem.

That's because he knows just how fkdup he is/we are!!!

Things that go bump's picture

"...and then I heard them mentioning my name - and leaving me the blame."  Pilate's dream - Jesus Christ Superstar.

snakeboat's picture

and that poll matters about .00000000001%

euclidean's picture

Hooray for Jim! Someone telling it like it is -

a. cart before the horse, how about jobs prosperity creates sound market - now that's a novel idea Jim. Something like P/E ratios back in the single digits??

b. either the Fed owns the stock market, or the stockmarket owns the Fed - The Fed is Walls Street's bitch. Period.

May your insights remove others heads from others arses, or at least their own. But I doubt it. The cranium rectum is epidemic.

Borrowing to the hilt at 0.25% for capex means your interest payments double on the first 0.25% rise, then triple on the next. Only a minor flaw.

edit: BTW, the higher gold price was not an unintended consequence. That is what is underwriting all this. The stockmarket is just the open market Ponzi wheel.

sheep92's picture

do you mean like aapl which will is estimated to earn 28$ per share next year on a share price adjusted net cash of about 250. or a 1 year fwd p/e of 9 for arguably the best technology company on the planet.

The stock market is already discounting another recession.  If it does not come to pass we are going to get an up crash.

 

viator's picture

“there is a 3.5b euro hole in the Greek 28.6bn medium-term austerity plan according to troika officials.”

http://twitter.com/#!/MatinaStevis/statuses/83662663313391616

KickIce's picture

Consumer based economies do not work when there are so few consumers.

he speaks well for an embalmed person.

cossack55's picture

Oh, the US has plenty of consumers.  Problem is they don't have any money or credit left.  Fuck the Fed.  Raze all their buildings to the ground and salt the earth. Banish the scum from memory (except a statute proclaiming anyone whoever mentions the words Federal Reserve shall be immediately executed).

KickIce's picture

Amazing that any government would allow themselves to be controlled by any private entity.  Our politicians are nothing but puppets.

aheady's picture

Amazing? Seems pretty trite to me. Apparently everyone has a price.

DaveyJones's picture

yup, Ben avoided many things today, including his humanity

HungrySeagull's picture

Colt, Winchester and Remington Customers that is along with ATK, Olin and Wolff.

Mr. Weak Lips is about to either wear out his tolerance for XANAX or lose it by the next meeting.

To me, August is not going to happen.

 

What this man needs is to get laid and stop being a weepy. MWAH! /sarcasm.

A_MacLaren's picture

Must have been the camera angle.  I couldn't see Margaret's Pom-Poms as she cheered for the ChairSatan.

rufusbird's picture

This thread should have been titled "Bloomberg's Margaret Brennan" debates Jim Grant...Problem is then I never would have bothered to watch the video. Who in the focking world wants to watch some bimbo news bitch attacking their guest. I don't get it at all. Somebody needs to tell these A**holes that to ask a question and then shut their mouth and let the guest answer the question...He gets extra points for keeping his cool and giving such great answers. I have even more respect for Jim Grant than before...

A_MacLaren's picture

Somebody needs to tell these A**holes that to ask a question and then shut their mouth and let the guest answer the question...

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rufusbird's picture

I quit patronizing the Bloombert site many months ago. Fock um...they are part of the problem. Their fucking news people always attack their guests. Fock em again.

Dagny Taggart's picture

Grant shredded the Fed. What you own, owns you Bernanke!

CompassionateFascist's picture

Metaphysics. Actually, the RedShield owns the Fed. And, therefore, we owe the RedShield a lot of money. They create the $$$ in cyberspace, loan it to us, and we had better pay it back. + interest. Or Else.

Caveman93's picture

I'd rather pay higher prices....doh wait no I wouldn't...I'd rather pay higher prices...oh no I wouldn't. Geez.