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Jim Rickards Explains Why Jim "Son Of Helicopter" Bullard's Reverse Psychology QE2 Plan Is Fatally Flawed
Still confused by Jim Bullard's critical paper from last week Seven Face of The Peril in which the St. Louis Fed president, and voting Fed member, stated that he has no qualms about buying up Treasuries, further debasing the currency, and raise interest rates at the same time should deflation persist? Is Bullard's entire well-orchestrated PR campaign merely a reverse psychology attempt at managing deflationary expectations, and represent that even though the Fed is now expected to keep rates at zero for years (an "expectation" that will certainly not spur lending as consumers have no fear of rising rates tomorrow... or a year down the line), that the Fed in fact sees material inflation behind the corner and will consider every option to keep it down (thus giving debtors a presumably far shorter horizon in which to borrow money from the bank at acceptable rates)? Jim Rickards provides some, as usual, very astute observations, in calling Bullard "Son of Helicopter" (for obvious reasons) and particularly notes the velocity of money dynamic seen during the Weimar Republic, when years of excess monetization had no impact on inflation, then overnight hyperinflation set in without warning: "Who says that you can print all of this money and you’re just going to get mild inflation? Who says you are not going to get hyperinflation?...Well, this is a dynamically unstable process and the example I would give would be Weimar Germany in the early 20’s."
Rickards observes that Bullard's paper is nothing more than a spin campaign whose secondary goal is to prevent panic if and when the time for monetization arrives. Rickards' conclusion is that the primary intent behind Bullard's oeuvre, is nothing less than a last-ditch behavioral experiment to shock the people out of saving and to instill the fear of currency debasement, thus forcing the consumer class to not only stop saving but take rush to take out credit and spend it all on hard assets (but not gold, the Fed doesn't like when you buy gold). Will it work? With trillions of deleveraging still left, (not to mention the cataclysm in the shadow banking system) the Bullard gambit is worth a shot, as the logical next step is the real deal. Yet Rickard's conclusion is spot on: "it's like treating the citizens of the US like lab rats in a great monetary experiment conducted by the geniuses of the fed - the same people who missed the tech boom, missed the housing boom, missed the severity of the crisis, cut the dollar by 95% in 80 years... what they are trying to do is scare people into spending money, but I don't think it is going to work... what will happen instead is they will print so much money in this effort and they won't get the traction, and then it will just tip, it will be like throwing a light switch and it will go from no inflation to hyperinflation instantaneously. At that point it won't be about spending money any more, it will be about the fact that money instantaneously becomes worthless."
In other words, the Fed has resorted to its last pre-destructive option: a free call option on animal spirits, to be rekindled by the combination of the fear of monetary stability in the future, and a surging stock market completely unjustified by anything in reality, yet one which keeps on going higher, thus tempting every Tom, Dick and Harry to buy up every stock imaginable on margin. And in this grand scheme, Bullard's reverse psychology campaign is the last chance to extend the call option by a few weeks or months. If that doesn't work, then it's time for Plan QE B.
Full Jim Rickards interview on King World news can be found here.
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They've created the Greenspan equity call, the BB bond buyer fund (unlimited borrowing and easy spread), and now have convinced the stock market that good economic news is bullish and bad economic news will bring more QE. Only 3 months to the election. They can goose the employment numbers with the B/D model and auto manufacturing seasonality. They won't want to do QE before the election, and are doing an exceptional job manipulating the stock market. So, they just might be able to make it until then.
As a counter-point, it makes one wonder who the PTB want to win the election. If they want Republicans back in, they might allow the stock market to go to 9500 in order to create a bit of malaise just before voting.
Jim Willie lays out some very interesting insights into the rigging of the bond market and QE.
..................................................................................
(paraphrase)
"$1.5 Trillion disappeared from the top floors of the WTC on 9/11. Nobody followed this up."
......................................................................................
His sarcasm is priceless re: JKF and 9/11 in part 2 of the interview.
Jim Willie's life has been repeatedly threatened and he now lives in Costa Rica.
http://maxkeiser.com/watch/on-the-edge/episode-65-31-july-2010-guest-jim-willie/
They're trying to turn stocks into the new American "currency." Look at what's happened in Zimbabwe -- the currency turned worthless, so the citizens turned to the Zimbabwe stock market in the belief that stocks would keep their value relative to the currency. So far, their market is doing great, and it's working.
"a call option on animal spirits"
Damn, pure poetry.
Agreed
In the event of a SHTF moment without complete loss of central control and in a environment where only Gold is considered money then you could go to a nationalised gold backed system - but this would only work efficiently where you would have a blanket cover of capital controls.
If this was the outcome and the authorities gave people the equivalent of the M1 money supply price of Gold - how much gold is in US.
My gut feeling is that there has been a dramatic fall in the level of personnel holdings of Gold in the US relative to Europe and this would have a dramatic effect on the residual buying power of a new US currency unit.
find the people behind the fed and you have found the gold.
Both discoveries equally improbable. You might as well jump in your Aztec and drive to infinity.
but be careful of who you offend...
http://www.theonion.com/articles/white-house-jester-beheaded-for-making-fun-of-soar,17495/
most hilarious!
It's $6.4 trillion Fed purchases around December. There's $14 trillion left of Americans' realizable assets left to loot.
Mellonesque liquidation is proceeding exactly according to the script, as are the howls of protest by those who have NO power to stop it.
We are now at a precipice; the doelarr sits on the chopping block. This but where are the crowds? Doesn't any of the Talking Sheep at cnbc chart the DXY? As an article on ZH recently said, (paraphrase), 'The DXY is not worth charting because it is so manipulated.' Well, it may be manipulated, but in my opinion, that is all the more reason to chart it.
The weight of last winter/spring was put in at 81.5. We went to 89. So now it is there and back again. Do any of the doelarr bulls have whiplash or what? So now that we are at this support level, what will happen if and when it breaks? What is its range?
The range appears to be from 80.50 to 82.50, and considering we almost touched the bottom of it, I would expect everyone to be panicking. Yet, all along the streets cars zoom effortlessly, going on a long road to nowhere. People chat like chickens to devices that cause brain tumors and slerp drinks that do the same. People, we are at the wall, and if you are holding up the wall, you are missing the point.
Once the doelarr breaks 80.50 the next move will be through the 70's. I will say this again, through the 70's. There may be a pause in the low of the range, 72, or 73, what have you, but I see the DXY by being in the mid sixties by December. So please, I beg you, panic.
And a repost:
And here someone that knows a thing or two, Paul Craig Roberts, the former Treasuie Secretary Assistant, and creator of Reaganomics in its raw form, on Jones last friday, as he outlines what sounds like his version of The Long Emergency.
http://www.youtube.com/user/fairinfowar#p/c/7082038AF71D2041/9/F-Odvm-8-oQ
Here is the article.
The Year America Dissolved:
http://www.counterpunch.org/roberts07262010.html
Yes, I believe the dollar is going lower - but not necessarily against the other currencies. What will people buy instead of the dollar? The Euro? One bank/sovereign away from a collapse of the currency. The Yen? Terrible demographics/fundamentals. The Yuan? Sure. But not that trade-able. Versus gold, oil, commodities? Yes.
Right. And I believe that some will buy the Euro, some will buy the Yuan, and so the gold panning continues as people jump between the sinking ships of the currentseas. But yes at the end of the day it will be gold in the bag, and FIAT in the chimney, where they each belong.
Those with passports might hold some CAD
Which passports? The ones with the RFID chip?
I disagree that the USD is heading so low as you claim. On a perspective of DXY (relative that is) sure it can head down. But with all major currencies, EUR, GBP; they will do the same. In a flight to safety, absolutely nothing has changed from having the greenback being the staple currency. GBP was dead long ago, and the world (read: EU, South America, anywhere not in Asia) isn't ready for the RMB to become the reserve.
Please see USTs for further proof demand has not evaporated - much less, it has increased. Safe haven = US bonds. To purchase anything longer than a 1 yr bill would indeed be stupid, but you have to park that $ somewhere.
First, the gig is up. Paper FIAT backed by nothing does not work. It never did. Now the truth is out. Everybody knows. Make a dash. Make it headlong. Here comes the tape. Second, they are trying to hoist the SDR on the world, and they are not just bankers. Geithner has mentioned it, Sarkozy has mentioned it, and other prominant world leaders, politicains and businessmen, and institutions have mentioned it.
People will park their wealth in physical gold...silver...platinum.
Wrong. The dollar is backed by oil and will be held up by the fiat currencies of rest of the world. Only if there is fallout among the CBs will there be any danger of currency volatility.
Who needs the SDR when u have the USD ? Intl bankster cabalists already own the Fed.
So you believe what geithner says Lennon? Don't.
They do not have a dollar. The dollar is dead. Blown to bits by the cabal themselves. For if they hadn't done it, it would have done it on its own. The SDR is merely the next puppet medium of exchange that the cabal is trying to hoist upon the status quo, this via the UN, an organization holier than thou.
Do I believe Geithner? How about, do I belive Geithner is an idiot....and for the rhetoric, yes I do.
For example, this is him thinking on his feet, "Uhm, uh, uh, Timmah!"
http://www.youtube.com/watch?v=ds_qGXbxK-4&feature=PlayList&p=98B170E161...
The dollar is backed by the performance of the US economy. The economy is contracting, tax revenues are plummeting. When people realize that the economy can no longer service the govt debt then the debt will be sold off and it will lose value. The dollar will be sold off in the fx market because remember, its backed by full faith and CREDIT.
When the dollar sells off, real cost of commodities will go up.(inflation)
As the wheels fell off the US economy and everything but bonds suddenly became vastly cheaper in US currency terms.
Is it going to be different this time? Please do share...
No its not going to be different this time.
Bonds sold off in the 30's and the 70's.
A swing and a miss for jdrose1985
You're beyond help. I'm throwing in the towel and going to go look for time more well spent rereading Fooled by Randomness.
Dltd
Backed by oil? The US has no oil reserves! You mean oil is traded in $$, not backed by them. Totally different.
The day people park in PMs is when the acolypse reaches us. Though by then, it'll be the end of civilization, so it won't matter. Paying in gold is a joke. The poor locals do so in Africa and they get ripped off left and right on not having an easy to separate grams from grams.
The next big thing is e-money. Paying in a global currency (sure, call it SDRs if you wish) via your phone or whatever chip you have on an item you will always carry with you everywhere (video phone/notebook hybrid).
Not necessarily. Gold will just recapitalise the banks and then we can start the whole process over again. Don't believe everything a fiat bug tells you, gold has yield when you lend it out.
I dont believe gold has any yield besides a store of value (if that).
As for fiat bugs... suffice to say theres enough gold bugs on here that taking the paper money side of things gets you the 'contrarian' label.
A stack of FRNs sitting under your mattress has the same yield as a stack of gold under the mattress. You need to lend them both out to get yield.
I have not done the calculation but I wonder if the gold swap deals that central banks do have a higher yield then interest rates.
Are you aware that US bonds rely in the same revenue stream as stocks ?
Which revenue stream is that, dearest sir?
you're like the epitome of dense. have fun with your dale earnhardt commemorative 24k plated coins, sucker.
I think you have to look at it not only from a short and medium-term perspective but also from a long-term perspective. On a long-term perspective, financial globalisation will disband and will leave room for local currencies to provide the exchange medium.
So the issue of reserve currency will no longer be relevant in the terms we think about it right now. The problem in itself is false, because we assume the that after the dollar goes bust another currency will shoulder the global burden of being a reserve currency and that economic area must be the global economy's main engine. Wrong way of seeing the question, in my view. All big economies have major flaws, many of them can become aggravated becuase of the degree of speculation that exists in the global economic environment, so the answer is not to replace the dollar, but to make the system obsolete.
Right on, JimiJohn. USD headed to 72 and then 62.
You don't really believe that horseshit, do you?
You will have to be more specific than "that horseshit". Which horseshit?
MR LH, with all due respect.
Couple months ago your line in the sand on the DX was 81.5, within 48 hours it blew through that on the way to 89. Just take it easy now, will ya?
From JSM. Required reading. Exactly 100% correct.
A similar situation now exists in that bastion of public interest – the stock market. Trading is simply impossible. Stop-losses can’t be held as orders because they will be used against anyone with a position. As related in M. Lewis’ latest book, the Chinese Walls that supposedly exist in the multiple platforms that trade a single stock should be properly considered as “Bullshit”. Charts are painted to flush people out. What passes for a market is now just a serious of raids up and down the flagpole to shake the hell out of its minor participants. If you aren’t equipped to play “chase the algos” (entry ticket c. $40 million for the technology and servers), your money will simply be taken. The market has for hundreds of years taken money from weak hands, but now anyone without a first class algo can be considered and proven as weak. Fundamental analysis will not help the small trader. It’s simply pointless to participate. Instead of tree-shaking… now the whole damn forest is being shaken. As explained in the book “A Pocketbook of Gold”, any individual with the slightest amount of margin will be destroyed by the hyper-over-leveraged banks that don’t have to mark to market, never have a margin call, and have a government guaranteed, taxpayer funded bailout. These are the NEW fundamentals. You want to participate on the other side of this, so call “trade”? If you do, you need serious help. Do you want to play with the take-down artists, the chart painters and algo-drive market-bashers? (To Mr Sinclair’s “haters” of the past fortnight please recall his relentlessly iterated warning to abandon all Gold trading and margin at $548 per ounce, and hold the core as insurance only.)
The result is that retail has had it with the so-called “market”. Outflows are increasing steadily, while liquidity swamps financial institutions unwilling to do anything other than sit on the liquidity. The bail-out looks like a bail-in. Only idiots like the zero-return in a decade (and a lot less if properly numerated against Gold) pension funds are left. The suckers have woken up and are refusing to play. Computer driven markets go from awash with liquidity to zero liquidity and back again in seconds. It’s enough to make a schizophrenic look balanced. Risk is fully on, then fully off, then fully on again several times in a given day, soon to be in a given hour, minute, second, mille and then micro-second. Trade if you have a death wish only. As the public exits, the algos will now attack each other in a macabre pas de deux of death dance.
Government, of course, is playing its part too in the death of the markets by destroying the value of fundamental analysis. The capitulation of FASB to a government/Fed dictated policy of suspending the assessment of fair value has, as its corollary, the suspension of even the possibility that ‘fair value’ can still, in fact BE determined. Since the government now determines market outcomes, reading Maoist “Wall Posters” is now all one has. (“If one knows the nuances, the walls tell all” was the nod for Deng Xio Peng’s political destruction. This is what we have been reduced to.) As if analysing Greenspan’s FedSpeak wasn’t enough to live through, we now must be scanning the horizon all day for the QE II, instead of analysing a company’s worth and prospects. Resistance may be futile, but participation is now idiocy. Money supply is viciously ramped up and then completely shut-off, at a whim, and with few but opaque methods for observation. When people are buying the stock market only because they envision a Bernanke money-printing induced melt-up, it’s time to leave. That is no reason to be in the marketplace, it is a reason to avoid it.
Previous market participants are sick of trying to decide the level of deceit in Government statistics. No one can anticipate whimsical “on the hoof” policy (like occupying Iraq), so everyone is fearful of investing. Money is going to the mattress like a Spaniard living under Franco. Germans and other Europeans are rushing into the Swiss Franc in outright fear of what politicians might do next. The level of trust from the investing public has never been lower. Government won’t let Fundamentals play out, just like they refused to take a recession ten years ago. The Fed can trump all fundamentals until, of course, they can’t any longer, and they blow up everyone including themselves (i.e. sovereign default). When proper valuation is suspended for as long as possible and seemingly, hopefully, forever, one would be advised to spend their time building a nuclear resistant financial bunker, preferably lined with Gold. It could give a whole new meaning to the old adage that the “Fundamentals always win in the end”. In the new intonation, the emphasis is on the word “end”. An “end” that seems to be in the process of being succinctly arranged.
In the search for absent fundamental indicators, “Shadow Stats” became preferred, but that only detracts from confidence. It does nothing to enhance it. Mr. Williams does not sit at the Fed or in Government. Most likely, it will be QE to infinity, because the disastrous outcome of a Treasury market implosion could be even more devastating than perpetuating a depression. QE is a government played trump card that destroys Fundamental analysis by moving the pricing numerator. Desperation is palpable. It’s why the Government is actively destroying any attempt at fundamental analysis. The sustaining of the smoke and mirrors game demands it. If Government continues to spend, they eventually go bust from debt. If they head down the austerity path, you’ll never have enough GDP to SERVICE the debt. They’re cornered. Devaluation de facto or de jure (i.e. default) is the only possible outcome short of waiting for inevitable systemic collapse along with the hyper-inflation which will give you about as much warning as a Tsunami on your visible horizon. As Mr. Sinclair has related, “Gold is financial High Ground, when a Global Tsunami hits.” Prepare accordingly.
There is definitely something unusual underway that is affecting the performance of the precious metals stocks lately. Today is yet another example where most of the factors that influence trading in the sector are very bullish. This would include the dollar sharply lower, oil higher, the overall markets trending higher, and both gold and silver bouncing very nicely off the lows of last week. Also the timing is positive, since many investors are beginning to appreciate that the optimum window to buy mining stocks is after the market intervention has peaked relative to COMEX op-ex.
Yet here we have another day where most of the PM stocks are sharply lower.
The slow motion train wreck that has been affecting financial markets worldwide is driving more and more people into the long term security of gold.
The compliant media in the US may be unwilling to report on the real fundamentals for gold, but there are strong buyers elsewhere beyond the reach of the usual media propaganda campaign that will be significant buyers.
As physical bullion becomes harder to find, it is only the paper futures that be used to create short term raids and selloffs. Gold is a haven for the entire world, and as more buyers compete to own bullion it is no longer subject entirely to the whims of the market crooks with a North American agenda.
It will likely continue to ascend in price and drag silver along for the ride. However the market weight of all listed precious metals stocks is still relatively small, and mostly confined to markets that are easily manipulated by the Cartel.
This would explain why the PM stocks are stuck in the mud even while the metals are heading into greater strength.
This is not just a normal functioning market.
The last week or two has been a departure in the normal trading relationship for these stocks as per the driving fundamentals.
Do not for one second think this is just a coincidence.
It is clear that the Cartel has some kind of arrangement with the regulatory agencies to allow for blatant and recurring intervention, with not even the hint of hiding their activity.
Repeated waterfall sell offs, a disconnect from historical trading relationships, and the manipulative concentration of short positions in the metals pits, all demonstrate that the Cartel has increased the intensity of their illegal intervention.
This is not the behaviour of a group that has any fear of reprisal or prosecution.
You can document this crap and report on the obvious corruption that is ongoing, but it is clear there will be no official response or even a token prosecution of the ringleaders.
They are too politically connected and the system has already invested too much to prevent the institutions involved from crashing.
Therefore there is no will to threaten stability of those banks 'too big to fail' by initiating an investigation that would further undermine the integrity of the entire financial system.
The regulators have concluded it is the lessor of two evils to stand back and let the crooks carry on.
This lack of courage on the part of the regulators will be part of the scandal when things finally go off the rails. But in the meantime the mining stocks may continue to slide.
So what is the retail investor to do?
Buy where you can on these dips, focus on those companies that are profitable, with minimal debt, and operating projects with large resources to support these companies if indeed we see a prolonged slump while this latest manipulation runs its course.
No form of intervention can continue indefinitely, even a scheme led by powerful institutions and protected by a lack of regulatory scrutiny.
The sentiment levels in this market have returned to lows seen in 2008, or even 2001. People are just not willing to trust their own instincts or wait around while the sector is creamed day after day, and the same media shills broadcast the same bearish message about gold every week.
If one can find companies that are strong enough to survive the market, and can buy these stocks and stand firm until the sector recovers, then that is the only option available for the retail investors who want leverage to gold and silver.
At some point in the future, the light will go on, and people will discover that gold and silver are not a bubble. The economy has not been in recovery. The worldwide financial crisis has not gone away. And the safety of paper money is a mirage. There will be a stampede into the mining stocks that will blow up any capacity to cap or short the sector. Program trading and naked shorting will not be enough to offset the flood of buyers looking to establish positions.
That day may come too late for many investors, but it is going to come nonetheless. Dig a foxhole very deep, and be very patient.
The HUI is hands down the single best leading indicator IMO.
Edit: [New World Order] agenda.
The corporations are loading their boats now. Got sail?
Great post, especially pointing out the ties of the Cartel. Brian Mulroney does sit on the board of Barrick Gold Miners for a reason afterall.
Also, the BIS does have gold on loan for a reason ;)
Yet the DOW bumped up over +200 today.
"C'mon Jake get out of here, it's Chinatown!"
"This is not the behaviour of a group that has any fear of reprisal or prosecution"
And there it is.. The only phrase everyone on this site understands and te only one we are trying to get across to the 80% of the JerseyshoreAmericanIdolites.
They think you are dumb, they think your weak and they have pulled off the mask and are perfoming a financial Coup d'état before our eyes and using the protection of their purchased former United States political party after decades of stealthy extraction of liberties and changing of cornerstone laws to benefit them will distracting the public with every possible irrelevant to society "media" story. How many Americans will be sitting there one day protecting their families in their basement with a Bowie knife and eating Hostess Cupcakes after 12 years of no jobs as the modern day feudalism takes place and say to themselves.."Wow and my my biggest worry was the Cowboys game and Dancing with the stars"
History unequivocally compels us to remember the majority of human civilzation aside from the last 60 years has been dominated by the power seeking, the dictators and we have seen centuries of war and Malice all over one thing ..resources. To be to myopic as to believe you are te lucky individual to be born into times without Tyrants is wishful thinking.
Evil always has existed and it comes for us once again and it has taken longer solely because of the uniqueness of this nation and it's foudings.
I warn you now to get organized with like minded inherently good people,friends and prepare yourselves that the evil comes in our lifetime.
This website is the most important gathering place for intelligent thought, rational thinking and inherently good people.
Our enemy has no face and no name but many faces and many names and they are aligned against the common man because they can be exploited because they are simple and always will be. Nobody ever believed it can happen in America buy it is happening in front of us.
If someone had told me that I would think of this my country like this in 2 years I would have laughed at them but I see it now for thr first time.
America is becoming a shared Borderline fascist plutocracy.
I feel ya, brother. I'm tired of fighting, tired of getting the information out there. Tired of hearing "just live your life, man"...tired of the ridicule and tired of seeing a look of hate cross peoples thinly veiled eyes when I talk about the truth.
I'm tired of being met by deafening silence, but ill not stop fighting to liberate myself and encouraging others to join me.
Are we insane to continue expecting different results?
don't believe the police state?
Look at what Gates says about Wikileaks.
GATES claims the moral high ground while the Armies he commands REGULARLY slaughter civilians...knowingly. In fact, the video which brought Wikileaks its boon in eyeballs was precisely showing THAT, the gunning down of innocents by a 20mm chain gun.
Now I see that CNN says that the gov will go after MIT students who helped whistleblowers encrypt data...
The gov will not allow you to tell the truth. The truth is "classified."
excellent, DP.
as i have been watching the manipulation of the silver market in particular, i also wondered if the sluggishness of the mining stocks was also a result of some other form of cartel hijinks. but the trading volume has been so low this summer it's hard to say. it could be that this low volume is exactly what's been making it so easy for them to suppress i suppose. or is the inability of these stocks to move higher just a result of low volume, the summer doldrums, and the well-known jpm comex short keeping the silver price down anyway?
but today's activity definitely chapped my ass. with the dow up 200 and silver up near .40 i expected more from the miners. then i remembered that the canadian market was closed today and maybe that contributed to this blase' day for miners too, though it shouldn't have affected it that much.
all i know is that tomorrow i hope to see some lost ground quickly made up here. but i'm not counting on it as i am seeing things your way as well.
just for kicks, about when do you see the miners breaking out?
Great comments DP. I read over a Jesse's that the Canadian markets were closed today for a national holiday. So part of the unusual behavior in PM stocks and the bullion trusts might be attributed to that. We'll see tomorrow.
Don't know what others have been doing but I've been using the cartel's manipulations in the paper market to buy physical on the cheap. The Banksters are helping me and others buy PM which serves to tighten the noose around their own necks. It won't be long before the COMEX and LBMA default. Then the fun begins. Prices will sky rocket and gold-bugs will be chiding themselves for all their wailing and mashing of teeth during options manipulation week.
Hang tough. Victory belongs to the righteous.
Provincial holiday only (the exchanges happen to be in that province).
Back to the usual churn higher tomorrow..
"The result is that retail has had it with the so-called “market”. Outflows are increasing steadily, while liquidity swamps financial institutions unwilling to do anything other than sit on the liquidity."
This is ridiculous. The Feds run all banks now. It is not "the banks" who "sit" on liquidity. In a Mellonesque liquidation, the decision has already been made that the economy is a disaster and that government must withdraw from it. That means, no loans. It's not coming from "the banks." That's naive.
It's simply a statist economy designed to loot. And it will loot. There's a big fat $14 trillion sitting in Americans' pockets of quickly realizable assets. That needs to be stolen. It will be.
Agreed. Anyone with more than a morbid curiosity invested in these markets is either a swinging dick or a nutcase in my eyes. adding insult to injury will be when they start drafting kids to die as a major war is started to divert attn.
interesting times, sorrowful when society is viewed thru the prism of detachment.
Serfing USA...How sad.
I hate to induce independent thought amongst the ZHeeple but why doesn't anyone here ever think about investing in a company that has a successful algorithmic trading program?
(No names so as not to shill). They generate very, very nice returns. Tarzan says it's a jungle out there, Evolve.
+1 oz.
same thing, in not so many words, that I argued with douchinger about on TF.
Austerity means default by the sovereign. Deflation kills debtors.
The only avenue is to either accept death now or do what everyone does and try to extend the game. The situation is actually hopeless from a macro perspective of attempting to restart aggregate growth.
I see no possibility of austerity and cutting; how long could such a cycle last before you're voted out and people beg Christ to print? As long as they can monetize, they will monetize. The elites are better-served now by that; they are head hogs at the leverage trough.
I think Canadian willfully chose to cut their annual deficits and to pay off there cumulative debt in the early 1990's. Unemployment hit 13-15 percent and included a 10 or 20 percent cut in the government workforce. This has been done before and its not that hard. Your children will thank you. Mine are.
Excellent post, Turd. Muchos gracias..
Very nice article. Thank you, Turd.
Excellent post TF... I add that monetization has not stopped and is continuing. How can a broke Great Britian cut it's budget by 40% in an extreme austerity move and at the same time double it's US Treasury holdings? ...
"As of end May, China still holds a gaggle of USTreasurys, but their USTBill holdings are down to a trifling $7 billion, as China sells into the confusion, especially at high principal prices tied to near 0% yields. China is selling the bubble. Without any question whatsoever, the USFed and USDept of Treasury are using the UK as a ledger item for their mammoth US Treasury monetization, all barely hidden, with the TIC data used as a tiny fig leaf that offers inadequate coverage. The story receives no mainstream attention. The United Kingdom has wrecked banks, staggering deficits, no trade surplus, yet managed to buy a whopping $28 billion of USTBonds in just the month of May. Seems like Printing Pre$$ operations and London serving as the Hidey Hole. At end 2009, as of the Dec tally, the UK owned $180.3Billon in USTBonds, yet somehow managed to accumulate iin the new year, up to date $350.0Billon. The UK supposedly has almost doubled their holdings in five months!
http://www.kitco.com/ind/willie/jul222010.html
Exactly!
Big fat "monopoly money" swap line with the FED ... they buy our junk, we buy their junk!
Bond auction MUST NOT fail ...
+ .999
@turdF
Excellent!
At the very beginning of the interview, Eric King talks about a suggested one page re-fi mortgage form for home owners who were current and making timely payments. Establishing the lower interest rate on current mortgages. The effect would be putting money into home owners hands immediately. I love it! For once, a plan that rewards people who are "doing the right thing." I wonder if the TBTF would go along with the plan?
But only those on the FHA teat - if you got a conventional through your bank you're out.
No money is going to be put in the pockets of a bunch of slob Americans. These are the very same people who are now being looted via liquidation. You're going to put money in their idiot pockets? Never! They are being played out until they are broke. Then they join the underclass. Goodbye.
If someone can tell me how to post a picture, I will show you why this will never happen. No joke.
Yes. Junk that as if I am not totally serious.
I do not think you can post a picture unless you are a ZH writer/contributor. If enough people walk away from mortgages, I believe that the banks will come around....better to have a little money now, than no money later.
I will describe it then. It is a picture of a poster that I was given which hangs in a Chase call center. It is titled "chase watch" The picture is a black dude peaking over his cubicle at you. The text is: " You hear a co-worker, who is also a friend, referring a customer whose modification has been turned down to a third party loan modification specialist. You don't want to get your friend in trouble, but...know how to act. Know when to act.
The thing looks like WW2 propaganda. The bottom line is, they don't do modifications and they better not catch any employee actually helping in that process.
Several articles lately in the Seattle Times about people who were rejected by Chase (their lender) for loan modifications, but they did not have any problem getting them in 30 days when they went to a loan mod broker. Also, my sister-in-law in Phoenix (hopelessly underwater with a first and second at Chase) was jacked around for six months by Chase re a modification, then finally rejected (their explanation was that she made TOO much money). But now they call her every day (including Sundays) wondering why she stopped paying her loans.
huh? and deprive the richies who own nothing but bonds of their coupon?
that would fuck them in the ass and that ain't happening, unless enough black people find themselves able to actually make payments on their mortgages
I have not seen the details but would bet that home owners going for this plan will lose their non recourse loan status. I figure home prices are going to fall another 20% in most areas so this is another sucker deal.
The general point of all of this is to bring the SDR (XPR) in as the perfect little zen master of calm amid the global currency storm - a de facto WCU. To do that you must create a crisis of confidence in all non-yuan currencies. Hyper inflation for the central banks and soviergy debt and deflation for the main street schlubs. When its all over, you can literaly walk in and privately own city/state services and demand direct payment of public tax revenue.
"One Ring to rule them all, One Ring to find them,
One Ring to bring them all and in the darkness bind them"
The point is to relativize all currencies and peg the XDR from the current currencies to a basket of commodies (only if nessasry). This is the only scheme publicy supported by China and that is the kicker in all of this - how to get the culture from Planet 10 to join the Bretton Woods scotch and soda crowd. Where is the Mothership for all these central banks? Look to the BIS and the iMF for "solutions" as the soverign debt piles up. Don't forget, the XDR was created in 1969 and was on pace until 1974. Those baby boomers are going to have it their way.
This is closer to the truth. A big fat pile of wealth has been built up in American homeowners. That needs to be looted without the monsters becoming aware of it. If that is your goal, then you go about it pretty much the way the Fed is going about it.
So ignore this pocket-picking. Just wait until BLS tells us Bachelors level unemployment is 20%. That's the revolutionary number.
yeah, the raid on equity continues. they wont be satisfied until they drive people will 90% equity in their mortgage penniless. thats where the money is. as for bachelors unemployment, check China, a lot of horny dudes with rifles.
Physical Keynsianism: Here's a pile of feshly printed money. Borrow it now before it becomes worthless.
Psychological Keynsianism: We're going to print a bunch of new money. Borrow it now before it becomes worhtless.
Calm down folks. Aint like we never saw a manipulated ramp job before. Im not so scared of the big bad Fed these days.
They really dont want to print any more money. They are painted into a corner. Jaw jacking is free so they are going that route. But just watch, the effect will wear off quick just like it did in Europe until the CBs backed up the tough talk with some bailout trillions.
Right before the market tanks they always pull a last ditch ramp job in order to sell off stocks at better prices. The smart money is phasing into bonds.
Besides, think about it, How is Ben going to sell QE2 with a soaring bull market?
As far as elections go, so long as no third truly independent party wins, a republican takeover would be just fine for the corporate sponsors.
Look for QE2 around SP 400-600, maybe. An August 10 announcement of actual measures would be counterproductive and unnecessary, just the hint of it is more than enough for now. If they were to actually implement it, oil would shoot over 100 in a few days along with many other nasty side effects.
The big stock sell-off is a-comin,imo, this week.
Thank you for your more phlegmatic comments. This may be the most hysterical thread I've ever read on ZH.
Yes, the markets are manipulated, but survival-level existence is not just around the corner. This kind of freaking out, panic-mongering bullshit serves no positive purpose.
BTW, PMs are not "impossible to find". I just bought $20K of beautiful, graded Eagles, from a garden-variety dealer, and he would've been happy to sell me a quarter-mil's worth--he had 'em in stock.
You better get it out of the USA. When you go to sell your beautiful Eagles the IRS will be there too.
1099 Sir.
What's his name and number, I'll take all of them.
Deflation is coming per Bill Gross!! In an emergency you will be forced to sell your gold for US Treasuries. Individuals will be forced to declare all gold holdings (on or offshore) by the IRS under severe penalty (maybe $100,000 and 10 years in jail for deliberate understatement). All trust/IRA/401K investments will be mandated to hold major Treasury positions within five years. The "flat world' globalization means there is no place, no way to protect yourself. The elite families in the world have the gold and will make the rules.
Repricing is coming
Witnessed the 10 year bull market in Gold where it has outpaced all other competing asset classes during this time frame.
What is very interesting is that the value of ALL the Gold in the world is valued at less than 1% of ALL assets globally ...all above ground supplies AND all of the Gold still in the ground and yet to be mined
Less than 1%! How stupid is this?
Historically it had been above 20% until the modern paper alchemists took over in the early 70's allowing "money" to be freely printed with no backing.
Here are a couple of pesky little questions...
"where is the foundation" to our financial system?
If Gold (metal and miners) was equal to 20%+ in the past and is now less than 1% what kind of foundation is this?
Gold doesn't matter anymore, it is a barbaric relic and is no longer money?
Who needs Gold when you can use Dollars for the foundation and print the hell out them as you please, right?
Sorry but this is the problem nearly in its entirety... the US can print and borrow (until now) in unlimited amounts.
The world is just as at fault because they let it happen and accepted it.
The foundation to the world's financial system is nothing more than digital pieces of paper issued at will and at the whim of the world's most indebted and thus most bankrupt entity on the planet!
By extension does this mean the entire financial system is a bust?
So the world has built it's "financial house of cards" on a foundation of rotten wood set in sand while the real foundation material has been relegated to a dark closet.
It has been sitting in the closet while above ground supplies (from current mining) are growing between 1-2% per year. Paper on the other hand has been growing at (pick a number if you include derivatives) at 5-10+% per year FOR YEARS!
Once investors figure out that the tides have washed away the sand and all that remains is rotten timber, a mad rush for the only real foundation will commence.
BUT, this material will not be able to be purchased at prices anywhere near these "closet levels", it will be revalued enormously.
It has to for several reasons.
First off, if money is to have a foundation or backing, there is clearly not enough metal to go around AT THESE PRICES!
Then (when not if) the rush for solid foundation material begins, governments will decide that prices will need to be high enough to give THEIR remaining reserves enough "value". This will at the same time discourage investors from piling in by pricing them out.
And of course we still have the fact that probably only one real ounce exists for each 100 that have been sold on a paper or digital basis!
THIS is why at some point the Gold market (and all others) will close for an unspecified period of time, governments will be overrun with demand for the real stuff and will have to close the window (of opportunity) and reprice Gold "over night".
They will have to do this to "reflate" and "refill" their Treasuries and central banks.
They will have to do this in order to create supply from the public and to curb the current and coming huge demand.
They will have no choice because THEY set these conditions.
It is only a matter of time, don't be shocked when it happens and be prepared ahead of time, you and several future generations will depend on this for financial survival!
Haha, love the logic.
"Once investors figure out that the tides have washed away the sand and all that remains is rotten timber, a mad rush for the only real foundation will commence."
Let the infomercials begin. Carlton Sheets will be your point-man.
DP Your statements bring back memories of the dot com bubble before y2k. Swap the USD for tech stocks and swap gold for "traditional bricks and mortar" stocks. Insane valuations reinged supreme, (remember). It'll take some catalyst again to pop this bubble too. Don't know what it is yet, but we know what always happens to bubbles.
I agree with Rickards. At this stage in the game (at least) Bullard is bluffing. Each phase of QE will have less and less impact due to diminishing value of the currency. They have to get as much impact from the threat of QE2 as they can before they would actually implement it. There may never even be a QE3. If there is we will be getting into Weimar territory by then. Many think that hyperinflation is coming, but I'm still not sure that Prechter isn't right. Deflation may be the way this goes because TPTB have most of the money now, so why would they want to devalue it? Hyperinflation seems to create more uncertainty for them. And how much inflation are the Chinese going to allow before they get more agressive?
I may not know much but one thing I do know is that I'd like to nail this Ali bachelorette broad every which way to Sunday.
and to think you could have been a finalist, turd...
Mandy wouldn't let me try out for the show.
I promised her that, if I won, the first thing we'd have was a Ali-Turd-Mandy 3-way but she wouldn't sign off. Shit.
some people just don't know how to have any fun i guess. in the meantime, persistence, turd, persistence.
If the FED (controlled by the shadow powers) manage to destroy the usd, it will be the worst crime the world has ever seen. Guaranteeing death, destruction, and a global war.
I can see that you're a real optimist.
Nonsense. The world can manage without the usd.
wow, Rickards referenced footnote 17 of Bullard's paper. That was hands down the most intelligent thing ive seen on CNBC. Rickard's seems to have a solid handle on things these days.
Rickards on CNBC
http://www.businessinsider.com/james-rickards-krugmans-wrong-what-americans-need-is-lots-more-deflation-2010-8
QEII
Can't happen.
They know it is death.
holy moly!!!! check out Paul Craig Roberts, former reagan asst sec of treasury on alex jones the other day!!
collapse is coming he says..and that he see's government stopping soc security and conficating pension fund manager's allocation rights to buy tbills
2 parts
http://www.youtube.com/user/TheAlexJonesChannel#p/u/14/dlQDDdR3G7A
PMs pump stocks so it lowers its 'expected' dividend yield to as low as, say 3-year bond yield 0.8%. With that target reached, people are discouraged to take risk and either hold short-term bonds or SPEND ('supposing' people do have savings). Does it make sense?
Maybe bullard should view my new HFT video. That'll put some fright into him.
http://www.youtube.com/watch?v=IlCT4WXY39E
(480p recommended)
Working on embellishing it a bit more, its the first cut.
Enjoy!