John Taylor: "Next Year Is Going To Be Truly Miserable" And QE 3 Will Come

Tyler Durden's picture

As usual, FX Concept's John Taylor (not the guy with the inflation rule, or the guy with the bass guitar) does not sugarcoat his views, and as disclosed by his latest outlook on the world, things, especially if there is no QE3, are about to get much worse: "Next year is going to be pretty miserable." The reason: the same one that caused us to predict, correctly, late in 2010 when we mocked Goldman's call for a US economic renaissance, namely that with the Fed blowing its wad on QE2 at a time when fiscal "consolidation" was about to become the norm in Washington, that the impact of monetary policy would have an increasingly less pronounced impact. We are surprised by how few people still get it: that cutting deficits at the same time as monetary easing is ending, will be an unmitigated disaster for the economy, and, yes, eventually the markets: "I'm afraid that the cutting the deficit means cutting final demand. It means the economy is going to slow. It might not be a bad thing to cut the deficit, but unfortunately, when you cut the deficit, you're going to get a slowdown. The more you cut the deficit, the worse it's going to be." As a reminder, DC hopes to cut up to $4 trillion in future deficits. And this is happening as the president is entering the fight for his second term. Basically, his only reelection chance, now that Europe is fully austere and China is tightening is some miracle out of Japan (which will not happen), or, cue surprise, the Fed, and QE 3. Ironically, the only hope left for the administration is that "this time it is different" and the Fed can get it right. Which it can't. But it won't stop it from trying. Taylor agrees: "QE 3 will start or not? No. No more? Well, eventually it will start I would argue. I think the fed has to really see the economy printing minus numbers first." So there's the benchmark: contraction, or at least collapsing growth. Which is precisely where we are now. Yes, QE3 is a certainty, and when it is announced, to borrow a phrase, hide your kids, hide your wife, and certainly hide your gold.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
surferexx's picture

obviously going to be at least a small gap between QE2 to #3.  how long is anyone's guess.  Market going to bounce around even today or are we going to see a follow through?

RafterManFMJ's picture

*Caressing a stack of ASE* "So precioussssss..."

FlyPaper's picture

Gap between QE2 and QE3xx - duration:  seems to me that Obama can't get reelected if the economy is in shambles.  Also, the public that is onto the debt threat can be quashed if the economy tumbles and the government 'cuts back.'  

Hence a strategy is to let things cool enough then wait for Joe public to be mislead by the mainstream media to cry out for relief.  That's when QE3 comes; time to dump money into the economy as the election cycle heats up.

Just a theory, but since the thread is always power and money, this seems to fit both criteria.


Deep's picture

See while everyone here and mainstream media think QE3 will be a replay of QE2, where we rally 25%, IMHO i dont think so. By then it will be all too obivious that this will not work either, and i see a massive run on the markets.

SheepDog-One's picture

A QE3 would simply be a momentary feeding frenzy like throwing a pig carcass into a school of Great Whites. Who is left to believe whats failed will now work? I really believe soon as further 'easing' is announced the wheels fall off immediately after maybe a quick spike up at best.

Alexandre Stavisky's picture

Austerity? Ha-ha

You mean the one in seven who has his daily calories and shelter provided by Big brother.  How about all the gov't employees and military and social security recipients, most of whom are fully dependent and have all their forward payments factored completely to their lifestyle?

You would have revolution.  All the mortgage writers, all the construction and manufacturing workers, all the marginalized finance guys--no work.  Additionally, austerity means the money supply must contract and fast.  That means necessary add'l defaults, add'l bankruptcies, add'l strain on the already broken beyond fix financial system.

With all the printing, stealth monetization, restructuring and "reprofiling" to keep sovereigns from default, and gimmick felonious accounting keeping banks appearing solvent, the global financial system barely passed the guffaw test.

Austerity, money supply shrinkage, recognition of insolvency, 40-60% reduction in social welfare?

No way.  The globe will print until every outlier who has so far escaped the rapacious destruction of monetary and economic mismanagement capitulates.  Then "free market" western capitalism which is truly just command and control socialism disguised, will resort to strong arm command economy.

There will never be a willing acceptance of austerity.  Too long have TPTB shown NO tolerance for discipline.

No thank you currency.  No thank you negative cash flow, maintenance nightmare, annual tax tribute RE, no thanks pretty equity and debt certificates with no fundamental underpinning and twice exposed to degradation--denominated in arbitrary fiat and derived from super-impaired volatile opaque cash-flows.

This structure is so wobbly it couldn't support the flimsiest austerity.  Print, pretend, pray.  Philosophy of men that would be king.

Lucius Cornelius Sulla's picture

Great comment.  Better learn to grow your own food and raise your own chickens!

JW n FL's picture

I think you missed the fact that he is not happy with the way things are..


I think that you missed the fact that $18 Trillion Dollars was handed to Wall Street not the po' folk of the land in the last 3 years with no benefit to the economy or "We the People"...


Thusly, you need to read more and respond less.. you stupid fuck!

chrisd's picture

Don't underestimate the stupidity of those receiving the money

SheepDog-One's picture

What money, the fiat worthless dollars they'd move the decimal point on? Big deal. Lets see how good the fiat money is when Syria style riots show up here when the millions living on SNAP get cut off suddenly as congress is talking about doing.

Chump's picture

You're right.  QEIII is not coming.  Calling it a certainty in every other headline on ZH is not going to change reality.

Alpha Monkey's picture

Do banks still have tons of bad loans they need to offload?  Is there a new buyer of last resort (someone that has confidence in the US and it's financial institutions)?  Does our economy collapse if new debt isn't created?  Is under/unemployment at all time high levels?  Are people able to take on debt if there are no jobs?  Are companies hiring?  Are people already up to their eyeballs in debt.  Are banks willing to loan to poeple if there is a chance they won't be able to collect on those debts?  Is wall street still running the country? Perhaps you're not looking from the right perspective...

Chump's picture

Did QE, QE-lite, and QEII do a single thing to help alleviate any of that, or did it ultimately make all those things worse?  Has QEII even ended yet?  C'mon man, think!

Bwahaha WAGFDSMB's picture

Does our economy collapse if new debt isn't created?

The Fed will delay the inevitable as long as it can.  When it can't delay any longer, TEOTWAKI.

h3m1ngw4y's picture

not that i am interested in this crap but its TEOTWAWKI. not that id care about your spelling. it only proves the point

WakeyWakey's picture

I agree they didn't alleviate the problems they were meant to solve, however it has made the millionaires and billionaires of the world even richer, and it is they who pull the strings....C'mon think, its a plutocracy and without us being in debt they dont make money.

DosZap's picture

They have bass ackwarded the QE funds.

Obama wants 2.5T more coin.

GOP wants 4T cuts.

Wet dream for both.

IF a QE were to be done, it should go directly to the PEOPLE.

Not the banks,not the Treasuries.

Dole out that kind of cash to John Q, and watch the spending spree.

Might be the last hope for at least a kick start on the economy,( likely way too late) and would guarantee Owambas re-election.

sschu's picture

Dole out that kind of cash to John Q

Politically this is what Bam etal wants, direct cash in the hands of the voters, or maybe something around a mortgage refinance program to bring everyone to 2%.

Bennie wants more juice for his Wall Street cronies, I suspect we will end up with a bit of both.

Neither has worked so far, but this of course will provide a 9 month economic jump start to get the Bamster elected.  Look for it around October.  If this happens, 2013 will make 2009 look like a party. 


Chump's picture

If printing money and handing it to citizens is an even mildly effective way of giving an economy a "kick start" then why the fuck should anyone ever work a day in their life?  Why doesn't the government just print money and deliver checks to every citizen every Friday?

ZH outlines the various pitfalls of money printing almost daily, not the least of which is currency debasement.  You rightly acknowledge that QE isn't even making it into the "real" economy, and yet we see the $ getting crushed.  Do you somehow think that when some type of QE is actually focused on delivering checks to commoners that said debasement of the $ will...subside?  Or do you think it will accelerate and negate any effects of this populist crack pipe dream?

WakeyWakey's picture

i refer to my earlier answer. They are doing exactly that, ensuring their rich friends never have to work a day in their lives. They get 'free' money at our expense, and the politicians get to join the plutocracy.

RKDS's picture

That's only if people waste the money on new stuff and speculation.  If they responsibly retire debt, then they'll be much better off.  Heck, that's what I would do with any government check that came in.  The banksters were going to get a free money handjob anyway, so why not help those who actually need the help at the same time?

Bwahaha WAGFDSMB's picture

You assume that if the Fed knows QE is destructive they will stop doing it.  That assumption is false.

jedimarkus's picture

I totally agree.  I would not expect the same market reaction as we have had.   Less and less buying the big lie...

mayhem_korner's picture

Sales of deadbolts and bolt-action rifles robust...

Vlad Tepid's picture

And P-47 Thunderbolts and neck bolts.  As long as it has a bolt in the name, I'm buying!

TradingJoe's picture

QE3: One BIG move upwards then woooossshhhh and that's IT folks, lights out!

Good Luck to You All!

SheepDog-One's picture

Yes good luck, people will need a lot of it, in particular those who really have no idea of whats set to go down, that would be most all americans.

Dr. Engali's picture

We won't make it that far. Once it is announced that will be it. The dollar will break all support vs all other currencies and be dead.

SheepDog-One's picture

Yea I seriously doubt the 'move up' part will happen at all, just a sudden bubble pop and this time they have zero answers. 

SheepDog-One's picture

No way out, and the world central bankster cabal is about to take it out on the people. Really its been the plan all along, its their 'new world order', but people liked calling that 'conspiracy theory' and therefore it couldnt be true. But it is totaly true.

DosZap's picture

Been preaching that for YEARS, only to thought a loonie.

Wish I had been incorrect.......

 Really its been the plan all along, its their 'new world order', but people liked calling that 'conspiracy theory' and therefore it couldnt be true. But it is totaly true.


WakeyWakey's picture

I agree, the 'Solution' will be a one world government with a single world bank using a single world currency.


The only problem with that is China is never going to agree to that, especially as it is about to take over the mantle as world super power. So what is the solution to that ?

Easy, The US goes to war with China. How ? maybe have the Pentagon change the rules of engagement for war to include cyber terrorism, and then have the Chinese Govet conduct an unverifiable hack on the US govt...but start small, like hacking the g-mails of senior US gov staff....See how easy this shit is, sow the seeds and roll out the propaganda when required.

As China holds most of America's debt, if the US declares war on China, does that cancel the debt? I mean, surely a debtor nation would not credit it's enemy in time of war.

Its kill four birds with one stone

1) Cancel the debt

2) Send the Chinese back to the stone age to decimate their economy

3) Bring all the jobs back that the Chinese can no longer do

4) War generates business in arms, weapons and ballistics..good for stimulating the economy...look at WWII, it was the catalyst that brought the US out of the great depression.


I hope to fuck I am wrong on all this, but the dumb fuckers in charge have their safe bunker under Denver airport to survive the nuclear fallout for a few years.

Bwahaha WAGFDSMB's picture

You think it's possible to have a US/China war that doesn't go nuclear?

Vlad Tepid's picture

Yes, but not one that the US wins.  US military leadership would be stupid enough to fight it in Western Pacific...China would never go to San Diego.  They'll lure in the 7th fleet and wipe it out.  End of the war pretty much.  Then the Pentagon dingbats go nuclear as was said above.  It's a possibility but I don't think a one-world currency will have anything to do with it.  More like resource hegemony, if the US is still on it's feet.  If China thinks were becoming a threat to them, they will cut our economy out from under us. 

fuu's picture

...they raping e'erbody out here.

chrisd's picture

hide your kids, hide your wife

jomama's picture

and hide yo husbands

johny2's picture

hide with your neighbours wife

Thomas's picture

What? No daughters?

unky's picture

reminds me of the NIA movie: The day the dollar died

francis_sawyer's picture

Titanic bitchez!

Gold first... Then women & children...

chartcruzer's picture

VERY LONG TERM,,   S&P500 IN GOLD[s235939273]&disp=P

How much lower can it go.   Simply consider the size of the current debt bubble relative to 1929

buzzsaw99's picture

The stock market is the economy.

A depression means stock prices are low.

"They" know at what level of the stock market QE3 will be applied and you don't.

kridkrid's picture

Ha!  Hide your kids, hide your wife, hide your gold. 

"You're talking the real economy, not markets"... the world has gone mad.

"Europe can't do anything... Europe is falling apart"... may you live in interesting times.

"Housing is not going to save us"?  How can those words come out of the interviewer's mouth?

"We are looking like the Weimer Republic"... "When fascism comes to America, it will come wrapped in the flag and waving a cross"... Wait for it... wait for it....

TwoShortPlanks's picture

And behind door number 2 i-i-i-s, National Socialism 2.0....congratulations America! And here's your friendly dictator, G-L-E-N  B-E-C-K! (Secretly Trump was hoping to get the gig, but he got fired).

HellFish's picture

Two Ns in Glenn Beck dummy.

kridkrid's picture

Not sure why the junks... must be a lot of Glenn Beck fans here.  I watch the R's with interest to see if there is someone who could foot the bill.  And before you junk me... this isn't an anti-R thing... it's a timing thing.  And it's the R's who will be challenging the "Wiemar Republic".  Our current predicament would be unchanged had John McCain won.  Had he won, I would be watching the D's with interest.

myshadow's picture

Actually I think it would be a lot worse.  phil gramm would have been in charge instead of timmeh, he certainly would have fucked things up big time.  Otherwise, as a guy who voted D, I agree with you.