Tyler Durden - Founder
Marla Singer - Foil
Travis - Author
Cornelius - Author
Sacrilege - Senior Researcher
tips [ at ] zerohedge [ dot ] com - Our Reader Tips Mailbox
Make sure to read our "How To [Read/Tip Off] Zero Hedge Without Attracting The Interest Of [Human Resources/The Treasury/Black Helicopters]" Guide
ads [ at ] zerohedge [ dot ] com - Advertising Inquiries.
abuse [ at ] zerohedge [ dot ] com - Abuse / Infringement Issues
It would be very wise of you to study our disclaimer, our privacy policy and our (non)policy on conflicts / full disclosure.
Zero Hedge Offices:
United States:
888.qui.zero (888.784.9376)
Zurich:
+41 43 501 6717
London:
+44 20 3318 4753
copyright ©2009 zero hedge - limited reproduction (with attribution) permitted by request
zero hedge's redundancy powered by:
on Mon, 10/26/2009 - 10:36
#110591
nice reversal.
any reason for usd strength in last 30 mins?
on Mon, 10/26/2009 - 11:08
#110614
Chinese currency diversification clarification, probably
on Mon, 10/26/2009 - 11:41
#110638
thx.
and brazil buying usd
on Mon, 10/26/2009 - 11:30
#110615
*
on Mon, 10/26/2009 - 11:41
#110636
'Spose the jump in 10 yr UST above 3.5% had anything to do with it?
on Mon, 10/26/2009 - 10:42
#110595
Dallas Fed went negative. Print more, I say.
on Mon, 10/26/2009 - 11:01
#110606
You paged me?
on Mon, 10/26/2009 - 11:50
#110647
+1
on Mon, 10/26/2009 - 12:27
#110683
I knew when I watched the computer industry work dilligently for faster an faster printers that it was all leading up to this. LOL
I wonder what happens if the FED hits a paper jam with one of it's primary dealers?
on Mon, 10/26/2009 - 13:34
#110755
speaking of printing, anyone else notice a higher percentage of pre-2000 $20s coming out of ATMs? the banks had a policy to retire those old bills in exchange for new bills yes?
maybe some of the old bills are coming back into circulation?
on Mon, 10/26/2009 - 14:46
#110817
I received a 30 year old $100 bill the other day. Running out of paper and ink I think.
on Mon, 10/26/2009 - 15:48
#110873
Not to worry, it's simply the lag time from the drug cartels laundering their USD currency.
Remember, first it either journeys up to the principal US banks, Citi, BofA, JPM from their (as in owned by them) Mexican situated banks, then it goes through several iterations before ending up in the ATMs.
Advisory: just be sure to wash your hands after handling the money, it is riddled with trace cocaine, after all.
on Tue, 10/27/2009 - 13:13
#111921
oh i know where it's coming from, sgt -- every time i find one, i lick my fingers ;)
just find it interesting that the banks are no longer retiring those old bills. maybe Brother Larry just wants his and Ruby Rubin's signature back in the public consciousness.
time for the 12 year olds to sneak onto their parents' photo printer...
on Mon, 10/26/2009 - 17:32
#110984
Maybe they want to put easier-to-counterfeit bills out there...sortof outsourcing the printing work.
on Mon, 10/26/2009 - 22:59
#111301
My green ink and paper futures have been sky-rocketing.
on Mon, 10/26/2009 - 12:27
#110684
I knew when I watched the computer industry work dilligently for faster an faster printers that it was all leading up to this. LOL
I wonder what happens if the FED hits a paper jam with one of it's primary dealers?
on Mon, 10/26/2009 - 10:45
#110599
All this spending and so little results. (Though I realize the "friends of Dems" are getting their money's worth).
on Mon, 10/26/2009 - 10:49
#110601
Pretty neat how lately the USD is just like the sun. It rises in the morning and sets in the evening.
on Mon, 10/26/2009 - 10:53
#110603
I would follow Marc into hell, despite his limp-wristed Euro spelling of his name. But I already been to hell once, see, and I headbutted the devil. So thats that.
on Mon, 10/26/2009 - 16:10
#110890
The abreviation is for Marcus. Mark is a name in its own right (hence the difference).....American fool.
on Mon, 10/26/2009 - 11:00
#110604
I dont think Bernanke has enough time to flip the ON switches for his USD Printing Factory when the SP500 plummets from 1100 to 700 in a matter of an hour.
on Mon, 10/26/2009 - 11:21
#110627
Not gonna happen. The HFTs are gonna save us with all their bids. Thats what theyre there for remember?
on Mon, 10/26/2009 - 18:46
#111045
Ha! Just make sure your not sticking your head into the elevator shaft when the express comes whooshing through.
on Mon, 10/26/2009 - 11:22
#110628
this is the argument i have been going back and forth on... i have been in the deflation camp, but i have to agree with Marc that a weaker USD is inflationary, as we are still very much an import economy... i wonder what can get the dollar to rally if anything... and make no mistake Ben will be able to print more money very quickly... too bad i dont like gold as an asset otherwise i would be loading up
on Mon, 10/26/2009 - 11:41
#110637
M1 money mult came out again well below the $1 level, which is deflationary, but i am trying to figure out how deflation can actually take hold if Bernanke just continues to print money and crush the USD... is there any scenario which we can have the dollar weaking and deflation? doesn't seem possible, so the next question is can the dollar rise with unending money printing? also doesn't seem possible... curious to know your thoughts...
i am not sure Bernanke can actually print forever since we are a debt bassed economy and someone has to be willing to take onadditional debt.
on Mon, 10/26/2009 - 12:35
#110691
"...is there any scenario which we can have the dollar weaking and deflation?"
IMO yes, it is called a hyperinflationary depression. The cost in your currency of everything you need goes straight up, while the value of everything you own goes straight down; throw in job loss just for good measure, since your home country's economy is totally devoid of capital, owing to the destruction of your currency by your central bank, abnegation of capital-protecting bankruptcy laws, etc. Sounds like fun, huh?
on Mon, 10/26/2009 - 14:11
#110788
Thank you O Benevolent Fed!
on Tue, 10/27/2009 - 07:31
#111525
thank you swr...
I will repeat and repeat and repeat this like a broken record: the negative marginal productivity of debt is the inflation eating away at the GDP, hence we have deflation too. They are feeding on each other. It is so damn simple it is stupid.
This negative feedback loop monster will continue to morph into something more ugly than has ever been seen in world economy.
on Mon, 10/26/2009 - 15:27
#110852
"so the next question is can the dollar rise with unending money printing?"
Does the USPTO accept applications of perpetual motion machines?
on Mon, 10/26/2009 - 18:50
#111049
No. Note (D) in the link. But then you already knew the answer, I suspect.
http://www.uspto.gov/web/offices/pac/mpep/documents/0700_707_07_g.htm
on Mon, 10/26/2009 - 11:54
#110645
Mark it zero!
Gee if it goes to zero then God help us all, it's not a world that any of us want to experience.
Ironically though, here comes the dollar rally! Perhaps a bit like Jim Rogers when he said that sterling was finished and then it went on a massive rally. I know they are both talking in the long term, but it's funny how they can mark short term turnarounds with these extreme calls.
on Mon, 10/26/2009 - 15:50
#110876
That is why Marc said at the start of the show that he is lucky on some of his calls. Jimmy Rogers always says he is the worst market timer on earth too. I think I am though.
on Mon, 10/26/2009 - 11:52
#110649
Don't tell people that were selling EURUSD. Making some good coin on that action today!
on Mon, 10/26/2009 - 11:57
#110657
don't know if the fed jackals or foreign central banks were behind the violent dollar move today...gold got smashed too although half of that was strictly dollar action....
on Mon, 10/26/2009 - 11:58
#110658
The only means to save the dollar are the institution of tariffs.
There is absolutely nothing else that can keep any value in the dollar. Nothing.
on Mon, 10/26/2009 - 12:00
#110661
On the surface, his dollar deflation thesis makes sense but he fails to answer how a dollar deflation can take place with slack labor demand and no mechanism for increasing wages. If you think it through, a crash of the dollar versus other currencies would make US labor so cheap that the Chinese would send manufacturing to us. We know that won't happen.
I have little doubt regarding the printing press as a final option, but the structure of our economy is such that labor price increases have no way of taking hold. Instead, we'd get mass layoffs which would be inflationary at the point where the government would have to support 50% of the population. This would be wildly negative for housing, corporate earnings, commodities, etc. It would also destroy the global economy because you'd decimate US demand for their exports.
on Mon, 10/26/2009 - 12:38
#110694
The answer to your quandary lies in the answer to this simple question: what is the value of an unbacked fiat currency in the event of a sovereign debt default of the fiat's host country?
on Mon, 10/26/2009 - 13:20
#110735
SWR - that makes sense if we're talking Zimbabwe, but the dollar is a global reserve currency. In the case of the dollar, debt default is impossible given the ability to print interest and principal. Yet if that's the road taken, how does that money get into the hands of US citizens so they can drive up prices? The nature of our employment base is one of value-added product/services which is entirely different than an economy that is closer to subsistence. The more these layers of value-added are unwound, the more deflation takes place making it harder for the US government to print enough money to stem the tide.
Presumably, an episode such as this would be accompanied by massive job loss and a collapse of imports. Under those circumstances, the rest of the world is bankrupt as well.
I realize I'm arguing for deflation because that's the channel most easily argued but in truth, I'm on the fence until I can think through the entire inflationary process. I'm sorry but the flippant response of "they'll just print" is not good enough, although this is exactly what I expect them to do.
on Mon, 10/26/2009 - 14:40
#110812
Has anyone figured out how much USA civilians spend vs. how much the USA DOD/HS/State Depts/IMF spends? I think I remember reading some stuff (which I have not the slightest idea how to check) that said that way more than half the actual spending by the USA Federal Govt now is military/police/spy/etc. The reason I mention this is that that spending can increase even if USA civilian spending is decreasing. I guess it would have to decrease only when/if suppliers refused to take any more USA$ in payment. I don't know what we would do then. Trade them more tangible things in payment, like maybe some of Project Mayhem's and Cheeky's girlfriends?
on Mon, 10/26/2009 - 15:26
#110848
"...but the dollar is a global reserve currency."
So? This means we can print it, but it doesn't mean it will buy anything. To clarify, printing is a type of default. The U.S. has defaulted twice in the past 100 years; once in 1933, and again in 1971.
"Yet if that's the road taken, how does that money get into the hands of US citizens so they can drive up prices?"
I have never believed there is a need for this mechanism. You are talking about demand driven inflation, I am talking about a currency collapse in which our trading partners no longer accept our the output of our presses in exchange for anything.
"The more these layers of value-added are unwound, the more deflation takes place making it harder for the US government to print enough money to stem the tide. The more these layers of value-added are unwound, the more deflation takes place making it harder for the US government to print enough money to stem the tide."
Of course, the "printing press" is merely a figure of speech; money is created now with mouse-clicks, and there is no practical limit in the mechanism itself. Virtually any amount can be clicked into existence and deposited into banks' reserve accounts, by the close of business today.
Presumably, an episode such as this would be accompanied by massive job loss and a collapse of imports.
Collapse of imports, yes; think fuel, for starters. This is the fuel that is needed to move anything, anywhere, to run tractors in the fields to harvest food, trucks to bring food to markets, etc etc. Food prices, even domestically-grown food, would skyrocket in price.
Under those circumstances, the rest of the world is bankrupt as well.
So? If all fiat collapses in value, then the price of all necessary commodities and monetary metals skyrockets, when denominated in fiat-du-jour.
on Mon, 10/26/2009 - 15:49
#110875
Well said, SW, I agree.
I have predicted stagflation at best, hyperinflationary deflation at worst.
on Tue, 10/27/2009 - 07:42
#111531
!!
-MPD vs. QE
and the winner is?
-MPD
The more debt we produce the less real GDP we produce the more debt we produce the less real GDP we produce the more debt we produce the less real GDP we produce, inflation-deflation inflation-deflation inflation-deflation...
on Mon, 10/26/2009 - 20:41
#111175
Agreed. When the only difference between $1 billion and $1 trillion is that a clerk at the Fed has to hit the Zero key 3 additional times, there truly is no limit to how much damage we can do.
on Tue, 10/27/2009 - 13:36
#111958
That's it! The solution is: remove the zero key, and force the clerk to type "+1" 999 billion times.
Genius!
on Mon, 10/26/2009 - 12:04
#110665
On the surface, his dollar deflation thesis makes sense but he fails to answer how a dollar deflation can take place with slack labor demand and no mechanism for increasing wages. If you think it through, a crash of the dollar versus other currencies would make US labor so cheap that the Chinese would send manufacturing to us. We know that won't happen.
I have little doubt regarding the printing press as a final option, but the structure of our economy is such that labor price increases have no way of taking hold. Instead, we'd get mass layoffs which would be inflationary at the point where the government would have to support 50% of the population. This would be wildly negative for housing, corporate earnings, commodities, etc. It would also destroy the global economy because you'd decimate US demand for their exports.
on Mon, 10/26/2009 - 12:07
#110667
Sorry about the dupe - I merely attempted to refresh the page.
on Mon, 10/26/2009 - 12:15
#110672
Marc has excellent credentials and he is worth listening to.
Personally, I believe the U.S. dollar will rise against the Euro over the next months, although it will likely fall against BRIC currencies.
The catalyst for the move higher will be the GDP numbers later this week, and the eventual economic recovery while European recovery will be slower.
It all has to do with interest rate differentials and relative economic growth.
time123
P.S. I get my timing signals at http://invetrics.com
on Mon, 10/26/2009 - 12:32
#110690
He may be right in the long term, but not today!
http://merrillovermatter.blogspot.com/2009/10/currency-and-stock-market-gyrations.html
Wack! Wack! Wack a Euro today!
on Mon, 10/26/2009 - 12:35
#110692
The dollar is like a drowning man, he will come up and gasp for air 2 or 3 times before he goes down for good. The dollar came up last spring and summer and gasped, and it may (may0 come back this fall for a gasp, but eventually it must fail. There is no political will in the Congress or Administration to do the things required to save it. See the video on Mish about the CA State Treasurer saying the same of their state govt. He spanks them with one hand while the other is in the cookie jar.
Bernanke the Mad Professor, is as addicted to printing as any crack addict to crack. He cannot stop himself and will print until the dollar dies. For him it is all about proving his theories about the Great Depression.
on Mon, 10/26/2009 - 14:20
#110796
"For him it is all about proving his theories about the Great Depression."
God-damn...I wonder if that's true. If so, he's really a depraved individual...and after his efforts fail, I would fully expect him to be so distraught as to hang himself.
on Mon, 10/26/2009 - 18:39
#111040
...and we will go wild in the streets !!!
http://www.youtube.com/watch?v=3_6ozjPnuQ4
on Tue, 10/27/2009 - 13:39
#111962
WTF is JBJ wearing. I can't watch...
on Mon, 10/26/2009 - 22:47
#111291
Bernanke hanging himself would be an immense relief. The man is a sociopath.
on Mon, 10/26/2009 - 15:53
#110878
+1000
"Bernanke the Mad Professor, is as addicted to printing as any crack addict to crack. He cannot stop himself and will print until the dollar dies. For him it is all about proving his theories about the Great Depression."
Nailed it.
$1.25T MBS = USD FAIL
on Mon, 10/26/2009 - 18:10
#111016
This is pretty much just a science fair project for Ben. Everyone holding dollars will be sacrificed for his amusement.
on Mon, 10/26/2009 - 14:42
#110814
It's not just about the dollar, the dollar being in the center of the current system by going down will drag all the fiat currencies with it. Euro or yen are just slightly better than the dollar and not going to survive on their own. Remember, gold was money for a long time, while fiat money - just for several decades. Ultimately, the biggest problem with paper money is the easyness with which government can abuse its privilege to create them out of nothing. Once they get their hands on the printing press, they cannot resist temptation to print more and more. First, to get bigger, 'create' wealth (simply bubbles), finance wars, then when the system breaks - to bail-out their friends in the banking industry. That's where the biggest moral hazard these days. You thought it's bad in the banking industry - you ain't seen anything.
Marc is right in the long-term and one of the few people who's got the guts to speak about that publicly.
on Mon, 10/26/2009 - 16:24
#110918
The USD is still the prettiest of the ugly fiatsco brides out there.
Keep that in mind.
Also, the USD bride has the biggest bazookas under her dress.
on Tue, 10/27/2009 - 13:41
#111967
I dunno...the problem is, beauty is only skin deep.
on Mon, 10/26/2009 - 16:57
#110950
All I want to know is who is that chick? Man is she hot.
on Mon, 10/26/2009 - 22:15
#111265
Looks like Bloomberg stole a play outta CNBC's playbook with that one
on Mon, 10/26/2009 - 19:17
#111077
The largest problem with the inflation position, at the moment, is that all the other countries want to have currencies worth less than the US zombiebuck. If you look at Chinese printing over the last year, it makes Bernanke look like a piker. So at the moment everyone is devaluing.
However, I don't think that can go on forever. So at some point other nations will decide to just screw the US and let the zombiebuck fall. I believe the problem so far lies in that the rest of the world isn't quite sure yet on how to replace the zombiebuck. And as long as this is the case, the zombiebuck can rise again, like today.
The inflation monster will escape its cage when the rest of the world stops holding the door shut. The problem, of course, is figuring out just when that moment is.
on Mon, 10/26/2009 - 20:42
#111176
11,000+ views of a dollar death article... sounds like a bottom may be in place.
on Tue, 10/27/2009 - 05:05
#111484
^
This.
on Mon, 10/26/2009 - 23:02
#111305
They mention Fabers 'calls' in 87 and in March.
Is that 2 for 2
Or 2 for 200?