The Printman Always Rings Twice

Tyler Durden's picture

We won't bore readers with the Fed's balance sheet: yes, it is at a new record, and will be at a new record until the week of July 7. Which sure makes for click inducing headlines week after week. It will make for even more headlines after the announcement of QE3 when the same meme will be abused for another 1.5 years, at which point everyone will be so habituated to the idea of "record" anything, not to mention a record low dollar, that the Fed's mission will be complete. There are two things that do need noting however: FX swap lines were not used in the past week, although they will see about a trillion worth of use when Greece defaults, and discount window borrowings jumped to the third highest in 2011, or by 25% W/W (to $91 million, and by 62.5% in the Primary credit facility), another number which will shortly surge. Yet the most notable number, or as the case may be, chart, is as usual the Adjusted Monetary Base, which continues to track the asset side of the Fed's balance sheet well into the stratosphere, and is up by 20% YTD. There is about another $80 billion left on this number before it tops out. What is disturbing however, is that despite the ongoing rise in the AMB, coupled with an actual decline of $100 billion in excess reserves in the past week to $1.57 trillion, the market continues to trickle lower. What happens when the incremental additions to the AMB and to reserves end in precisely 24 days?

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casey13's picture

There will be no QE3. They wore that out. It will be called something else and look different.

Rational Psycho's picture

I think ZHers will recognize it as QE3 no matter what it's called or how it looks. Operation Twist 2 counts as QE3 in my mind.

Pure Evil's picture

A turd by any other name would smell just as unpleasant.

Fancy Bear's picture

Geez, it really is an echo chamber in here some times.

Xibalba's picture

why take a hooker to dinner? 

jm's picture

Moving a lot of MBS.

blunderdog's picture

But but...deflation fears.

Rynak's picture

Inflation vs. deflation is so yesterday. Stagflation bitchez!

On-topic: What happens when that "adjusted montery base" actually becomes effective in your local supermarket?

Oh wait..... now i remember.... i've seen something like this during the introduction of the euro in germany..... it was really horrible...... yet, it was a one-time thing. Is the current agenda of the USA a one-time thing?

Kill those fucking assholes already..... if this thing hits the supermarket, and is constant, then 3rd world america may not be an exaggeration. You will get poverty, and lots of it, if that happens.

bobert's picture

My income has been rather stagnant the last few years.

24 cans of Pabst cost me $11.99 @ Costco today, whereas two weeks ago the case cost me $10.59.

So "Stagflation" is upon me and it's horrible.

I still like the term "biflation." Some things will go up and some things (RE) will go down.

Sabibaby's picture

That right there is "beerflation".

mynhair's picture

Damn, my beers don't reproduce that way.  Just disappear.

mynhair's picture

Damn, my beers don't reproduce that way.  Just disappear.

Rynak's picture

That's what happened in germany during the introduction of the euro:

You get flat wages, but prices in supermarkets increase by 30-40%, in just one year. It instantly turned the lifestandard from "excess" into "carefully couting every cent when buying". Yet, as i mentioned, it was a one-time thing (though, recently thanks to QE, something similiar is happening again in supermarkets, though at reduced intensity in supermarkets (10-20% per year)).

It is worse enough if something like this happens once...... but with the current policy of the USA, this is turning into something that is constant.

This is not sustainable from a political POV. When the printing press begins to strongly affect prices in supermarkets, and does this continiously, then it will be a matter of 2-3 years until you get widespread unrests in the USA, simply because people will be starving unless wages increase strongly!

Caviar Emptor's picture

@bobert thanks, my Biflationist brother in arms! 

Take a look at how many hits you get if you google "Biflation". That's viral, baby. 

Next, take a look at the dates on those hits: almost all subsequent to when I first posted on the subject here on ZH in late 2009. 

Next take a look at who's posting on the subject: the meme is going mainstream! 

That's the power of ZH!

blunderdog's picture

Can beer's the perfect commodity gauge.  Aluminum, rice (if it's 'Merkin beer), water, and transport, in one simple package.

css1971's picture

Good point.

Also energy. The the malt has to be dried and the tun has to be kept hot.

hugovanderbubble's picture

Wells Fargo Exits Reverse-Mortgages on ‘Unpredictable’ Market

2011-06-16 19:11:11.783 GMT  By Dakin CampbellJune 16 (Bloomberg) -- Wells Fargo & Co., the largest U.S.home lender, said it was exiting the business of reversemortgages because of the possibility that property values willdecline further.“The decision was made based on today’s unpredictablehome values,” the San Francisco-based lender said today in astatement distributed by Business Wire. --Editor: Dan Kraut To contact the reporter on this story:Dakin Campbell in San Francisco at +1-415-617-7174 To contact the editor responsible for this story:Dan Kraut at +1-212-617-2432 or


* Long SRS,


I am Jobe's picture

I think the Swiss banks have been told to report all the losses. I wonder if US banks will?

bobert's picture

Perhaps the patient is having a reverse reaction to the medicine.

QE is causing a slow down.

Perhaps the absence of QE would then cause an increase in economic activity.

Just wondering.

Rynak's picture

stockmarket != economy

Related, but in these times often seperate things. "The economy (tm)" has been going downhill all the time - well, at least the part that matters to 99% of the population. Now, for a change, the stockmarket actually mirrors "the economy"..... which will then be the excuse for another cash infusion.... which is kinda perverted: It will not be the economy as most people  feel it, which will trigger another round of stimulus, but instead wall street. Sounds familiar?

The Feds Connection's picture

Well it eventually will, but after a major crash in *everything*. After that the increase in "economic activity" will consist of bartering. 

hugovanderbubble's picture

The future is Bullion Bank Licence

UBS is in default

Tyler look this...(use traslator, and please edit something to Crash STD US EQUITY)

Banco Santander is fully loaded of crap ...STD is a Big sell till this mafia ends.



The National Court Judge Fernando Andreu declared admissible a complaint of anti-corruption prosecutor to investigate whether the chairman of Banco Santander, Emilio Botin, his brother James, president of Bankinter, and 10 children together, including Ana Patricia Botin have regularized their accounts completely opaque at HSBC Private Bank Suisse. Anticorrupción ha presentado la denuncia para investigar posibles delitos presuntamente cometidos durante los ejercicios de 2005 a 2009 y, en su caso, por falsedad documental como medio para cometer aquellos. Corruption has filed a complaint to investigate possible crimes allegedly committed during the years 2005 to 2009 and, where appropriate, for forgery as a means to commit those.

La denuncia es contra Emilio y Jaime Botín y sus 10 hijos The complaint is against Emilio and Jaime Botin and 10 children

El juez investigará si las regularizaciones presentadas por la familia Botín, que han supuesto el pago por su parte de 200 millones a Hacienda, les ponen al corriente de sus obligaciones tributarias, en cuyo caso no habría responsabilidad penal, o si no es así. The judge will investigate whether the adjustments made by the family Botin, which led to the payment for its share of 200 million to the Treasury, will catch up with their tax obligations, in which case there would be no criminal responsibility, or not.

El juez dice en el auto que "cabría la posibilidad de que hubiera podido cometerse un delito contra la Hacienda pública, si bien es cierto que los datos ofrecidos por la Agencia Tributaria respecto a los hechos que, indiciariamente, pudieran ser constitutivos de infracción penal se ofrecen desde la perspectiva de su imposibilidad de comprobar si las declaraciones complementarias son o no correctas, y ante la premura de tiempo que supone la posibilidad de la prescripción de los hechos derivados del ejercicio del año 2005; es decir: nos encontramos ante una denuncia interpuesta a prevención de que la regularización practicada por los denunciados no fuese correcta". The judge says the car that "there is a chance he could have committed a crime against the public finances, although the data offered by the Tax Office about the facts, circumstantial, may constitute a criminal offense offered from the perspective of their inability to prove whether the statements are correct or not complementary, and given the time constraints posed by the possibility of prescribing the facts derived from the fiscal year 2005, ie we are dealing with a complaint to prevent that the adjustment performed by the accused was not correct ".

La familia Botín se mostró sorprendida por la decisión de la Agencia Tributaria y de la Fiscalía de judicializar el caso, puesto que en un comunicado hecho público ayer, destaca que en 2010, regularizó "de forma voluntaria" el patrimonio que Emilio Botín Sanz de Sautuola y López (Emilio Botín II), padre del actual presidente del Banco Santander, situó fuera de España tras el estallido de la Guerra Civil. The Botin family was surprised by the decision of the Tax Office and the Attorney General prosecute the case, since in a statement released yesterday, notes that in 2010, regularized "voluntarily" the heritage Emilio Botin Sanz de Sautuola and Lopez (Emilio Botin II), father of current chairman of Banco Santander, Spain stood outside after the outbreak of the Civil War.

En diciembre de 1936, y ante la situación creada por la intervención del banco, Emilio Botín II decidió ausentarse temporalmente de España, según el comunicado. In December 1936, and the situation created by the intervention of the bank, Emilio Botin II decided to take time off from Spain, the statement said. "Fue en ese contexto cuando Emilio Botín II situó una parte significativa del patrimonio familiar fuera de España para protegerlo, constituyendo una fundación de derecho inglés en Suiza", señala la familia, que asegura que desde el fallecimiento de Emilio Botín II, en 1993, no ha habido nuevas aportaciones a esas cuentas. "It was in this context when Emilio Botin II placed a significant part of the family property outside of Spain to protect him, forming a foundation of English law in Switzerland," the family, says that since the death of Emilio Botin II in 1993 no new contributions to those accounts.

Ya en 2010, el fisco español recibió información de la Hacienda francesa de titulares de centenares cuentas del banco HSBC en Suiza, datos que fueron supuestamente sustraídos por un empleado. In 2010, the Spanish tax authorities received information from the French Treasury hundreds of holders of HSBC bank accounts in Switzerland, data were allegedly stolen by an employee. Hacienda instó la regularización a todos los titulares. Treasury urged to regularize all the headlines.

La familia Botín declaró "todos los impuestos derivados de la existencia de dicho patrimonio y de sus rentas (ascendiendo el importe satisfecho a 200 millones de euros)". The Botin family said "all taxes arising from the existence of these assets and their income (the amount paid ascending to 200 million euros)." La familia sostiene que el ingreso fue totalmente voluntario porque, ni el actual presidente Emilio Botín ni Jaime Botín eran titulares de cuentas de HSBC, ni han recibido requerimiento alguno de regularización por la Agencia Tributaria, y dice que las acciones se dirigieron inicialmente contra Emilio Botín II, ya fallecido. The family maintains that the income was entirely voluntary because neither the current chairman Emilio Botin and Jaime Botin were HSBC account holders, nor received any requirement of legalization for the tax, saying that the actions were directed initially against Emilio Botin II, now deceased. Sin embargo, según el auto del juez, hubo requerimientos a Emilio y Jaime Botín por su capacidad de disposición sobre esos fondos. However, according to the judge's order, there needs to Emilio and Jaime Botin for its ability to dispose of those funds. A raíz de ello, los ahora denunciados presentaron en su mayoría declaraciones complementarias para regularizar su situación. As a result, the now reported statements showed that most complementary to regularize their situation.

El 15 de abril de este año, Hacienda se declara incapaz, a la vista de la ingente documentación aportada por los Botín, de determinar si las regularizaciones han sido completas y veraces, y como el 30 de junio prescribirían los delitos correspondientes al ejercicio de 2005, lo pasa a la Fiscalía Anticorrupción, que con el mismo fin, ha presentado la denuncia. On 15 April this year, the Treasury declared incapable, in view of the massive documentation provided by the Boot, to determine whether the adjustments were complete and truthful, and as the June 30 crimes prescribe for the year 2005 , passes it to the anti-corruption prosecutor, which for the same purpose, has submitted the complaint. Fuentes jurídicas han puesto de manifiesto que no deja de ser chocante que la Agencia Tributaria no haya sido capaz en un año de determinar si ha habido una defraudación superior, o si ha habido falsificaciones instrumentales. Legal sources have revealed that it is still shocking that the tax has not been able in a year to determine whether fraud has been a superior, or if there fake instruments.

El juez Andreu ha designado a dos peritos de la delegación central de grandes contribuyentes de la Agencia Tributaria para que determinen si la regularización es correcta o no. Judge Andreu has appointed two experts of the central delegation of major contributors to the tax office to determine if the adjustment is correct or not. La familia Botín afirma que ha facilitado desde julio de 2010 a la Administración Tributaria toda la información y documentación necesaria para comprobar la regularidad de las liquidaciones efectuadas. The family says it has facilitated Booty from July 2010 to the tax authorities all information and documentation necessary to verify the correctness of the assessments made.

Según la información facilitada por la AEAT al Congreso de los Diputados, de un total de 659 cuentas, únicamente 293 hicieron regularización con declaraciones complementarias, de las que resultó una recaudación total de 260 millones de euros. According to information provided by AEAT Congress of Deputies, a total of 659 accounts, only 293 made additional statements regularization of which was a total revenue of 260 million euros. De este proceso, la AEAT ha realizado 527 inspecciones, de las que 349 han terminado en sanción y 7 han sido enviados a la Fiscalía. This process, carried out 527 inspections AEAT, of which 349 have resulted in punishment and 7 have been sent to the prosecutor. Este era el balance a 11 de mayo. This was the balance on May 11.




francis_sawyer's picture

easy for YOU to say...

As for me... the simpler answer to 'WHAT HAPPENS' is...???



Yen Cross's picture

 The postman has a camera on your mailbox!

alien-IQ's picture

Great interview with Nigel Frange on RT. Talks about Greece, the future of the ECB and the Euro...and as usual...he holds nothing back. Really good stuff:

Nigel Farage: Bankers+politicians = 'unholy alliance' vs people

buzzsaw99's picture

from bloomie:

Layoffs are coming for Wall Street’s fixed-income managing directors...

as trading revenue and interest-rate volatility have plummeted...

boo hoo! the parasites in the intestinal tract of the usa taxpayer are downsizing.

The Feds Connection's picture

they didnt climb up the ladder fast enough

buzzsaw99's picture

Why go to a ripoff tbtf when vanguard charges a mere 0.22% per annum?


edit: why pay a high priced hot shot trader when sack and frost do all the work for free?

nmewn's picture

Its eating its own "tail" we get to see if it disappears.

Popcorn anyone?

Yen Cross's picture

  You get a (like) as well!

Caviar Emptor's picture

Hehe. And after eating it's own tail, it will try to suck up the world, it's backdrop and all anti-matter. There was a cartoon like that...Yellow Submarine I think....


Watch the last minute

holdbuysell's picture

On OT2/QE3:

Fed pins the two-year at some %. The Fed does this by buying what it needs to of the 2-year to keep it there.

What is currently available in the market to buy vs. what will need to be monetized for such an effort?

Also, what amount of buying (per unit time?) would be required to keep it pinned?

Jasper M's picture

Oh, Tyler, if your money is where your mouth (pen?) is, you are setting yourself up for a truly unpleasant surprise.

holdbuysell's picture

I'm listening...can you explain your logic?

Atomizer's picture

Someone doesn't want to lose on CDS money bet. A group of individuals believe that the gravy train must go on.

An old video that still rings truth.

Lil' Liberals'


hugovanderbubble's picture

VIX up 4% market up¡¡¡¡¡¡¡ LOL¡¡¡¡¡¡¡¡¡ CIRCUS¡

hugovanderbubble's picture

Korea Lows...

267 kospi...jaja , emerging markets bubble coming.

Eireann go Brach's picture

QE3 will be Called "OHM"..."Obama's Hail Mary"...

Buck Johnson's picture

They won't have a choice for QE3 and all it will do is make the landing alot harder when this whole game comes crashing down.

bugs_'s picture

Juice like a strawberry
Money to burn baby, all of the time
Cut to fade is me
Fade to cut is she
Come juggle with me, I say every time

mynhair's picture

The Fed is not exempt from diminishing returns, unlike Weiner.

Will the Chinee interfere again tomorrow?

AgShaman's picture

Huh....Nice chart.

Reminds me of my new mountain property in Austria

Yen Cross's picture

 Nothing slips  BUY me! Sarc on( and laughs aplenty.  


     That was a good post!  You pay attention!!!!!!!!!!!

TruthInSunshine's picture

Let me play contrarian, and not just necessarily for the sake of playing the contrarian.

First, the Fed's swollen balance sheet can't really be fairly valued. Yes, I realize how much the Fed doled out to purchase the assets constituting what is now its swollen balance sheet, but many of those very assets are subject to significant adjustments in their underlying value whenever the time of liquidation comes, aside from the tnotes and MBS that they will hold to maturity (not all tnotes will be held this long, presumably, but many of them may be held this long; the MBS side is trickier, quite a bit of it will default, and another good chunk of it will lose a good deal of value if one assumes that many of the assets securitizing much of that MBS are significantly and permanently impaired).

Second, the monetary base does not = the money supply. As fundamental as this is, too many people regrettably speak of each as if they were the same thing, and this will destroy the integrity of any analysis or discussion that flows from this basic error.

Third, is there or can there be any doubt that one of the most crowded trades any of us have ever witnessed is assumption that there is going to be additional QE or QE-like programs of anywhere near significant amounts as in the past, and that even if so, this will produce a similar reaction in 'risk on' asset classes as it has in the past (there are further points that could be made here, also, such as whether even if such additional monetary policy is conducted, Bernanke will still be able to cap yields on tnotes and bonds in general)?

Finally, if one grants, for the sake of argument, that a) further QE or QE-like monetary policy of significant amounts is conducted as in the past, and b) it produces similar results as past rounds have, and c) it allows Bernanke to effectively and artificially keep tnotes yields, bond yields and interest rates low -

What will the adverse consequences be, such as inflation, to what extent will those adverse consequences undermine the economy, even to the point of inducing a full fledged depression and/or political crisis, how will the rest of the world react to this clearly unpopular continuing policy, and how does 2012, which is a presidential election cycle, fit into the whole scheme, if at all, of the willingness and appetite to conduct such further monetary policy?

One last thing: I've noticed that many in the ivory towers have begun to more loudly criticize monetary policy as either ineffective or harmful to the nation, given the ailment of high structural unemployment, and have called for a total sea change and shift into fiscal stimulus.

If any of you respond with QE or QE-like monetization must continue, given that it is the only way to monetize the deficit while suppressing interest rates, go one step further and tell me whether this would remain true even if the global economy weakens significantly, and the riskier asset classes that performed so well for the last 2 years (even if due to much voodoo due to Bernanke's policy of ZIRP), become less attractive.