QE2 - The Day After: Entire World Blasts Deranged Madman's Uncheckable Insanity

Tyler Durden's picture

Yesterday's Ben Bernanke penned an Op-Ed in which he essentially said: "I am doing whatever I interpret my mandate to be, which right now means only thing: Dow 36,000. I am only accountable to the private bank that is the Federal Reserve, a few Wall Street CEOs, and no one else. Congress has no power over me. Try to stop me." And while the stock market is so far in love with this exhibition of outright hubris which promises record bonuses even as a record number of Americans subsist on foodstamps and real, not BLS, unemployment is over 20%, putting the Chairman in a long-overdue strait jacket will ultimately require an outright clash between those who still believe in that piece paper called the constitution and the kleptocratic cartel to whom the trade-off between a senior bond impairment and their first born is never all that clear. And while more and more try to educate a hypnotized, strategically defaulting US society what QE2 means to their future, the rest of the world is already rising in a tidal wave of disapproval aimed at the Federal Reserve. As the FT reports, Brazil, China, German, and Thailand, and soon everyone else, have already voiced thighest criticism and their condemnation of this escalation in FX wars.

China, Brazil and Germany on Thursday criticised the Fed’s action a day earlier, and a string of east Asian central banks said they were preparing measures to defend their economies against large capital inflows.

Guido Mantega, the Brazilian finance minister who was the first to warn of a “currency war”, said: “Everybody wants the US economy to recover, but it does no good at all to just throw dollars from a helicopter.”

Mr Mantega added: “You have to combine that with fiscal policy. You have to stimulate consumption.” Germany also expressed concern.

An adviser to the Chinese central bank called unbridled printing of dollars the biggest risk to the global economy and said China should use currency policy and capital controls to cushion itself from external shocks.

“As long as the world exercises no restraint in issuing global currencies such as the dollar – and this is not easy – then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament,” Xia Bin wrote in a newspaper under the Chinese central bank.

Korn Chatikavanij, Thailand’s finance minister, said the Thai central bank had told him it was “in close talks” with regional central banks over measures “to prevent excessive speculation.”

The renewed tension is likely to complicate US efforts to get leaders of the world’s leading economies countries meeting in Seoul next week to press China to sign up to a new accord promising to limit current account balances.

Everyone now realizes that the most benign outcome of this act is the symbolic isolation of the US by the rest of the world. The outright isolation will come the second China, Germany and Russia announces they have come up with their own, commodity-backed currency.

Dan Price, partner at the law firm Sidley Austin and formerly George W. Bush’s White House representative at the G20, said: “The US may find it increasingly difficult to galvanize countries to push China on [renminbi] appreciation when many think the Fed’s quantitative easing policy is itself a major contributor to currency misalignment and imbalances.”

Neither the Federal Reserve nor the US Treasury commented on Thursday. The tension over exchange rates has created fears of a wave of protectionist trade and investment actions in response, a reaction that so far has been markedly absent from the global economy during the recession and recovery.

The World Trade Organisation, in association with other international institutions, released a regular report which said that new restrictions on trade, direct investment and capital flows had remained subdued.

At some point all Americans, no matter how engrossed with their facebook profile, will have to ask themselves: is preventing a few multibillionaires from suffering debt writedown losses a sufficient compensation for the trillions in incremental debt, for the conversion of America to the laughing stock of the world and its subsequent insolvency, and to the collapse of the standard of living of those 81% of Americans who barely have any stock market holdings, and thus benefit exactly zero from this action.

photo credit: William Banzai

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TheMonetaryRed's picture

Hey, Tyler, maybe Bernanke knows something you don't.

Perhaps he sees a major default event in the offing?

mikla's picture

I'm sure that's true.  It's an economic war, and he's attempting to trigger foreign sovereign defaults before the US sovereign default.

For many reasons, it is quite important that the US sovereign default occurs *last*.

jus_lite_reading's picture

YES YES AND YES! Good GOD! You see the light! You must have felt my brain wave. If they default FIRST, then everything will be just fine!

mikla's picture

I'm not sure if I read that right -- sarcasm?

This is a complicated topic related to "how to reboot".  In short, you are watching the reboot process.  For example, here's one scenario regarding a reboot that demands yesterday's actions to trigger foreign defaults before US default, the Fed removing itself from its Congressional charter, and becoming re-chartered under the IMF.

Why?

  1. The Fed would no longer bother with the silly Congressional testimony.
  2. The IMF would *finally* get to print without having to deal with sovereign political structures.
  3. It would yield a highly oppressive, but highly stable system from which it would be tremendously difficult to "opt out" (e.g., worldwide tax).

http://www.zerohedge.com/article/nightmare-scenario-fed-outlives-us-federal-government

centerline's picture

I missed that orignal ZH piece.  Thanks.  Now, could you please pass some prozak or something.  I think my happy place is now being foreclosed upon.

jus_lite_reading's picture

I meant NO sarcasm. It was excitement that someone else sees the light! Sorry for the misunderstanding.

Mediocritas's picture

First rule of default: he who defaults first defaults best. Mikla doesn't understand this.

The Fed is *not* trying to cause foreign defaults. All central banks would prefer to see zero defaults. But what the Fed *is* trying to do is export deflation and import inflation with target #1 being the Chinese currency 'peg'. 

The Fed is basically taking aim at the BRICs and their suppliers and is, so far, losing. It doesn't help the Fed at all that the situation in Europe is so delicate which limits how far the Fed can go.

FreedomGuy's picture

It almost reminds me of a short squeeze. You say to the Chinese, "Okay! You wanna peg your currency to ours at an artificially low rate? Well, wait and see how many of these damn dollars we can print! We will take this printed crap and buy real stuff from you! Then you will have our paper and we will have your stuff!"

 

Emotionally, I actually like that idea. It's a trade war of sorts. Rationally, its probably a disaster. Like war there are large casualties on both sides. Because its the dollar it becomes a trade war with the world. It will be interesting to see how the others play or fight it.

BigJim's picture

The problem I see is this:

What's stopping the Chinese buying a shedload of dollars with freshly printed Yuan, and spending it on silver, gold, platinum, coal, oil, etc, etc, etc? Why is China obliged to keep it all as US$? And wouldn't that stop monetary inflation (though not inflation in everything it buys, obviously)

Someone please explain....

mikla's picture

First rule of default: he who defaults first defaults best. Mikla doesn't understand this.

That is true when you re-organize and come back (e.g., purge debts, and re-enter the system).  For example, Zimbabwe has better economic growth than does the US in 2010 (because none of its economy goes to servicing debt).

However, it is *not* true when the system is being rebooted.  The first central bank to default will drive all capital from that defaulting nation/region to perceived "safe" havens -- any other foreign country perceived as "safer".  Literally, people will trample each other to get to the "higher" end of the ship (even though the whole ship is sinking).

If the ECB defaults first, the US wins.  If the Fed defaults first, the ECB wins.

The Fed is *not* trying to cause foreign defaults. All central banks would prefer to see zero defaults.

We disagree on the assertion.

Further, I would prefer to be taller.  However, the Fed and all central banks know they are all going to default.  It's just business:  We are simply seeing "every man for himself".  Let me know if you see any "unity" in worldwide central bank meddling.

But what the Fed *is* trying to do is export deflation and import inflation with target #1 being the Chinese currency 'peg'.

There is no scenario by which this will occur.  Debasing the currency raises the cost of inputs (commodities and energy), lowering margins.  Those lower margins are expressed in decreased wages (typically the greatest business expense, and the easiest to compress).  This is demonstrably true:  We see low-and-lowering employment, and high-and-higher commodities and energy prices in the US.  Further, we see high-and-higher inflation in the rest of the world (those dollars are *running* to Brazil, China, anywhere in a worldwide carry trade).

Bernanke cannot halt the deleveraging.  Yes, the scale of his printing does grant him tremendous ability to make prices volatile.

The Fed is basically taking aim at the BRICs and their suppliers and is, so far, losing. It doesn't help the Fed at all that the situation in Europe is so delicate which limits how far the Fed can go.

The Fed is trying to kill other banks before they kill him.  And, the Fed is winning.

zaknick's picture

What a rube I am. Your explanation makes a lot of sense. I'm still not sure if you're correct but....

 

THANKS!

Hedge Jobs's picture

"If the ECB defaults first, the US wins.  If the Fed defaults first, the ECB wins." i would disagree with this. If the ECB defaults first the US doesnt win, it loses as the $ will rally which is the exact opposite of what the FED is trying to acheive.

"Let me know if you see any "unity" in worldwide central bank meddling." what about the swap lines that the FED voluntarily opened to the ECB a few months ago so they wouldnt defualt? that looked like unity to me.

"The Fed is trying to kill other banks before they kill him" The FED, ECB and BoE are all in this together and they are not trying to kill each other they are trying to kill the middle class of the western world.

"And, the Fed is winning" i have to agree with you here, a holocuast is coming for the middle class.

 

 

mikla's picture

"If the ECB defaults first, the US wins.  If the Fed defaults first, the ECB wins." i would disagree with this. If the ECB defaults first the US doesnt win, it loses as the $ will rally which is the exact opposite of what the FED is trying to acheive.

If the ECB defaults first, capital would flow into the US economy (to perceived "safety").  That would bolster against US default. Yes, it would strengthen the dollar.  However, that won't matter at that point:  The goal is to destroy the ECB so the Euro is not a viable currency to compete with the dollar. 

At that point, a "stronger dollar" is the "eat-your-cake-and-have-it-too", as the stronger dollar will "back off" the US dollar from a similar collapse.  (Not permanantly, but temporarily.)  This is *also* the equivolent of Ben reloading his "big gun":  With a stronger dollar (resulting from the ECB collapse), Ben could print even *more* money (as the ECB collapse would be deflationary through defaulted counter-parties).  Ben could then spend these new dollars to buy more assets, and gain more control over the chaos in Europe.

Then, with the ECB in default, the damage would already be done:  It would likely trigger counter-party defaults to topple the Bank of Japan, which is quite coupled to the Euro (to achieve the similar goal of removing the Yen as a viable competing currency).

"Let me know if you see any "unity" in worldwide central bank meddling." what about the swap lines that the FED voluntarily opened to the ECB a few months ago so they wouldnt defualt? that looked like unity to me.

That was the Fed encouraging other central banks and sovereigns to lever debts denominated in dollars.  That establishes (1) leverage over those central banks and sovereigns, and (2) an explicit future demand by those central banks and sovereigns for dollars.  That action was absolutely necessary to trigger Fed control.

In contrast, all central banks are trying to debase against each other (not with unity), and all central banks are squealing about the Fed's current printing.  There is no unity here:  The Fed is on its own with no friends (and it does not care).

"The Fed is trying to kill other banks before they kill him" The FED, ECB and BoE are all in this together and they are not trying to kill each other they are trying to kill the middle class of the western world.

IMHO, it's both.  Kill the middle class, *and* kill competing currencies that might rival the dollar as the world reserve currency.

IMHO, BoE is on "life support", and assisting the Fed.  The Fed doesn't care about BoE:  It wants to kill the ECB and BOJ.  However, the Fed "knows" the BoE will die anyway.  The BoE probably knows that too, but is assisting the Fed, because the Fed is backstopping each breath of air the BoE takes day-to-day.

"And, the Fed is winning" i have to agree with you here, a holocuast is coming for the middle class.

Agreed.

BigJim's picture

I just went back to your October piece and read it. I don't know how I missed it the first time round. It was one of the more interesting things I've read for a long time, so, thanks for that.

My objection is this: I don't think the Federal government will collapse before a complete collapse of the US dollar. This would also mean the complete collapse in confidence in the Fed as a monetary institution. Now, as many people have pointed out (including yourself), for a fiat currency to be accepted, either the issuer has to be able to stand with a gun to your head, or you have to believe other people will accept it, ie, it has to be a store of value, even if that store is for a few days. And if the dollar is collapsing (ie, hyperinflation), I can't see our trade partners sitting around accepting the situation long enough for the scenario which you've envisioned to come about. Already a number of the BRIC countries have negotiated to do commerce in their local currencies; as the dollar went hyperbolic I think this would become more widespread until it became the rule, not the exception. 

People keep saying that most international obligations are in US $, and thus the US$ is necessary, but if the $ has collapsed I don't think meeting those obligations would be particularly difficult, do you?

The key is OPEC. As long as they insist on being paid in US $, there is some... 'hope'... that the US $ will survive. What the US military would do in the situation of the US breaking up is hard to predict, but I can't believe it will become more effective at projecting power abroad when it's facing mutiny at home. If the US starts breaking up, it's probably safe to say its influence over the Saudis will wane. China or Russia or even both could step in and guarantee their security, in return for them accepting yuan/rubles/gold in exchange for oil, and that would be the US $ finished as the world reserve currency.

That would still leave the Fed being the owner of most of the US, after having printed like mad and bought out the entire stock market and every single US mortgage. But I can't imagine even the US people would put up with them profiting from the destruction of their country.

mikla's picture

I think we agree on the issues.  IMHO, the wild-and-crazy thing is that we're talking about "brinkmanship", and that implies some wild thrashing (e.g., the "unthinkable" becomes the "inevitable").  For example, it was unthinkable that GM would go bankrupt (but it did), and it is currently unthinkable that California will default (but it will, and *soon*).

My objection is this: I don't think the Federal government will collapse before a complete collapse of the US dollar.

I pray you are correct.  My fearful response is that IMHO, it is trivial for the Fed to trigger a US Treasury Bond auction failure in a matter of minutes on any chosen day (and the Fed's power over the Congress is increasing each day due to increased Treasury debt issuance -- we are already *in* the exponential feedback loop).  That would screw the Treasury, but not the Fed.  Similarly, as much as I agree with Paul that the Fed is "out-of-control", I don't see any possible "extraction plan".

I can't see our trade partners sitting around accepting the situation long enough for the scenario which you've envisioned to come about.

Agreed, that is *exactly* the question.  However, if the IMF *wants* to cut a deal with the Fed, they have the power to throw a lot of "trading partner weight" behind it.  And, they *want* the Fed's charter.

The only thing in opposition, IMHO, is a viable competing currency.  Oil must be priced in *something*.  That's why the Fed needs to kill as many foreign central banks as possible *now*.

Already a number of the BRIC countries have negotiated to do commerce in their local currencies; as the dollar went hyperbolic I think this would become more widespread until it became the rule, not the exception.

Yes -- exactly -- which is why Ben must print and detonate the economies in Brazil and China through high inflation in those countries, and reduced ability to export, from a dollar world carry trade.  That's exactly what's going on.  Ben needs Brazil to fall apart to "stop" such collusion that may compete against the dollar.  Ditto with the ECB.

People keep saying that most international obligations are in US $, and thus the US$ is necessary, but if the $ has collapsed I don't think meeting those obligations would be particularly difficult, do you?

No, *if* the Fed collapses first.  However, if the Fed collapses *last*, then *everything* is priced in dollars (e.g., sovereign default elsewhere in the world is deflationary, everybody holds worthless Euros, and can't afford to buy dollars to de-leverage).

Weird stuff.  I think we agree on the issues.  It's just crazy-nutty-stuff because it's "brinkmanship".  IMHO, we haven't even *started* to see Crazy Ben Unplugged.

BigJim's picture

Thanks for the chat.

Did you come up with this idea on your own? I ask for two reasons i) if so, hats off to you, sir; and ii) if not, and other people are thinking along these lines, then the other central banks must be drawing up defensive plans.

This is such an interesting time to be interested in geopolitics and macro-economics. Just hope it doesn't get too interesting, if you know what I mean.

mikla's picture

Did you come up with this idea on your own? I ask for two reasons i) if so, hats off to you, sir; and ii) if not, and other people are thinking along these lines, then the other central banks must be drawing up defensive plans.

There was a committee comprised of stuffed animals, and voices in my head.  I usually don't listen the the voices, though.  Even when they get *very* angry.  They tell me to burn things.  The stuffed animals are more "team players".

Yes, it's my/our theory.  This theory kind of freaks me out.  Not as bad as the voices, though.  They yell in languages I don't even speak.

I/we merely compute probabilities based on "game theory", and I/we *hope* other people might also think about these things *before* they happen.

For example, if this comes-to-pass, I/we expect the following, and it freaks me/us out:

  1. Failed US Treasury Bond auction.
  2. Gas stations are closed and ATMs don't work.
  3. A deal is announced that the US Sovereign Debt will be forgiven if the Fed re-charters under the IMF.  (A similar deal will be made for foreign sovereigns, if they agree to merely adopt the IMF-dollar.)
  4. Thunderous applause worldwide.
  5. Gas stations open and ATMs work.
  6. I want to crawl into a hole and hide with the voices in my head, as I will find the voices preferable to keeping company with my elected "leaders".

IMHO, it's important to understand the implications for such things *before* they happen.  For example, the implication at that point is:

  1. No nation on Earth is sovereign anymore.
  2. Elections are mostly irrelevant.
  3. An oppressive (but stable) system will have been established that funnels a worldwide tax to a central ruling authority that unilaterally dictates all wars and commerce.
  4. We'll probably start immediate construction of the Death Star.
BigJim's picture

Well, if it plays out that way my PM collection won't have been much of an investment. I keep hoping FOFOA's got it right.

Did you hear about this?

    http://www.facebook.com/event.php?eid=137793666269183

it probably won't come to much but I think I'll be taking some money out of the bank well in advance.

Good luck with the voices. I prefer my guitar ;-)

fajensen's picture

All this talk of "killing": Bernanke ending up like Roberto Calvi would be both a start and a message.

TheMonetaryRed's picture

Mikla, please.

Wouldn't a very, very large monetization be a little easier?

mikla's picture

No.   Too much, and too fast, and people flee the dollar.

Rather, Ben wants to debase the dollar to overheat foreign economics (e.g., worldwide carry trade).  That's exactly what's happening, which is why foreign sovereigns are squealing like "stuck pigs".

The goal is to trigger foreign default events.  I give 60/40 that Ben can pull this off.

centerline's picture

With you there.  This is possibly the game to watch.  Risky bet for sure.

SDRII's picture

which foreign sovereigns do you have in mind? The idea that Bernanke engineers anything like what your saying is a long ball. Perhaps it is home bias but one wonders why it is assumed that everyone is playing for a US win? To suggest there is no aternative is a tad shortsighted but good for a trade (nto to be confused with trade) I suppose

mikla's picture

which foreign sovereigns do you have in mind?

ECB (how dare they try to build a world reserve currency to compete with the dollar) and BOJ.

Sorry, BOE, it's just business.  Irritating BOC is merely a bonus.

The idea that Bernanke engineers anything like what your saying is a long ball.

True.  It's possible he's simply stupid.

Perhaps it is home bias but one wonders why it is assumed that everyone is playing for a US win?

Everyone is playing for an infrastructure to suppress the populace.  That is the only game since the beginning of the world.  The fact that you could actually suppress the worldwide populace is merely a *great* bonus.

To suggest there is no aternative is a tad shortsighted but good for a trade (nto to be confused with trade) I suppose

It is a "theory".  However, IMHO, we are seeing toggling among their "Plan A" and "Plan B" and "Plan C", etc.

In essence, we're merely looking at "contingencies" so that they "win" even when they "lose".  There is great precedence for this.  I'm currently unsure if this theory is in the "A" or "B" category.  However, actions are consistent with the theory.

What_Me_Worry's picture

Quite an original thought.  Never considered the Fed may be trying bring down the foreign economies, which would therefore make everyone trip over themselves to buy anything US$ denominated.  Which would therefore let you have your cake and eat it too.

The only way for them to do that is to punch themselves in the face hoping the other guy goes down first when he decides to punch himself in the face to counter you.  I guess the Fed is gambling that they don't decide to punch the Fed in the face instead and sell off the USD.  So far, so good.

This is so many levels of stupid that it could turn out to be genius.  And if they're wrong, only means the complete destruction of the USD and the worldwide economy.

Bernanke likes these odds.

Bananamerican's picture

"when he decides to punch himself in the face"

sounds like this crazy movie i saw a few years back...

mikla's picture

I just re-read your post, and I agree with it, but I have something to add:

The only way for them to do that is to punch themselves in the face hoping the other guy goes down first when he decides to punch himself in the face to counter you.  I guess the Fed is gambling that they don't decide to punch the Fed in the face instead and sell off the USD.  So far, so good.

I didn't think about it that way, but yes, that metaphor works:  Fed printing will trigger *more* foreign central bank printing, which could trigger foreign sovereign default *first* (because for various reasons, the Fed is actually in a "stronger" financial position to weather the printing).  (You have no idea how painful it is for me to form those words).

However, there are a couple other variables where foreign central bank action *does not matter* (for whether or not they follow Ben into the printing abyss):

  1. Ben's printing generates dollars that flood foreign economies in a world carry trade.
  2. Foreign economy inflation takes *off* (we see this now).
  3. That inflation in the foreign nation triggers higher interest rates for the sovereign to service its debt (because people can get more money by *not* buying that government's bonds).
  4. The depreciated dollar kills that nation's foreign exports, lowering their ability to manage their sovereign debt (e.g., even though inflation is high, the economy slumps).

Think the US 1970's economy (high inflation, no economic growth) in Brazil, Japan, and throughout Europe.  It would trigger governmental collapse (especially for Europe, because it has tremendous-and-growing welfare expenses currently, but more-so in such a scenario).  However, even without welfare, it would *kill* productivity (even though inflation was high).

So, with this logic, Ben doesn't have to bet on *any-one's* "possible future action" (although as you point out, yes, a misstep there would make things easier for Ben).

 

Vampyroteuthis infernalis's picture

Here is my opinion on why Helicopter Ben is doing this printing.

1. Strike at China. This is going to cause rampant inflation there since they depend heavily on commodities.

2. Europe is going to strike back by throwing one of the PIIGS out of the Eurozone crashing the Euro and spiking the dollar.

3. You have to fund that enormous US gov't debt somehow with no buyers.

Instant Karma's picture

Well Tyler you've been warning us for a good while about this monetary mischief. I have a lump of metals in the bank and just tossed some money EWZ, GDX, GDXJ, SLV and OIH.

Dollar Damocles's picture

Instant Karma.  You are in the right sectors, but you haven't been reading enough of zerohedge.  The ETFs GLD and SLV are the largest ponzi schemes in the history of the gold market.  They are unbacked.  Read their prospectus, you can drive a dumptruck through them.  You will be defaulted on.  Also, why do you have your lump of metals in a bank?  If the dollar goes into a tail spin the first thing that will happen will bank holidays.  They will board up the windows to stop the bricks from the rioters and you will NOT get your metal.  See the great depression, or more recently argentina.  The ENTIRE point of owning physical metal is to be YOUR OWN CENTRAL BANK.  This means physical gold, in your possession, outside the banking system.  GDX and GDXJ are good, but frankly, at this point any paper investments are risky due to the total insolvency of the US banking system and counterparty risk with your brokerage.  If you want a really good mutual fund play, I recommend Sprott Asset Management and John Hathaway's Toqueville Gold Fund.  If you want to own physical bullion not in your possession - the only two insititutions I would give my money to are Sprotts physical gold trust (an ETF that is actually backed and independently audited) and James Turk's goldmony.com which is also independenly audited and is backed 1-1.  Most people who own paper gold are going to find themselves defaulted on with no legal recourse.  If you want more information on GLD and SLV and their fraudulent nature, let me know and I'll provide you with some good links.  Good luck and take care!

FreedomGuy's picture

Banks will open to let you open your safe deposit box. They won't open for transactions. Worst case, you get a court order. Storing metals yourself, particularly in hyperinflation is very risky.

Shameful's picture

I would not trust a safty deposit box.  I would be more apt to trust the Bank of Folgers located in the yard a few feet deep.  Yeah the bank is a mother on withdrawls but people will rarely rob it.

Instant Karma's picture

Oh, I've been paying attention. I know about the concerns about the metals trusts, and the benefits of Sprout's little fund. However, for the time being I wanted some quick, efficient exposure to silver, with good tracking of the metal price. I've heard about concerns about putting metals in banks, and seizure or bank closure. So it's not all in a bank.

Seems to me the Fed is blowing bubbles, and I'd like to make some money on the way up, pay off the mortgage in depreciated dollars. I just have that feeling again.

 

Yits and the Yimrum's picture

you took the squids bait just like so many; need to speculate in the squid markets to keep your head above water

it doesn't work; your loading into fiatsco's as the rapid devaluation takes place in cyber space

we are at the end game, and those with the Spam will have a fleeting last laugh

merehuman's picture

DD has it right. Good advice. No trust, at this time its every man for himself.

jus_lite_reading's picture

You mean like Ireland's default?

But wait! I thought the PM of Ireland and JC Trichet said, "there will NO restructuring of debt in the EU!?!?!" I'm so confused...

Well, ok I'm not confused. But it is funny!

Fascist Dictator's picture

Just like when Ben testified (lied) to Congress that "There would be no monitizing of the debt by the Fed." Yeah, right....

TheMonetaryRed's picture

Well, the Fed's not going to monetize $4 trillion.

The Fed may "sterilize" the monetization of $4 trillion, but ultimately that has to be done at another part of the government.

The problem is not that Bernanke lied about monetization. The problem is that Bernanke can't monetize enough.

Tyler Durden's picture

He certainly does see a "major default event in the offing."

TheMonetaryRed's picture

So, who's the next "Banco Parmalat"???

Or are you talking about some Rothbardian mega-default?

TheMonetaryRed's picture

Well, of course it's getting reasonable to talk about "end games".

But if that's true, then it's time to talk about reasonable end games, not a silly circus.

This is no longer about selling gold coins on talk radio. This is now actual public policy that will affect millions for years.

Dr. Richard Head's picture

I would welcome reasonable end games, but who the hell is going to propose it?  Government?  I haven't seen that as of yet and I'm not so sure the new batch will either. 

Many civilians have brought solutions to the table, but if government will not implement we are left with a monetary and fiscal policy that is not sustainable for much longer. 

The circus is the circling of the drain of the dollar and a currency crisis tend not to be reasonably ending while a transition is being made.  At least that is what the history books tell me.  Then again history is always written by the victors’ right? 

All I know is that there are more insolvent banks than solvent.  A run on the banks is being orchestrated in Europe and these banks hold many of the "assets" that American banks refuse to recognize the losses on.  As more and more people catch on, more and more will stop putting their capital into these institutions just like I did.  Solvency is a just a reflection of perceived reality by the people.  Once an awakening to a new reality, the reality of insolvency of their banks comes into play. 

QE2 announcement has garnered much media attention which means the people are seeing this as well.  Who knows, but Obama left the country at an interesting time.

 

Red Neck Repugnicant's picture

Attention!  Attention Everyone!!

I have an extremely Urgent Message!!

I've been in front of a chalk board all night trying to make sense of this quantitative easing nonsense.  I have sufficient evidence to believe that Obama is trying kill our grandparents. 

Here's the Glenn Beck-style flow chart:

1. QE2 leads to a weak dollar. 

2. The weak dollar leads to higher oil. 

3. Higher oil leads to more electric vehicles. 

4. Electric vehicles are dangerously quiet (in fact the new Nissan Leaf doesn't even make a noise) 

5. Geezers are normally deaf.

6.  Geezers will get killed when they cross the street because they can't hear the god-damn cars.

7. Obama is trying to kill old people.

Thus...

QE2 is a stealth attack on old people. The beginning of eugenics and a master race has been put in motion. 

Beck/Palin/Disinformation 2012

*this message has been approved by the Glenn Beck/Rupert Murdoch propaganda machine.   

Red Neck Repugnicant's picture

Plus, electric vehicles will create more homosexuals. That's a fact. 

According to Jerry Falwell and many other fundamental Christian organizations, God will send hurricanes to punish Americans for their supposed tolerance of such buggery. 

So...

Unless we want a nation of dead senior citizens in the streets, rampant homosexuality and hurricanes once a week, we need to rise from our Lazy Boy Chairs and take our country back!

Tune into Glenn Beck tonight at 8pm on Faux to learn how QE2 is actually a sinsiter plot by the Obama brown shirts to bring back eugenics.    

Beck/Palin/Disinformation 2012

kathy.chamberlin@gmail.com's picture

red neck never really ever followed you. but i like your Pluses.

Rahm's picture

At this point, even Stevie Wonder sees it ;) ...

FreedomGuy's picture

LMAO! Best line of the day...so far.