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Sean Corrigan Butchers The Chairman's Inversion Of Cause And Effect, Discusses The Fed's Brand New "Unbridled Imperial Arrogance"
Diapason's Sean Corrigan is out in full force for the second week in a row, this time looking at the consequences of a QE2, in which as he explains, the very premise of cause and effect has been inverted by the Federal Reserve, and which will result in even more dire consequences bequeathed by the launch of the HFRBS QE2. Yet in the last ditch effort to preserve a crumbling system, Bernanke is willing to sacrifice it all: the middle class, the dollar, and now logic. Here is how... and why.
So the Bernanke Fed has finally launched its next great economic experiment, undertaking to buy some $600 billion in US Treasuries over the next eight months, in addition to acquiring an estimated $250-300 billion more by way of reinvested MBS proceeds.
Monetization on this scale will mean that Tim Geithner (or whoever may end up replacing him in the aftermath of the mid-term massacre) can look forward to sending the entire bill for the Federal deficit straight to the Marriner Eccles building and not having to fret about finding a real investor to cover any part of that monstrous shortfall.
Nor will he have to worry any further about being overly polite to those annoying foreign central bankers to whom he could otherwise have expected to have flogged another $400 bln or so, over the same period. Now, backed by the might of the domestic printing press, he can affect a posture of unbridled imperial arrogance in his dealings with his fractious creditors, secure in the knowledge that he can henceforth dispense with their services as committed takers of Uncle Sam's prolific IOUs.
Yet, where Corrigan's ire really shines through (and we don't blame him as we had the same reaction), is in his reponse to the Chairman's soon to be legendary WaPo Op-Ed, which basically confirmed the Bernanke Put will never go away, and only those who believe the Fed may be wrong (which it, of course, is and laughably so - when has central planning ever worked?), should not be buying stocks.
"This approach [of buying longer-term securities] eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.
Underpinning this apotheosis of moral hazard (you know, the thing that got us into this mess in the first place), Bernanke further emphasised the Fed's determination to keep Wall Street in bonuses by avowing that:-
"We will review the purchase program regularly to ensure it is working as intended and to assess whether adjustments are needed as economic conditions change."
The madness has indeed progressed greatly from a passive observance of the false precepts of the Jackson Hole doctrine - whereby the FRB should play the role of Three Wise Monkeys in the face of a burgeoning asset bubble - to more of a Jackson Hose approach, whereby it judges policy to be successful only when it has created just such a bubble in the course of its own deliberate actions!
And here we come to the core of the argument: that in his pursuit of reflation at all costs, Bernanke has inextricably inverted cause and effect, and that the whole premise behind wealth effect as generated on artificial basis is flawed at its core, which in turn means that the logic behind QE2, as defined by Bernanke, does not exist!
So the cycle of error is perpetuated, with cause and effect both being confounded and wrongly assumed to form an easily reversible reaction. The fact that rising real asset prices are a result of increasing prosperity no more guarantees that their prior, artificial inflation will subsequently augment that same prosperity than does the act of spraying your driver with champagne while he still sits on the grid make him a certainty for a podium place at the race's conclusion.
Continuing to debunk the very premise underlying QE2, Corrigan goes back over 300 years to a text by Dudley North, which our most revered chairman-cum-historian has handily ignored in his deliberations to flood the world with worthless pieces of paper:
As long ago as 1691, Sir Dudley North was dismissing such cart-before-the-horse crankdom in his 'Discourse upon Trade', by writing:-
"It will be found, that as plenty makes cheapness in other things, as Corn, Wool, &c. when they come to Market in greater Quantities than there are Buyers to deal for, the Price will fall; so if there be more Lenders than Borrowers, Interest will also fall; wherefore it is not low Interest makes Trade, but Trade increasing, the Stock [wealth] of the Nation makes Interest low... It is said, that in Holland Interest is lower than in England. I answer, It is because their Stock is greater than ours. Thus when all things are considered, it will be found best for the Nation to leave the Borrowers and the Lender to make their own Bargains, according to the Circumstances they lie under; and in so doing you will follow the course of the wise Hollanders, so often quoted on this account: and the consequences will be, that when the Nationa thrives, and grows rich, Money will be to be had upon good terms, but the clean contrary will fall out, when the Nation grows poorer and poorer."
Not that we expect such tested wisdom to carry much weight in the rarefied, DSGE Councils of the Mighty today. Consequently, not the least of Bernanke's many mistakes in, implementing this shallow conjurer's trick is the conflation of a higher nominal price for some claim to goods with that greater command over valuable, real resources which is actually the only true measure of "wealth"
Simply to pump in money in order to swell the price of a parcel of farmland is not to generate any greater cultivable acreage, nor to boost the yield of the land already in existence and, hence, is not to enhance its ability to better nourish its owners or their customers. If that were only the case, we could end Man's long battle with poverty at a stroke, simply by pencilling in a few extra, terminal zeros on the denominations of all our banknotes - a palpable fantasy by which ex-BOE MPS member Willem Buiter, for one, seems to be deliriously and incurably gripped.
And here is where Krugman, who ridicules Jim Rogers' understanding of assets and liabilities, should pay particularly close attention, as it is none other than his own master, Ben Shalom, who appears to have a fundamental misunderstanding of how assets are appraised, and that their true worth is not based on a ever more dilutable piece of monetary equivalency, but something much more intrinsic.
Assets, after all, are claims upon actual or potential streams of an income which must never be judged solely in pecuniary terms but rather on the basis of what it contributes to the satisfaction of material human wants. If that stream of income is unaltered, the price of the asset can only make a difference to the owner's standard of living if parts of it are broken off and sold to another, so realising an otherwise entirely notional increase.
Even then, the asset-seller's immediate material gain must come at the cost of the buyer's deferred benefit, unless this latter avoids such a temporary sacrifice by borrowing some newly-created, 'fictional capital' with which to make the purchase. Should he do this, however, it must be seen that he is only helping transfer the inflation from one involving the asset which he buys to one concerning the real goods which his seller wishes to acquire in its place.
The seller may not realise it, under the confusion of money illusion, but what he has, in fact consumed is some of his hard-won real capital. The buyer, too, seduced by the allures of a bull market, is helping to drive down the real translatable value of his own purchase in the same measure as he is pushing up its nominal cost.
Though this process may take some time to come to fruition - and though winners and losers may not be so easily disentangled, especially where the process is protracted and where titles changes hand.s many times at escalating prices - herein lies the essential truth of the Austrian contention that while we may be forced to take our losses in the Bust, we actually make them in the preceding Boom.
Not content with destroying the fundamental fallacy behind monetary intervention, Corrigan then goes on to ridicule the primal flaw behind that other core precept of Keynesian economics: fiscal stimulus.
Unchallenged here goes the usual canard that in some strange way, /wealth' is about destruction, not generation; i.e., that what the world is lacking is an orgy of consumption of the most final, exhaustive kind and so, if we can once inveigle or coerce people into burning, rather than building, things by fooling them as to how well off they are, economic 'recovery' will at last be assured.
Perhaps we should lust impose candlelight and thatched roofs, ban fire insurance, and outlaw smoke alarms by way of a 'stimulus package'.
And the final nail that obliterates the any last trace of credibility behind (the lack of) Bernanke's logic:
What Bernanke and the other Nomenklatura fail to appreciate is that what must be facilitated is the selling, not the buying, of valued goods and services at a price others are willing to pay: that this is the key to wealth creation for, by this means, the vendor furnishes himself with the wherewithal to buy any of the myriad non-competing goods available him through the efforts of all his possible counterparties while also allowing him to secure whatever inputs are necessary for him to repeat this mutually enriching process in the future. Somtimes, this, perforce, must include selling at a lower price than before - a necessity utterly abjured by the mainstream as comprising a maelstrom of 'deflation', a condition erroneously presumed to be coterminous with a self-aggravating depression.
The truth is that no amount of a macromancy aimed at shifting the monetary valuations of asset holdings can have more than a passing influence on such a continually evolving, but also continually renewing dynamic of want-satisfactions - of the earning and enjoyment of an income.
Having destroyed the premise behind the QE2 argument, Corrigan then goes on to imply that the effects of this action are also broadly misunderstood, and that there isn't really any true appreciate in assets values in non-dollar denominated terms. The underlined text is what everyone who is participating in this "bull rally" is so blatantly missing.
One further unanswered question is whether the FRB moves can increase the value of US assets in anything other than the chronically depreciating dollars to which they are giving rise. If not, we are only adding another inflationary veil of illusion over a loss of, not a gain in, the value of financial capital. The undeniable fact that record low yields have done nothing to move T-Note futures beyond a TWI-adjusted, 28-year mean, while the TWI-adjusted S&P500 labours where it was back in the mid-90s, suggests this is no trivial challenge to overcome.
Another side effect of QE2 is what we discussed will soon become evident to the poorest segment of society, who will soo see their food and energy prices skyrocket, despite what the core CPI is telling them about prevalent deflation.
We might also ask whether higher asset prices will help the poor, huddled masses who have so few savings to begin with or whether lowered mortgage rates can do much to help those suffering a deficit of collateral value (i.e., negative equity) against which to refinance. Yes, it may allow some fixed- value debts to be discharged through the surrender of such newly-inflated claims as one may hold, but this is nothing which a direct renegotiation between borrow and lender could not achieve with far less risk of further distorting the overall capital structure of the economy.
One group that is sure not to complain about any aspect of QE2 is Wall Street, as the past 48 hours of non-stop punditry on CNBC demonstrates:
The fact that the Fed has made its programme so blatantly open-ended and expediency-driven has already triggered talk of an eventual QEIII and, moreover, has so far dispelled fears that the market impact would be one of ennui shading into disappointment, replacing this with what Mohamed El-Erian called "turbo-charging the direct policy impact before those purchases have even been specified."
But while fine and dandy for the wealth shufflers on Wall St., for the wealth creators on Main, this could be counterproductive for the very reason alluded to in the preceding paragraph: viz., that in an economy suffering from that widespread discoordination of means and ends, prices and costs, which has been engendered in the Boom and then made dispiritingly concrete by the application of so many ill-advised anti-recession measures taken in its aftermath, only greater discoordination lies in store - not least through the pestilential effects of wild foreign exchange swings (and the crude political reaction these tend to spawn) which are being disseminated across the global trading network like a Genoese hold full of black rats, or the surge in input costs which the incipient Flucht in die Sachwerte and out of the Greenback is everywhere now provoking.
The final word belongs not to Corrigan, but to BOE Governor Eddie George who 3 years ago stated why QEX is irrelevant and doomed to failure:
In defiance of the injunction, 'de mortuis nil nisi bonum', we can only recall the words of then-retired BOE Governor Eddie George to the Treasury Select Committee in March of 2007 — four years after he had handed the baton seamlessly onto his willing deputy Mervyn King and just as the first cracks were appearing in the precarious CDO-sub-prime LBO superstructure he and Alan Greenspan had helped to put in place after the Tech Bubble in which they were also instrumental:-
"You have to step back from this. You have to recognize that when you're in an environment of economic weakness at the beginning of this decade, you only have two alternatives of sustaining demand. One was public spending, the other was consumption. We knew we were having to stimulate consumer spending. We knew we pushed it up to levels which couldn't be sustained. That pushed up house prices. It increased household debt. My legacy to my successors has been, sort this out. We didn't have much of a choice."
If you listen closely, you can hear the stonemasons, already chiselling out Ben Bernanke's legacy on the tombstone of sound money — and possibly on the mausoleum of dollar hegemony. It will be left to all of us to mourn the inheritance he has bequeathed us in his lunatic's charter of 'quantitative easing' and Keynesianism a outrance.
The entire world has now daringly embarked on the most doomed from the beginning voyage of the HFRBS QE. The inevitable collision with an iceberg of reality and common sense is inevitable. In the meantime as nothing can be really done, is to sit back and listen to the wonderful music and watch as the deck chairs are rearranged ever faster by those who delude themselves there are lifeboats available for them somewhere on deck.
(credit: WilliamBanzai7)
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Top 10 Reasons Why QE Won’t Help the Economy
http://blog.atimes.net/?p=1607
For the life of me, I cannot fathom why anyone would waste one calorie of mental energy attempting to debate/rebut the relative merits of the purposeful lie that is QE2. Hello! The entire raft of policy prescriptions presented for public consumption during this crisis - both monetary & fiscal - have had only one intent: deceit.
Yes, the objective all along has been to deceive the body politic about the true nature of the underlying risk: derivatives exposure. And this exposure is so great that it represents a truly existential national security threat. Hence, the (criminal) partnership between governments, central banks and financial institutions to try and push back the day of final reckoning.
The problem isn't really the total absolute debt, it's the lack of viable growth alternatives to reduce the net nominal debt to a manageable basis. If you don't see/hear an official addressing the core essence of the economy and the ability to provide a sustainable employment basis, then it's all just a waste of electrons.
This obsession with Bennie & the Fed has got to stop. I guess he might have two months or so to continue hogging the spotlight, but when the 112th Congress is sworn in next year, it's show time. The beauty of their position is that we (and they - no one is getting out of this unscathed) are screwed either way:
They either tacitly let Ben continue by approving an increase in the debt ceiling or they don't. If they do, we will have a veritable revolution on our hands, and if they don't, then the deflationary collapse that has been forestalled for 2 years will finally commence.
2011 is going to be a very "interesting" year.
What he said. Either K Street completes the sale and the rookies from outside the beltway side with QE3, 4, and ..., or we witness a jolt of sobriety in our drug addled economy not seen since Volker's cruel tonic.
http://www.youtube.com/watch?v=EosAtSpu1Pw
You forgot: war with Iran.
Weapons of mass distraction loaded and locked.
well said.
Where are the American Corporations and the "Better Business Bureau" in all this....why so damn quite? ANYONE in business can see that what you have to buy tomorrow to "make" your goods is going to cost more, no matter if you make it in the USA or China. Who is going to absorb the increases...
This pathetic bunch that controls money has no idea how it functions. If the cost of goods goes up, and the only ones with jobs and "extra" money to spend are wall street spoilers and government employees, that is not enough to support CORPORATIONS.
No wonder the insider selling is 3,000 to 1 for weeks and weeks and weeks. Corporations KNOW their days are numbered because their customers are and will continue to be even more numbered. World trade, rising economies...illusion.
Time to make examples of every name on FOX. Rupert...where are you when we need you?
Conspiracy theory of the day, Foundation X edition:
http://blogs.reuters.com/felix-salmon/2010/11/03/conspiracy-theory-of-the-day-foundation-x-edition/
Stop talking about my Foundation.
Maybe if Uncle Benji dropped from a real helicopter he might have some idea of the danger.
Here is yours truly doing my weekend thing.
I'm the guy with the red chin cup.
Enjoy.
http://www.youtube.com/watch?v=sXc23PsMWDE
Dropping Ben out of a helicopter ? Is that inflationary or deflationary ?
Perhaps Quick Exit...
a BRE-X helicopter ride!
Krugman was interviewed on CNN this morning by Fareed Zakaria on GPS regarding QE2.
Very interesting....
.....................and?
@ robo
did that idiot advocate printing $10 TRILLION, like he did here:
http://www.youtube.com/watch?v=ZKtVCwWiy6I
beware the academic who understands the true scale and scope our a government "deficit." he speaks not to solving a problem be merely to bringing up the existential reality of "Living in America" as a political class and "having to pay for it."
Was it as snooze-worthy as all the other Fareed Zakaria pieces?
An interesting character this Zakaka. An Arab as a banksters' man through and through.
Zakaria is a CFR talking head.
really, though...who among us WOULDN'T sell out to the seductive siren song of "be part of the big club"?
I mean, the ship is going down and they are offering you a lifeboat with flush toilets, what do you do?
It's funny how all of the talking heads end up part of the CFR club. Just a little money and a little access and a gold pen and everyone gets stars in their eyes.
"Monetization on this scale will mean that Tim Geithner (or whoever may end up replacing him in the aftermath of the mid-term massacre) can look forward to sending the entire bill for the Federal deficit straight to the Marriner Eccles building and not having to fret about finding a real investor to cover any part of that monstrous shortfall."
That's the key. QE2 is all about finding the government and the military and basically puts US finances on a war-time footing. Running the purchases through the bankers and bidding up asset prices along the way is the Obama Administration paying their masters and throwing chaff so nobody looks at the budget. The problem is when do they put the rest of the economy on a war-time footing and for what war?
Once you start with QE, there is no stopping, or it all just collapses. I'm guessing bank holiday and new currency or new war, either way, the peasants are fucked.
I don't know if I agree, it's already been performed and partially unwound. That's why this is called QE2. The pheasants are quite content and warming up for Christmas. The fucking Christmas displays are already set up, the music is playing and top searches on google are keen for 'black friday deals' already. It's too bad everyone can't refinance before Thanksgiving and buy buy buy.
Partially unwound? What exactly has been partially unwound? Link, please.
Lets be clear, the gross Fed balance sheet IS expanding today substantially, but the assets that it is consumed with has changed. To deny that their balance sheet did not contract between QE1 and QE2 is not factually true.
http://www.marketoracle.co.uk/images/2009/Sept/financials-19_image002_00...
http://www.caseyresearch.com/images/72988417JQ_FederalReserveAssetsUseso...
http://www.econbrowser.com/archives/2010/02/fed_assets_feb_10.gif
http://www.federalreserve.gov/newsevents/testimony/bernanke20100325a.htm
The first round of quantitative easing was initiated in Nov/Dec 2008.
Since this date, Treasuries/Agency debt/MBS has only ever grown (your links). Maiden Lane was not part of QE1, it was part of Hank's $700bn blanko cheque, I believe.
http://www.caseyresearch.com/images/72988417JQ_FederalReserveAssetsUsesofFunds.jpg
http://www.econbrowser.com/archives/2010/02/fed_assets_feb_10.gif
As far as Bernanke's testimony you must be kidding if you think I believe a word out of that liars mouth.
Fair enough - our love for the fed appears to be aligned, but my arguement is that the fed balance sheet has contracted before and the world did not implode.
You've made an egregious error. The reason it's called QE2 is to obscure the fact that it is fundamentally different from the first $1.7 trillion QE.
In the initial QE (about $1.4 trillion of agency MBS and $300 billion of off-run Treasury paper) the purchases were structured to effectively sterilize the new credit by constraining the banks to sequester it in Fed reserve accounts where it served the dual purpose of shoring up the banks' LLR capital positions and earning interest income for the banks.
Look carefully and you'll find that there is no mention of sterilization in the Fed's language about this new program. It represents potentially $900 billion in new credit pipelined to PDs for the purpose of frontrunning the Fed on new Treasury issuance as well as off-the-run.
Look again at your first chart pf the Fed's balance sheet composition, and notice how far off the chart another $600 billion in Treasurys will take it.
At the same time, consider the fact that these charts are extremely misleading because they do not account for the massive supply of Treasurys which the Fed purchased indirectly through foreign CB purchases funded with dollar swaps, and those held by primary dealers but purchased with funds supplied by the Fed.
With no sterilization, $900 billion hitting the streets in the context of a flat to declining economy necessarily implies far too much money chasing zero additional goods and services.
By the end of Q2 of next year, no one will be talking about how "inflation expectations remain firmly anchored."
http://www.utahbirds.org/birdsofutah/BirdsL-R_2/RingNeckedPheasantKK4.jpg
HA! well played.
I hope Banzai puts together a picture of the tombstone masoleum scene.
The talk of QExx is insane. I've seen a lot of things that make you go "whaaaa?" on CNBS, but the past week, seeing all those traders in the pits talking about, "we all absolutely expect there will be more QE", really took the cake.
Join me: http://www.zerohedge.com/forum/fight-club-and-twitter-lets-go
Conrad excellent suggestions, keep up the great work. On election day, I taped an 11x17 blown up image of the zero hedge logo to the window for the commute. On several occasions, I was met with honking horns, thumbs up and cheers. People out there are starting to get it. (There were a few tinted out cars that tried to run me off the road, but I just swerved around them...)
The propagation of truth backed with irrefutable evidence is unstoppable. It is only the means and speed through which they are distributed and accepted that is in question. This can be measured in days or decades based on how much passion and motivation is out there.
Your suggestion about twitter is also exceptional. I have contributed in that space for years under many pseudonyms. I would encourage many others to comment on major newspaper article portals, blogs and everything else that allows construction of bridges between lunacy and reality. American Idol and History books. Add links to youtube videos and zerohedge stories, craft the link to the appropriate reader. Dedicate consistent daily time to this effort.
WB7 has now opened the PR branch of the ZH movement which makes for a fantastically easy gateway drug to administer to broad audiences.
Here's to a peaceful conclusion of this tragedy in motion, but let us compete loudly in the court of public opinion while there is no blood being shed. Perhaps someone bold, someone unknown and someone who's willing to put their country and their future sons and daughters before themselves can stand up and take the torch that is burning brightly, yet bears no runner beneath it.
I am busy taking notes...
BTW have either of you seen this film this weekend?
Ben could certainly pass for Sean Connery in Indiana Jones and the last Crusade.
Or Ben Bernake and The Last Bubble!
-Where Timmay or Obama plays the role of Harrison ford and Ben plays Sean Connery.
http://www.gamillah.net/Movies/images/69887f.jpg
http://movie-poster.ws/movies/wallpaper/indiana_jones/last_crusade.jpg
This guy could pass for Alan Greenspan.
http://3.bp.blogspot.com/_dIqFrcAiH_Y/TJfl77lGzFI/AAAAAAAAAN4/EYoHZ0OHRw...
Look it's the Federal Reserve:
http://www.embracingthenerd.com/wp-content/uploads/2010/03/indianajonesl...
More
http://www.mastemag.com/wallpapers/data/media/1941/indiana-jones-and-the...
Large:
http://www.char-kob.com/_gl_images_/INDIANAJONES_LAST_CRUSADE.JPG
Damn you WB7, coffee out the nose hurts like hell
Bartiromo is hot for a 46 year old.
Oh, come on, she's a cow. Now, Melissa Lee, on the other hand...
43...not 46. But whatever.
ah who cares.. everyone stares at fox
http://www.ihatethemedia.com/fox-news-anchor-babes-short-skirts-video-photo
but I'd trade all those whores in for that georgia peach elizabeth prann
http://activitypit.ning.com/forum/topics/a-new-face-for-red-eye-guest?page=3&commentId=1981927%3AComment%3A1725649&x=1#1981927Comment1725649
http://www.youtube.com/watch?v=en4OSSzY9Zo
I think it's neat seeing www.zerohedge.com hand written on the borders of a $bill.
Excellent idea.
I don't want to be a negative Nellie, but isn't defacing notes illegal?
Don't you want to get your 2 - 2 dollar bills with a picture of Yellowstone for only $10 plus S&H?
Isn't that what the fed is doing? Oh, no wait, you said defacing not devaluing, never mind.
Were going to need robo stampers soon.
I just ordered my own robostampper. Went to rubberstamps.com and ordered a rubber stamp that reads "end the fed - www.zerohedge.com"
Plan to stamp every FRN I get my hands on. Use their paper to spread the message.
Damn, only $15 bucks for a custom self-inking stamper!
I just remembered there's a stamp maker not too far from me. I'm going to go this week and have the same thing made up. We'll have to get a thread going in the forums once this gets under way.
You are on!!!
Tyler, I want asome Zero_hedge bumber stickers dam it!
Will paste as many as possible on government vehicles
haha
Seconded.
Where is the "like" button?
Word
@ Conrad
Isn't it QE A/N (as needed) aka: infinity sign. No QE III needed.
The Chameleons "Caution"
http://www.youtube.com/watch?v=pmJJVeuUp3c
Enjoy the artwork from a not so distant time.
I flag this song as not junk. Love these guys.
All these trillions over these past years and I see NOTHING affecting "main street," except the creeping unemployed being crippled by slowly rising food and housing prices - just like the frog in the pot of cool water that slowly is set to boil. All this and you have to compete with the illegal labor market - among these Obama limo elites, the John Stewart clever-comic crowd and the neo-con-artist RINOs American citizenship is worth as much as a exploited Mexican lettuce picker living in and out of the shadows and margins.
In the minds of these beasts - your children's future means nothing.
The city here just bulldozed the local homeless camp, with a bunch of hand holding the local government ran around finding temp shelter for this segment of non-working poor - only to have that plan go bust a month later. The tent city is back on the lawn of a local church. Its not going away people. EBT is getting rolled out for the 21 century electron bread line and can now be used at every fast food joint 42 million on the rolls - smells like Great Britain - and we know where they are headed.
I'm not for welfare so much, but when Corporations like GE, GM and Goldman Sachs are subsidized a la Mussolini, I expect the Citizens of the Republic to at least get the opportunity to eat the peanuts out of Bernake's and Madoff's shit.
A complex government becomes a fraud and the Fed and its shadow practices are just the final gasp. Republicans "win" the election and I already see Phil "Gram-Leach Bliley and my c*nt Enron board member wife" Gramm getting air time a few days later.
They will repeal a few anti-insurance Obamcare provisions, but keep the requirement that you mail 16% of your paycheck to a private for-profit anti-trust exempt insurance company. QE3 coming at ya this Summer.
Its the Year Zero (again).
It is us who must consider the ends of the path we are now on. Specifically for our children. As a nation that thrives on desires rather than necessity, we must now meet the maker of all which we have procrastinated upon.
We need look not further than the mirror to see who is to blame. Let us not continue to remain idle while there is still time to re-galvanize the rule of law to re-tame those that have taken from us and stand to continue to do us (and our children) harm.
isn't it interesting that "the policy of the executive branch is to keep interest rates at or near zero."
Lower mortgage rate, lower corporate bond rates, higher stock prices spurring wealth: will all be negated as costs of commodities and consumer goods/services rise. The ZERO SUM game.
Increased spending will lead to higher incomes and profits: Increased spending comes from higher prices only and will result in less goods purchased and thus less profits. Higher incomes will be non-existant off Wall St.
look, until the basics of the math of the monetary system as debt are addressed, all this whining about what the federal reserve is doing is no more than just a bunch of bullshit.
there are two options:
1. the people who write this tripe actually understand why the Fed is attempting to "refinance" the monetary base at 0%, because of the math mechanics of debtmoney. If so, they are no more than shills for letting the banksters acquire the entire real economy via deflation.
2. they do not understand debtmoney, consequently they should STFU
Then explain.... or STFU. It does not prove your intelligence or oracle like understanding of Fed thinking if all you say is "if you dont understand what I understand STFU"
JFC dude, I have done exactly that about 2 dozen mfin times on ZH. Pay attention next time
I've never owned a CD in my life, but i noticed our local credit unoin offers a whopping .35% on a 6 month CD. Barely enough scratch to wipe your ass once daily with a premium 2-ply
you've been Benroned bitchez!
FED double speak
Price stability = inflation
Wealth effect = more money that buys less
Watching Meet the Press this morning -- no mention of anything of substance.
More political kool-aid being served up for the masses.
I get more disgruntled day by day.
"I'm not an anarchist -- I'm you!"
David Stockman destroyed mike pence this morning with simple math..
http://crooksandliars.com/susie-madrak/presidential-wannabe-mike-pence-i...
These village stenographers let these idiots spew totally unchallenged.
david gregory is a total tool as is his lesser twin john king.
I must say that some of the comments on that link are idiotic to the extreme.
Really, Bush 6% unemployment, Obambi 9.6%
Dont take me wrong, there are a whole bucket of things the Bush administration did wrong. But we cant get to a solution by making idiotic claims and playing the
/stoned hippie voice "Bush is Hitler man" /stoned hippie voice off
If we approach a problem with a clear mind and honest view, we can at the very least protect ourselves from the effects.
Hang on, I'm not saying Obama is doing the right thing, but it's hardly a great solution to "fix" the economy by lowering interest rates WAY below where they ought to be, and send out cheques to everyone. Bush solved nothing - he merely postponed the pain.
I fully agree. Interest rates should be at least 1% above real inflation in order to provide actual wealth protection to savers and de-leverage debt. Would it hurt new mortgages? Yes, but only those who can actually save and put some money down, lets say 20%, will be able to borrow for real estate. This would further devalue real estate prices to an affordable level.
Depreciation is the natural course of all economies. As the economies of scale and technological advances make products cheaper and easier to produce, purchasing power increases. Those who save can purchase more and better products with the same amount of real money.
That is one of the many problems of fiat. Since it can be inflated at will, depreciation and wealth accumulation become a loosing battle. With real money you could work and save 30 years with the certainty that your savings will carry you thru retirement or a second career.
i'm sorry goldsaver, but that's a retarded line of argument. obama inherited the collapse set in motion during the bush years. you can't compare the unemployment rates as if obama was responsible for the melt-down that occured in october 2008 - before he was elected.
jeez. use a little common sense please.
well, i've been reading all you passionate commentator/freaks for long enough now. might as well try jumping in. i'll try to find an appropriate photo soon.
I can not blame MaObama or Bush, neither controls appropriations. I blame congress for the out of control spending and the fed for foolish monetary policy. This collapse was set in motion right after the dot com bubble. The current mess is the result of the real estate bubble (Banks lending with no standards) and immense congressional spending. The congressional spending spree started under the republicans in 2004 (that is why the got voted out in 06) and went ballistic under Pelouzy.
Bush and MaObama could have vetoed the spending, true, but it was congress that was responsible for the spending.
Of course, the original comment was in reference to the commentary that bush was the worst at job creation in the last 70 years. Presidents dont create jobs. But the federal government can set favorable or unfavorable condition for job creation.
Welcome aboard.
Read "The Price of Loyalty". Paul O'Neill disagrees with you.
Once Bush won the midterm election in 2002, they pressed ahead with out of control spending, caring not one bit about the deficit.
He is entitled to his own opinion, but not to his own facts.
When boosh took office in 2000, with a repugnicant house the national debt stood at $5.7T
When Pelousy took over Speakership, still under boosh in 2006 the debt stood at $8.4T, an increase of $2.7T during the first 6 years of boosh.
At the end of 2008, when boosh left office and MaObama took the chairmanship, with the wicked witch of the west as the speaker, national debt stood at $9.9T and increase of $1.5T in 2 years.
The debt at the end of 3Q10 stands at $13.7T and increase of $3.8T in less than 2 years.
That is an increase in debt of $2.7T in 6 years for the repugnicants (under boosh) and $5.3T for the demorats in less than 4 years (under both boosh and MaObama). Twice the debt in about half the time.
That, my friend is parabollic.
http://en.wikipedia.org/wiki/United_States_public_debt
Paul O'Neill was Bush's first treasury secretary. I'm pretty sure he's not making up stuff.
Im well aware of who Paul O'Neill is. Im also well aware that:
1. Presidents do not appropriate money, congress does. See U.S. Constitution, Article 1 Section 8
"...To borrow money on the credit of the United States"
http://www.usconstitution.net/const.html#A1Sec7
2.Paul O'Neill is an insider in the Mordor on the Potomac club. I don't know what his reasons for saying or doing anything might be, but boosh is toxic in that environment and he might have been trying to go along local folklore to ingratiate himself to the club.
3. Numbers do not lie. 2+2 will never equal 5 no matter how badly you may want it to or who wrote it does in a weighty tome. Please refer to my previous comment on the numbers.
Ray Kravis was primarily a tax accountant, and he had invented
a very special tax shelter which allowed oil properties to be "packaged" and sold in such a way as to reduce the tax on profits earned from the normal oil property rate of 81 percent to a mere 15 percent. This meant that the national tax base was eroded, and each individual taxpayer bilked, in order to subsidize the formation of immense private fortunes; this will
be found to be a constant theme among George Bush's business associates down to the present day.
...
Such activity imparted the kind of primitive-accumulation mentality that was later seen to animate Ray Kravis's son Henry. During the 1980s, as we will see, Henry Kravis personally generated some $58 billion in debt for the purpose of acquiring 36 companies and assembling the largest corporate
empire, in paper terms, of all time. Henry Kravis would be one of the leaders of the leveraged buyout gang which became a mainstay of the political machine of George Bush....
more truth:
https://docs.google.com/document/d/184QQFdCAHRkFfqR1XeLc3sZXhdHuIxllYgLU...
Agreed. The media should call it the Jackson Black Hole doctrine, not the Jackson Hole doctrine.
Epic picture
"I get more disgruntled day by day. "
I hear you Rocky, every damn day.
Thanks a lot Ben and the other Nomenklatura.
http://www.youtube.com/watch?v=WINDtlPXmmE
I appreciate your reference, great movie. There is a big difference between disgruntlement and anger, however.
American Citizens are the Sacrifical Lamb to the Money God Bankers. By the FED.
That picture sums it up very good.
Pardon if I as a Euro give you Yanks a lesson? Do you know what a "civil servant" is? And you seem to believe that all central banks are the same? NO. The US central bank, the fed is owned by private interests, in Europe the central banks are owned by the state and populated by civil servants.
It's a helluva difference! Don't you get that...
In Europe public central bankers impose austerity to pay the private central bankers on Wall Street? Is that the difference?
Ah hah! Proves my Theory of Sanctimonious Fungibile Stupidity.
With Europe pursuing austerity and keeping grandmothers on the job until they plop over dead, who else is going to keep the ponzi going but Ben?
I am telling you, unplug that beast! I was so mad every time I had to see/hear a bunch of fluffy crap while I knew Rome is burning. My provider has called 6 times begging me to come back and then I get to tell them what a bread and circus crap sandwich they are giving the public. And I save 4 oz silver/month!
I posted this on an earlier thread, but received no responses, so let me try again:
I'm confused. Lets say that the Fed monetizes all the debt. Not just future bonds, but all internationally held bonds as well. Chinese held, Japanese, British. The Fed is actively trying to devalue the dollar. So are all other major markets. So in the race to the bottom, wouldn't this result in a dollar index that is relatively stable as compared to all other fiat? Of course, PMs would go to the moon, but wouldn't oil and all other commodities retain their relative dollar value if oil does not increase? Yes, the banksters would own all US debt. But they already own the US government so what is the difference? Fiat only has value in relation to other fiats and real assets. So as long as the oil/dollar ratio remains stable (due to exchange rates against other fiats) no immediate negative impact. Please feel free to junk me if I am loosing my mind (small blue letters at the bottom of this post for the newbies), but at least discuss your point
IMO, this scenario can not happen. The more you monetize the more friction you get from other countries. All commodities including food, oil, PM's will go to the moon and hoarding will ensue in a millisecond. People will starve and the masses will break into food depos.
Chaos and revolution in an instant. Marshall law and only god knows what.
True, but only if the other mediums of exchange remain at the current value while ours is devalued. If all fiat devalues together, how is oil price going up?
You are talking about flooding the world with trillions upon trillions of dollars. Dollar dilution would be catastrophic, and there would be no dollar stability. Trillions of dollars looking for a home would produce massive commodity bubbles in all commodities including oil. That's a perfect recipe for hyperinflation.
yes.
The problem is that the status quo is untenable. American hamsters are not signing up to borrow to do geometrically more wheel running in the future. They can't. They're exhausted.
The Fed is trying to devalue the wheel's units of measure, because that's the way the math works.
However, the foreign mercantilist nations want to continue to export and not import, because they are protectionist of their own employment markets. The center cannot hold here.
On one hand, the foreigners LIKE the status quo of the perpetually strong dollar and continual debt growth because that keeps their factories humming and their trade balance continuously positive. This has been China's growth strategy for decades and was Japan's and Germany's as well, and is intended to be Brazil's as well.
The resource exporters like Canada and Australia are alone in allowing appreciation without steep intervention or bitching.
Foreigners have to accept that as our productive base has declined, we simply don't have the real economy to support the trade imbalances they want. They will either have to import our inflation or accept a loss in their export industry. It's as simple as that.
If everyone tries to devalue with us in order to preserve the DXY at a fixed measure, the pressures will continue to build.
However, with declining real oil supply, the world needs to accept that contraction is the new status quo. They won't...they will attempt to maintain FX imbalance to scrap for a steady share of a declining pie.
So, weenies and marshmallows are (literally) going to cost an arm and a leg by the time the jacquerie get around to roasting and toasting them over the embers on the corner of 20th and Constitution?
goldsaver, are you implying that cheating ripoff crooks can get away with it ?
50.00 bread is ok with you? Cause thats where this is taking us.
They have so far.
And that is my question. Prices are based on supply/demand, cost of production and relative value of the medium of exchange. So, if all fiat races together to the bottom, production costs that are affected by oil would remain flat. In order for a loaf of bread to cost $50k it would require some other outside force to push it there. For example, if salaries go up by 1000% percent, bread would obviously go up 1000% along with salaries (all things been equal) But, if OPEC decides that oil is 50k a barrel, then production costs would force bread to 5k a loaf without the corresponding salary increases. That can only happen if one of the major currencies does not fall relative to the dollar, providing a superior currency following oil in the open market. Further example. If the Euro stays at current value and the dollar devalues via inflationary printing (QE) by 50%, then Euros would be more valuable and oil woul cost $160 a barrel. But, if the Euro gets devalued along the dollar, what better currency would chase oil?
Of course, the jig is up the minute that OPEC countries refuse to accept fiat and demand gold or any sovereign decides to not play the deflationary game.
Now, another concern would be slow deflation. As QE creates "wealth" in the market, the additional price of commodities would by rote leak into the general economy, This would cause prices of goods to increase as more dollars would be available to chase the same number of goods. This, by its very nature, would cause a dollar bubble (not that we are not already in one). All bubbles eventually pop. Just not at the speed we are all expecting.
You assume the rest of the world will be willing to accept USD in that environment. Hyperinflation is the ultimate outcome in your world, which would be sparked by just 1 important country refusing to take USD.
Of course hyperinflation would be the result, but only if the OPEC nations or one of the major exporters (China, Japan, Canada, Australia or the EU) stopped playing the game. I mentioned that the jig is up the moment that happens. My question remains though, because as trav points out, exporter nations have 2 choices, import out inflation or import our products. If they stop importing our inflation, they destroy their exports into the US.
I suspect that is why China has been building so many bridges into Europe and Africa. looking for a new market(s) that can replace the US.
"And the candle by which she had been reading the book filled with trouble and deceit, sorrow and evil, flared up with a brighter light, illuminating for her everything that before had been enshrouded in darkness, flickered, grew dim, and went out forever." (Anna Karenina/Tolstoy,p.816)
Correct me if I'm wrong:
The dollar (fed note) is backed by the credit of the US governmenment.
The US government is backed by the largest nuclear arsenal.
The US government is also backed by it's capability to create and export it's own food.
So the U.S can defend itself against the entire world, and feed it's citizens.
This is good for the dollar AND the U.S....
Yeah well, try creating this massive food surplus without importing large amounts of oil and NGL.
If oil rockets in price, so does food.
You left two very key things out of the equation. The first is oil, and the second is credit. Without either, the U.S. can no longer feed its citizens. 9/10 of all calories we consume is basically from oil. And without credit, business just plain stops. Consider well all of the credit involved in moving food from the farms to the table.
Over time, the U.S. could probably re-establish the food supply chain. But if you consider that this chain is built upon Just-In-Time delivery methods, and stores might have at best a 5 day supply of food, there's going to be a wee bit of a problem if this supply chain is disrupted.
Correct me if I'm wrong:
The dollar (fed note) is backed by the credit of the US governmenment.
The US government is backed by the largest nuclear arsenal.
The US government is also backed by it's capability to create and export it's own food.
So the U.S can defend itself against the entire world, and feed it's citizens.
This is good for the dollar AND the U.S....
*The US also has the largest producer of credit in the world.*
I thought the U.S was the largest exporter of agricultural commodities....hmmm
Who imports more agriculture than they produce?
It might be smart to re-invest in America...if you were to listen to Jim Rogers.
Guest post from Janet Tavakoli
How to Corner the Gold Market
First, let your greed overcome all regard for the stability of the global market, and overcome your aversion to illegal activities. Stay away from people like me, and fly under the radar, because I'd like to see you thrown in jail.
Most Washington officials, regulators, and Wall Street managers are probably safe to hang around, especially if you cut them in for a piece of the action or give them vague promises of a future lucrative job.....
Now you are ready to execute your plan.*
Step 1: Let everyone in the futures markets know you are buying gold, speculating in gold, and want to take physical delivery. It helps that China openly announced it wants to increase its gold reserves; the market isn't looking too hard at you. At first, act like you're naïve. Buy on margin and pyramid up by reinvesting your profits when you have them. This part is legal, but you don't want to draw too much attention to yourself. Your buddies in the market will distract attention from you by buying gold and putting on straddles (selling the near months and buying in future months). No one will suspect collusion.
Step 2: Get the banks to let you finance your gold. They will lend you most of the value of your gold, especially if you do not argue about the interest rates they charge. Since they are borrowing from the Fed or another Central Bank at nearly zero, they consider the difference they get from you (backed by your gold) as gravy. As the price of gold rises, they will lend you more, and you can add to your gold position.
Be careful with the loans, though. In March, 1980, Paul Volcker was Chairman of the Federal Reserve. As the Hunts tried to corner the silver market, Volcker inadvertently (or otherwise) ruined their plans. Volcker raised interest rates to fight inflation and issued a special credit restraint to banks admonishing banks not to provide financing for speculators in gold and silver. Borrowing costs rose, while silver prices dropped. The former billionaires were bankrupted by Volcker's prudence. Fraud is not for sissies. But don't worry too much. No one in Washington is really listening to Paul Volcker today. They just trot him out for a photo-op, and then dilute any "rules" he suggests to render them totally ineffective.
Step 3: Book up all of the space at gold refiners, so that no one else can do it. Buy as many gold mines as possible, and do not hedge (sell gold forward). Since the price of gold is going up, persuade other mines to keep as much of new production as possible off the market, while you execute your plan to push up prices. Keep the part about your attempt to manipulate gold prices a secret. You won't be 100% successful with all the mines, but you don't have to be, and every bit helps. Besides, if these other mines insist on hedging (by selling gold forward), your plan may drive them into bankruptcy, and then you can buy them cheap.
Step 4: Create credit derivatives contracts that give you the option to ask for your pay-off in gold. Make the reference credit the United States or the United Kingdom and create extra triggers like credit downgrades or other events that make it easier for you to demand payment in gold. The steps you use here to manipulate the gold market can be adapted to the credit derivatives market, so even if you can't trigger the event, you can make the spreads move in your favor and demand collateral in gold. Hide the credit default swap contract from the eyes of the clearing exchanges by embedding them in a securitization, a credit-linked note, or a sovereign fund product. Most investors that invest in these products never read the documentation, so when you trigger the event, they won't realize they are caught in a short squeeze--scrambling for your gold at the high prices you set--until it is too late.
Step 5: Pick the future month to make your big move. You will go long gold futures and demand physical delivery. Your buddies will all go long, too. Mix it up a little by buying some straddles to make it appear you are just a regular speculator, and throw everyone off the scent. Balance your straddle so it is relatively neutral, and the initial long position continues to apply pressure. When the long side of your straddle becomes due, demand physical delivery (this will be before your other long position) to keep up the pressure.
Step 6: Secretly and habitually start making some large early purchases in non-U.S. markets. That way, when the U.S. markets open, gold should follow the upward trend. Create chaos by doing as many as the following as possible in the shortest time possible. Move any remaining gold you have in trading depositories to private storage. Get some banks to issue research reports on how the bullion banks don't have enough gold to cover their massive short positions, and talk about the tight gold supplies. Trigger some of those credit default swaps. Inform the investors in non-allocated "paper" gold ETF's just how stupid it is to give their money to a "manager" that doesn't audit the gold, insure the gold, prevent leasing of the gold, allocate the gold, or otherwise prove the gold is backing the fund.
Step 7: The bullion banks and dealers that have over-hedged their physical gold with short positions will now be squeezed and have to meet cash margin calls. You and all of your speculator friends will look bad, so now is the time to use a ruse. Offer to cancel some of your forward contracts at favorable prices in exchange for early delivery of gold. This will temporarily relieve the bullion dealers' pain on their short positions, and give you control over even more of the gold supply.
Step 8: You and you friends have pinched off the gold supply and control most of the free gold supply having locked it up in your own vaults and warehouses. You are all long a lot of futures contracts, and you will all demand physical delivery. You now have the naked shorts exactly where you want them.
Step 9: Rely on bankruptcy and bailouts to get what you want. Normally, you would be afraid that you would never get paid, because your demands would bankrupt the naked shorts. But the naked shorts are likely to be unwary hedge funds or other sophisticated investors, and no one cares if you bankrupt them. Other naked shorts are likely to be the bullion banks, and they are all being bailed out by the Central Banks who will lend them what little gold they have left and then beg the IMF for whatever they have. In lieu of that, you can set a very high cash price and take cash. In the gold feeding frenzy you have created, you can gradually unload some of your physical gold. If you managed to bankrupt any gold mines, circle back and see if you can scoop them up for a song.
China is a wild card. If it is not part of your scheme and decides to lend its gold, it could dampen your profits or even upset your short squeeze. But China may not want to help out your victims. Why should they? If China buys enough gold mines and increases its reserves enough, it may be in its interest to befriend you. Your combined ownership will have made the futures markets irrelevant. Together you will not only have cornered the gold market, you will have cornered gold.
http://dailybail.com/home/how-to-manipulate-the-gold-market-and-become-a...
The Hunts were undone by the very exchanges they traded on. The margin requirements were raised substantially and other changes in the game were made that adversely affected the Hunts. As it turns out the principles of the exchanges happened to be short silver so there was a classic conflict of interest between those that ran the "exchange", the interests of the public, and the interests of financial hackers like the Hunt Brothers.
My sister in law witnessed a tragedy this morning on her way to church with her 8 year old daughter. They were driving about 55 mph when the passenger in the car in front of them threw himself out of the car. We found out that the couple in the car had just dropped off their 3 year old at her grandparent's house and were having an out of control fight about money. The husband had lost his job and things were getting desperate. We don't know if he will live. I suppose one day my niece, the 8 year old witness, will look back and know this was the day QEII kicked in. No need for a ship to sink, just a car out for a Sunday morning drive will do.
It might be a little comforting IF the Fed was planning to extinguish all the debt it was buying as part of QE. But, alas that is never to be discussed - until after the Fed is stormed like the Bastille. There may be a method to this madness if the Fed was buying up debt to "reverse-print it" back to Treasury. That way the federal deficit would not be over $14 trillion in the next couple months and the Fed's balance sheet would "go back to normal." IF that was the intended arc of this transaction, then hey QE may be considered a sound mechanism. All these smoke and mirrors, so expect the worse.
When this whole manufactured nightmare surfaced when the credit markets seized and the folks started losing their homes - not from speculation but real chronic unemployment, the Fed through the banks should have done "ZIRM" - Zero Interest Rate Mortgage. Rather that have all these stress tests and fake mortgage modifications, the Administration could have come out and said to all the TARP banks - 'you need TARP? Fine. Re-write all your residential mortgages to 0.00% regardless of LTV for random number of years - get some money in the pockets of people and let the homes of those truly unemployed or underwater foreclosure naturally.' Give folks a chance to sink or swim.
Instead its one crisis after another with each step another bailout for bad or cryptic behavior. The future is clear. Look to post soviet Russia per Larry Summer's influence or GM's influence across the City of Detroit and you can see the future of "American" business. These robber-barons will be living in Abu Dhabi with Erik Prince. All these trillions are just free money to be invested into Asia and Africa to combat the rise of Chinese resource hegemony.
its getting very ugly out on main st. my business is now severly limiting personal checks due to an explosion of returns over the last 6 to 8 weeks.
i believe we will see outbreaks of civil unrest soon, the poorest of our people. but i believe it will be against other people and small businesses.
lock and load
sudden rise in property crimes in New Hampshire as well as certain "extreme forms of personal violence" which i reported on in SA. It is well documented and i think a social scientific fact that "humans will attack the innocent first in their path to civil war." in the case in NH it was a young male brutally hacking with a machete a young woman and her daughter with absolutely no remorse shown before the Judge or Court. A "message is being sent"--are the authorities listening? Are they even asking for a dialogue? If they are I've never heard it spoken--certainly not in the last two years and certainly not for the next two either. The word "power" keeps coming up again and again and again. Whatever happened to principle?
Yep, that's the problem right there. When the working class starts rebelling, it's the middle class which will bear the brunt of the pain. The people they blame will once again escape without attracting attention.
The FRB is leveraging America's strategic gains post-WWII to enrich banks and the capital behind banks, including int'l corporations.
Neocons are rolling out a strategy for more war to increase the gains so they can also be leveraged later. Think petro-dollar and Iran.
But -whether you detest war and strategic gains or not - no one is is discussing leveraging those gains in the service of the bottom 90% of Americans. Iraq was the beginning of the purely privatized war. The costs accrue to the American people squarely, the benefits accrue to international capital. Yes, there were huge benefits to Iraq. The only possible way for American citizens to see them was in the form of a corporate tax. Even those loopholes were widened. The American people saw no net benefits. Small cabals of people got filthy rich from Iraq and continue to this day.
THIS must be addressed. We will always wax and wane between questions of war and peace, but the disconnect between the Federal government and the interests/benefits of the people have never been this wide. I don't think Rome would have survived long without sharing the benefits of war with Roman citizens. Had global oligarchs lobbied Rome to war, used Roman soldiers and privatized all the benefits to these global interests, Rome would have fallen in 100 years, especially on the gold standard without a reserve currency.
SCOTUS decision on campaign finance law is purely logical when you see the world as they do. A world in which PRIVATE PROPERTY, no matter how consolidated, should control all the instrumentalities. What is threatening to them, in the age of the internet and open communications, is the PEOPLE, not property, controlling the instrumentalities.
The Supreme Court decision was very logical to this end. They see the Howard Deans and the money bombs. This had to be addressed from their perspective. It is no accident this decision was forced and rushed and outside the legal question presented, an unusual practice for SCOTUS. This was a response to the 2008 crash and bailout. They knew very well this nation would suffer for a decade and populist movements, in the age of the internet, would flourish. They saw the storm on the horizon. They saw a GOP candidate on the stage being applauded for wanting to outlaw the FED.
These are all serious existential threats to property. So, they responded, by allowing property (money), and those that hold it, full carte blanche in American elections.
good post, thx
From Spiegel On Line
Germany Blasts BernankeResults of Fed Stimulus Could Be 'Horrendous'
German Finance Minister Wolfgang Schäuble has sharply criticized the US Federal Reserve's decision to pump a further $600 billion into the country's ailing economy. He says the move could create problems for the global economy. Others have joined in the condemnation.
You are not alone....
Best regards,
Econolicious
no sympathy for protectionist mercantilists. Germany is nothing compared to Japan or China in that regard, but they still have to shoulder some of the blame.
Either take the inflation or accept export contraction.
Germany is ONLY pissed off because they can see how QE is going to FORCE the latter of those two. We are necessarily going to be buying LESS Mercedes Benzes and they don't like what that means for their job market and socialist programs.
They have to get their heads around how phony the last 20 years was for us.
All of the band-aid measures will fail. The problem is the Federal Reserve, which concept is founded upon debt-based currency and fraud. It must be closed down or it will continue to suck the resources of the U.S. with its currency management contract. The American government could do the Federal Reserve's job for virtually nothing, and save the U.S. taxpayers between $200 and $900 billion each year in interest off a debt that will never be paid off.
http://thomaspainereturns.net/
In these times that try men's souls, those without souls need to be tried and convicted. They are the culprits. They are the criminals. They are the evil slave masters.
http://thomaspainereturns.net/posts/tpra.html
we have an "inversion" alright--of the destruction of any and all on a fixed income by no less than the government itself. "You were fools for trusting us" is the explicit message and "right on cue" the seniors rightfully so attacked the health plan for they saw via government interest rate policy what is patently true: if you're living paycheck to paycheck this regime is gonna kill you "and it starts ironically enough with a health plan." the Right Wing would be wise to raise hell but do nothing since "the only way the trillion get's downsized is with a forced insurance option." will there be an actual benefit at the other hand? I think Ms. Burnett of CNBC fame has interviewed Tiger Mgt's Julian Robertson already knowing the answer: "tax fat." Their is your benefit. In short "these policies are crafted by highly intelligent people who understand they are paid for by further instructions from higher." Of course "they leave out the or else part all the time." FDR and the Depression Dem's really did "get it." Cut the phucking check...win the phucking war." More to the point "lose the war...lose everything."
listen, man, you need to rapidly get your head around the fact that there is NO MARKET for borrowing your money at the rate you think you're entitled to.
There's NOBODY out there who can turn a profit and pay you the 6 or 8% profit you want from the use of your money.
The Fed cannot legislate profitability; it has to follow what the MARKET says an acceptable cost-of-credit is.
Good article, but I'd like to make one clarification.
The article says it is more important or appropriate to facilitate selling than buying. But in fact, focus on either buying or selling is a fundamental mistake. Consider the following example.
GoldmanShafts owns 1000 tons of gold, which they decide to sell at a profit, then later buy back at another opportune time, then repeat. JPMorgan has a similar idea, except they decide to start the process by purchasing 1000 tons of gold. So GS and JPM both program their HFT computers and hit "run". Over the following year, their HFT algorithms sell that 1000 tons of gold back and forth to each other 1 billion times.
At the end of the year, 1000 * 1000000000 == 1 trillion tons of gold has been sold (and purchased).
But wait one second! Only 1000 tons of gold was ever produced, and only 1000 tons of gold can eventually be consumed (in microelectronics, jewelry, optics, etc). But the "value" of all those "sales" (and purchases) is greater than the GDP of the entire universe for all history.
What matters is production. Not selling. Not buying. But production.
To be sure, we need some way to decide whether a specific instance of "production" should actually count as production. If someone was to produce something that nobody wanted and nobody ever got any benefit or utility from its existence, then that seemingly productive activity should not count as "production".
The fact that someone was willing to buy a specific chunk of goods is a fairly reasonable basis to judge the activity as legitimate "production"... and also gives us a reasonable basis to assign a specific value.
However, we cannot count the "value" as 1-trillion tons of gold, or the price paid for 1-trillion tons of gold. The "value" is 1000 tons of gold, or the price paid for 1000 tons of gold.
I believe the only way to understand modern economics today is to remove all fiat, fake, fraud, fiction, fantasy units/goods/concepts from the thinking process, and consider only real, physical goods [and services, but be careful]. Otherwise the massively bogus concepts spred by the predators-that-be will confuse. That's how the predators-that-be gain any support for their massively destructive actions, by claiming the results of their actions are opposite of what they are.
Nice post...
it's the start of a new trading week. have a good 'un boys and girls!!
BREAKING FT NEWS....
World Bank Prez, ROBERT ZOELLICK calls for using GOLD in currency standard.
Pretty big news.
Too bad he's a major league neocon who was pumping Iran war in Canada with Lindsey Graham.
http://www.ft.com/cms/s/0/eda8f512-eaae-11df-b28d-00144feab49a.html#axzz14dzvQ2br
Does anyone else think that things are moving a bit fast?
Zoellick says G20 should consider global gold currency metric
http://www.ft.com/cms/s/0/eda8f512-eaae-11df-b28d-00144feab49a.html#axzz14dssSRl1
NIA Rant - best yet IMHO:
http://www.youtube.com/watch?v=po6HhQ1ZRxE&feature=player_embedded
Pauper or Prostitute I still survive. My choice to face death through living or simply exist through the death of myself. Natures continuum
Amazing how Ben is attempting to circumvent the completely natural cycle of M&A. Even this admittedly abbreviated and bastardized version as now exists. A hubris that cannot but fail, epically. The great pitfall of orthodoxy is in believing one has attained the voice & power of a god. And in so doing make a lie of ones own humanity.
Having one of those days.. Nostalgia really brings back memories.
For instance, we where the type to tell the faculty to piss off & get bent.
Today, those are fighting for their pensions. Oh the irony.
On a positive note, thank you Mr. Edmonson. Your one of the few teachers who demanded me to work hard. Your responsible for who I am today.
The Suit
It is your character
Deep in your nature
Take one example
Sample and hold
Romance and replace
The lack in yourself
It is your nature
It is your nature
We see you climbing
Improving the effort
Wearing my suit
It is your character
There is a limit
Over your shoulder
Everyone loves you
Until they know you
Perfume aerosols
May champion the strangers
Nick
Standing around
All the right people
Crawling
Tennis on Tuesday
The ladder is long
It is your nature
You've gotta suntan
Football on Sunday
Society boy
On social security
It is your nature
Tennis on Tuesday
Sipping champagne
Football on Sunday
Home on the train
It is your nature
Girl from Totteridge Park
Said you were nice
So was my suit
The ladder is long
http://www.youtube.com/watch?v=8VHIRTWcc3g
(Reuters) - The Group of 20 is beginning to look more like the G19 plus 1 as emerging and rich countries alike accuse the United States of breaking a vow of unity.
http://www.reuters.com/article/idUSTRE6A62BC20101107
The German finance minister called Dr. B "ahnunglos", which literally translated means "clueless" but more correctly is something like "unaware". Schäuble, like any German who peers into his country's past knows that money printing works until it stops working and then leads to deep unhappiness. And unhappy voters can elect fascists.
You're on to something with the bill stamping.
A goal of marking at least as any bills as Ben is going to birth seems fair.
Check this out regarding the Fed implementing fiscal policy: http://www.businessinsider.com/hussman-bernanke-has-engaged-in-fiscal-po...
Inflation, deflation, reflation, biflation, stagflation - fuck 'em.
CONflation - that's the best word that describes the Fed's (or any other CB for that matter) monetary antics.
My long term indicators continue to warn of USD strength and EURO weakness.
http://stockmarket618.wordpress.com
This guy is the Shakspeare of economics.