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Sprott Calls The Fed "A Ponzi Scheme" As Half A Trillion In Treasury Purchasers Are Unaccounted For

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Wed, 12/23/2009 - 21:11 | Link to Comment delacroix
delacroix's picture

not coming up, blank page

Wed, 12/23/2009 - 21:31 | Link to Comment J.B. Books
Thu, 12/24/2009 - 12:25 | Link to Comment ATG
ATG's picture

Brilliant piece on rot at the top...

Thu, 12/24/2009 - 12:28 | Link to Comment Anonymous
Thu, 12/24/2009 - 15:16 | Link to Comment Anonymous
Thu, 12/24/2009 - 19:15 | Link to Comment Anonymous
Wed, 12/23/2009 - 21:18 | Link to Comment janchup
janchup's picture

I seem to be getting used to the ongoing nausea.

Wed, 12/23/2009 - 21:19 | Link to Comment Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Clearly, we all need to be drinking much more excessively in 2010.

Why am I not surprised at this?

Wed, 12/23/2009 - 21:38 | Link to Comment HooFlungPoo
HooFlungPoo's picture

Way ahead of ya.  On my 4th glass already.  I really hope this little house of cards makes lots of noise when it falls and doesn't just quietly die off as most do.  I want dinner AND a show!

Wed, 12/23/2009 - 23:25 | Link to Comment Scooby Dooby Doo
Scooby Dooby Doo's picture

Don't forget to smoke some scooby doobies.

Thu, 12/24/2009 - 11:24 | Link to Comment Anonymous
Thu, 12/24/2009 - 17:38 | Link to Comment rubberduckie
rubberduckie's picture

Lots of scary stuff posted lately; this is one of the scariest.

Thu, 12/24/2009 - 18:13 | Link to Comment carbonmutant
carbonmutant's picture

You guys sound like a bunch of Russians.

Fri, 12/25/2009 - 01:52 | Link to Comment Anonymous
Wed, 12/23/2009 - 21:32 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

ixis afixis ou, thnixis en polemo.

Hence, death is certain by a quintillion dollars 

Wed, 12/23/2009 - 21:33 | Link to Comment deadhead
deadhead's picture

"Household Sector."

Could this become even more infamous than green shoots?

Before the Fed's insanity becomes the death of the Republic, could we please do a comprehensive balance sheet and cash flow audit to see what the hell is happening to our currency and financial status?

Could we all chase down our Senators again on the Bernanke nomination and demand that we get specifics on the "Household Sector"?  That's alot of coin to be laid out by the "Household Sector".

 

Wed, 12/23/2009 - 21:47 | Link to Comment delacroix
delacroix's picture

the poison's been swallowed, there is no known antidote.

Wed, 12/23/2009 - 22:15 | Link to Comment MinnesotaNice
MinnesotaNice's picture

The Fed is already insane and we are living in their asylum.

Wouldn't waste any energy chasing down our Senators... that would result in a blank stare with a pasted on smile at best... with the comment "household sector, ah, yes". 

However, eventually everything will come tumbling down... down... down...

 

Wed, 12/23/2009 - 22:31 | Link to Comment El Hosel
El Hosel's picture

 A measley half Trillion?  They sweep 1/2 trillions under the rug all the time, whats the big deal... Nobody is watching.

 

Thu, 12/24/2009 - 00:48 | Link to Comment SteveNYC
SteveNYC's picture

Bernanke is a shill in two respects:

1) Congress has the itch to spend, and enable them he has/will. They won't throw him out, plus....

2) Wall St., congress' masters, are also being appeased by Ben.

 

Basically, he is doing as ordered by those who pull the strings, both levels. No way they throw this guy out, he is the ultimate shill. Only the people could get rid of Ben.

Thu, 12/24/2009 - 12:51 | Link to Comment Anonymous
Thu, 12/24/2009 - 01:10 | Link to Comment Cursive
Cursive's picture

@DH

+1.  I'll be calling Vitter next week.  I realize that many ZH regulars are jaded with the corruption, but the ramifications of this story are huge.  If the FR has been purchasing Treasuries by a factor of 3 times the amount it officially commited to, we have a massive fraud here.  Why is it fraud?  They obviously intended to deceive the American public with the $300B figure.  Why is this any different than the unlawful acts of the FR over the last year?  Because it's easy to understand.  No acronyms, no complicated rules.  They fraudulently purchased more than 3 times what they said they would and they didn't notify anyone.  The UST and FR could have clarified it, but no, both acted like it was the "Household Sector."    

Thu, 12/24/2009 - 10:17 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I encourage you and I and others to push this information to the forefront. But if there is anything I've learned over the past few years, it's that the more outrageous and blatant the criminal acts, the more likely a large portion of the public will hide their eyes. This is why the powers-that-be feel so impervious and arrogant.

So while I will help you and others to get the word out, I caution everyone to not let the public reaction (or non reaction) to this and other disclosures be seen as a validation (or non validation) of your efforts.

Remember that you are sane and the vast majority of the public and the powers that be are not sane. Do not place near impossible tasks in front of you and then expect that you will accomplish everything you desire. That would be insane. Maintaining our own sanity inside the insane asylum is of the utmost importance.

Keep/place the oxygen mask on yourself at all times before attempting to help/awaken the others.

Thu, 12/24/2009 - 12:43 | Link to Comment Anonymous
Thu, 12/24/2009 - 12:48 | Link to Comment B9K9
B9K9's picture

What is the difference between Stalin & Hitler? Both were mass murderers responsible for crimes against humanity, yet one died a natural death (stroke) while still at the height of his power, while the other died from a bullet through his skull as his world came crashing down upon him.

So what can we take away from this lesson? That the key differentiating determinant regarding punishment is power - whether it is extant or extinct. You are wasting your time pursuing traditional representational channels - our republic no longer represents our interests. It is a false choice.

The personal safety of the PTB is literally at risk. If they fail to successfully blow another asset bubble, they will not be able to survive the chaos induced by the resulting debt-deflationary spiral. OTOH, if they do pull off a miracle, nothing will ever come of these activities. They will GET AWAY WITH IT.

The best advice I ever got was this: "He who complains has already lost". The Soviets didn't complain about Hitler - they killed him. But millions upon millions complained about Stalin - and he got away with his crimes.

Think about it. Please can the calls for action and watch the trends - it all comes down to whether or not we can create sufficient output to service the next layer of debt. If not, then we won't even have a republic left in which to petition our "leaders".

Thu, 12/24/2009 - 13:46 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

In essence, what you're saying is that we should be rooting for the Ponzi. For if they fail in their efforts, all hell will break loose and we will all suffer terribly.

Sadly, I suspect you're correct and this is the fundamental reason why so many people remain "asleep" at the wheel. They aren't really asleep but rather captured and dependant upon the Ponzi to continue. The time to call for a stop to the insanity was decades ago.

However, I don't think they will succeed without great pain and destruction and they know this. Thus the reason for the wholesale theft by everyone and anyone who can.

Thu, 12/24/2009 - 14:37 | Link to Comment Blindweb
Blindweb's picture

I was actually just saying something similar on a political blog.  The reason liberals only half heartily attack the U.S. empire is because deep down they know without it they could be living close to a 3rd world lifestyle. 

Thu, 12/24/2009 - 15:23 | Link to Comment tip e. canoe
tip e. canoe's picture

"But there’s another region of the brain that can be activated as we go about editing reality. It’s called the dorsolateral prefrontal cortex, or DLPFC. It’s located just behind the forehead and is one of the last brain areas to develop in young adults. It plays a crucial role in suppressing so-called unwanted representations, getting rid of those thoughts that don’t square with our preconceptions. 

The lesson is that not all data is created equal in our mind’s eye: When it comes to interpreting our experiments, we see what we want to see and disregard the rest. The physics students, for instance, didn’t watch the video and wonder whether Galileo might be wrong. Instead, they put their trust in theory, tuning out whatever it couldn’t explain. Belief, in other words, is a kind of blindness."

Accepting Defeat:  The Neuroscience of Screwing Up

http://www.wired.com/magazine/2009/12/fail_accept_defeat/all/1

 “This DLPFC is thought to cause the forgetfulness during sleeping due to its “executive ego functions of working memory.” This shutting down of the PFC causes what is known as hypofrontality which is also experienced in altered states of waking consciousness."

http://lucidconsciousness.com/?p=42

reduced DLPFC activity has been measured in subjects suffering from schizophrenia, depression and under the effects of cannabis, ketamine LSD & psilocybin.  and it seems that one of the effects of numerous antidepressants (and ambien) is to artificially activate the DLPFC.

Thu, 12/24/2009 - 14:22 | Link to Comment Anonymous
Thu, 12/24/2009 - 17:38 | Link to Comment Kayman
Kayman's picture

Hey there Big Dog

A "normal" solid growth rate of, say, 3% net is $420 billion on a $14 Trillion economy. Do the math, you cannot "grow" your way out of this one.  

We are starting from a huge debt base, an over inflated asset base- both paper and real estate, and the engine of the (original) economy- the working (middle) class has financial cancer from "outsourcing" American jobs and the Negative Wealth Effect (the Poverty Effect) of retrenching asset prices.

So... tell me how to "grow" our way out of this one.  

Sitting on the sidelines while Nero burns down Rome seems a tad bit acquiescent.

Sorry for getting personal in my last post. My Rottweilers say you're OK.

 

p.s. The only difference between Stalin and Hitler, is that Stalin had somewhere to retreat to (the Urals) while he regrouped, Russia had once before defeated a megalomaniac (Napoleon) through a scorched earth policy and Russian winter and Stalin was smart enough or lucky enough not to get into a 2 front war.  Russia only declared war on Japan after the Japanese were effectively defeated.

p.p.s. I forgot to mention Hitler was democratically elected.

 

 

 

Fri, 12/25/2009 - 01:41 | Link to Comment Assetman
Assetman's picture

The best advice I ever got was this: "He who complains has already lost". The Soviets didn't complain about Hitler - they killed him. But millions upon millions complained about Stalin - and he got away with his crimes.

 

Think about it. Please can the calls for action and watch the trends - it all comes down to whether or not we can create sufficient output to service the next layer of debt. If not, then we won't even have a republic left in which to petition our "leaders".

 

Powerful commentary, B9K9, but your analogy about Hitler/Stalin is a really crappy one.

The Soviets didn't actually kill Hitler (nice try), but if the Americans, British, etc. didn't get there first, I'm sure the Soviets would have gladly done the job.  And if the Germans had actually not frozen to death out on the Eastern Front, Stalin would have been literal toast.  It's not as if the Germans didn't try, believe me.  

As repressive and cruel as Stalin was, he did have massive internal support due to his own military successes-- and due partially due to a self-constructed cult of personality.  Stalin was a far cry from being universally hated inside Russia.

And as good certral planning would have it, his best friends were the ones that actually still had the rifles after the war.  Most of his so-called enemies were poor an unarmed.   That doesn't sound much like a country I know that has a 2nd amendment. 

Even with so much control, there is STILL some valid debate about the stroke/ cause of death thing.  It very possible that rat poisoning triggered the stroke and permature death.  And it's not as if one drinks rat poison just to see if it tastes real good.  So perhaps people did take action... it just took a little longer.   Wonder why?

Thu, 12/24/2009 - 10:37 | Link to Comment Mrmojorisin515
Mrmojorisin515's picture

Empty factories to the east and all our waste
The shape of things that came shows on the broken workers face
To the west you'll find our silicon promised lands where
Machines replace our minds for systematic profit plans
The course of human progress staggers like a drunk
Its steps are quick and heavy and its mind is slow and blunt
I look for optimism but I just dont know
Its seeds are planted in a poison place where nothing grows
Its 1989 stand up and take a look around
Weathers bitter tension it seems is sinking down
Drunk with power and fighting one another
Every hour shows the winter getting harder
Theres a freezeup coming
One nation stands the tallest radiating blinding light
Plastic and fluorescent energy robbing us of sight
Set in our way content with our decay
We wave the flag of freedom as we conquer and invade
Ever ask yourself wheres my place in this hell
But no ones there to tell you cuz they dont know that themselves
The well rehearsed lines from our elated politicians
No longer offer solace we can see the self destruction
Just one political song to drop into the list
That is years and years long

 

Operation Ivy

Thu, 12/24/2009 - 11:49 | Link to Comment WaterWings
WaterWings's picture

Before the Fed's insanity becomes the death of the Republic, could we please do a comprehensive balance sheet and cash flow audit to see what the hell is happening to our currency and financial status?

Somebody needs to remake that Downfall scene with Hitler discussing Allied positions closing in on Berlin as Benny, Timmy, Larry, and Rahmmy discussing the above.

But Führer, vee don't haff eenuff shredders to do zee jop!

Thu, 12/24/2009 - 12:50 | Link to Comment Ripped Chunk
Ripped Chunk's picture

That is the item that really caught my attention.  Creative accounting at its finest.

They better audit this house of cards.

Thu, 12/24/2009 - 15:23 | Link to Comment Anonymous
Wed, 12/23/2009 - 21:42 | Link to Comment Miyagi_san
Miyagi_san's picture

imagine the company that makes the printing press gloating how successful their machine saved the Fed but destroyed the free world

Wed, 12/23/2009 - 22:13 | Link to Comment Anonymous
Thu, 12/24/2009 - 12:12 | Link to Comment JR
JR's picture

Jumping Jehosaphat.  Shot in the act.

Thu, 12/24/2009 - 12:30 | Link to Comment ATG
ATG's picture

Smell Soros selling...

Wed, 12/23/2009 - 21:40 | Link to Comment HooFlungPoo
HooFlungPoo's picture

Nice one ghost. 

Wed, 12/23/2009 - 21:41 | Link to Comment Kayman
Kayman's picture

Hey little people   "Household Sector" is none of your g-damned business. And you wouldn't understand it anyway. Like, if we don't understand it, then how the hell could you understand it ????

Merry Christmas,

Little Timmy and Big Beard Ben

Thu, 12/24/2009 - 04:52 | Link to Comment Anonymous
Wed, 12/23/2009 - 21:44 | Link to Comment bugs_
bugs_'s picture

Yes.  Quite a thought experiment.  Great post.

Wed, 12/23/2009 - 21:44 | Link to Comment donatoloscalzo
donatoloscalzo's picture

Gentlemen, we are inches away from the precipice........may God have mercy on us innocents, but let the guilty be brought to justice.  What worries me is not only the criminal activities of the FED and Bernanke in particular, but the amazing indifference (or collusion?) by the mainstream media: nobody cares, nobody asks the right question and whenever Ron Paul at least tries he is ridiculed.  I am scaredof what awaits us ahead ........

Wed, 12/23/2009 - 22:10 | Link to Comment Anonymous
Wed, 12/23/2009 - 22:37 | Link to Comment Anonymous
Thu, 12/24/2009 - 10:01 | Link to Comment geopol
geopol's picture

DING!!!!!!    Step right over here to get your prise.

Thu, 12/24/2009 - 12:38 | Link to Comment ATG
Wed, 12/23/2009 - 21:49 | Link to Comment msorense
msorense's picture

This whole "recovery" is one massive fraud.  We knew it all along:

http://finance.yahoo.com/news/Are-Big-Banks-Pumping-Up-etfguide-3166930847.html?x=0&.v=1

Wed, 12/23/2009 - 22:17 | Link to Comment Anonymous
Thu, 12/24/2009 - 10:15 | Link to Comment Scooby Dooby Doo
Scooby Dooby Doo's picture

Known in the financial intelligence community as The Reston 6.

A secret committee

Don't you hate it when juicy news is making its rounds but you are kept out of the loop? Welcome to the club. Already back in 1988, Ronald Reagan signed an executive order to establish a specific committee designed to prevent major market collapses.

As per this order, the Secretary of the Treasury, the chairman of the Federal Reserve, the chairman of the SEC and the chairman of the commodity futures trading commission make up the core of this team. By extension, major financial institutions like JP Morgan Chase and Goldman Sachs are used to execute their orders.

The existence of this team is said to have been confirmed by former Clinton advisor George Stephanopoulos on Good Morning America. Last year, former Treasury Secretary Hank Paulson called for this 'financial fraternity' to meet with greater frequency and set up a command center at the U.S. Treasury designed to track global markets and serve as headquarter for the next crisis.

There is much more to this unique arrangement designed to keep a lid an potential market meltdowns and use major Wall Street firms as marionettes to accomplish this goal. A detailed report about this secret team is available in the most recent issue of the ETF Profit Strategy Newsletter.

Thu, 12/24/2009 - 13:09 | Link to Comment JR
JR's picture

"We are in a hyperdrive casino with distracting sideshows to cloak what is imminent. Sovereign default. The USA will renege on its debts. The LEHs, DSLs, MERs are just the minor royal chess pieces insulating the King. But the King is dead. Long live the King."--  Guest on 2008-09-05 18:41:30

 


Working Group on Financial Markets |Wikipedia, the free encyclopedia

The Working Group on Financial Markets (also, President's Working Group on Financial Markets or the Working Group) was created by Executive Order 12631, signed on March 18, 1988 by United States President Ronald Reagan.

The Group was established explicitly in response to events in the financial markets surrounding October 19, 1987 ("Black Monday") to give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence".

As established by Executive Order 12631, the Working Group consists of:

"Plunge Protection Team" …The term "Plunge Protection Team" was originally the headline for an article in The Washington Post by staff writer Brett D. Fromson, published on Sunday, February 23, 1997. He did not invent the term. It was added later by a copy desk editor as a sensational nickname for the Working Group.

 

 

To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®.

March 13, 2008
hp-871

President’s Working Group Issues Policy Statement
To Improve Future State of Financial Markets

Washington -The President's Working Group on Financial Markets issued a policy statement today with recommendations to improve the future state of U.S. and global financial markets. The statement offers the group's insight on causes of recent market issues and next steps for mitigating systemic risk, restoring investor confidence, and facilitating stable economic growth.

"The President's Working Group on Financial Markets has been reviewing policy issues to help reduce the likelihood that mistakes of the past are repeated. We have completed the assessment phase of our review, and are moving forward to focus on implementation," said Secretary Henry M. Paulson, Jr., chairman of the PWG, which includes the Treasury Department, the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission. "I believe today's recommendations, when implemented, will strengthen market discipline, enhance risk management and improve the efficiency and stability of our capital markets."

"The recommendations set out in the Working Group's statement constitute an appropriate and effective response to the deficiencies in our financial framework that contributed to the current turmoil in financial markets. I strongly support them," said Federal Reserve Board Chairman Ben S. Bernanke...

"These recommendations are a critical step in strengthening the US financial markets.  The CFTC will continue to work with the other PWG members to implement the recommendations," said CFTC Acting Chairman Walt Lukken...

President Bush called on the PWG in August 2007 to review the underlying causes of the recent market issues. Members of the group have frequently discussed the causes of the recent turmoil, including: lax underwriting standards for mortgages, particularly for subprime mortgages; an erosion of market discipline in the securitization process; flaws in credit rating agencies' assessments of some complex structured credit products; risk management weaknesses at global financial institutions; and regulatory policies that failed to mitigate risk management weaknesses.

The PWG will work with foreign regulators, finance ministries, and central banks through the international Financial Stability Forum and other venues to address these challenges globally...

 

 

As is well known by now, the PPT, the Working Group,  "is an orchestrated mechanism that attempts to manipulate U.S. stock markets in the event of a market crash by using government funds to buy stocks, or other instruments such as stock index futures."   It seems we are now in a chronic state of "market crash," as diagnosed by the TBTFs, as the PPT daily transfers the nation's wealth into the ailing financiers' pockets.

Wed, 12/23/2009 - 21:51 | Link to Comment FLETCH
FLETCH's picture

Banks:  "Holy Sh%T! I need money"

Beard: "ok. i have that.  but one condition"

Banks: "Yes, my fearless benefactor?"

Beard: "you must buy the sh%t debt."

Banks: "Sh%T debt?"

Beard: " Yes, my boney little buddy timmy needs some help"

Banks: "ok, but will you still pay for our deposits?"

Beard: "no problemo."

Banks: "can we also invest retail deposits?  they'll never know and by the way, their f'd anyway by Timmy"

Beard: " i can't hear you..."

Banks: "hello... hello... hello"

Obama: "yes?"

Banks: " who's this?"

Obama: "Barry O.  now listen up: start lending.  i don't care about the fact that people have no earning power and can't pay you back.  lend the money..."

 

To be continued.....

 

Wed, 12/23/2009 - 21:54 | Link to Comment Shameful
Shameful's picture

Good post, another voice telling us the obvious the Fed Reserve is buying the Treasuries.  They have to after all who else has the supply of dollars i that quantity and willing to toss them into a furnace?  Wish they would just man up and admit it "Yeah we are buying all the bonds, so what?"

Wed, 12/23/2009 - 22:04 | Link to Comment Mad Max
Mad Max's picture

It doesn't HAVE to be the Fed.... it could be purchases with central American drug money... or Russian, Chinese and middle eastern oligarchs... perhaps some undead sea creatures are buying the debt with the intent of getting 100% equity stake after the pending sovereign bankruptcy... I mean, c'mon, there's lots of other nightmare scenarios to consider.

It does make you wonder if the Fed hired all of Enron's financial engineers, though.

Thu, 12/24/2009 - 00:34 | Link to Comment Anonymous
Thu, 12/24/2009 - 02:30 | Link to Comment Shameful
Shameful's picture

Okay if Cthulhu is buying up those treasuries I will personally travel to R'lyeh to deliver the thanks of the American people.  Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn

Seems about as plausible as the oligarchs.  I mean I could see them doing it if the debt was backed by land or something, but it's backed by the full faith and credit of the US.  I figure the full faith and credit of the US and a buck will still let you dine at the value menu at most fast food places.  You could be right about the drug money though...after all that saved the banks before.  But if it is shouldn't we let all their customers out of jail?

Thu, 12/24/2009 - 09:07 | Link to Comment Mad Max
Mad Max's picture

I was actually talking about the vampire squid, but Cthulhu is a good option too.

Thu, 12/24/2009 - 13:51 | Link to Comment Anonymous
Thu, 12/24/2009 - 14:11 | Link to Comment Zé Cacetudo
Zé Cacetudo's picture

"It does make you wonder if the Fed hired all of Enron's financial engineers, though."

Not sure about the financial engineers, but they definitely hired Enron's lobbying crew (headed by Linda Robertson) in 2009-06:

e.g. http://www.bloomberg.com/apps/news?pid=20601087&sid=aZjQKyLci1AM

Wed, 12/23/2009 - 21:56 | Link to Comment Stuart
Stuart's picture

The Fed:  Ya, so what?  Whatcha gonna do 'bout, eh punk!

Public:  ssssssssooorrryyy  sssssssiirrrrr..  

Wed, 12/23/2009 - 21:56 | Link to Comment digalert
digalert's picture

Suppose we just say the Bernanke household has a taste for treasuries.

Wed, 12/23/2009 - 21:57 | Link to Comment Rusty_Shackleford
Rusty_Shackleford's picture

COLLAPSE ALREADY, BITCHES!!!

Wed, 12/23/2009 - 22:59 | Link to Comment MarketTruth
MarketTruth's picture

Time for a BANK RUN!!!

And buy gold and silver.

Thu, 12/24/2009 - 12:40 | Link to Comment ATG
ATG's picture

Or not.

Deflation is a beach.

Dollars to donuts... 

Wed, 12/23/2009 - 22:01 | Link to Comment Anonymous
Wed, 12/23/2009 - 22:02 | Link to Comment Anonymous
Wed, 12/23/2009 - 22:36 | Link to Comment Assetman
Wed, 12/23/2009 - 22:02 | Link to Comment Andrei Vyshinsky
Andrei Vyshinsky's picture

I'm wondering if the whole report is even true, that the category, "Household", is a sham and that it is being employed simply to give substance to the totals that are being reported. Could it be that this miscellaneous category is really an empty vessel? I mean we pre-emptively invade foreign countries, torture people in countries that the NKVD and the Gestapo had had earlier experience, and we sell our democracy for campaign contributions, why not fabricate bogus categories in our accounting in order to make the totals come out the way we'd like?

Wed, 12/23/2009 - 22:04 | Link to Comment Cistercian
Cistercian's picture

 Is it a ponzi scheme?Absolutely.

Wed, 12/23/2009 - 23:19 | Link to Comment Hansel
Hansel's picture

Agreed.  All signs point to yes.

Thu, 12/24/2009 - 00:31 | Link to Comment Benthamite
Benthamite's picture

Ergo, We. Are. Fucked.

Thu, 12/24/2009 - 01:28 | Link to Comment milbank
milbank's picture

Come on Hansel, fess up.  You only say that because your Magic 8 Ball told you so. 

Thu, 12/24/2009 - 01:35 | Link to Comment Anonymouse
Anonymouse's picture

Have you ever known the Magic 8 Ball to be wrong?

Thu, 12/24/2009 - 11:57 | Link to Comment Anonymous
Wed, 12/23/2009 - 22:08 | Link to Comment mrmortgage
mrmortgage's picture

And we have 37 MILLION americans living on food stamps. MSNBC article here http://www.msnbc.msn.com/id/34479788/ns/business-personal_finance/

 

Why not create and entity that lends to small business to create jobs? Oh wait.. its called the SBA. Maybe we have Timmy print $100b and give it to SBA?

 

I say people in the streets within 6 months unless they get people working. Hey it worked in the great work programs of the depression era.

Thu, 12/24/2009 - 01:32 | Link to Comment milbank
milbank's picture

No.  It didn't work.  What worked was world war. I'm not endorsing that solution, just correcting your rewrite of the facts.

Thu, 12/24/2009 - 12:16 | Link to Comment Crime of the Century
Crime of the Century's picture

It didn't "work" as in solve the underlying issue, but it was one of the few tactics that they tried that wasn't counter-productive.

Thu, 12/24/2009 - 14:42 | Link to Comment faustian bargain
faustian bargain's picture

The thing it did do was destroy the manufacturing base of competing economies, allowing the US to get ahead.

Thu, 12/24/2009 - 18:32 | Link to Comment batgirl791
batgirl791's picture

That's exactly what I heard Karl Denninger say! It totally explains why the US did so well

Wed, 12/23/2009 - 22:11 | Link to Comment Anonymous
Wed, 12/23/2009 - 22:23 | Link to Comment Cistercian
Cistercian's picture

 I think you are correct.The over leveraging via CDS and derivatives is the unstoppable deathstar.They keep extend/pretending(and manipulating equities)...but there is zero hope they can fix the blackhole the greedpigs created.System Fail.

Wed, 12/23/2009 - 22:30 | Link to Comment Anonymous
Fri, 12/25/2009 - 21:49 | Link to Comment Tahoe
Tahoe's picture

+100 .... too priceless.  Excellente, Muy Muy Excellente!

Wed, 12/23/2009 - 22:32 | Link to Comment perchprism
perchprism's picture

 

When things get really, really bad, people still need to eat, and they'll be eating wheat and corn from the US.  And burning US coal that we're not allowed to burn ourselves.  So they can't completely cut themselves loose economically from the US. 

It'd be interesting if our gubmint tries to settle sovereign defaults with ag goods.

 

 

Wed, 12/23/2009 - 22:37 | Link to Comment Anonymous
Thu, 12/24/2009 - 13:30 | Link to Comment ATG
ATG's picture

Bango

Wed, 12/23/2009 - 22:50 | Link to Comment Gilgamesh
Gilgamesh's picture

All corn is now set aside for Ethanol 90%.  Find another source for your silly "food" desires.

Thu, 12/24/2009 - 00:18 | Link to Comment Anonymous
Thu, 12/24/2009 - 13:52 | Link to Comment Anonymous
Thu, 12/24/2009 - 18:04 | Link to Comment Kayman
Kayman's picture

Like Swine.

Thu, 12/24/2009 - 13:31 | Link to Comment ATG
ATG's picture

Bongo

Wed, 12/23/2009 - 23:21 | Link to Comment Eric W
Eric W's picture

Brilliant.

The new jobs program: indentured servitude in the New Agrarian Order. Who'd a thunk we'd see a return to slavery in the good ol' US of A?

The new green buildings for the US masses: sod houses with dirt floors, and we can all walk to work, in the fields owned by the bank massas.

Thu, 12/24/2009 - 12:04 | Link to Comment Anonymous
Thu, 12/24/2009 - 12:26 | Link to Comment Crime of the Century
Crime of the Century's picture

Read "One Day in the Life of Ivan Denisovich" to see how the Soviets handled it circa 1951. The women borderline starved on the collective farms, while the men borderline starved in the work camps. American leftists still idealized it over the hated Ozzie & Harriet paradigm.

Thu, 12/24/2009 - 13:31 | Link to Comment ATG
ATG's picture

Visionary...

Thu, 12/24/2009 - 13:29 | Link to Comment ATG
ATG's picture

Bingo

Thu, 12/24/2009 - 13:01 | Link to Comment ATG
ATG's picture

Go to the head of the class but rethink the gold calf...

Wed, 12/23/2009 - 22:13 | Link to Comment Anonymous
Wed, 12/23/2009 - 22:13 | Link to Comment Anonymous
Thu, 12/24/2009 - 13:03 | Link to Comment ATG
ATG's picture

So you're saying Arabs will be running the camps

or in them?

Wed, 12/23/2009 - 22:16 | Link to Comment Anonymous
Thu, 12/24/2009 - 10:12 | Link to Comment geopol
geopol's picture

anon,

MIke Ruppert, the whole system is a ponzi scheme/pyramid... Trailer for the movie CoLLapse..

http://www.collapsemovie.com/COLLAPSEMOVIE/

Thu, 12/24/2009 - 12:45 | Link to Comment Crime of the Century
Crime of the Century's picture

A good movie for critical thinkers. I don't buy all of Ruppert's scenarios, just like I don't buy all of Jim Willie's, but many people (mostly non-ZH types) would be served by at least exposing themselves to some of the cold water. It helps to separate the message from the messenger as well (see Ruppert vs Alex Jones affair). Go down the rabbit hole, but bring a sturdy set of pitons and carabiners.

Thu, 12/24/2009 - 18:08 | Link to Comment Kayman
Kayman's picture

Truth, plainly spoken.  Inflating assets is not productivity.

Wed, 12/23/2009 - 22:24 | Link to Comment Stuart
Stuart's picture

Gangster economics.  We're no better than any bush league banana republic that we like to ridicule.   We only follow rules when it serves our purpose but when the rules hurt us, fuck that, bend them and if people see it, so what, too fuckin' bad.  Whatcha gonna do about it.

Wed, 12/23/2009 - 22:31 | Link to Comment Anonymous
Thu, 12/24/2009 - 15:04 | Link to Comment Anonymous
Wed, 12/23/2009 - 22:31 | Link to Comment jwthomps
jwthomps's picture

The bailouts here create jobs in China.

Wed, 12/23/2009 - 22:34 | Link to Comment Anonymous
Thu, 12/24/2009 - 10:37 | Link to Comment Sancho Panza
Sancho Panza's picture

Even when all parties act in agreement and the government keeps printing more and more and more money, the ponzi cannot go on forever.  Hyperinflation is a bitch. 

It's a matter of nature, as sure as gravity.  Printing money reduces the money rate of interest below the natural rate of interest.  If the banks attmept to hold money rate of interest below the natural rate of interest forever, hyperinflation is the only possible outcome.  Take a look at a graph showing the money rate of interest over the last 60 years.  Guess how this ends? 

Thu, 12/24/2009 - 13:12 | Link to Comment ATG
ATG's picture

We had 86% devaluation of the dollar

in terms of gold since 2001, the economy

is saturated with debt, and rolling defaults are

ramping up. The real rate of interest is -10.3%

YOY GDP plus zero to 64% APR nominal credit card

rate. Volcker never had real rates so high.

You still think this is hyperinflation?

Get thee back to the Dirty Untouchable Thirties...

 

Thu, 12/24/2009 - 13:35 | Link to Comment ATG
ATG's picture

The flow of Fed funny money is not infinite.

It stops when the economy is debt-logged

and can no longer service 64% real rates

of interest (-10.3% GDP + nominal

credit card APRs including penalty fees)...

Thu, 12/24/2009 - 18:19 | Link to Comment Kayman
Kayman's picture

Printing money is not infinite. Like Zimbabwe and Weimar, it means hyper-inflation and no jobs.

Wed, 12/23/2009 - 22:40 | Link to Comment Spitzer
Spitzer's picture

If enough of this gets around then the game is up.

The million ounce question is if there will be another general market selloff or if gold and gold stocks will take off.

Thu, 12/24/2009 - 13:15 | Link to Comment ATG
ATG's picture

Could be on the edge of an ultra thin EFT

holiday market precipice where stops

trigger into air pockets. Re gold, the trend

is our friend, and it is not up as of late.

Hope springs eternal and people are most

bullish after the top...

 

Wed, 12/23/2009 - 23:12 | Link to Comment phaesed
phaesed's picture

*sigh* Banks are purchasing Treasuries.

Banks are purchasing Treasuries because those are what's used to bolster their deposit base.

- Why would they be bolstering their deposit base?

Because they need to pay back all the cash that they borrowed to loan out.

- Why would Treasuries be used to pay back cash?

Because Treasuries are essentially cash in a deferred state, when they mature, the US Government credits cash to the banking institution.

- So wait, Banks borrow Treasuries and don't buy them?

Correct, Banks borrow Treasuries from the Fed, then they sell the Treasuries to individuals so they hold them on the book as an asset and make a loan against that asset.

- So if banks made a loan against the asset wouldn't they still have the Treasury security?

Not really, the treasury was still held in electronic form but they loaned out the cash that would be received from the Treasury, so these loans were supposed to be returned in cash form so they can pay back the Federal Reserve, who purchased them from the United States.

- You're not making any sense.... Why would the bank borrow from the Fed instead of purchasing the security outright? And if they purchased the security and made a loan against the security, why would it matter? The cash would come on their books anyways!

Kind of.... A bank has a reversed structure. An asset for the bank is a liability for anybody else and vice versa. The way it works is that I give a bank $10000, this becomes a $10000 liability for the bank, but like everyone knows, they only need $1000 on deposit, but they don't really have it on deposit because my account is less than $200,000 (read FDIC insured here), so what they do is they purchase a $1000 bill/note/bond and loan out the rest to a corporation.

Well the corporation can't pay off the loan and goes bankrupt... thus while the bank has a $1000 US security, they don't have the other fractional amounts needed to cover what they loaned out, so they borrow this from the Federal Reserve, but they borrow this in the form of Treasuries and while they pay interest on these Treasuries (which we really pay), eventually they need to pay the cash back when the Treasury matures.

Well as we all know, the banks loaned out all their cash holdings, so now they need cash delivered to them. So what do they buy? Well, cash of course... but not cash today, that's too expensive and could collapse equities... so they buy cash due 1, 3, or 6 months from now. Sometimes they buy it to be delivered a year from now.

- So okay.... the banks need to pay someone back.... who????

Good question, who did the banks borrow from on a massive scale? Us of course.... you assume that they held that $1000 when in fact nobody checked and they loaned out that $1000, unfortunately now they aren't going to get that $1000 back and they can't pay us back. When you add that to the fact that the reserve requirements will be going back up next year, they are going to need more cash deposits, meaning more T-bills, meaning a low rate of interest in anything due under a year.

- So what happens if they don't have enough cash deposits when they are going to be due?

They collapse the market and take the cash we put into it right back out. Oh, and the T-Bills will become worth more as well, increasing the deposit base for the banks.

 

Confused you yet? :)

Wed, 12/23/2009 - 23:20 | Link to Comment Anonymous
Thu, 12/24/2009 - 14:31 | Link to Comment phaesed
phaesed's picture

No, but essentially the ends are correlated, however weakly. This is the worst negative correlation ever right now from what I can gather, but I'm about to do an actual study. I'm willing to beat this was the case in the 30's also.

Thu, 12/24/2009 - 15:25 | Link to Comment Anonymous
Thu, 12/24/2009 - 01:49 | Link to Comment jedwards
jedwards's picture

Thanks for this phaesed.  I was beginning to get a bit freaked out at this.  But what you're saying makes total sense.  Well not really.... I need to draw this out on a piece of paper, but it certainly sounds like it makes sense.

 

 

Thu, 12/24/2009 - 14:32 | Link to Comment phaesed
phaesed's picture

"I need to draw this out on a piece of paper"

 

Hell, I understand it and it confuses the hell out of me :)

Thu, 12/24/2009 - 08:17 | Link to Comment FLETCH
FLETCH's picture

Yup.  See my post above.  alot will show up as "household/other"

Thu, 12/24/2009 - 08:25 | Link to Comment Zippyin Annapolis
Zippyin Annapolis's picture

Excellent analysis

Thu, 12/24/2009 - 13:18 | Link to Comment ATG
ATG's picture

So in other words, a hyperdeflationary implosive

spiral into disappearing dollars...

Wed, 12/23/2009 - 22:41 | Link to Comment Anonymous
Thu, 12/24/2009 - 13:25 | Link to Comment ATG
ATG's picture

Marx's point to Rothschild re fractional reserve

banking. NR cut him off after a couple of thousand

pounds and the Communist Manifesto paved the

way for them to finance both sides of the

revolutionary and counter-revolutionary

insurgent and counter-insurgent Hegelian

political dialectic for a few centuries.

Stalin exiled Kondratyev to a Siberian Gulag

Death Camp for pointing out economic cycles

are self-correcting and don't need totalitarian

central planning. Maybe there's a pony in here

somewhere for Christina, Franz, Hank, Larry,

Shalom and Big 0...

Wed, 12/23/2009 - 22:47 | Link to Comment Daedal
Daedal's picture

Audit the Fed!

Thu, 12/24/2009 - 00:35 | Link to Comment Benthamite
Benthamite's picture

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men."

-W. Wilson on the Federal Reserve

Thu, 12/24/2009 - 01:05 | Link to Comment whacked
whacked's picture

Thanks for that ... pity this idiot only realsied after he allowed the bill to be introduced and put through the senate...

 

Read the full story on WW's involvement with the Fed and you realise that the idot only came to his senses when he was within his final months as Prez..

 

The US are littered with fools and none bigger that those that elected them!

Thu, 12/24/2009 - 17:18 | Link to Comment Benthamite
Benthamite's picture

Frankly I was surprised he came out and said something like this.  Can't speak for any contemporaries close to Wilson's stature.  

Thu, 12/24/2009 - 13:44 | Link to Comment ATG
ATG's picture

WWI, who, like 0, was bought and sold

by the money trust he campaigned against,

and negotiated the Versaille Treaty which

led to A Hitler financed by Fritz Thyssen,

Union Banking Corp with Prescott Sheldon Bush

and George Herbert Walker directors...

http://en.wikipedia.org/wiki/Prescott_Bush

 

Mon, 01/25/2010 - 17:37 | Link to Comment mouser98
mouser98's picture

plus it is very likely that AH's maternal grandfather was a Rothschild...

Wed, 12/23/2009 - 22:50 | Link to Comment Anonymous
Thu, 12/24/2009 - 09:17 | Link to Comment Anonymous
Thu, 12/24/2009 - 13:47 | Link to Comment ATG
ATG's picture

Really, the Fed insolvent since 1933 and

1971, not to count Federal Land foreclosure

out. We may not see the final bottom until

District of Criminals cries Uncle...

 

Mon, 01/25/2010 - 18:01 | Link to Comment mouser98
mouser98's picture

wound?

Wed, 12/23/2009 - 22:54 | Link to Comment Segestan
Segestan's picture

Oh ..so thats what .. Change means... alot of new change is circulation. Seriously this is going to end badly.

Wed, 12/23/2009 - 23:01 | Link to Comment Anonymous
Wed, 12/23/2009 - 23:06 | Link to Comment Anonymous
Wed, 12/23/2009 - 23:09 | Link to Comment Anonymous
Wed, 12/23/2009 - 23:15 | Link to Comment TheInterest
TheInterest's picture

So what's the big deal? We're not buying foreign crap so foreigners don't have US dollars to buy our debt. Local investors aren't buying our debt. That leaves only the Fed to either buy some debt, or make some debt up with the "household sector". Big deal. The debt is just numbers in a computer. We can pay the debt off tomorrow by moving numbers from "savings" to "checking".

How many years of "the sky is falling, the sky is falling" will we have to go through before people realize the debt doesn't matter?

Perhaps one should stop worrying about the debt and start asking why we have debt in the first place? Who is making money off our debt? A debt that doesn't exists?


Thu, 12/24/2009 - 00:07 | Link to Comment Anonymous
Thu, 12/24/2009 - 00:25 | Link to Comment Spitzer
Spitzer's picture

There has never been a time in history when debt didnt matter.

 

If debt didnt matter then why has all fiat currencies failed ?

 

If debt didnt matter then why is gold just a commodity for the jewlery market ?

 

Thu, 12/24/2009 - 13:49 | Link to Comment ATG
ATG's picture

Borrower slave to the lender

Proverbs 22:7...

Thu, 12/24/2009 - 00:53 | Link to Comment Kayman
Kayman's picture

Hey man, its debt, what's the big deal. Lets move to Zimbabwe, debt and printing are a growth business.  Argh..........

Wed, 12/23/2009 - 23:15 | Link to Comment Anonymous
Thu, 12/24/2009 - 08:51 | Link to Comment Anonymous
Thu, 12/24/2009 - 13:09 | Link to Comment Ripped Chunk
Ripped Chunk's picture

Two very good observations here. 

Even if we folks were organized enough to start a run on the TBTF's and move our money to local banks, the Fed would rescue the TBTF's and impose stricter capital limits and asset quality reviews on the local banks to limit their growth.

They are running the game. Out legislators are at their feet to do their bidding.

 

 

 

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