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

Tyler Durden's picture

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delacroix's picture

not coming up, blank page

ATG's picture

Brilliant piece on rot at the top...

Anonymous's picture

Where's the problem? Once the idea of QE is accepted, just the size and scope has possibly changed. After all it is all money that is being birthed out of thin air. Atleast we are not actually borrowing from foreign entities that would need to be repaid. What is a few trillions between two US govt. entities?

Anonymous's picture

Sprott's bon mot
shows the rot at the top
without which treasuries flop...
in a trap we are caught.

Gold got?

Anonymous's picture

ponzi schemes are a gas!

janchup's picture

I seem to be getting used to the ongoing nausea.

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?

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!

Scooby Dooby Doo's picture

Don't forget to smoke some scooby doobies.

Anonymous's picture

I'm buying vodka by the gallon now.

My god. I'm not even joking.

rubberduckie's picture

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

carbonmutant's picture

You guys sound like a bunch of Russians.

Anonymous's picture

We're on our way to resembling Russia, in more ways than I care to dwell upon.

Oracle of Kypseli's picture

ixis afixis ou, thnixis en polemo.

Hence, death is certain by a quintillion dollars 

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".


delacroix's picture

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

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...


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.


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.

Anonymous's picture

why get rid of Ben?
Get rid of those pulling the strings

Cursive's picture


+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."    

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.

Anonymous's picture

"Maintaining our own sanity inside the insane asylum is of the utmost importance."

That's a keeper. How do you avoid the "psychological capture" CG? I would have thought that the secret service would have had you on meds by now.

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".

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.

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. 

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


 “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."


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.

Anonymous's picture

So then, do you think when the SHTF that Ben, Tim, Larry and O will be the same as Hitler at the end, throwing wild tantrums because the American people have failed them? Between their fits of rage, they will babble about reserves the republic no longer has, wealth they can confiscate that has already fled, or trillions more fiat dollars they can print and sell to non-existent buyers?

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.




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?

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

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!

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.

Anonymous's picture

Green shoots are the monetary diarrhea we've become accustomed to in our state yellow fever.

Yellow because they are afraid to allow the natural consequence of decades of misfeasance.

Mellon said, "liquidate", he meant, this is Chapter 11.
We will reorganize and emerge to a greater future of growth.

Paulson/Geithner have said. Chapter 7, but imposed not willingly undertaken. We will be dissolved for good.

Geithner saying, "We will not ALLOW the markets to naturally correct" is a signal.

Only wall street traders will profit as the PPT attempts to hold a line on Treasuries and equities. Traders will pressure movements requiring response by gov't via printed dollars. Traders will cut out strays from the herd. Common people will have currency debauched and their productivity drained.

Paper traders only will profit. Suspension of market rules and efficiency.

Ever attempted, ever failed. Red flag to prepare for currency collapse. There is no longer any other way.

You are a fool to hold the currency for anything other than momentary exchanges. It is a false staff.

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

Anonymous's picture


Still trying to figure out where the P&I payments from the mortgages purchased are going? Could the Fed be using the performing P&I payments to purchase more treasuries? On the portfolio which is almost a trillion at this stage it would net off something like 50-60 billion per anum crudely which is good for one 2yr funding schedule. Leveraged is another story. Has the Fed said what they are doing with the return of capital on the mortgages still performing? If not, why hasn't someone asked Bernanke?

Any thoughts on how the Fed will try and manuever a new program. I suspect they will use the wind-down of the exisiting facilities to introduce a new facility or allocate more of TARP to a CRE bridge.

As for the $500 billion, the flows coming out of Carribean ought to be checked carefully. FARC to the rescue. Ever wonder why there was so much posturing during the late Bush era about the "Free Trade" deal with Columbia? Clearly a payoff, but for what?

JR's picture

Jumping Jehosaphat.  Shot in the act.

HooFlungPoo's picture

Nice one ghost. 

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

Anonymous's picture

Isn't the worldwide heroin market about $500B?

bugs_'s picture

Yes.  Quite a thought experiment.  Great post.

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 ........

Anonymous's picture

donato, be serious. the mediatards have not a clue.

Anonymous's picture

the mediatards may not have a clue but their
bosses in the cia do....

geopol's picture

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