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Visual Recap Of The Theory Behind The Fed's Debt Monetization
If after years of explanations, and cartoons with bears, readers still have not quite gotten the grasp of how QE should work in theory (in practice the only thing about QE is how dramatically its intended and realized goals have diverged) perhaps this animation from the AP will finally put all doubts to rest. So for those still confused by terms such as "money printing", "open market operations", "outright monetization", and "Weimar hyperinflation", this brief and concise clip is for you. And once you see it, forget everything, because what QE2 has done has been precisely the opposite: rates have gone up, but the Fed does not care - as everyone now knows, the Fed's only true goal was to provide Primary Dealers with the capital to bid up stocks. End of story. Lastly, keep in mind, that the Fed is now implicitly funding the US deficit: as it purchases more and more bonds, the interest that is owed to the Fed is subsequently remitted to the Treasury as an actual revenue item, completing the world's most unprecedented Ponzi scheme constructed since the days of Rudolf von Havenstein.
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Have you ever noticed the Pyramid on the dollar?
pyramid scheme...lol, never thought of it that way befor
And the top capstone is all the elite bankers and politicians. You and me are just the base holding it all up.
But guess what.... I QUIT! This Atlas Shrugged.
$US dollar just died on a 5 minute graph, going to zero.
www.silvergoldsilver.blogspot.com
...ever notice the Star of David on the dollar?
wordnetweb.princeton.edu/perl/webwn?s=obsession
... man, that brought back some memories.
http://www.youtube.com/watch?v=3zso0qmV8s8
The new branch of the Ministry of Truth?
Puhhh-thetic
How long until they start showing this stuff in public schools?
Never. The Peons & Peasants should never know the Ponzi scheme that is stealing their wealth thru inflation.
Main stream ciadia still couching it all in "could"?
Ben breaks it down for us.
http://www.c-spanvideo.org/program/MonetaryPolicyReport3/start/6976/stop/7200
If that is the best that the ministry of truth can do, then the revolution won't take as long as I originally thought.
Not even Fed 101.
And 2012 is an election year. Accommodation, get thee behind me!
"the interest that is owed to the Fed is subsequently remitted to the Treasury as an actual revenue item"
Just like cash back rewards on a credit card. People buy that bull sh*t too!
Why doesn't the fed just sell the debt back to treasury for a penny? Debt ceiling fixed and I'm sure they can come up with some accounting policy so its win/win :) but isn't I insane to have debt ceiling issue and fed largest holder???
Anybody catch Webster Tarpley on Coast to Coast AM last night? The guy has quite the grip on the political and economic realities and isn't shy about expressing himself, speaking truth to power.
His segment last night was pretty powerful, but today, his website is down:
http://tarpley.net
Coincidence? Too many requests for the servers to handle? Did he say too much?
Site is back up and running now. Move along...
Excellent idea. Then Bernanke can buy up all the Treasury debt and sell it back for a dollar. Then Ben can print enough money for the government's total spending and no taxes would need to be paid. That debt too can be forgiven. Then Ben can print enough money to send each taxpayer a check for a million dollars, hell, 100 million dollars, make us all rich, then forgive that as well. I think you are onto something dude.
To think we figured it all out here. How come nobody else figured out this _obvious_ solution?
In an electrical schematic this whole scheme would be drawn as a Generator that powers an electric motor, whose shaft spins the generator.
Wait, you could simplify this down to a power strip where the plug is plugged into one of the six outlets on the strip.
Bravo my good sir, bravo!
That is an excellent overview clip for sheepleducation.
ORI
FOMC members are listed and their voting tendencies described under the FOMC tab. They describe Benny as centrist??? If they broke it out as Keynesian vs. Austrian, it would be much more informative and clear who is more or less destructive. I suppose they are all destructive....
Interesting comments by Buffet this morning on the topic of inflating our way out of the problem and the ultimate value of fiat (= 0).
Do those people have any idea the crap they are putting out. What a waste.
but the background music is great, it made me dance and feel so good, somehow like my inner economy was growing - I asked the AP about the composers... the band is called THE PONZIS and the song performed is INVERSE PYRAMID, you can buy their new CD with inflationary more songs at the New York FED for the special price of just one ounce of silver.
"...could 'strengthen' the economy..."
No. This constant lowering of rates only gives the economy a short-term false boost. After the effect wears off, another "recession" ensures and more "easing" is required. Look at the chart (yield) of the ten-year since 1980. Who believes the crap these people are shoveling?
I believe it is too simplistic to say the purpose of QE is for Primary Dealers to bid up stocks. The Fed is servicing the federal debt by purchasing US Treasuries. Maybe the Fed fears that the US Treasury could not find enough buyers to service the debt if the Fed were not a buyer.
And that is how the mechanism is supposed to work. The US Treasury could find enough buyers.... at the right rate. But since we cant afford it (tax revenues can not support the interest rates required to attract international buyers), we are left with two options. Stop spending or increase revenues by having the Fed inflate the dollar. Guess which one they picked?
The bond rates are supposed to be the control mechanism. When spending gets out of control and foreign nations no longer believe in our ability to pay, the rates are supposed to stop our politicians from further spending (kind of what happens when you keep on exceeding your credit limit on yor Visa). THe Feds actions cheat the market system by bypassing it. No matter. You can not ignore the laws of physics forever.
Rudolph von Havenstein must have had a beard to welcome the busy bee into his haven. Stony place, facade like the columned FED, stern upper lip posture on face, but... where the honey grew not in its destined hot spot. That was the whole spiel behind the fronted honest Joe deal. Honeycombed beard, smooth on outside but micro pored, allowing all the honey to disappear into dark pools where it was drained off through high frequency transactions into far off havens, packaged out as enticing cookies. Now you see it now you don't... as the great Ponzi milked honey from the honest bee who thought his nest was inviolate. It spread like the plague into the market, toxic cookie, with a CDS to make it even more volatile as messenger of Ponzi. The rip-off so smooth it even fooled those who engineered it into believing it was too cool. Now every body's a fool. Fail safe loop wide open like Pandora's box. Rudolf von Havenstein's stony beard now covered in crow shit.
As he can't shave it off, it's his head that will now have to be shaved instead by guillotine.
What a waste of stone but then crow shit is black like some other dirty commodities. They never learn to stay away from honey and black hearted gold, those crows.
Blankenfiesta, Ben bonfirebaking time coming.
on the moon the dollar is worth 1/6 of it's value.
Slow down Timmy, we're not on the moon yet!
What I would like to see is the direct evidence of PDs using the POMO money to buy stocks. I know it is true either directly or indirectly, but the hard evidence would put the naysayers to sleep. There are many, including the Benster, who say it is simply an asset transfer- a balance sheet change with no money created. The money was there in reserve, but the transfer to the PDs is the crux of the biscuit. We know what they do with it. They do another asset transfer from what was FED's reserve money to PDs to stocks- like magic.
I too would like some specifics, but they're hard to come by. Everybody just assumes the QE operations lead to stock speculation.
My guess is the answer lies in the Fed Funds market, where banks and other reserve holding entities, loan and borrow those reserves, which in the corrupt language higher finance is called "Fed Funds Sold" and "Fed Funds Bought."
So, for example, when the FED pays pays for Treasury paper bought under QE they simply credit the selling Bank/PD's reserve account at the bank. Over the last three weeks, such reserves have gone up over $200 bn (the FED is not only QEing the world, but using this tactic to cover Treasury checks on the Treasury's checking account at the FED and paying back the Supplemental Finance Program loans).
Would the clever bankers really just let this 'money' sit there (total reserves now about $1.3 trillion) without finding a clever way to use it. My guess is that thru Fed Funds lending and borrowing, combined with complex things like repo agreements, they can find a way to finance stock and commodity speculation.
I'd also guess that they've found a way to loan out these reserves while also earning the interest paid on the reserves by the FED. A 'have your cake and eat it too approach.' This is not unknown. The securities lending business works on the same principal, where a securities lender can keep the lent securities on its balance sheet, collect any dividend or interest payments due thereon AND earning a small fee for lending it out. And the securities lending business is a huge, multi billion dollar biz. So 'have your cake and eat it too' can be done these days. If you're powerful enough.
Good points DP. I wonder if they are doing very small time frame loans, and then using fractal leveraging to power up the fiat, turning the whole thing over in a few days, and doing that again and again. This would help explain the pumping action on low volune. The HFTs are fed daily, churmed every 13 seconds and the profits are releveraged as loans to themselves.
as the representative of the financially challenged, unwashed masses - who take it as given that my government is looking-out for my best interests:
the clip implies that by buying treasuries the FED is displacing investors from parking thier money in treasuries forcing them to "put it to work" Is moving this money into stocks going to stimulate the economy? The transactions certainly are stimulating a few people. It certainly seems that cash in the bank is not valued (has negative return).
It seems to me the party has left our shores - are we on a mission to dump our money on other markets (force feeding them dollars)? It seems we have a senario of mutally threatened destruction - we are threatening to nuke ourselves if the other players don't acceed to our demands.
i think bernanke knows that one thing they have "under control" is inflation. really this is a result of the path to globalization - standards of living around the world are being normalized (except for those at the top). inflation would require that we get paid more - not happening for the most part
I work as an engineer in the US in manufacturing - 80% of the factory workers are illegals (and I consider them my friends). I also work alongside engineers who are illegals and very capable. I looked at one of thier time-cards - the guy worked 100 hours in the week. I have two kids, can't do that. I was about to be laid-off, but I think someone got nervous and let the illegals go.
That is the reality. So much for the value of college.
As someone who has worked on the people side of many engineering and tech companies in the past, I would advise you to not share your feelings in the work place with anyone. Companies do not like to have their warts exposed, least of all their financial and people practices. Best of all would be to forget everything you see and hear. Its all good - Just smile and wave.
I'd advise Mendigo to rat out his quisling employer and for you to shut your acquiescent piehole
You really do need to acquire some additional education on what is behind the curtain in most workplaces. I hope that this education does not come at a too steep price for you.
1. Advice on how to keep a job these days may be helpful to those that do not want to commit career suicide.
2. You also need to fine tune your "sarcasm" antenna. Most of us on this site are not "acquiescent pieholes," but may have learned something along the byways of life after getting a few bloody noses along the way.
"I work as an engineer in the US in manufacturing - 80% of the factory workers are illegals (and I consider them my friends)"
With friends like that who needs a JOB.....
they are people with kids to feed also
they are taking the opportunities as they find them
the people you might report it to are well aware this is happening but they don't want the public to know this is status quo this is where rising productivity is coming from and we would want to diminish the perceived value of a college education (big business) the upside is it doesnt really matter if kids can read - its all about endurance
so,
do you wait until amerika installs "jumper nets" outside its factory walls for your kids?
Gather the details and dial 1-800-DHS-2ICE. http://www.ice.gov/
Fight back
you raise a difficult point
the idea was to to get an education - be a knowledge worker - but I am not sure what is a good bet anymore
right now everyone seems OK with the status quo - sometimes things have to get really bad before they can get better
my point is this is not an accident, this is the plan this is why we won't see inflation so you will be able to afford that ipod next year (food... not so much)
I don't understand why you bother to produce a video that will almost certainly fly over the heads of the average American. John Q Public could use a quick primer video to understand the mechanics of the destruction of his way of life, but this is not it.
Everyone here already knows this crap, and the video still manages to sound condescending despite it's pathetically shallow scope. Sorry, but 105 seconds is not enough time to cover the important details of the Fed in plain English. You need a series of 3 or 4 3min videos that spell out not only the players, but the mechanics, the impact and some sane alteratives to the Fed madness. I guess I shouldn't be surprised, after all this is a AP "production".
from that video....that's quite a jump to say loan rate will lead to increased demanded. Granted, this country is full of tards that will overextend themselves on a whim.
more scare tactics....... it is merely an asset swap. Long term assets swapped for short term assets. It all accounting magic, there is no "money printing". There is no extra liquidity added by QE. If assets from QE are used to buy stocks, someone has to sell stocks. NET 0.
what a worthless POS.
One question, did congress' creation of the Fed via the federal reserve act in essence grant to the Fed powers that were not granted to the Congress.
Me thinks the answer to this question is yes, and if the answer is yes then we have a legitimacy issue here.