This page has been archived and commenting is disabled.
Why Bernanke And Pals Will Soon Need a New Pair of Pants
The Fed must
literally be about to pee itself.
The $600
billion in QE 2 bought at best roughly three months’ worth of improved economic
data. Granted, it was heavily massaged economic data (US economic data is now
largely a work of fiction), but for simplicity’s sake, we’ll say that the Fed
got roughly one month’s worth of improved economic data for every $200 billion
it spent.
However, QE
2 ALSO blew up food and energy prices up: between 2010 and 2011 gas rose 33%
while ground beef, cheese, and vegetables were all up in the double digits as
well.
So the Fed
needed things to cool down a bit. So they allowed QE 2 to end. Of course,
Bernanke juiced the market one final time to the tune of $76 billion, probably
hoping that the market would buy his bluff and believe that things might hold
up without Fed juice.
But the
market didn’t. Instead, the markets have begun to implode proving beyond any
doubt that the Fed was the primary support behind the stock market rally.
So here we
are today. The US economy has very clearly fallen off a cliff. The Fed already
has a $2.8 trillion balance sheet (larger than the GDP of France, the UK or
Brazil). Announcing QE 3 would mean creating an inflationary disaster. And NOT
announcing QE 3 means a market collapse and very likely another 2008 scenario.
So it’s
literally “pick your monetary poison.”
However, in
the end, regardless of how we get there, QE 3 will come. The reason for this is that EVERY Fed move since the
Financial Crisis began has been aimed at propping up the large Wall Street
banks who continue to remain insolvent due to their TRILLIONS in derivative
exposure.
When it
comes between screwing the taxpayer vs. triggering a systemic implosion that
will destroy the banking oligarchs, the Fed has taken option #1 EVERY TIME.
They’ve already done it to the tune of $4 trillion (at the bare minimum). They’ll
do it again.
Why?
Because
letting the banks collapse means hitting “reset” on the entire financial system
(at least temporarily). Wall Street as at minimum over $200 TRILLION in
derivatives sitting on its balance sheets. And the Fed will do anything it can to
try and contain this disaster. That includes kicking the US Dollar off a cliff
and screwing US consumers.
Ultimately,
all of these efforts will fail (see the Euro situation today). But this will
only happen after the Fed has done any and every action it can to prop things
up. This will include QE 3 and as many QE’s as the US Dollar will allow.
So, QE 3 is
coming. We might even see QE 4 before the system collapses. But the system WILL
collapse. And when it does, it will be a 2008 type Crisis on steroids.
On that
note, if you’ve yet to prepare for these issues, you can download my FREE
report devoted to showing in painstaking detail how to protect yourself and
your portfolio from the coming ROUND TWO of the Financial Crisis (round one
wiped out $11 TRILLION in wealth).
I call it The
Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a
wealth of information about portfolio protection, which investments to own,
which to avoid, and how to take out Catastrophe Insurance on the stock market
(this “insurance” paid out triple digit gains in the Autumn of 2008).
Again, this
is all 100% FREE. To pick up your copy today, go to http://www.gainspainscapital.com
and click on FREE REPORTS.
Good
Investing!
Graham
Summers
PS. We also
offer a FREE Special Report on the inflation situation in the US. This other
FREE Special Report, The Inflationary
Disaster explains not only why inflation is here now, why the Fed is
powerless to stop it, and three investments that absolutely EXPLODE as a result
of this.
All in all
its 14 pages contain a literal treasure trove of information on how to take
steps to prepare AND profit from what’s to come. And it’s all 100% FREE.
To pick up
your copy today, go to http://www.gainspainscapital.com
and click on FREE REPORTS.
- advertisements -
I love anything that's free
the economy must collapse before it can mend....the cancer must be excised and that only comes through liquidations which at this point should be massive....
Just one question, from the 100% absolutely free reports:
What is the vulnerable index that shorting it will bring 40%, "easy?"
There is a video record of the last federal reserve meeting
http://www.youtube.com/watch?v=GhxqIITtTtU&feature=topvideos_mp
Agree, we have the picture as clear as can be. But I am amazed when I think I am ready and know what is going down that something bizarre from another world pops up from Tylers post. It is more than surreal, it is the twilight zone.
Have been ready for a few years now, except would like more physical but for now I think we might be in for an E ride on Space Mountain for a few days. Buckle up and enjoy.
And still, hardly anyone I know has physical gold or has any idea how to purchase it. I have been harping to my older brother for 5 years now to get some gold. Has no interest in the barbaric relic. Oh well, I tried.
run for the hills!
He acts like he has some big secret that everyone needs to have before the "system collapses". Its simple, if the system is going to collapse the things you need are:
- Gold
- Food
- Guns
- Toilet paper
- Booze
There, I just saved everyone $850 for his survival kit!Add:
Ah, forget it.
Actually in your case, you might be better off paying the $850.
You forgot the most import item: Water.
Guns are also useless with out Ammo, and the right ammo for the gun(s).
You'd think even the big banker types that own governments would realize what all the finance blogs have been talking about for what now, a couple of years? I know I 've written a few screeds like this one myself.
Have they not made ready and gotten out of the fiat business and walked away since they have to know this even better than we do, despite some surely being in serious denial? I'm failing to understand something here. Even a slightly sane person would have ditched and run long since.
Or, is it that, since at least half of them are on the wrong side of those trillions of bad paper...they can not come to consensus on when to just walk off? Of course, that's denial too, as there is no bailout that can come up with many times world GDP to bail out conterparties, someone's going to have to lose here.
Is that why the extend and pretend, delay and pray? Everyone is trying to not let the music stop until they (alone) are beside the only rickety chair left, if indeed even one exists that would hold their fat ass?
Maybe what we need is for them to agree to just split their ill gotten gains and ride off into the sunset together (preferrably within range of a sniper rifle of course) so we can just reset and get on with the world? Forget all that bad paper? Man it was all fake to begin with, I just don't get it somehow.
I trade like a cowboy monkey myself, but hey, it's not live or die, it's a damn game, not worth wrecking even my little world over, much less the planet.
Hopefully they will change into orange prison jumpsuits.
If the Fed keeps juicing that much they better have some serious estrogen blocker handy...
I am thinking "Wag the Dog".
I have had enough abuse for one day. I love ZH in some kind of abusive S/M relationship. OOPS "was that in my 'out load voice' ". Gone Now.
I'd love to see an unemotional unbiased analysis of the consequences of a systemic implosion on the average citizen. Got a feeling more than that the oligarchs would get hurt. If anyone has a link I would appreciate it.
I don't know that there is such an animal as an "average citizen" when it comes to SHTF. It becomes all out survival mode, and each's situation and mental state will dictate his/her response. Some may be prepared to be self-sufficient, while others completely caught off guard (deer/headlights).
But consider...what if the meltdown hits bottom in January, and fuel is cut off from international trade? People will freeze to death. What if those JIT deliveries of prozac and celexa suddenly are not available? What about those that rely on public water supplies vis-a-vis those with wells and filtration accessible?
So-called "mass hysteria" is still an event of individuals. Just food for thought.
Thanks, I get what you are talking about.
I was thinking more about the consequences of letting the overleveraged banks that made bad bets fail. Who really gets hurt by this? How quickly would the financial system recover?
Maybe we end up as you describe? Maybe not?
He is confusing WILL WITH MUST
These posts are like the movie 'Groundhog Day', the same thing
day after day. It's de javu all over again.
Alright dipshit, this goes out to you and others who complain.
If you don't wish to read Graham Summers, then don't click on the link.|
I'm seriously tired of your whinging.
Can you do better, are YOU willing to submit free content to Zerohedge?
If not then shut the fuck up!
hi Graham
OK
I reached the point where nowadays I read about half-way through the article, and then as soon as I see this famous line approaching (and it always does):
"On that note, if you’ve yet to prepare for these issues, you can download my FREE report..."
...I immediately skip down to the ZH comments.
You nailed it
Might be a broken record, but it is hitting the right note - collapse is inevitable; this cannot be sustained. Eventually, what is fake must fail.