This page has been archived and commenting is disabled.

Why the Fed Has Upped the Ante in Money Pumps (Hint: the System is Crumbling a La 2008 Again)

Submitted by Phoenix Capital Research on 04/18/2011 21:48 -0400

Monetary Policy

Earlier
today I put out a piece noting that the Fed is now putting $200 billion per
month into the system.

To provide
some context to this, consider that during QE 1, the Fed was putting roughly
$50 billion into the system (large money pumps in bold):

After QE 1
ended, the Fed’s monthly liquidity pumps fell to roughly $30 billion or less.

That’s when this happened:

So it’s not
surprising the Fed freaked out and started QE lite in August.

This kept
things chugging along until QE 2 was announced in November at which point the
Fed began putting $100 billion into the market.

Despite
this, the financial system crumbled in March:

The ONLY
thing that kept the market afloat was a coordinated effort on the part of the
G7: the first in 10 years.

So if you
think that somehow the Fed’s money pumps will keep the system afloat and stop
another 2008 type even from occurring, consider that we’ve gone from $50
billion to $200 billion per month in money pumps… and we’re still seeing sharp
sell-offs occur.

Indeed, at
some point, and I cannot say specifically when, the Fed will lose control of
the system. When that happens, the Crisis that follows will make 2008 look like
a PICNIC.

If you have not already taken steps to
prepare for this, I strongly urge you to download a copy of my FREE Special
Report specifying exactly how to prepare for what’s to come.

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 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.

Best
Regards,

Graham
Summers

PS. We ALSO
publish a FREE Special Report on Inflation detailing three investments that
have all already SOARED as a result of the Fed’s monetary policy.

You can
access this Report at the link above.

Again, this
is also 100% FREE. To pick up your copy today, go to http://www.gainspainscapital.com
and click on FREE REPORTS.

- advertisements -

Tue, 04/19/2011 - 14:23 | 1184965 dxj

Despite this, the financial system crumbled in March

I seem to remember something about a massive earthquake, a tsunami and a nuke meltdown happening to one of the World's biggest economies.

Tue, 04/19/2011 - 07:19 | 1183227 Waterfallsparkles

I was thinking about your article from yesterday last night and this morning.

It appears that the FED has to double every year the amount they put into the Market every year to keep it up. It is like pushing a HUGE bolder up a very steep mountain. The higher up you go the steeper the mountain gets and needs more and more of an effort to get it higher. Every time the bolder rolls back a little it takes more and more energy to get it back up to where it was. At some point the bolder will win and roll back down the mountain crushing everything in its path.

We have had many take money out of the market. A lot of that money will be out of the system as people buy precious metals that will just sit there and not produce any GDP. Some of the money will go to retirees that will use the money for living expenses and not spend on discretionary items.

With the amount of money the FED is putting into the system it is increasing Oil and hard and soft Commodities by raising their prices as well. At some point the price of Oil, hard and soft Commodities will kill the balance sheets of almost all Companies in the Stock market because of higher input costs. Which will hurt their bottom line and stock price.

If next year the FED has to put 400 Billion a month to keep the market up, how long will it be before the Debt overcomes the entire Country.

Tue, 04/19/2011 - 06:11 | 1183186 AldousHuxley

Simon Johnson needs to be heard:

"Let me tell you why this isn't happening.

"The bankers want to continue to be paid on a unadjusted for risk, return on equity basis. Of course they do. And the way they get nice compensation packages is by taking a great deal of leverage...

"The executives of the top 14 financial institutions took out in cash $2.6 billion between 2000 and 2008. They top 5 took out $2 billion.

"They are, in order: Sandy Weill, who built Citigroup, which then blew up, after his watch. Henry Paulson, who built Goldman Sachs, and was the point-man lobbying the government to lower leverage caps, for investment banks, which even now Larry Summers says was a great mistake. Goldman Sachs blew up. Angelo Mozilo, number 3, built Countrywide and that actually built up on his watch. Dick Fuld, number four, Lehman Brothers, and Jimmy Cayne, Bear Stearns.

"Those 5 people took out $2 billion. So that's the private gain, one measure of it.

http://www.youtube.com/watch?v=-GmBoJ7qHYg

Tue, 04/19/2011 - 05:07 | 1183164 jbc77

Thanks for the data, puts into into perspective and makes sense.

Tue, 04/19/2011 - 03:04 | 1183124 capitallosses

Great news!!! Someone is now making fast drying ink so Benny can print faster!!!

Noodler's Bernanke Blue fountain pen ink. A quick-drying ink ideal for lefties or anyone who needs a fast drying ink ... "he must need a quick-drying ink for the dollar bills!"

http://www.gouletpens.com/Noodler_s_Ink_Bernanke_Blue_p/n19067.htm [no affiliation]

Tue, 04/19/2011 - 02:49 | 1183113 grl

just had to say it. Regular (like every hour or so) reader of ZH. Regularly skip everything posted by Phoenix Capital Research (skipped this one too). Read them a few times; came to the conclusion that PCR is ZH's answer to CNBC. Dump 'em!

Tue, 04/19/2011 - 02:00 | 1183055 cranky-old-geezer

When that happens, it's the end of America.

There. I was more specific.

Tue, 04/19/2011 - 00:49 | 1182957 Grand Supercycle

DOW bearish megaphone weekly chart:

http://stockmarket618.files.wordpress.com/2011/04/2011-04-16_dow-wk_x.png

Mon, 04/18/2011 - 23:57 | 1182870 dalkrin

The end is nigh!

Gas and food prices seem high!

Gold and silver gain in luster

Guns and ammo let one bluster

That Bernank, what a guy!

Seriously folks, things are getting real, finally some action in this world of deceit.

I don't own a farm, yet I hope to continue to eat.

Mon, 04/18/2011 - 23:42 | 1182845 Jason Bourne

I don't care if I'm part of the economy that is going to collapse....Fuck you Bernanke Fuck you Tim and all the pricks who are the real players behind them - fuck you all.

As long as you pricks are not in control of what is happening - bring it!

I will say it again - may the collapse happen in such a way that even J6P is aware of who is responsible.

Bring it!

Mon, 04/18/2011 - 23:25 | 1182825 chumbawamba

If you have not already downloaded his FREE "Special Report", you can instead read my FREE Special Report right here:

GOLD BITCHES!!

I am Chumbawamba.

Tue, 04/19/2011 - 02:33 | 1183087 Hook Line and S...

Chumba,

After pocketing a few prophylactics I downloaded your COLD BITCHES!! special report with release, and sure enough... they stole my Gold.

You train your ho's the right way. A righteous pimp you are!

Mon, 04/18/2011 - 23:55 | 1182868 DoChenRollingBearing

+ the usual $1490

ZH-er Sudden Debt earlier today said he was 99% in PMs, although I do not know exactly what he meant by that.

He is Chumbawamba. Maybe one day he will let us know what that is!

Tue, 04/19/2011 - 05:05 | 1183163 UncleFurker

Even those people with only 1 gold coin in their possession will be 99% into PM's when their fiat dollars and stocks become worthless.

Tue, 04/19/2011 - 04:50 | 1183156 Dugald

***F U B A R***

Tue, 04/19/2011 - 02:29 | 1183093 Hook Line and S...

DCRB,

Perhaps it was a misprint, he meant to type BM's.

Tue, 04/19/2011 - 01:22 | 1183007 davebrik99

I think precious metals may be different things to different people. Gold bars will probably not be used to buy groceries and even silver will only work in certain situations. If things get bad enough the only reaal insurance might be lead....and whiskey ...if ya git my drift.

Tue, 04/19/2011 - 00:39 | 1182935 TheMerryPrankster

He gets knocked down, but he gets up again. You're never gonna keep him down.

http://www.youtube.com/watch?v=kS-zK1S5Dws

Mon, 04/18/2011 - 23:39 | 1182840 Problem Is

Your rating:

+5 -- Awesome -- Bonus for Sarcasm

Problem is, I am NOT Chumbawamba.

Mon, 04/18/2011 - 23:09 | 1182721 SME MOFO

I always feel soiled when I get to the end of these phoenis capital research articles

Mon, 04/18/2011 - 23:03 | 1182718 Hook Line and S...

Phoenix Capital seems to like FRN's as much as they don't.

Talk about hedging your bets!

Mon, 04/18/2011 - 22:42 | 1182665 akak

It's the end of the world as we know it
and I feel fine.

Tue, 04/19/2011 - 02:03 | 1183063 Sedaeng

That is a good song... but I really think of 'The Doors' - The End when I think of all that is going down in the world/our economy.

http://www.youtube.com/watch?v=rguwtBY-nVg

Mon, 04/18/2011 - 22:59 | 1182708 robobbob

TEOTWAWKI

Mon, 04/18/2011 - 22:38 | 1182651 Dirt Rat

All of this seems to be going exactly like 1929 and the aftermath. Market crashes in 2008. Valiant attempts are made to reinflate the bubble and they're somewhat successful for a while. And then it crashes all over again and flatlines á la 1931. And we can all remember what happened after that :-(

Mon, 04/18/2011 - 23:51 | 1182857 faithfulwatchman

...But it's OK because Benny "Bubbles" is a historian of the Great 1929 Depression. He'll know EXACTLY what to do...(To get us into a drepression) and I'm afraid he already has...

Mon, 04/25/2011 - 02:55 | 1202510 All Risk No Reward

>>He'll know EXACTLY what to do...(To get us into a drepression)<<

exactly. you nailed it.

bernanke PURPOSEFULL created the depression and i can prove it. in fact, he BROKE THE LAW to do it.

google and read section 2a of the federal reserve act. the fed mandate isn't dual, it is singular - keep monetary and credit aggregate somensurate with GDP growth. read it yourself. they lie and say the results of the mandate are the mandate itself - orwell would be proud of his prophetic abilities.

so, what did the fed do? took credit PARABOLIC TO GDP GROWTH!

http://market-ticker.org/akcs-www?get_gallerynr=1296

all the while bernanke was taking money/credit almost vertical to gdp growth, he and paulson were harping on the "great economy."

a fifth grader who has taken exponential math knows that chart will not end well.

and so does bernanke.

he just doesn't want **you** to know it will end badly.

the less you prepare, the more you get hurt and the more control his bosses can exert over you.

Tue, 04/19/2011 - 00:28 | 1182916 Dirt Rat

Therein lies the irony of it all.

From what I understand of his thesis, he tried to gloss over the fact that the important (rich) people could make mistakes and tried to find 5,000 other reasons for the '29 Crash happening, as long as it absolved those at the top of their excesses. I guess that's why he's so popular with certain classes of people in this day and age. But still his analysis was all wrong and he has simply turned a blind eye to anything that matters. Therefore, we're repeating the same mistakes.

Tue, 04/19/2011 - 04:05 | 1183148 Bagbalm

Greed and fear and self important grubbing slime balls have not changed in a century - why should their reaction be any different this round?

Mon, 04/18/2011 - 22:38 | 1182648 Ben Fleeced

Redacted.

Mon, 04/18/2011 - 22:33 | 1182629 Occams Aftershave

"Again, this is also 100% FREE." Umm, it is not free if one has to buy a subscription first. Realize everybuddy's gotta maka livin' but would rather not start out with a less-than-truthful teaser.

Tue, 04/19/2011 - 01:45 | 1183034 Silver Alert