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Why You Should be Freaked Out About the Stock Market
I doubt you
will see this chart in the mainstream media any time soon... if EVER.
This is a chart of the US monetary base. In simple terms, it charts how much
money the Fed has pumped into the system (at least that it admits). So it’s a
kind of visual of the Fed hitting the PANIC button: when the monetary base
explodes higher, the Fed is FREAKING out.
You'll note that during the Financial Crisis the Fed didn't do much until the
autumn of 2008 when it pumped nearly $1 trillion into the system. Think about
that, the Fed didn’t go nuts pumping money until the stuff REALLY hit the fan.
You'll also note that there's only one other time when the monetary base went absolutely
vertical: TODAY.
Indeed, the Fed has pumped nearly $500 billion into the system since the start
of 2011. Don't even try to tell me
this is QE 2. If it was then the monetary base should have spiked in
late 2010, NOT in 2011.
No, this is the Fed FREAKING OUT about the financial system again. And it's a
freak out on par with 2008.
So if you think that all is well "behind the scenes" you're in for a
rude surprise. Something BIG is going down and it's NOT good.
And rest assured, by the time the mainstream media announces what it is, it
will already be in full swing.
Prepare Now!
Graham
Summers
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CONGRATULATIONS....YOU WON!!!
This is not a Joke!!
I don't think I'm sufficiently intelligent to understand the things you talk about here and I've been 'listening in' for months now here and other investment sites but it's all very confusing. Can someone tell me if we're headed for a stock market disaster in the very near future or if it's safe to stay in a while longer? Thank you.
Who the hell knows. One thing I am sure about though is if you religiously read this blog somebody will find you dangling from a rope in your basement. Durden can never be accused of exactly painting a rosy picture. Ever.
Money in circulation rises because the demand is there.
And because demand is there they print it.
The real question is why people use all this cash. The numbers from Visa show a large decline these last 27 months and I think there's a link.
People are cutting down on cards and using more paper.
BTFD nuf said
Good thing Summers has a handy link right there at the bottom of the
post to help guide me thru this whole catastrophe. I suppose this is
cheaper than an ad on the page.... or is it? Does Summers pay for this post
or is this *content*?
choose the right cliff... one that heads to a nice lake. Spend the rest of your life fishing real fish not fishy stocks on a fishier market.
Med almost gets it. This isn't the Fed freaking out. But neither is Graham Summers. Summers is merely an insurance salesman watering down the roads in -20 degree temps. Nice little bump for business if he can create a little wreck to keep the rubber-neckers freaked out. He doesn't know any more about what's happening, or when, than any one else (including EVERYONE on ZH!). We have devolved to the level where the gamers have figured this out, and realize there's money in fear. So they steal what they can, from whoever they can, while they still can, until the music winds down. And the Fed, the banksters and our politicians are at the top of that food chain. They don't freak out. Regardless of what happens, they win. Everybody knows the whole shit comes crashing down eventually. The math can't lie. So either climb on board and figure out how you're gonna get yours before TSHTF or join the rubber-neckers too busy staring at the wreck to see that they are about to drive off a f-ing cliff!
I recommend you panic.
If the above chart is accurate the money in circulation has increased from 850 billion in 2008 to 2450 billion now. In other words the money supply has tripled. Unless the goods available to be bought has tripled (it hasn't) then we have 3 times the money chasing the same goods. This suggests to me, that prices today should be 3 times what they were 4 years ago.
Prices are higher no doubt, but they have a way to go yet. And the Fed is still pumping.
No it hasn't. This is base money we're looking at, not net money supply (best indicated by M3 which includes Eurodollars). Net money supply is still less than it was in 2008. Summers is cherry-picking to try to freak people out so he can sell newsletters.
If they're as good at pumping as the guys of tepco, they will be at it forever, without results. Similar situations : big fall out.
This isn't the Fed freaking out, this is Graham Summers freaking out because he doesn't understand what the Fed is doing.
M3 is still way below where it was before the crash of 2008, the shadow banking sector is still imploding faster than the traditional banking sector can take up the slack. M0 is expanding but is feeding into excess reserves which are not being multiplied out into credit due to lack of borrowing demand and by the fact that they're not actually in excess if Basel III compliance is enforced (mark to market of toxic MBS will wipe out excess reserves). M2 and M1 are expanding yes, but not by overly large amounts by historical standards.
If people are looking for the source of commodity price inflation, try comparing Chinese money supply growth to the US, there's your answer.
Back to the graph - two comments/questions:
Shouldn't the money supply steadily increase beginning around Oct 2010 when QE2 was announced? Also - my guess would be the explosion of the money supply relates to funneling cash to Europe as the govt debt situation is back in focus (again)...
Can you imagine what this chart will look like when we move into QE-3/4/5...?
I think Bernanke should CRASH the Market. The reason is because it would force people to sell and lock in their Gains. At that point they would have to pay Capital Gains Taxes. This would help to increase Tax Revenues to the Government and help to pay down the Debt created to stimulate the Economy by the ones that received the Stimulus.
Question : does the price of irradiated gold and silver bars go up or down? Is there a premium for owning becquerel infested gold?
Henri Becquerel said: "Who says you can't take it with you?"
Despite market intervention/QE - natural market forces can not be stopped - only delayed.
When the market does reassert control, the reaction (the overdue correction) may be even more extreme due to that delay.
And some may erroneously refer to this as a Black Swan since it’s ‘unexpected’.
However they will be wrong because major market events can be predicted by some analysts.
http://stockmarket618.wordpress.com
Japan will begin selling its Gold and Silver Reserves for Food?
...If radiation spreads to Asia....they will be selling their Gold and Silver for Food too?
...If radiation spreads across Japan then to Asia...which Japanese/Asians will be allowed to relocate to North America first?
why worry? ..the Presidents new Committee of Fiscal Responsibility is on it.
You'd think they'd have come up with a simple solution: balance the budget.
But not yet. They're still thunkin about it, Doh!
Big thing going down? What porn site?
What is to stop someone from racking up a few credit cards to buy metals, then pay off with worthless dollars. Then again, why bother paying back at all if the dollar will be worth zero!
Bankrupcy and humiliation. Sounds like Nazdaq 5000!!!!! LOL
The spike is due to the recent printing of sufficient funds to relocate the entire population of Japan - courtesy of the American Taxpayer and driving public. Thanks for the (Toyota) memories! Cue Bob Hope.
Besides debt slavery, I'm freaking out because there is too much reward for catastrophe! Judging by how the DJIA reacted to Japan, if a tsunami hit DC, Philly, and NY tomorrow....the Dow would embrace it and climb to 13,000. Who's to say it wouldn't do the same if those cities are bombed?! Money rules, apparently.
I got yelled at by my wife today for promoting the fact that we need bags of supplies in case of an emergency (bombing, quake, tsunami, power outage) were to occur. Are we so closed-minded as people to think that we should pay for car insurance and not have catastrophe plans implemented? I told her, if I pack a bag and TSHTF, she will be SOL! And as for being a conspiracy theorist......if I had a dollar for the # of times I said "I told you so", I would be in Costa Rica by now!
Just do it yourself or ditch the wife and go to Costa Rica. You can have all the women you want there without the bullshit. Start at the Del Rey Hotel in San Jose and then the Beatle Bar in Jaco, over at the Beach. Women are falling out of palm trees.
If you do it yourself, you're establishing a future chain of command with you as the alpha male so just go do it. Stock up on the food specials now, before prices of food go way up. Canned goods and sacks of oatmeal, rice, etc. Save Emergency medical, basic meds, etc. Look at some web sites that have lists of things so you don't have gaps.
If you don't stock up tell your wife your emergency plan is to leave her and go to Costa Rica.
I got yelled at by my wife today for promoting the fact that we need bags of supplies in case of an emergency (bombing, quake, tsunami, power outage) were to occur.
I told her, if I pack a bag and TSHTF, she will be SOL!
Why I don't have a wife. If/when SHTF most women will be a ball & chain around your ankle. Not all, but most.
A man without a woman is like a dog without a leash.
O contraire, mon ami! Most women are uniquely qualified and experienced in TSHTF--most every day, as a way of life. Sure, some are themselves the source of that, but most of those will straighten up. A man without a woman to pull for and be supported by will be in a very tough spot if TSHTF in a major way.
Debt exists when there is someone you owe the money to. In the case of the USA, it owns the world, so who is it in debt to? At most, itself. I'm sure one oil field in Iraq will offset the Feds stabilization of the monetary system. Debt is an issue when someone has a gun to your head to pay. In the case of the USA it has absolute global domination. In reality, the world owes the US a favour for maintaining global stability as long as it has lasted. Typically in the 1800's there was a recession / depression every three to eight years. Count your blessings you live in a world where the benevolence of a christian USA has enabled unprecedented human development coupled with unfettered progress. We will look back on the past 50 years with longing.
Be carefull of that terra firma, if you ever wake up and connect with it, you may get a big shock.
Have to say I am totally baffled by your picture of Eden. The constant printing effect has pushed people into debt, caused the weakest of our society to move into risk based assets, and has managed to steal real wealth by constantly causing increased prices.
How is this a good thing?
Whether or not it is a good thing depends on whether you're the thief or the victim.
ZeroHedgers are supposed to be well informed enough to front run the thieves. That's a good thing.
We only "own the world" because the dollar has been the world reserve currency. This allowed us to financially strong-arm our power and consume resources that should/could have been used to improve local quality of life.
That superstar "Owners of the World" status will be ending very soon, and we will soon see how all those people we "owned" really feel about being slaves to our desires and ambitions.
There will be hell to pay.
Your "the US owns the world" line qualifies you for the idiotic post of the year award.
You get my vote
I junk you because I don't like your face.
The US went from a $40B deficit before WWII around 1938 to over $400B in 1943-44. About the same as going from a $10T to a $100T deficit in today's dollars - without inflation. How you ask.
You assume dollars in banks or in stocks equals dollars being lent out. It's a typical push industrial perspective. A demand pull perspective suggests we don't have to worry until lending picks up. It won't pick up until larger capital items are needed.
Relax. sit back and watch overall demand patterns. When demand and prices start to rise watch the Fed draw down M1 by converting short term bonds into long term bonds.
Relax. They were all worried about inflation in the middle of a depression in the 1930's as well. It never materialized; even with a war.
Relax, we've been here before and we won't have war this time because our depression is not coupled with a profound ideological crisis of governance.
Our poor educational system is exemplified by Zero Hedge. It preys on your ignorance but I love them to death. Great web site. Awesome news analysis. Sensitive panic button.
Best site on the Web.
Without inflation ha ha ha. They managed to hold it down with bond drives , wage and price controls and rent controls and rationing but when they took off the controls, what happened?
Value of the dollar cut in half between 1940 and 1945 then more inflation into the early 50s.
Terra-Less Firma?
You said "Relax, we've been here before and we won't have war this time because our depression is not coupled with a profound ideological crisis of governance."
No war..... hmmmmm discounting Iraq, Afghanistan, Pakistan, Yemen, Libya and soon to be other MENA. Someone said the other day... WWIII, one country at a time.
But since I am a poorly educated reader exemplifying myself on ZH... I won't mention this to you. OOPS I just did... damn there I go again. I am such a dumb ass.
PUD
You are, an idiot.......don't worry, this is coming from a drunk! Back then, one family member worked 40 hours. Now, 2 family members work 95 hours for the same standard of living! We won't have a war, because our government will bomb us before anyone else just to keep the DJIA afloat (don't think, look at what the tsunami did to the DOW)! And, don't take into consideration the US's demographics and the world's infinite population explosion! No, we won't ever have to fight for the never-ending supply of clean water, oil and crops the endless Earth supplies!
Apparently you don't appreciate the hedonic riches we now enjoy. Sure, we work more, but now we live like kings! iPads, permanent press fabrics, microwave ovens, HD video, toaster pastries, cappuccino at home, remote garage openers . . . and more! Hell, we are virtual Gods!
You don't think that should come free, as some kind of benefit of increased productivity do you? DO YOU?
The standard of living that existed in 1965 is our benchmark. That is clearly all the non-owners of the "means of production" are entitled to. If you want more, you gotta work for it, muther fuckers! Anything above and beyond 1965 living standards accrues to the banksters and other "real producers."
Be glad for whatcha have--especially since a few decades down the road there will be a helluva lot fewer jobs. In fact, mechanization will likely make you literally obsolete. Try bitching about having to work too much then . . .
Relax while the FED transfers your wealth to the chosen few
Relax while the FED makes debt slaves of you, your children and their children's children
Relax while the FED stealth taxes your money into oblivion every day
Relax while the FED sends you and your children into war after war
Relax while the FED robs you to recapitalize the banks
Relax while the FED robs your 401K to enrich it's members
Relax while the FED lowers your standard of living
Relax while the FED increases your cost of living
Relax until the FED blows the next bubble designed to take your wealth away again
I said RELAX for fuck sakes, the Chairsatan is got everything under control
Dude, chill out.
Sure, relax, governance looks just great.
I don't foresee Weimar, but inflation is already here and quite real. Hard to know how sensitive the majority of the US population is to real shock.
Only one air traffic controller at airports..... 10 tsa agents at EACH screen point.
Libya is going to cost more than 1 weeks worth of POMO
OBAMA gave south America some dollar swaps
Ben is flooding MENA, Japan with swaps. Afghan warlords want 100% more in protection money.
Ben is printing secretly for EU bond bailouts so EU doesn't have to
IMF has run out of money so Ben is giving them a 1 year advance
Ben is shorting oil and food to no avail and is getting margin calls making him print more
Pick one or all the above
oh relax. the monetary base doesn't do anything until the banks loan it out. and they aren't doing that. M2 is what you should be looking at, and its really quite boring
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=M2&s[1][transformation]=pc1
The real issue is... why should the Fed and its favored banks sit at the apex of the pyramid and be the utmost authority on the despending of credit?
There was a time in the past when banks merely facilitated transactions between two parties by providing liquidity. However since the creation of the fed we have an all powerful central bank becoming lord and master of the financial universe. Perhaps my father & grandfather accepted that... but I certainly don't.
Who the hell is ther Fed?
The term 'fed' is bantered numerous times on this and other sites but do we really know ...WHO are the principles behind the Fed?
Surely it's not Ben, he's a placeholder just as much as Obama.
Could it be pension funds such as Calpers? Nahh. PIMPO? Nahh.
Is it Lloyd or Jamie? Nahh .. while they're CEOs, it isn't likely they are the true owners. Is it a consortium that include types such as the former? Perhaps.
Who is the underlying decision maker that controls the direction of the policies of the private banking cabal known as Federal Reserve?
The fact is ...we don't know. And it appears that is by design.
The fed's true movers & shakers are hidden behind a labyrinth of legal entities to the extent that nobody has ever definitely pinned down who gives the Fed chairman his marching orders. Don't think for a moment that it's left up to Ben alone (or Alan before him).
Far as I can tell, the best way to figure out the principles behind the fed is to look back at its founders and follow their family trees.
The fact is...... the U.S. in controlled by this black box
and we don't know who/what is inside that black box.
They're without "principles". Or were you wondering about "principals"?
Who owns the FED:
http://www.scribd.com/doc/46627723/Federal-Reserve-Directors-A-Study-of-Corporate-and-Banking-Influence-Staff-Report-Committee-on-Banking-Currency-and-Housing-House-of-Representative
sourced from http://federalreserve.mywiz.org/node/2127
For an alternative to the FED and lending check out:
www.prosper.com