Piling up: The Detritus of Failed Stimulus Policies

Wolf Richter's picture

Wolf Richter   www.testosteronepit.com

“Ugly” doesn’t even describe it. I’m not talking about today’s ISM index of US Manufacturing, which was quite ugly, dropping to the worst level since 2009; and whose all-important New Orders sub-index was beyond ugly, plunging 12.3 percentage points, one of the worst dives in the history of the index. And I’m not talking about the JPMorgan Global Manufacturing PMI, which was truly ugly as it fell to its lowest level since June 2009. Those are volatile indices, and they might turn around on a dime, though that appears to be wishful thinking.

No, what “ugly” can't describe is their relationship to the worldwide explosion of government deficit spending and central bank money-printing operations, ballyhooed for years and with deafening intensity as a powerful stimulant to the economy. They did goose certain markets around the globe—though not all, for example equity markets in China or certain European countries. And they did prop up economies around the globe, but only briefly and unevenly, producing an ongoing four-year recession in Greece, mediocre results in the US, and stellar results in China and Germany.

Since the onset of the financial crisis, central banks have forced yields on high-quality debt, such as US Treasuries, to near zero—and often below the rate of inflation. And they have printed voluminously to buy assets that are now decomposing on their balance sheets: $18 trillion “and counting,” or “roughly 30% of global GDP,” is now weighing down these balance sheets, according the Bank for International Settlements. A huge monetary stimulus.


And fiscal stimulus—that is, deficit spending—around the globe took on mind-boggling proportions. At the very top is Japan, whose fiscal quagmire has no peers among developed nations: by March 2013, the end of the fiscal year, gross national debt will surpass $14 trillion, or 240% of GDP. Of its fiscal 2012 outlays, 56% will have to be borrowed. In the US, budget deficits have been ballooning for a decade, driving up gross national debt from $5.75 trillion in January 2000 to $8.68 trillion in December 2006, just before the financial crisis oozed to the surface. Then, all heck broke loose in Congress, and it opened the spigots all the way, and by December 2012, gross national debt will have nearly doubled to well over $16 trillion. It’s already over 100% of GDP. China also dumped stimulus on its economy, and so did Europe, despite the debt crisis festering on its margins, and despite “austerity” which continues to produce hefty deficits.

But now the party appears to be over. The economies have burned through these trillions and have misallocated or squandered them, and what’s left are mountains of public debt everywhere, a debt crisis in the Eurozone, and central banks with balance sheets that are stuffed with reeking assets they’d bought with the money they’d printed. I have previously written about the effects of the Fed’s policies on housing and the broad employment picture [read.... The Big Lie], but now, the JPMorgan Global Manufacturing PMI shows the combined economic impact of worldwide central bank operations and record government deficit spending on a big part of the real economy:



While the global PMI fell to 48.9 (below 50 indicates contraction), the lowest point since June 2009, and while Output fell to 49.3, it is the New Orders sub-index that took the biggest hit, plunging from 51.5 to 47.8—reflecting the historic nosedive of new orders in the ISM index of US Manufacturing. A cruel harbinger of things to come over the next few months.

The Eurozone was a key contributor to the decline. Even stalwart Germany is now heading south. But the debt crisis with its ups and downs and plot twists and happy endings that turn out to be the opening lines to the next installment has taken some of the focus off worldwide economic data as it’s being released country by country like Chinese water torture. But the global PMI confirms the relentless stream of disparate data: major economies around the world have been slowing, including the US, China, and Japan....

Despite the mind-boggling amounts of “stimulus” provided by governments and central banks alike! So the question arises, if this stimulus bought only such small amounts of growth for such a short time, on such an uneven basis, what will happen when the next slowdown cascades around the world—and stimulus as we’re now seeing, no longer works even in the short term?

Debt from that stimulus is greater than ever and growing daily, and central bank balance sheets are overflowing with muck. Any additional stimulus will only add to them. While it still might goose the markets briefly, its impact on the real economy appears to be negative over the longer term, and more of the same will accomplish nothing—other than leaving behind the mountainous detritus of failed policies.

Already, certain central bankers have come out of the closet admitting that their favorite shenanigans—ZIRP and QE—can’t solve the very problems they were designed to solve. What they’re not yet admitting massively, though some are starting to pass out hints, is just how much havoc these policies are wreaking. Read.... The Worldwide QE Quagmire.

And here is a hilarious video from down-under comedians Clarke & Dawe that sums up in 2½ minutes the true nature of Quantitative Easing.

And here is Chriss Street’s edgy and excellent.....  Chief Justice Roberts Gutted Congressional Power and May Still Have Invalidated Obamacare.

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phat ho's picture

Gadzooks... somebody's stuck on the us citizenship thing. We're all meat for the locker if we don't unite on some central issue, and I mean "REEEALLY REEEEALLY" soon. An alien invasion scenario would be timely right about now, and somewhat entertaining. But I think if enough ppl were able to explain to Joe Shmoe about these tidy financial instruments were developed to deprive him and his family of their livelihoods he'd be po'd enough to take some action. That's when the tide turns on these corporate a'holes.  :-)

phat ho's picture

But now that I think about it; tptb will explode another war if they get a scent the natives are starting to get restless; nothing to see here, move along. Go shopping good sheeple everywhere.

Hohum's picture

"Printing" is not really a good term.  What the Fed does is pay above market prices for collateral.  That action, though, seems to do some good for stock and bond prices.

falak pema's picture

When there is enuff detritus recycling it becomes economical. Keep that in mind. In this context "recycling" means sending back the fiat to its initiators; aka the FED. That will be awesome when it comes. T-note Ben gets his sandwich returned! 

janus's picture

Tyler Durden,

janus has a bone to pick with you, bruthah.  I gave you the intel story of the year; and you choose to igonre it.  now you git your bloody eye.

yes, janus is privy to lots...and tyler decided to turn his feminine-face away...lil bitch dat he is.

it's like this:  the punjab was behind the attacks in mumbai...period.  janus has it on Good Authority.  i gave TD the story...he didn't believe the details.  all is True.  saudi handed the pakistani-ISI-guy over to the hindus...this is fuckin huge.  do you bitchez realize what the fuck is going on?  janus tried to explain to TD the relevant facts; and he decided to consult MSM...great work, TD...way to go, bitch.  you deferred to MSM because they knew their own timing.  awesome.  (think janus hasn't ears, muthah fucker?)

now you foresake the 'real' story of the year-so-far cause you don't want to dance out on a limb...what's to become of you, TD?

yup, the paki-prisoner-cum-saudi...he's singin like a bird...tain't in the western MSM yet cause it's ballistic.  if you want to know what the fuck janus is bitchin about, google something like this: "pakistani deported from saudi arabia...mumbai bombings"

not a goddam thing in the western press...and, yet, it's more than True and it's got nuclear potenital on either side of the dilemma.  oh, and did i mention, american intel turned him into the hindus...shit is gettin muthah fuckin real...but, TD, just ignore the shit janus sends ya.  he's just a cab driver.  that's your last "big scoop", bitch.

no big deal...just check with the regular sources to see if it's got 'legs'...they always relay the big stories....well, they relay them after they're fully vetted and sanitized and erect for the ass-holes of lil-media bitchez...oh, janus is sorry, did dat hurt?  so fuckin sorry.  hell, if you wanna know what sex snookie's baby may be, just check with ZH first.  they may have it on verifiable authority.  best-a-luck.

learn where you fuckin stand, TD.  you have a seat at the table...learn how the fuck to use it.  it's not by bein all obsequious...learn to fuckin assert yourself, bitch.   be a mutha fuckin man!  you ask em all like, 'what does all this mean?'  NO! you goddam think; then you tell them what you know...it is by such that you find.

what the fuck, TD?  

do bettah.  janus is listening. 

LEARN THIS, TYLER:  IT IS OUR GAME; WE MAKE THE RULES.  LEARN THIS OR LOSE.,.learn the mechanics of POWER.  this is a game; and all games are about winning.  

okay, bitchez, janus decided to do the googlin for ya...here's a lil:




this lil mutha fucker has spewed so much in his interrogation...get out in front on this story, TD.  really, somebody should.  perhaps if he'd fucked pamela anderson it would mean more, no?


no big deal...just two nuclear powers who hate one another.  nuthin but a wacky, irrational terrorist bombin out of the clear blue...nuthin to be concerned with...just the balance of power in the region...

move along, ZHealots...nuthin to see here.  it's totally irrelevant.  means nuthin at all.


when you're back in your ole neighborhood/

the cigarettes taste so good/

...i want to thank you all for nuthin/

nuthin at all,


janus (so misunderstood)


LULZBank's picture

What was the big story?

falak pema's picture

...janus (so misunderstood)...

thats cos u have two faces, it was poured in concrete when you chose your avatar! 

AnAnonymous's picture

and all games are about winning.


Games as they are codified by US citizens. Clearly, when reading about the evolution of rules of games codified by US citizens, indeed, it is all about winning.

Nil, stalemate were made impossible in many ways.

US citizen games will want to support two outcomes only: win or defeat. The third option, no winner, no loser is hunted down.

Good reading, that of the evolution of US citizen codified games.

GMadScientist's picture

I know you're all bent about the D3 auction house, but get over it. There'll be other jobs besides farming gold. Like bulletcatcher or perhaps a live ottoman on which a ranking party member can rest his weary feet.


AnAnonymous's picture

D3 auction house? What is that?

akak's picture

I don't know either, but I am sure that it is something nefarious and has something to do with insidious creeping Chinese Citizenism.

AnAnonymous's picture


Lets take a bet then. I state it is linked to US citizenism, like being a product made by US citizens etc

I have it easy because US citizenism is real while chinese citizenism is just fantasy invented by US citizens to avoid answering questions on US citizenism (in other words, kicking the can as it is a US citizen sport)

Bet on reality vs bet on US citizen fantasy, who wins?

akak's picture


I have it easy because US citizenism is real while chinese citizenism is just fantasy invented by US citizens to avoid answering questions on US citizenism (in other words, kicking the can as it is a US citizen sport)

Behold, behold, behold!  Thrice, then frice, then fice times behold!
Behold again and again until magical much lucky number of Chinese Citizenism self-denialism is reached!

The glaring, autistic, dishonest, malevolent hypocrisy of Chinese Citizenism on display!  Like a naked 500-pound women walking down the boulevard, it is impossible to ignore, and hideous to view.

All evil in the world is the direct product  of roadside-shitting Chinese Citizenism.  Because collectivist, totalitarian, Borglike Chinese Citizenism is eternal, evil is eternal as well.  So will be the limp and tiny Middle Kingdom dicks requiring muchmuch fried tiger sex organs and bear gall bladders.  But hinting is my giving to the you: nation of yours is grossly overpopulated, no more Chinese bangbang is needed for a while yet.

akak's picture

Chinese Citizenism games:


"Who can make the largest roadside pile of nightsoil?"

"The Great Race to blob-up resources around the world"

"The shadowy world of Chinese ghost cities"

"Online trolling in support of totalitarian overlords for fun and profit"

AnAnonymous's picture

2 and 3 are US citizen games.

US citizens usually treat better dictatorship than some other US citizen aspiring nations.

See Haiti, see Iran,see Chile, see Mali.

akak's picture


US citizens usually treat better dictatorship than some other US citizen aspiring nations.

Strawberries, benign crustacean slurry, precipitious cetacean ribbons belie oak sighs.

AnAnonymous's picture

US citizens require fantasy to mediate between them and reality.

US citizen nature is eternal.

TheFourthStooge-ing's picture

AnAnonymous said:

US citizens require fantasy to mediate between them and reality.

US citizens are a fantasy that exist due to the fantasy of AnAnonymous.

But fantasy moves ahead, for the iceman just took a turn for the better.

US citizen nature is eternal.

You see US citizenism in the mirror; peering back at you is something which is guaranteed to shake you up.


Edweena went to Calumet, then left from there to college.
She took along a porcupine whose name was known as Knowledge.
Now their relationship was fraught with pangs of loving hunger.
The porcupine could question all, but all she knew was slumber.


akak's picture

Chinese Citizenism requires (and is based on) fantasy only, dispenses with reality altogether.

(Such as bigoted and nonsensical fables about non-existent nations being responsible for the collapse of societies hundreds of years before said nations were even founded.)

Chinese Citizenism autistic insanitation is eternal.

janus's picture


i meant to attach this song.

now that i have exercized my wrath...i think i can dance atop the points of my perspective...and with deft and whatnot.


there's a party there that we all ought to goto/

you still love rock-and-roll,


ebworthen's picture

Less jobs = less savings = less spending = less production.

No amount of "stimulus" is going to fix the basis of the equation.

AnAnonymous's picture

Less expansion, less jobs.

Jobs are consumption and without input to support jobs, no matter how qualified a person is, there is no possibility of work.

Ask US citizens, they know a lot about that as they have stolen so much environment to trigger an unsustainable activity.

More money wont mean more Indians to be found to support the US citizen project of freedom, truth and justice.

But hey, US citizens can hardly picture themselves for the thieves they are.

They are always the robbed, never the robber. A grand distortion of self perception as US citizens by far are the biggest robbers of them all.

akak's picture


Ask US citizens, they know a lot about that as they have stolen so much environment to trigger an unsustainable activity.

Tibet. Inner Mongolia.  Manchuria.  Chinese ghost cities. Environmental devastation of rare earth elements extraction.  Restaurants and markets devoted to bear gall bladders, tiger penises, and other endangered animal parts of Chinese lip-smacking goodness for Middle Kingdom limp dicks.

Oh hypocrite of a rhino horn-grinding Chinese physician, heal thyself!

AnAnonymous's picture

Tibet, inner Mongolia, Manchuria... They are nothing compared to the deeds of US citizens.

Manchuria? I supposed you are aware the Manchus ruled in China.

Ah, US citizens wish for symetry when there is only asymetry.

US citizens have risen from the ranks as the best extorters of the weak and farmers of the poor ever. US citizen achievements in those departments are unmatched and bear no rival.

OneTinSoldier66's picture

<-- I have a high demand for a 21st Century Savings Acct. Gold!

<-- I have a high demand for Debt on my Credit Card so I can SPEND!

All Risk No Reward's picture

Does anyone actually believe what these serial liars have to say?

I've left the chumptocrats and moved on.

This was never about stimulus - they criminally blew the world largest credit bubble and now they are looting all the cash they can, while dumping their worst debt onto the citizenry, in order to prepare for the coming collapse where they buy up the world for pennies on the dollar.

Yes, hyperinflation is the end game, but the deflationary spiked pit between here and there is the key to them trading in their trillions in debt holdings and more trillions in cash fohard goods - your hard goods.

Come on folks, the Money Power behind JP Morgan will determine the outcome (they control Bernanke, Bernanke is a front man that knows better than to have an original thought) and they are NOT giving out 3.6% 30 year mortgages ahead of an imminent hyperinflation.

Weapons Of Mass Debt


There is no saving credit and monetary aggregates AND THEY KNOW IT.  After all, it is all based upon fraud...

Debt Money Tyranny




hedgehog9999's picture

Too much viagra stimulus can actually kill you!!!

I think that's starting to happen , the bankers have had a hard on since Oct 2008 and 4 years is a bit much...... their brain has no blood left over and mistakes are starting to become more visble:

   - Dimons Whale

    - Barclays on-going manipulation of Lie-bor

    - City Banks' money laundering efforts

    - Morgan Stanleley's snafus...and margin


    - The addition of the corzine verb to the english language

    -  European bank runs in Spain, Greece and France

    - Failed banks (Bankia, Dexia, and others)

    - Serious bank outages of longer than a few days as in RBS's case and some Japanese outages....

    -  Fraudclosure situation ugly and continuing to deteriorate

    - and the devoping worldwide recession will be the coup de grace for those most stimulated since '08.

    - Most European banks bordering on insolvency in spite of all stimulus to-date.


Too much stimulus is bad for 'ya!!!

GreatUncle's picture

The global economy devouring itself :p

If there is only one global trader, not the individual nations stuff that is just a body part. It must devour itself too survive.

Unless you find another populated world to trade with and exploit.

zorba THE GREEK's picture

When everything is turning into s@#t, what's so bad about printing

money and buying all that s@#t and burying it on some Fed balance sheet?

The alternative really stinks. But spending twice what you take in and

printing the difference, that very inflationary. The Fed needed to stop after

QE1 and hand the problem over to Congress. That would have forced the

government to deal with situation and stop kicking the can at the expense

of our children and grandchildren. 

cdskiller's picture

So, what this piece is saying is that no banks should have been given a red cent. But he doesn't mean to say that, you see? What he is trying to say is that pro-growth Keynesian policies are stupid. Bailing out banks is not Keynesian, it is economic fascism. The problem is not one of economic theory, it is one of criminality. We need to stop the criminality of the financial markets and eliminate their control over our governments. That is accomplished through anti-capitalist policies and an acceptance that capitalist democracy without severe restraints does not work and invites rampant criminality. Hundreds and hundreds of hedge fund ponzi schemes were operated in the US during the past decade. Institutionalized crime syndicates took over. That is the problem, globally. Not Keynes.

AnAnonymous's picture

Bailing out banks derives from US citizenism.

No US citizen is a criminal in a US citizen system when he/she behaves the US citizen way.

Nothing new here, no change.

US citizenism has been the same since 1776,July, 4th.

How it comes some US citizens have grown so uncomfortable with US citizenism? Because they are on the wrong side of it?

Bitching on the rules of a game when they no longer favour you makes you a sour loser.

You wanted US citizenism to prevail? You have it and you stick to it.

TheFourthStooge-ing's picture

AnAnonymous said:

You wanted US citizenism to prevail? You have it and you stick to it.

Made me laugh. US citizenism? You created it, now you stuck in it, with much adhesion.

akak's picture

The diseased and atrophied cerebellum of our Chinese Citizenism-spouting dishwasher in action:


AnusAnonymous hates horseradish.

Therefore, horseradish is automatically, by his own (infinitely flexible) definition, a manifestation of so-called "US Citizenism".


akak's picture



(With credit to FourthStoogeing for that AnAnonymousization.)

r00t61's picture

Government is merely a form of legalized, rampant criminality.

AnAnonymous's picture

US citizen government is merely doing what US citizenism calls for. By US citizen standards, it can not be criminality.

US citizenism is as US citizen does.

TheFourthStooge-ing's picture

US citizenism is as AnAnonymous looks in the mirror and sees.

akak's picture

Chinese Citizenism is directly underneath roadside-squatting Chinese Citizens.


Let a thousand stink lilies bloom!

Itgoestoeleven's picture

That is accomplished through anti-capitalist policies and an acceptance that capitalist democracy without severe restraints does not work and invites rampant criminality.

Again, want to see the bad actors wither and die? Do not give them your money. Force is not the answer.

Itgoestoeleven's picture

"We need to stop the criminality of the financial markets and eliminate their control over our governments"

WE need to stop the criminality of the government and eliminate government control over us.

If you don't like what they did with your money, don't give them any more. Giving the gov. power over you is not the answer. Assholes are everywhere.  We steal, lie, cheat and kill each other constantly. Please do not give anyone the ability to hurt you. Especially if they have important titles like chairman, banker, officer, counselman, congressman...

RockyRacoon's picture

Man is free at the instant he wants to be. - Voltaire

AnAnonymous's picture


Another great thought by US citizen thinker.

And remember, in death, everyone is free.

A thought an extorted has to remember when trying to walk away from an extortion scheme.

Savyindallas's picture

If death is freedom, I'd like to liberate banksters. Their ill gotten gains and wealth are but the heavy chains of bondage. What did Jesus say about a rich man entering into heaven? Harder than a camel going through the eye of a needle? Let's lighten their load and unshackle the chains. We may not be able to push that fat ass camel though the needle's eye, but all Christians have a duty to try.

Vic Vinegar's picture

Absolutely that's a great quote by the V-dog.  And RockyRacoon is one of the best commenters here.  I always read and think about whatever he has to say.

You - not so much.  What is your purpose for being here, AnAnon?  Other than feigning an ignroance as to who Lindsay Lohan is, what have you ever done here?  

AnAnonymous's picture

One of the best US citizen commenters then.

Being read by you is no guarantee of quality. Stop placing yourself at the center of the universe. Oh, you cant do that, you are a US citizen.

How is it a great quote? It fundamentally denies the existence of power. How is it great? (not expecting an answer, that is beyong US citizen capacity)

Best, US citizens calling for justification?

The genocidal tendencies are showing. Once again.

US citizenism at work.

akak's picture


The genocidal tendencies are showing. Once again.


TheFourthStooge-ing's picture

AnAnonymous said:

Best, US citizens calling for justification?

Even better, and crustiest: AnAnonymousistic self justification, as it renders the impossibility of self indiction.

Chinese citizenism preference for fantasies showing. Once again.

AnAnonymousism at work.

AnAnonymous's picture

That is quite a thing. So there can not be people knowing about that Lindsay Lohan?

The hubris of US citizens is unmatched.
Now if that Lindsay Lohan was such a part of your world that you cant believe others do not know her, well, that is your problem. Not mine.
Bear with it.

The 'cultural' world brought by US citizens is such that I gave on it some time ago. I know very little of the latest additions to it. I can not tell you the current US citizen movie, song, book stars. I have no idea of them. I dont want to.

Could you provide one item of the US citizen cultural world over the last years that is worth dedicating time?