The End of the Bernanke Put is Here

Phoenix Capital Research's picture


For well over a year, even after Ben Bernanke admitted that the consequences of QE outweighed the benefits, the financial media world is awash with claims that QE 3 is just around the corner. It doesn’t matter than it’s been over a year. Nor does it matter that the Fed has staged 10 FOMC meetings without launching more QE, everyone claims QE is coming.


Guess what? It’s not. And I’m going to lay this idiotic theory to rest right here and now.


First off, the Fed cannot launch QE because of the political climate in the US. In case you missed it, the last time the Fed engaged in a large monetary move (outside of just extending some pre-existing policy) was in November 2011 when it facilitated a coordinated Central Bank move to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements.


The political response to this was extreme. Every GOP candidate under the sun began to target the Fed. Some began calling for Bernanke to be fired.  Meanwhile, Obama became totally silent on defending the Fed. Let that sink in for a moment. Obama, who reappointed Bernanke, didn’t defend Bernanke’s actions. In fact he acted as if nothing had happened.


The message was clear: the Fed had become politically toxic and if Obama wanted a shot at re-election, he needed to distance himself from the Fed.


It was only a few months later that the Fed went into full on damage control mode by increasing its town hall meeting efforts (Bernanke now goes to colleges to explain why the Fed is great), writing complaints about how the media is presenting its moves during the financial crisis along, and of course the now famous “Bernanke’s a normal guy who drives a Sebring and reads a Kindle” article in the Wall Street Journal.


Consider that Bernanke, only a few years ago, lied to Congress about monetizing debt. Around that same time the Inspector General in charge of oversight of the Fed said that the Fed:


1)   Didn’t know where it was sending hundreds of billions of Dollars.

2)   Had not launched any investigations into where the money had gone

3)   Had not launched any investigations into why Lehman Brothers had been allowed to fail


Has everyone forgotten this? Bernanke, the savior of capitalism, Time Magazine’s Man of the Year, and arguably the most powerful human being in terms of monetary clout ON THE PLANET is now going into classrooms to explain why the Fed is wonderful and should continue to exist.


Even more than that, he’s having his favorite mouthpiece at the Wall Street Journal portray him as a normal American who drives a US car and reads his kindle. This is the HEAD OF THE FED we’re talking about. Since when does Bernanke need anyone to depict his private life? The guy used to tell the media to get stuffed when it snooped around the Fed’s actions… now he’s openly going to the media asking to get profiled?


Folks, the political game has changed in the US. The Fed is no longer invulnerable. In this climate more QE cannot possibly happen. End of story. Indeed, if the Fed were to launch QE at any time between now and the election, Obama is DONE. The last possibly chance for QE without it being a clear hand-out to Obama (and a gift from the political gods to Romney) was June. The Fed passed on that.


Don’t believe me? Why do you think Obama is privately begging Germany and EU leaders to keep the EU together until after November? He knows the Fed cannot step in and save the day without killing his chances at re-election. END. OF. STORY.


Finally, there’s a simple monetary reason the Fed cannot engage in more QE: BANKS NEED TREASURIES. Treasuries are the ONLY senior asset on bank balance sheets that are increasing in value (don’t even try to claim that mortgage bonds, corporate bonds or muni bonds are attractive to banks given what the banks know about the ongoing debt crisis in the world).


More QE pushes the US Dollar down. So for the Fed to engage in more QE would mean the Fed would be buying appreciating assets from the banks (which can be leveraged up for trades… remember all the big banks are now basically hedge funds) in exchange for cash which yields next to nothing and would be depreciating in value if more QE was announced.


The banks need all the Treasuries they can get their hands on. I know, I know, ultimately Treasuries will be worth much less when the debt crisis hits the US. But it hasn’t yet.


If you’re a large bank what would you rather own? Treasuries or some other sovereign bond which either yields nothing (Germany, Japan, France) or which is about to default (the PIIGS and others)? 


The answer is obvious. You want Treasuries. We’re not talking about ideals here; we’re talking about reality. And in today’s financial reality, Treasuries are the best senior most asset a bank can buy. WHY would a bank want to hand these off to the Fed for cash, which yields nothing?


I could go on and on, but the reality is the above arguments alone erase any reason for the Fed to launch QE any time soon, if ever. The ONLY reason the Fed would launch QE would be if liquidity needs were so desperate for the banks that the would be willing to give up their senior most assets in exchange for cash to meet day to day liquidity needs.


And if we get to that point in the US again, QE will be the LAST of our worries.


So, QE is not coming. End of story. You can continue to argue otherwise based on some idealistic view of the world, but the reality is Europe and Japan’s bond markets are both on the brink of collapse. US banks want all the Treasuries they can get. In a perfect world, they’re not great investments, but they’re far more attractive that the alternatives in the REAL world.


So… if you’re still investing based on the idea that QE is coming and that the Bernanke Put is firmly in place, you’re going to be in for a HUGE surprise in the coming months. QE isn’t coming. And the Bernanke Put is losing its credibility rapidly.


Which means… the primary prop underneath the US stock market and financial system (namely Fed intervention) is slowly being removed. What follows will not be pretty and smart investors should be taking steps now to prepare in advance.


If you’ve yet to take steps to prepare for this, I can show you how: my Surviving a Crisis Four Times Worse Than 2008 report is chock full of information on how to not only survive but thrive during the months to come.


Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).


Best of all, this report is 100% FREE. To pick up your copy today simply go to: and click on the OUR FREE REPORTS tab.


Good Investing!


Graham Summers


PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years, or how to stockpile food (where to get it, what to buy, and how to store it) our reports cover this information in great detail.

And ALL of this is available for FREE under the OUR FREE REPORTS tab at:








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ddtuttle's picture

As Pento (KWN) has been saying, things just aren't bad enough yet.  Let the market drop, unemployment rise, and the dollar rise, and QE will become politically acceptable over night (Save us Benny!).

Besides Europe is going to blow in some unpredictable way.  Most people think the PIIGS leave.  I think the Germans leave, and the the EU becomes a PIIGS sty.  Nobody knows, not even Ben.  So he waits, which is politically convenient for the moment.

The world is drowining in debt, and modern neo-classical, neo-Keynesian economics has failed.  Ben is NOT stupid, and has access to information that would curl even the most cynical ZH reader's hair.   They are slowly beginning to realize the jam they are in.  Politically they will be forced into what Jim SIncliar calls infinite QE.  But what we all know is that, in the end, it will fail.  At that point we will have a day of reckoning.  Most likely there will be a world-wide currency reset invovling all currencies.  That will effectively invalidate all past debt, and would be a world-wide debt Jubilee.

Bernanke's reputation will be garbage by then.  His legacy to history will not be one of greatness but of gargantuan academic arrogance, denial and hubris.  This is what he fears most at the moment.  Perhaps he'll be replaced before he has to deal with the full force of the perfect storm.

Clowns on Acid's picture

Agreed with author. Fed will force Congress to take tax action before any add'l QE type moves.

Bernake is in survival mode, he wants the focus on the politicians, very similer to Chief Justice Roberts technique.

The low brow shills in the MSM will flock to wherever the focus gets put on and tear the individuals apart (usually Republicans because they generaslly speak to right side of brain rather than the mushy left side). MSM only folllows left side as it is consistent with their media = selling advertising, advertising = appeal to left side of brain. 

ES will have no legs from Fed unless we see precipitous drop below 1300 or so.


johnjkiii's picture

I suspect he will continue to twist & trade his balance sheet. The risk is he pisses off too many of the rich & powerful & the politicians take over the Fed directly. History shows that when the central bank loses power over the cash & politicians take over, all hell breaks loose. Read about the South Sea, Andy jackson, Weimar or Zimbabwe & pray this idiot gets to keep control until he can be replaced with someone sane. The fit is going to hit the shan eventually but the politicians wipe out the middle class whenever they control the currency. I'd much rather be able to trade a shitty market & economy than have to figure out how to survive the political & economic collapse that would happen if Reid & Obammy ran it at the point of a bayonette.

Mr Lennon Hendrix's picture

Traders that trade bullishly on expectations of QE look silly, and rightfully so, but traders that trade on expectations of no QE look equally silly.  Bulls and bears unite, for you both adhere to a system which is clueless and lawless.

Look outside the paradigm and realize fiat currency has no intrinsic value.  The reality is that gold and silver is money, and nothing else is.  Until this fact is realized by traders from both sides of the aisles, there will be no predictability in the market.  Until that time, call your shots but risk looking foolish, for you are just as bad as the system you follow.

dlmaniac's picture

Somebody has to finance that 1.5 trillion deficit every year so the QE will go to inifinity regardless how it is officially called.

devo's picture

I've said it several times, but the FED can't QE. The next "QE" will be a corporate tax holiday. Much more politically viable, Obama will look like a friend of big business, etc. The Goog/Aapl/PFE of the world with money overseas will benefit. I've been buying these stocks.

agNau's picture

Ok, no QE.

*Credit rules have just been loosened.

Once again enter those least able to manage credit to save the day.

ie. Your credit score has just been raised!
Now go out and buy something!

Sorry Graham.......didn't expect that did you?

Clowns on Acid's picture

Very valid point agNau - The CRA Act on steroids worked (for a decade or so) given Barney "he made me bite the pillow" Frank ingenious plot to force banks to throw low cost mortgages at those who coulde least afford them.

Obama will now say " Well "we" have given banks plenty of low (no) cost money....but they havn't "given" it to those who need it most". Lend the money to people and the great American enterprenuers will lead the US back to prosperity".

Whoops...Obama has said that there are no true US entreprenuers. "Just people helping other people. No one does it alone". Obama is so confused himself that it is scary.


Dingleberry's picture

Not sure if the Fed has to do QE now anyway. Europe is cratering (neg yields) and such. Uncle Sam is yet again the only game in town.  For now.....

Ben doesn't have to buy treasuries. He can do whatever, wherever and/or whomever he fucking wants to do. And he has. Reeatedly. Without restriction or hinderence.  Ben IS currently the master of the universe due to the exigent circumstances clause in the fed act.  For now......Or have you forgotten the trillions in crap that he put on the fed's balance sheet, like MBS n' shit.  Ben has carte blanche.  He can buys stocks, bonds, swaps, ANYTHING!!!!  The repubs (now that they don't own the executive branch) are wailing and gnashing their teeth over wayward Uncle Ben. If Romney wins, watch how fast they change their tune.

No matter, whoever wins just serves at the behest of the banksters.   Including Uncle Ben.

MrBoompi's picture

The Fed has some pretty specific duties, namely printing money, manipulating interest rates, and influencing other markets when the need arises.  (I've heard they are supposed to do some regulation work too.) They've been printing money for 100 years.  You can say there will be no more easing.  I say the Fed will do what it always does, which is to add money to the supply by whatever means necessary whenever necessary. 

Fiat Money's picture

 "First off, the Fed cannot launch QE because of the political climate in the US. In case you missed it, the last time the Fed engaged in a large monetary move (outside of just extending some pre-existing policy) was in November 2011...

   The political response to this was extreme. Every GOP candidate under the sun began to target the Fed. Some began calling for Bernanke to be fired.  Meanwhile, Obama became totally silent on defending the Fed. Let that sink in for a moment. Obama, who reappointed Bernanke, didn’t defend Bernanke’s actions. In fact he acted as if nothing had happened.

The message was clear: the Fed had become politically toxic and if Obama wanted a shot at re-election, he needed to distance himself from the Fed."

   Thanks for that, G.S.   Confirmation of your notions is that Ron Paul's 'audit the Fed' bill has had so many supporters & co-sponsors in the House.  But of course it will be/is obstructed in the SENATE, the last bastion of oligarch elites.   This (senate obstruction) is made possible by the pathological liars of the corporate (elite owned)  "mainstream" media, who relentlessly shout down, ridicule, demonize, and villify anyone who is critical of their precious kleptocrat extortion machine.   

   As some historical background, don't forget that NONE of the THREE presidential candidates of the 1912 election - including so-called "liberal" Democrat Woodrow Wilson, or so-called "Republican trust-busting reformer" (and former president running as an Independent of the 'Bull Moose' Party) Teddy Roosevelt - made an issue of the looming Federal Reserve Charter (established by Congress in the infamous Christmas eve vote of 1913) - because they had all been bought-off by, and were in the pockets of,  the Europe-based banking cartel (with its.... JP Morgan, Senator Kefauver, & other American front-men) bankers.

   Even more important, due to the relentless "major media" propaganda job, it has taken the American public these 3, 4, 5, or more years since the "BAILOUTS" started becoming deeply entrenched as OFFICIAL U.S. GOVERNMENt POLICY  for the American public to look beyond the rabbit hole, and realize that 'BAILOUTS'  are FREE MONEY FOR BANKERS...  and, in particular, "BAILOUTS"  are FREE MONEY (and near-zero interest rate 'money', ZIRP) AT THE EXPENSE OF SAVERS, retirees, pensioners, and workers....  And, in particular,  "BAILOUTS" are FREE MONEY for banks that have SQUANDERED their  'capital' with long strings of BAD BETS, BAD GAMBLES, and rampant greed, KILLING THEIR OWN MARKETS -  selling 'securities' they KNEW to be toxic, garbage, but which they had their bought-and-owned #1. RATINGS AGENCIES,  AND #2. government regulators, AND #3. the financial press/media,  stamp as triple-A"  (AAA) "investment grade" securities.

    We, the "alternative" financial press/media/bloggers, investors, & activists still have a long way to go, to explain & illustrate to "average Americans"  how THE CENTRAL BANKERS are ALWAYS LOOKING FOR AN EXCUSE to PRINT MONEY - they take a slice in fees & "transaction costs" and earn interest from every billion $ they print - but it is finally starting to seep in, that the notion of that ALLOWING the Fed to GIVE TRILLIONS of printed-out-of-thin-air dollars to bankers, so maybe they will purchase Billions of governement debt (Treasuries) tomorrow, is like giving a teenager your credit card, and telling him to run it into the ground, in hopes that it will "save" the economy....

  (Here the NY Fed, under Geithner,  dished out 2/3rds of a TRILLION dollars to the member/owner banksters - $630,000,000 in FREE MONEY! - without hardly ANY notice by the American public, press/media, or Congress - this "liquidity injection"  practically DOUBLING  Hank Paulson's  $700 billion "TARP" bailout of just 1 week earlier!) 

   The "BAILOUTS"  started way back in the late 1980s with the S&L bailouts... were INSTITUTIONALIZED under Rubin & Summers with the LTCM debacle and "President's Working Group on Financial Markets"  (aka the PLUNGE PROTECTION TEAM - using  fiat "HOT MONEY" to ARTIFICIALLY BOOST STOCK PRICES by COORDINATED govt/Fed actions) - who all (Greenspan, Rubin, Summers, & Levitt) created the opaque, dark markets "Derivatives" nightmare

that led directly to the Sept. 2008 market crash - and the now DAILY institutionalization of  "FREE MONEY FROM THE CENTRAL BANK"  "QE" cash infusions to debt-wracked, bankrupt, insolvent, casino-gulag bankers who, like Rubin & Jacob Lew (both at Citi) paid themselves tens of millions of dollars in "bonuses" from TAXPAYER BAILOUT funds,  without which their banks would have crashed. 

deerhunter's picture

What is to keep our government from saying one fine sunny morning from the oval office that your USD are now worth 25 cents and no longer 1 dollar????  Since in reality they already are worth far less.  What is the dollar-commodity linch pin that keeps the whole imaginary bottom from falling out???  Joe six pack may be ignorant of world affairs but he sure knows when momma spends 200 dollars a week for groceries it is seriously cutting into his beer and cigarette money.  Also, when the state of Illionois adds a dollar a pack sin tax to cigarettes he has to smoke fewer or eat less groceries.  The whole country should by now know it is all OVER and we have been living a lie the past 20 years.  What causes the coming collapse?  Two more key in the mailbox homes in my formerly middle class neighborhood this past week.  Makes for nine that I know of.  Have a good day.

HungrySeagull's picture

I carefully read this... solicitation Graham.

First off you cannot truly believe how things are going to work out precisely. Only God knows what the Future holds and the rest of us are left to "Wing it" the best we can.

The Elections is going to be a one hell of a horrible experience for everyone. You cannot truly expect something like this to go well. And it will not go well if the Electoral College decides to disconnect and wave Obama back into office despite a 100% popular vote against.

The Fed is acting like a Pensioner who is down to less than one month's funds at the bank. It does not know when it will be needed and hopes it wont. However be that is may, War is a truly looming issue that will essentially require the mother of all QE, especially if we get hit here in our Lower 48 or Alaska without Insurance coverage (Acts of War across the entire Industry)

To be honest I don't know if it is the Military doing a good job of being careful and what they think is best within the Mission. I should be thankful that nothing truly bad has happened yet. But no, I believe deep down there will be a war with Iran (And Russia etc)

You say over and over there will be no QE. I am sorry but think one day it will happen. And when it finally does it's going to be something.

Yes, I stack metals against QE and also against what must happen due to the suppression of pricing.

The US Dollar on paper is worth millions for coffee and the Banks are finished. Credit Unions are turning people away because they cannot afford to raise costs the bank way.

As far as the super rich, I know I am a no body and could care less what the super rich do. I am more worried about the super poor.

Winter is coming and with it the season of our Discontent.

Let Europe Burn. I dont give a shit.

However the Euro too is dead. Finished. KAPUT.

It will be so easy to simply revert to National currency before the Euro was ever a dream. If that affects the US Dollar, so be it.

I am not a writer, never will be. This is little more than a rant.

If you truly believe you know exactly what is going to happen with your 9 pages.... Put em up here and let us all see it and compare then to what you wrote now.

If the events happen to match your predictions then you Sir will me very wealthy as the people flood into your church of 9 pages.

If not? We can take a hit or two and carry on.

But the day QE happens, it will happen. No matter how much everyone says it cannot be.

doc_in_the_house's picture

to hungryseagull:

you are right that the "election" is gonna be one hell  of an experience.  NOR FOR ME.  i'm going to relish it, savor it and welcome the experience with open arms.  i warned in oct 2008 about the antichrist...NOW IT'S TOOOOO LATE....LOL !!!!!

even IF Romney wins, do you honestly think that odummer will just walk away?? please !! ROFLMAO !!!!!!

maybe 12-21-12 is the date that he changes his  mind? ha, ha, ha, haaaaa!!!!!

Whats that smell's picture

"as soon as I take office Obamacare is over"

the check is in the mail

I won't come in your mouth

doc_in_the_house's picture

i covered my spx SHORTs of 1370-1360

last week @ 1326-1328....then PUMP to 1357...still WAITING for 1370+ to RESHORT.  come on MUPPETS, you can do it...YES YOU CAN.  will reshort @ 1370+ and RIDE til 1100ish b4 QE3.

QE3 ordered by the QEorgnanizer to bQE's (bernanQE) printing press...LOL !!!!

spx @ 1349 or so now...will NOT CHASE down (OR UP)....pump = me short !!

dizzyfingers's picture

Where are those damned guillotines!?

tony bonn's picture

qe never is foolishness to debate is disappearance as it has moved under ground taking other guises and manifestations, one of which was the massive currency swaps provided late last year.

whining about qe misses the point entirely....the fed is still bailing out european and us banks....sometimes it buys crap, sometimes it gives away the farm, and sometimes it commits flagrant crimes.....qe and its siblings are not going away and never have.

Bastiat's picture

Why would Bernanke care whether Obama or Romney is elected?  Both are bankster puppets it seems.

johnjkiii's picture

He doesn't but he knows it would be his job if he sided with one or the other. Every fed Chair in history has refrained from being seen as political in an election year. This guy is nothing if not wary.

gdogus erectus's picture

Pssssst, Graham. We already have QE, Who do you think buys treasuries (yes, indirectly) every single "auction"? I believe we call it printing money here at the Zero Hedge community.

Dude, wake up. Read a little.

Assetman's picture

Selling short dated Treasuries in favor of buying longer dated Treasury notes is a sterilized operation.  So long as the Fed isn't expanding its balance sheet (and it's really a matter of timing)... I'll say this falls short of meeting the technical QE term.

Now is the Fed manipulating rates across the whole Treasury curve?

Well... of course they are!  :)

Bastiat's picture

Yep QE while denying it.  The magician's misdirection.

When I first read the title I read:  The End of the Bernanke Putz is Here.

XtraBullish's picture

IF YOU WANT TO AVOID FINANCIAL DISASTER, BUY MY NEWSLETTER! (so you can ensure that I will avoid foreclosure).

bluemaster's picture

Look world markets chart Emini,Dax,Ftse  QE3,4,5,6 is there every day .. 

I shorted this shit and just going up and up 

Bicycle Repairman's picture

If political consequences in the US are all that is restraining the FED, then after November it's a whole new world.  And making it to November requires a fairly high level of cooperation from Europe at least.  Then there is the black swan known as war.  There are tinderboxes all over the place.

fattail's picture

The author thinks there will be no QE because it will hurt Obama'a reelection chances???  There will be no QE PRECISELY because it will doom Obama's reeletion chances.  Who do you think Wall Street wants as their wholly owned chief executive?  Their ever faithful lapdog Obama and his toothless and blind attack dog of an AG Holder, or one of their own?  A tried and true true-believer in the Wall St way, their very own private stooge, Mittens.  The only thing that would convice me more that the fix was in, is if Mittens picks a NWO neo-con as a runningmate.  The Condi trial balloon was floated a few days ago, Portman has been discussed,  I am still waiting for the Jeb Bush trial balloon.

The author actually thinks the Sheeple understand the Fed and all its Machinations??? Please, don't distract them from their Idol and DWTS.  QE means nothing to the average oblivious american, all they can do is whine about the gas price.

I forsee the S&P in the upper triple digits.

Nostradamus's picture

Absolutely. The average American doesn't even know who the FED Chairman is, let alone what QE is.  They just want to watch their TV shows and sports programs.  Bernanke doesn't care who the president is, and neither do the banks, whom both Bernanke and Obama work for.  Romney or Obama? It's all the same to them.  When the masses get tired of one puppet they simply replace him with another.  The FED will implement QE when it feels it has to.  They might let the market drop a little more this time. Who knows?  One thing they won't do is let the banking system collapse.  If they were going to let that happen, they would have done so in 2007.  They will continue to expand credit as needed to keep the system going until the currency is destroyed.

rsnoble's picture

QE3 or not, there is still some 'entity' propping up these markets at critical moments.  It's anyones guess how long that can last but it's all a about November im sure.  If shit goes to hell after the re-election I hope people finally wake the fuck up.  Hah, another day dream of mine.  These fucking clowns need to go.

Mr Pink's picture

Hey Graham, this is Zerohedge. Nobody still believes this " if he wants to be re elected" garbage. Do you really think the owners of the fed care which one of their puppets get elected? Anything that happens or doesnt happen in DC between now and November is just political theater.

FieldingMellish's picture

Ongoing QE is as certain as the sun rising tomorrow. The markets are unable to go on without it. It was certain to be this way since the start of fractional reserve and the debt bubble was blown.

Mountainview's picture

The whole QE thing will only stop when somewheresomeone will not accept US$ for payment anymore...Currently this does not happen...Arab,from the peninsula, are still willing to sell oil for US$ (as long as the US is on their side in Syria) and China plays the game must go on... So QE3...QE4... willcome without being named as such.

Europe is playing to the same script behind eternal Debt problems pampered by the ECB, IMF, LTRO's and others...

SafelyGraze's picture

got lost at "Treasuries are the ONLY senior asset on bank balance sheets that are increasing in value"

when did a (big) bank need an asset with value?

plus, Housing Rebound has been Signalled


geno-econ's picture

After elections all hell breaks loose whether Congress agrees to cut spending or not or if tax cuts continue or not.  Then Ben will get pressure from all parties. business groups(especially banks,pension funds and auto industry) . Bernanke institute QE3 and will again be Hero to the Rescue and Man Of The Year in 2013.  Will it actually make a difference? For 6-9 months then Poof---another credit freeze and recession worldwide. Meanwhile, China is striving to achieve a Balanced Economy to weather the storm and survive the upcoming disaster while the Developed Economies cling to notions of Free Trade, Global Keynesian Deficits and  Service Industry Superiority. Just look at the past to see the future----Enron, Madoff, Libor, Peregrini. MF Capital, HBC, AIG, GS, Lehman, MS, JP Morgan, Barclays, , Countrywide, Rating Agency conflicts, no oversight Derivatives, on and on and on and mostly in the service industry sector.

engineertheeconomy's picture

Tyler is fucked up in the head for continuing to spout this nonsense. Anyone with even one braincell left can see that globally it is a race to the bottom, and they are using this kind of propaganda to further the banker/military/corporations ability to rape, pillage and plunder globally thanks to their dollar-weapon. Cut the crap Tyler

Hobbleknee's picture

QE will continue.  They will simply change its name or stop talking about it.

paint it red call it hell's picture

There may not be more QE at the present but I do not believe for a moment the political environment has changed to a great degree. There will be no QE prior to election because the o'Bama administration is not to be given a 2nd term, batter up Romney.

I look for a neocon to be added to his ticket, somebody like wolfowitz but more sanitary.

SheepDog-One's picture

In reality, what will happen instead of QE is one morning people will be left with a Corzine'd trading and bank account and markets halted till further notice. Its going to be hillarious.

vmromk's picture

Graham has been spewing the same drivel for the last 300 points on the S&P.

His analysis, boasting and service are all horseshit.

Three years from now, when the shit does hit the fan, Graham will tout how right he was.


SheepDog-One's picture

Really, so how do you figure '3 years from now'?

You have no idea whats going to happen next month, just like everyone else.

Bahamas's picture

QE is happening right now, silently before our eyes. In a debt based monetary system banks have too keep creating money as they do not create the interest that matures (compound) on such sums.

SheepDog-One's picture

Exactly! All-out manipulation and money injections going on full bore with S&P 5% from all time highs and yet everyone desperate for a few more trillion from Bernank? People better buckle up because this shit heap is goin down! When it happens one morning it will leave everyones head spinning....this time will be the motherfuker of all crashes and there will be nothing you can do about it if youre exposed.

bshirley1968's picture

I agree.  Graham isn't talking about the continued use of the debt ventilator the fed puts on everyday.  He is referring to a major policy shift or surge in the money supply.   At the current ventilator rates we can go on for quite a while.  The 800 pound gorilla in the room is Europe.

eddiebe's picture

The one ton gorilla in the room is confidence in fiat.

Quinvarius's picture

The system requires an infusion of non-debt based cash that only the Fed or the Treasury can provide or it will collapse.  This system was kick started with real non-debt cash.  And so it will be again.  The alternative is a debt defaulting frenzy that will make the money completely worthless as no one will need any to pay down debt.  Our money has no intrinsic value other than demand to pay bills and debt.

bshirley1968's picture

The Fed has zero concern about the "economy".  Its only concern is about the banking sector.  When are people going to get this through their heads?  The fed doesn't care about: unemployment, consumer sentiment, retail sales, CPI, etc.  All it cares is that banks can go out and continue to issue debt.  It was a banking/debt failure/issue that started this whole mess.  I would venture to say the economy (not including housing and auto industry) is not much different today than it was back in '07.  Debt markets screwed up the housing and auto industries and that is where most of our problems are today.

Bottom line is that the Fed only cares about the banking world and all else is a distant second.  To get QE, Graham is right, we need another banking crisis.  I agree that he is calling this one correct.  The ultimate question any of you need to answer regarding QE is, "What are they waiting for?"  The only plausible answer right now is the election.  After that, if they don't do something, you will be waiting a long time or for the next banking crisis.

As long as they can keep the euro in the game the fed can sit on its hands.  If the euro were to crash and the dollar (by defacto) were to shoot up, then the fed would have to act to squelch any dreaded DEFLATION that would occur.  But at this point it would seem the euro is going to live forever being artificially held up by the ECB and the Fed.  The dollar needs the euro and any QE will come to Europe first.

Winston Smith 2009's picture

"Bottom line is that the Fed only cares about the banking world and all else is a distant second."

When it comes to the very survival of the largest players in the banking system as is currently the case, yes, everything else is secondary no matter how many need to be robbed to ensure that survival.  That's the whole point of central banks, survival of the banking system.  But like any good parasite, central banks don't want to kill their hosts and would prefer healthy economies to sick ones.

eddiebe's picture

Wow, Graham, you know exactly how this all will play out? Amazing!

Will liquidity injections into any markets or banks not called 'QE.' still be considered 'QE' by you? What about mark to model?

SheepDog-One's picture

Well just call Bernank taking a dump 'QE' then everything can be 'QE'.