Ben Wins - Who Loses?

Bruce Krasting's picture

The most significant market adjustment since Bernanke used the "Unlimited" word is not in stocks, bonds or PMs. It's in inflation expectations. Have a look at this chart. Focus on the incredible spike in the past 24-hours.



The sick part of this is that if Bernanke saw this graph, he would cry with tears of happiness. This is exactly what he was praying for. Ben thinks that inflation is a good thing. That it will cause demand to be pulled forward as people realize that things are going to cost more tomorrow than they do today.

I suspect Ben is right. Higher inflation expectations in the US will filter around the globe. Post the extraordinary steps Ben took yesterday, people will be stocking up on "stuff". Things like rice, flour, cooking oil, soy, wheat and sugar. If you can eat it, buy it now. It will be more expensive in a month. While your at it, fill up the gas tank, the price is going up next week and every week for the next few months.

Ben doesn't care about that stuff. He ignores this altogether. Maybe he's right, after all, food and energy are really not so important to the 7Bn folks who happen to be passing through this decade, right?

Some day the history books will study this period of time and ponder how so many people gave up control of key elements in their lives without ever having a say in the outcome. How could one person have gotten so powerful? Somehow we have anointed Ben as the new God. An omnipotent decider that is nether elected or whose power is somehow checked. Don't think for a minute that he's one of those benevolent gods, he's not.




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boiltherich's picture

Mittens says middle class is a quarter million a year, so 99% of ZH'ers are poor, don't feel bad, he will give a nice tax break to the rich so you can make 200k a year cleaning their toilets. 

ebworthen's picture

Ben and the Banks win.

The responsible citizen loses.

Fuck the FED and the horse they rode in on.

Implicit simplicit's picture

Bruce, I would think that the further developments regarding oil being priced in other than dollars is quite significant for many reasons.  What do you think? it seems to be worthy of a post from you or some of the other  great researchers at ZH.

Mr. Regression's picture

I read here often but don't post much.  All I can say is that as Mr. Bernanke continues his stimulus (along with the ECB), our family just cuts back on spending.  I'm not an equities fan at this point and we're largely in short term bonds and cash.  Since we cannot get a reasonable return on these investments (and we refuse to foolishly chase yield) we simply spend less.  Food is about the only area where we don't cut back, but even there we're finding ways to get around some high prices.  We've found ways to barter some of my services for high quality locally produced foods such as meats, eggs, maple sugar products and milk.  For now it's a small portion of the food budget but I can see it growing if things deteriorate.  If you have or can acquire some mechanical aptitude you can save thousands of dollars each year on things like auto repair, appliance repair, home improvements, etc.  Over the past couple of years I've done roof repair, fixed the furnace (control board), repaired a washing machine, a dryer and an ice maker.  I replaced struts and shocks on two of our cars and did brakes and some body work as well.  We removed some large trees with some help from friends who wanted the wood for heating.  All in all I estimated I saved about $10,000 - $15,000 in labor plus whatever markup I would have been charged on materials.    The internet is a great resource for information to get you started.  People are always scheming to make more money.  That's OK, but I think we often forget that cutting overhead is important too.


When you're cutting down trees and fixing the roof you're also getting a lot of exercise.  Maybe you can ditch the gym membership too.

ebworthen's picture

There you go.

Hit 'em where it hurts.

Cut debt and be self reliant.

TPTB hate that shit, they want you indentured to Chase and Wells Fargo for everything.

Vampires, they are fucking vampires, and the FED is in collusion with them to bleed us out.

Implicit simplicit's picture

You make some great points. I am over 60 but can still run 3   8m minute miles. I want to stay in shape for health and to be able to take care of things like you mention. Mt next skill will be acuiring climbing skills for trees and roof. I have scoped out climbing gear and harnesses, and I will start practicing the knots soon. I want to be prepared for the highr roof byu using the solid chimney as a tei around safetey with rope and possibly a bungee cord for push manuverability. I planted 14 blueberry bushes, 10 blackberry, 25 asparagus and 25 strawberry perrinial plants and root systems last spring along with regular vegetable annuals after roto tilling a half acre. I amgetting ready to change a tie rod in one of the family cars and I have replaced two family toiletts and gaskets in the past rwo years. 

Good luck. Money saved is money earned!

Oquities's picture

does anyone know what the FED pays when it buys mortgage-backed secrurities, market, par or other?

ebworthen's picture

The FED will pay whatever the asking price is to prop the banks.

To HELL with responsibility and the rule of law and free markets and the citizens of the U.S. (as far as the FED and TPTB are concerned - the writing is so clear and so large if you can't see it you need to see an Ophthalmologist).

Hang them all; Wall Street, Washington, and the whole Kabal of rampant thieves purporting to be saviors.

naiverealist's picture

The fed will pay 100 cents on the dollar, even though the MBSs do not have that intrinsic value (remember mark to myth?).


All this is, in toto, is another bail-out for the banks, but as long as they can recapitalize the BS loans made during the housing bubble and transfer those securities to the Fed, who will transfer them (at 100%, again) to the GSEs (Fannie, Freddie, FHA, etc.- read the "taxpayer") for an additional fee.  In this way they can reinflate the housing market (called, facetiously, "supporting the housing industry") and pull the American Economy (read "TBTF Banks") out of the insolvency they put themselves into.


Where else can you find an industry that through financing costs and the long term financing, sell a nominal asset for 200% (for a 20 year loan) or 300% (for a thirty year loan) as well as numerous "fees".  It's a racket!

El's picture

Aren't people still more than a little bit gun shy about home ownership? The last mess still hasn't fully unwound.

Also, there doeasn't appear to be a new crop of victims coming along because young folks 1) can't find jobs; and 2) are making payments that might otherwise have been mortgage payments to the U.S. Department of Education instead.

I really don't see this action by the Fed turning out well.

Kina's picture

That it will cause demand to be pulled forward as people realize that things are going to cost more tomorrow than they do today.

It doesn't work. People are too over borrowed to go on a spending spree, all they will worry about is what they have to eat tomorrow and next week.


Bernanke need to give them the money to spend first, better then throwing hundreds of billions down the banksters black hole. Now that would have caused inflation due to people spending.





ReeferMac's picture

Great stuff Bruce. Love reading your articles. Your writing has a way of cutting through the BS and getting the point across in simple to understand terms.

Earl of Chiswick's picture

Thanks Bruce

I have been spinning thru the blogs but you nail it, I read Felix Salmon once and a while and I guess they have reformatted and created what is clearly a clusterfcuk over at Reuters, they should just buy ZH

laomei's picture

Man, this is gonna be pretty awesome once the reality of americans being broke comes into play.  They can't afford shit as it is anyways.  1 in 12 have no bank account.  1 in 6 are on food stamps.  There are no real jobs that people are qualified for, and the ones that people are qualified for are trying to get something for nothing.  Raises? Good luck! Companies are still cutting jobs.  People are surviving because they are not paying mortgages, because the banks won't kick them out anymore.  People are surviving off of payday loans and credit cards and student loan money that has to be paid back at usurious rates.  HALF of america is living paycheck to paycheck.  The median per capita is around $25k.  And now you toss inflation into it?  Haha, you're all fucked.  The only reason it was tolerable last time was because everyone else snapped up that USD and imported your inflation.  After Arab Spring and seeing the pains associated with that inflation the first time around, can you honestly believe that anyone will do that again?  Have you not noticed how countries are starting to cut the US out of the picture for finance?  This time, the inflation will stay where it was created.

THE DORK OF CORK's picture

And no token fiscal investments in life support as is happening in France , just raw in your face Monetarism.

Much of suburban America and the Euro periphery simply can't hack this without investments designed to capture this new flow.

Me thinks this is the final act (maybe)

Extreme colonies such as Spain & Ireland need to renationalise their money systems or else they are all going to die.

Disenchanted's picture



The following has been attributed to Thomas Jefferson. I really don't give a damn who said it, but you can look around now and see it happening:


I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

Freegolder's picture

The world has got what it wanted, the game can continue for a few more years, debt deflation will be fought at any cost.

I hope you see where this leads Bruce? The world will continue to move away from the US dollar as a reserve, and that will unleash the hyperinflation that has been hidden in the dollar for 30+ years.

Get protected people.

xamax's picture

Hey Bruce
Many thanks for this article. As usual right to the point.
You are the best contributor
Wish you a nice day,Bruce
Sncerely Daniel

falak pema's picture

Bruce; the market is no longer the economy; the "unlimited" word has officially decoupled it from reality.

I can understand your state of mind and I sympathise.

But this situation is a much deeper malaise of civilisation and its something we should all delve into more; our generation that benefitted from it and has been totally impotent at turning the tide of this thirty + years of top-down imposition of a power logic that has been heading to the wall since at least August 1971, if not more. An erosion of VALUE systems behind short term, hubristic thinking, with no checks and balances imposed by the elected regulators of "we the people".

Your insights and hands-on analysis of day to day events contributes to that delving and understanding; and that is a modest blessing. We are living off the bread crumbs of a civilisation gone delusional on Truth and in open collusion with the worst instincts of man.

DOT's picture

Hooray! Hubristic Heuristics.


You are correct my freind, we survive on the inertia of past efforts and innovation.


The Alarmist's picture

Poor Ben ... his salary is only on the order of $200k per annum, so he is only middle class ... by Romney reasoning.  So he'll take it in the shorts in the inflationary environment he knows to be the right tonic for the rest of us, right?  But don't cry for Ben, because the royalties on his college textbooks will be somewhere between $200k and $2m, and he's got a pension worth something between $1.2m to $2.5m, so he'll manage to get by somehow.

falak pema's picture

Just remember that Bill Clinton and Tony Blair made more money on the lecture tour of "when we were kings" than they ever made as real kings of democracy. They became uber rich. Why should it be different for Big Ben, who could write his memoirs of "how I singlehandedly lost the West with my fiat bazooka; the contrary to the WInchester 73!"? 

GeezerGeek's picture

In the grand flow of events, Big Ben will appear as nothing more than a minor player in the destruction of the West. The values once embraced by legions of Western peoples have been replaced by a relativism that encouraged a multitude of ultimately destructive actions and tendencies. There is no longer a firm moral basis from which the masses might object to monetization of debts, outright seizure of private property, elimination of natural rights, etc. Something bigger is happening, and has been for well over 100 years in the West. Bernanke's actions, along with those of the complicit politicians, are but a symptom. The West is collectively committing suicide.

Dr. Sandi's picture

I assume Ben will only accept gold and not dying fiat when he's on that tour.

Umh's picture

What color would you like your fiat currency to be?

TuesdayBen's picture

My radio just told me that the Gubmint made huge money on its investment in AIG. The Gubmint simply moved money - my money, our money, future earnings of our progeny - from one pocket to the other, yet Obama will crow about a windfall profit he made for the taxpayer. And he will read it from TOTUS with a straight face - because the fucker is incompetent and dumb enough to believe it himself. Had Romney been POTUS he too would have claimed that he won one for the taxpayers, but in making the claim the eyebrow of the capitalist/money-man would have twitched tellingly.

The Banksters win, I lose, and I am told I won by my man in DC, who is there ostensibly to look after my best interests. Right? Obama works for me, right? Do I not pay his salary, fund the travels of his charming wife, pick up the White house lawn mowing tab???

WTFx10's picture

Those fuckin terrorist Muslim bankers are destroying the world !!!

The Alarmist's picture

Winning!  AIG made money for the Feds if you conveniently ignore the $25B or so they did not pay in taxes because they were able to write off the losses that should have vapourised in the process of reorganising them (bailing them out).

boiltherich's picture
Mitt Romney defines 'middle income' as '$200,000 to $250,000 and less'

Associated Press
Associated Press In Print: Saturday, September 15, 2012

BOSTON — Mitt Romney is promising to reduce taxes on middle-income Americans.

But how does he define "middle income"? The Republican presidential nominee defined it Friday as income of $200,000 to $250,000 a year and less.

The definition of "middle income" or the "middle class" is politically charged as Romney and President Barack Obama fight to win over working-class voters. If elected, Romney would be among the wealthiest presidents, and Democrats have repeatedly painted him as out of touch with average people.




FACT:  "...the difference in income between a household at the 50th percentile and a household at the 51st percentile is $1,237 ($42,327 versus $43,564)."


Hey Assholes's picture

Inflation hits the middle income.

I am poor now.

Umh's picture

By your definition the middle class is 1% of the population; the 1% between the 50th & 51th percentile.  I think we can argue all day about what constitutes the middle class, but the people between the 50th & 51th percentile are not it.

boiltherich's picture

Had a wee bit too much to drink tonight have we?  I did not say anything in that post, I just reported what Mr. Magic Underpants said at a Nazi rally and then reported a fact about American incomes.  Half of all Americans income is the 50th percentile or did they not teach such concepts in your high school?  The upper half is the 51st percentile or moree.  DUH!

The fact I posted is that the middle income for all Americans is WAYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY lower than the quarter million bucks a year Mittens thinks we take home.  Of course when you "earn" 24 million in a single year in which you had NO job what is a couple hundred thousand a year? 

I know the majority here will vote for that slimball prick, but do be honest about it, he is not going to help you in any way other than to be white.

hedgehog9999's picture

"The sick part of this is that if Bernanke saw this graph, he would cry with tears of happiness. This is exactly what he was praying for. Ben thinks that inflation is a good thing. That it will cause demand to be pulled forward as people realize that things are going to cost more tomorrow than they do today."

This would only last a month or two for a minority of people that have a little extra disposable income to over spend  (the vast majority live day by day), those that have disposable income in spades (top 5 %) don't give a shit and actually milk the inflation environment. 

So bringing demand forward is a short lived event. Also,  as oil and food and everything else goes up in price, there is less available income to overspend and buy forward.....

I lived in a country with very high inflation for 6 years. bottom line is the standard of living goes down for 90% of the population, 5% do OK and the other 5% milk the inflation in spades as they buy property at distressed prices, and other goodies due precisely to the available surplus money they posess.

The US will be no different, it is already happening with the current understated inflation levels in place.!!!

q99x2's picture

Food Riots Bitchez. There go the Hamptons.

sosoome's picture

But I wonder, Bruce, if this will actually cause inflation.

Are the central planners already at the point of dog chase tail?

"Expectation" will get them through the election, and they can put off the debt ceiling for a few months, but what then?

This appears to be more of a bank bailout which doesn't get liquidity on the street. 

Ben may have to do much more to actually generate inflation.

Umh's picture

I don't know if this is going to cause inflation, but if you're not getting a pay increase it's going to hurt.

Reese Bobby's picture

Bernanke? He's an errand boy for TPTB. He has about as much real power as you Krasting. Ben sold his soul to be a pompous front guy and that makes him a tragic idiot.

goldenboy's picture

Many would ask how it is that in our day you still don't know it? You might start with Carroll Quigley "Hope and Tragedy" or with Anthony C Sutton. Enjoy!

RobertMugabe's picture

He "knows" things like this, because he's a completely delusional idiot, along with half of the other ZH commenters

joe90's picture

you missed out ZH readers.

this guy misses the elephant in the room .... debasement of the dollar is  "exporting inflation" whichis theft.

bunnyswanson's picture

"There is a transnational ruling class, a "Superclass", that agrees on establishing a world government. The middle class is targeted for elimination, because most of the world has no middle class, and to fully integrate and internationalize a middle class, would require industrialization and development in Africa, and certain places in Asia and Latin America. The goal of the Superclass is not to lose their wealth and power to a transnational middle class, but rather to extinguish the notion of a middle class, and transnationalize a lower, uneducated, labor oriented class, through which they will secure ultimate wealth and power. The global economic crisis serves these ends, as whatever remaining wealth the middle class holds is in the process of being eliminated, and as the crisis progresses, the middle classes of the world will suffer, while a great percentage of lower classes of the world, poverty-stricken even prior to the crisis, will suffer the greatest, most probably leading to a massive reduction in population levels, particularly in the "underdeveloped" or "Third World" states."
Andrew Gavin Marshall, 'The Global Economic Crisis: The Great Depression of the XXI Century'  

  "Not all conspiracies are theories."



"We are ruled, though it may be difficult to imagine, by a small dynastic power structure, largely consisting of powerful banking families, such as the Rothschilds, Rockefellers, and others. They emerged in controlling the financial system, extended their influence over the political system, the educational system, and, through the major foundations, have become the dominant social powers of our world, creating think tanks and other institutions which shape and change the course of society and modern human history."



Andrew Gavin Marshall  

WTFx10's picture


Urban Redneck's picture

I know you're "Superclass" well, and I don't see them when I'm in Africa.

So if they have some master plan that requires "industrialization and development" in Africa, you rest confident that the termination of the middle class is decades off, or Andrew Gavin Marshall is just way off base .

bunnyswanson's picture

 By subsuming nations formerly in the areas of responsibility of three Pentagon commands under a unified one, the U.S. will divide the world’s second most populous continent into five military districts, each with a multinational African Standby Force trained by military forces from the United States, NATO and the European Union.

Later the same month, the Pentagon confirmed its earlier disclosure that AFRICOM would deploy regional integration teams “to the northern, eastern, southern, central and western portions of the continent, mirroring the African Union’s five regional economic communities….”




Securing Africa’s Oil Sources:


Against this backdrop, a major reason why Africa suddenly

became strategically important to the U.S. culminating in the creation of AFRICOM could be

seen in the history of the genesis of CENTCOM, which was primarily created in 1980 for the

security of crude oil supplies from the Persian Gulf (Klare 2008).


In the presence of US State Department Officials, employees from The Rand Corporation and Israeli military personnel, a military exercise was undertaken which tested how AFRICOM would respond to a disintegrating Nigeria on the verge of collapse amidst civil war. The scenario envisioned rebel factions vying for control of the Niger Delta oil fields (the source of one of America’s top oil imports), which would potentially be secured by some 20,000 U.S. troops if a US-friendly coup failed to take place At a press conference at the House Armed Services Committee on March 13, 2008, AFRICOM Commander, General William Ward then went on to brazenly state the priority issue of America’s growing dependence on African oil would be furthered by AFRICOM operating under the principle theatre-goal of “combating terrorism”.


Urban Redneck's picture

No matter how much the US likes to think of its military capacity (or the omnipotent power ascribed to it by the conspiracy theorists) the US is currently 4th in line for access to energy resources in any given African State, behind 1) The Chinese, 2) Whomever used t be the local Colonial power, and 3) the Russians.

Hillary Clinton getting off the plane with a bunch of here boss's campaign bundlers doesn't move the needle.  Uncle Sam isn't spending enough of the US Taxpayer's hard-borrowed dollars to win a bidding war, and Russians (and Ukranians) are offer much better prices than the US MIC.  And in the case of boots on the ground, a boat team would last about as long as in the surrounds of Sandpoint, Idaho if they tried to subdue the locals.

Blaming the situation on the cunt Lagarde is laughable, and the debate over domestic fuel subsidies in Nigeria was going for over a year (publicly) before she ever showed up (hint: corruption and those few account holders with so much of the deposit base)

The amateur conspiracy theorists at "real agenda" also apparently aren't even aware of the extent and duration of AFRICOM's presence in sub-saharan Africa (hint: War on Drugs).


Dr. Sandi's picture

Okay. So now that the truth be known, what?

bunnyswanson's picture

I don't know.  But if I had a say in it, I'd say:   Get on the phone and call everyone you love and ask them if they'd have a family dinner meeting and have a talk about the apparent truth, that very difficult days are ahead of us.  Then, enlarge the group to include associates and neighbors, church members and those whom you respect and have a larger meeting of the minds. 


To know this is coming is very frightening.  I believe it will go beyond this and there isn't much time.  If soldiers /constant presence of law enforcement end up in the streets, it is too late.


Majority rules because the majority has been right the majority of the time.