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Evergreen

Bruce Krasting's picture




 

 

 

I live not too far from a 100 year-old dam that’s part of NYC’s water supply. There’s a roadway that runs over the top. For years, the locals used the dam as the quick-way to town.

 

That ended a few days after 911 when some SWAT guys showed up. The thinking was that maybe the terrorists would hit the water supply next. That lasted a few months; then the SWAT guys left, and were replaced with NYS prison guards (a nasty lot). The guard guys hung out in a hut, smoked cigarettes and talked on cell phones.

 

Two years of guard duty (and a ton of OT) went by with no attack, so the Home Land Security folks brought in a few big rocks, and a heavy cable to keep things safe, sort of.

 

 

Things stayed like that for another five years, all the time people complaining that they had to drive miles out of the way, and the kids were stuck on buses for hours and it wasn’t safe as fire, police and ambulance had to go up the side road.

 

So finally push came to shove, and there was a big meeting, and the folks at the DHLS worked out a deal with the County. The dam roadway would be reopened; but only after the national threat alert went to green.

 

Green?

 

 

 

American won’t see a “Green” alert level for another fifty years. What kind of answer is that? It’s a lie.

 

I thought of this story after reading the comments from the Swiss National Bank’s Vice-Chair, Danthine. He set a time frame for how long the SNB would maintain the 1.2000 peg against the Euro. His words:

 

SNB can keep 1.20 cap as long as needed

 

As long as needed? That's about as open-ended as it can get. This language could be interpreted as meaning 1-2 years, it could just as easily mean ten-years (forever). Danthine is describing an inflexible policy that has no defined ending. I think of this as "Evergreen" monetary policy.

 

Evergreen policies are evident at all of the big CBs today. The ECB's, Mario Draghi, has used the word "Unlimited" when describing the scope of his willingness to intervene in the capital markets. He has also used the word "Forever" when describing the duration of the fixed exchange rate regime in the EU.

 

Forever + Unlimited = Evergreen

 

Japan has been Evergreen for years. Is it ten rounds of QE that the BOJ has done so far? And today, in what I find to be an extraordinary development, there is a promise that Evergreen will be taken to the next level. In less than a month, Japan will have an election, the outcome will mark the end of the concept of an "Independent Central Bank". The leading candidate, Abe, has promised that if elected, he will force the BOJ to conduct money printing monetary policies that would have no bounds.

I think of this as if the government was handing out cyanide pills. The markets disagree. The Nikkei has been on a tear ever since the national elections were called:

 

 

Why is it that the promise of more printing always brings with it a ramp up in equity prices? After ten failed attempts, one would think that investors finally "get it". QE does not work, it just distorts.

 

 

The Mother of all Central Banks is, of course, the Federal Reserve. Ben Bernanke, his cohorts at the Fed and the usual suspects in the press have been preparing the markets for the coming QE4.

Janet Yellen spoke a week ago, she talked Evergreen:

 

The three elements of forward guidance that were adopted by the FOMC in September 2012 would have been unthinkable in 1992 and greatly surprising in 2002, but they have, in my view, become a centerpiece of appropriate monetary policy.

 

Right. What was, not so long ago, "unthinkable", is now the "centerpiece". These people are actually proud of this "accomplishment".

 

Then Bernanke spoke, Evergreen was his message too:

 

we expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.

 

In other words, there is no scenario for an end to printing.

 

And finally, today, the WSJ's ace reporter, Jon Hilsenrath, has an interview with Federal Reserve President John Williams. The message? More Evergreen talk.

 

Conceptually you could imagine some upper limit to this but I don't think we're getting anywhere near it.

 

On whether the Fed could stop monetizing any time soon?

 

Stopping or scaling back would be "counterproductive" for the economy.

 

The US is at a tipping point on monetary policy. Operation Twist ends in December. The mind numbing reality is that if the Fed were to allow Twist to just end, it would be contractionary.

Traditionally, monetary policy could be either Restrictive, Accommodative, or Neutral. In 2012, Neutral is equal to Contraction. There is no longer a middle ground. Either the Fed adds more to the system every month for eternity, or else.

And that is exactly what will happen in December. The Fed will do QE#4, it will result in an additional $40+B per month of Fed buys. Along with QE#3, that means the Fed will be monetizing debt to the tune of $85B a month ($2mm a minute, 24/7). When QE#3 and #4 is ending, we will have QE#s 5 and 6.

Bernanke has said many times that all of his efforts are just temporary. That the big balance sheet of the Fed can be reduced with no problems at all when ever it might be needed. Ben's lying. He's fibbing in the same way as suggesting my roadway might reopen someday soon. America is never going to have a Green Terror Alert status again. The answer to the question, "When's the shortcut gonna open again?" is, "Never". The Fed is no different. They are committed to an Evergreen approach. They have no other alternative.

The major economies of the world are faced with Print or Die. So print it will be. I do wish the monetary overlords would acknowledge that what is being done is irreversible, and that the consequences will be felt for years. What was once unthinkable, is now permanent.

 

 

 

 

 

 

 

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Fri, 11/23/2012 - 23:05 | 3007984 Zero Govt
Zero Govt's picture

"QE does not work, it just distorts."

Well said Bruce.

"What was once unthinkable, is now permanent."

The patches from central bankers have become so large to cover the tragic clowns of banking and Govt they will suffocate entire nations in monetary madness

Everything Govt touches turns to crap ...monetary system next.

Fri, 11/23/2012 - 20:45 | 3007761 Dr. Sandi
Dr. Sandi's picture

What if a couple of local domestic terrorists clipped the cable with a one of those monster bolt cutters that fire departments use as keys? Then the judicious use of a small cat to carefully reposition the concrete barriers to once again open the road.

No government action required.

Repeat as necessary.

Fri, 11/23/2012 - 13:40 | 3006795 OneTinSoldier66
OneTinSoldier66's picture

Bruce,

 

Why are you worried? Representative Democracy has "checks and balances" via Mob Bankster Rules. We don't need no stinkin' constitution or free market.

 

</sarc>

Fri, 11/23/2012 - 13:16 | 3006710 OneTinSoldier66
OneTinSoldier66's picture

You just have to think like a banker. You can never have too much green. Until the Minsky moment arrives, and not one moment before.

Fri, 11/23/2012 - 13:05 | 3006673 Bansters-in-my-...
Bansters-in-my- feces's picture

Evergreen Aviation plays a role in spraying chemtrails on yous all....

Fri, 11/23/2012 - 11:38 | 3006380 moneybots
moneybots's picture

"The major economies of the world are faced with Print or Die."

 

A false choice.  We die either way.  Weimar Germany Printed.  Weimar Germany died in 1923.
What is the value of a worthless currency?

Fri, 11/23/2012 - 11:37 | 3006333 LawsofPhysics
LawsofPhysics's picture

WTF?!  Bruce re-posting more "scared old white man" shit.  Dissappointing, to say the least.  end the damn Fed, it's gonna happen anyway.

Fri, 11/23/2012 - 11:25 | 3006309 benbushiii
benbushiii's picture

The Fed has created the Evergreen Policy as a form of permanent tax rate increases on the majority of the population in order to finance the government programs and entitlements.  The general population believes they are entitled to their benefits, they don't realize that in order to achieve this a stealth tax has imposed in order to accomplish this.  Unfortunately fro them, the solution actually costs them more than the benefits they receive.  If someone would stand up and point out the Fed is basically an unelected group that has the ability to raise taxes without representation then maybe the American people will see what is truly happening.  Though the media does a wonderful job of promoting the solutions of the FED.

Fri, 11/23/2012 - 11:04 | 3006249 Vooter
Vooter's picture

We all know how this is going to end, and frankly, I'm not going to waste whatever breath I have left on the animals who are making it happen. Don't vote, buy and hold physical PMs and land, and do whatever it is that makes you happy. Fuck 'em--the United States isn't the first empire to collapse, and it certainly won't be the last. Live your life--don't let these people live it for you...

Fri, 11/23/2012 - 13:13 | 3006699 OneTinSoldier66
OneTinSoldier66's picture

Absolutely.

 

+1 ounce of Gold to you Vooter.

Fri, 11/23/2012 - 10:48 | 3006211 csmith
csmith's picture

"...mean ten-years (forever)..."

 

Not so, Bruce...only about 1/4 of an investing lifetime.

Fri, 11/23/2012 - 10:46 | 3006208 rodocostarica
rodocostarica's picture

Bruce OT but wondering about how the frying the Turkey thing worked out. Was it good?

 

Cheers,

Fri, 11/23/2012 - 10:17 | 3006128 Stuck on Zero
Stuck on Zero's picture

We need a law that says the government must decrease spending by 5% per year until the Homeland Security Advisory System drops into the Green.  Wanna bet it would happen overnight?

 

Fri, 11/23/2012 - 08:22 | 3005929 Ol Man
Ol Man's picture

Senza Fine, Baby!

Fri, 11/23/2012 - 06:34 | 3005887 e-recep
e-recep's picture

misallocation of the resources for the benefit of a few. the country is rotting, that's what it is.

Fri, 11/23/2012 - 08:56 | 3005940 therearetoomany...
therearetoomanyidiots's picture

the country?  The World!

Fri, 11/23/2012 - 04:16 | 3005838 ptoemmes
ptoemmes's picture

OK, you made me do it.  Streisand singing Evergreen: http://www.youtube.com/watch?v=kmuF3jiufww

Fri, 11/23/2012 - 03:28 | 3005821 etresoi
etresoi's picture

How are a few big rocks in the roadway going to prevent someone from blowing the Kensico dam, which is a very minor piece in the wate supply to nyc?

If one wished to shut down the nyc water supply, it would be easier to blow the aqueduct, which is very near the surface a little east of University Avenue, between Fordham Road and Burnside, in the Bronx, or has DHS posted goons every hundred meters?

Fri, 11/23/2012 - 09:00 | 3005945 therearetoomany...
therearetoomanyidiots's picture

Perhaps if Bloombust could take a few minutes from his freedom policing activities, he could spend some time and maybe some of the police union's money on desalinization plants.   That would be a bit safer than using centuries old technology to transfer water a hundred miles.  

Fri, 11/23/2012 - 03:42 | 3005829 Dealyer Turdin
Dealyer Turdin's picture

If it made sense, woud they be doing it?   

Fri, 11/23/2012 - 03:20 | 3005812 dunce
dunce's picture

Governments have options on monetary policy, and one option that never seems to be given serious consideration is doing nothing. They seem to feel that when ever there is a problem they must "do" something because it is their job to "do" something even though that something has no history of ever solving the problem they are facing. Is there an example in recent history of letting the market work it out?

Fri, 11/23/2012 - 02:40 | 3005796 trader1
trader1's picture

Looks like kensico dam...valhalla? Nice area!

Fri, 11/23/2012 - 01:14 | 3005718 tony bonn
tony bonn's picture

this is stale news....jim willie called this 2 years ago - perpetual qe.

besides being liars and terrorists, the fed banksters are also scared shitless about  even slowing qe because the bid for their crapulent book would vaporize in a nuclear cloud of exploding ir swaps....the criminals are in charge and they ain't goin' no place soon.

Thu, 11/22/2012 - 23:49 | 3005617 CunnyFunt
CunnyFunt's picture

I understand the sentiment and it played a part in my decision to renounce the "shitty" and fuck off. In hindsight, it feels strange to long for the days of Dinkins. The pics are outstanding (including the griff pics in other posts). Bruce, rock on, amigo!

Thu, 11/22/2012 - 22:36 | 3005534 three chord sloth
three chord sloth's picture

Why is it that the promise of more printing always brings with it a ramp up in equity prices? After ten failed attempts, one would think that investors finally "get it". QE does not work, it just distorts.

It should be obvious to all by now... the distortion IS the investment opportunity. It's like a huge wave that rolls through the markets from the top down. Each investor knows, deep down, that there will be hell to pay for all this... eventually. Eventually being the key word. Meanwhile, one can ride that wave, it'll take you somewhere (which is better than stagnating in place in a dead drift), and if one times it right, one can jump off the wave before the crash and churn feeds you a mouthful of grit.

Investors are not looking for profit... profit and loss are secondary. The distortion itself is the biggest game in town.

Thu, 11/22/2012 - 22:35 | 3005530 steve from virginia
steve from virginia's picture

 

Monetary easing is also pointless, it has accomplished nothing.

 

Whatever is lent is added to the existing burden of debt ... this burden is why there are accomodative policies in the first place.

 

The central banks seek to dig out of their holes by making them deeper.

 

The limits on borrowing have largely been reached. The issuance of new debt only services and retires existing debt. At some point it is impossible for the debtor to borrow enough to manage its existing debts. Afterward comes rapid collapse.

 

There is no real economic output ... to be had by taking on more debt. Without 'productive debt', industrialization itself stops working. This is the dynamic in Europe and is emerging in Japan right now. The borrowing from the Bank of Japan is only a gesture, an empty form. All of the various easings are a waste of time. Japan should know better as they have been easing for 20 years. What they have to show for it is deflation and massive debts.

 

What matters is resources not loans. Call me when the BoJ can print crude oil. 

Thu, 11/22/2012 - 21:56 | 3005481 THE DORK OF CORK
THE DORK OF CORK's picture

There is one wild card out there that I believe no one is taking seriously..........

 

The UK looks like its leaving dodge

The France / UK are in perfect trade balance..........

 

Its happened before , indeed many times in history and now that the Gaullist elements are so weak in France.

 

http://en.wikipedia.org/wiki/Cobden-Chevalier_Treaty

 

France gets a market for its nuclear reactors and agri - produce.

Not too sure what the UK can bring to the table - perhaps access to the gulf of st lawrence wider hinterland via close ties with the US & canada.

France is close (with a part) of Canada also.

 

Its possible.

Anything is possible now of course.

A new plantagenet ?

If Japan goes down will Detroit be back in business ?

http://www.youtube.com/watch?v=U15Fwo9tbJ4&feature=plcp

 

http://www.youtube.com/watch?v=AoY8OxuvvXc&feature=relmfu

Will North Atlantic trade push out longer distance Pacific and Indian / med trade routes ?

Its a long way between the UK and Japan / China........much marine bunker fuel is burned to preserve this labour arbitrage.

Is it worth it now ?

I don't think so.

Fri, 11/23/2012 - 09:02 | 3005947 therearetoomany...
therearetoomanyidiots's picture

"Not too sure what the UK can bring to the table" 

Pretty sure the answer is twofold:  drunks and bad teeth

 

Humor aside, good points

Thu, 11/22/2012 - 21:15 | 3005460 RagnarDanneskjold
RagnarDanneskjold's picture

USD/JPY 200, Nikkei 40,000

Fri, 11/23/2012 - 01:13 | 3005715 cifo
cifo's picture

Everybody seems to be drunk tonight.

Fri, 11/23/2012 - 02:51 | 3005799 mkhs
mkhs's picture

I wish.

Thu, 11/22/2012 - 20:37 | 3005394 lindaamick
lindaamick's picture

Everybody in on the printing game (all predators/investors) will play along forever. 

Meanwhile masses of children in the US whose parents relied on actually producing something with their labor are going hungry.

Nothing is sacred.  The predators lay bets on everything;  food, fuel, homes (ie, houses) and everything else that is needed for survival. 

I hear that the predators are licking their chops over the education system and water in the US.

Pity the poor children in the US. 

Fri, 11/23/2012 - 00:19 | 3005655 MeBizarro
MeBizarro's picture

Primary education is a HUGE opportunity if a state goes full voucher. 

Thu, 11/22/2012 - 20:24 | 3005376 Bansters-in-my-...
Bansters-in-my- feces's picture

..."Evergreen Aviation" They say thats one of the companies the USAF contracts the chemtrail spraying being done. Yous are being sprayed daily ,you do know.... Don't you.

 

If you don't think so you are "fucking dumb" and deserve to be sprayed anyways...

 

Eveyone,tell your friends and family whats going on if you know.

If you don't know about it,learn it on up....

It's for real.

Learn about SAG,and HAARP and "Own the Weather in 2025"

And watch the skies long enough to make an informed honest obsevations,and opinion.

Thanks all.....

This is urgent.

Thu, 11/22/2012 - 20:04 | 3005343 Offthebeach
Offthebeach's picture

I sense dissention in the hive mind. You are all remembered by the force, and will enjoy correct thinking camp.

Fri, 11/23/2012 - 03:47 | 3005832 Dealyer Turdin
Dealyer Turdin's picture

No, we are the drugs that you cannot make for yourselves.  You must not tell anyone.

Thu, 11/22/2012 - 20:03 | 3005339 lamont cranston
lamont cranston's picture

QE ad infinitum = Guaranteed Inflation, say 8%

Combine with the 15-20% of the workforce that will be cut to 29 hours/week max starting in Jan 2013. (Thank you Chief Justice Roberts)

At some point (I'm no economist) the shit hits the fan. 30% of my business is servicing REOs, and it just keeps growing. 

I do plan driving to the Tanger Outlet Mall outside of town to witness Midnight Madness. Oh - it has a restaurant serving beer, so all is well.

Regarding "Forever", I'm reminded of the line in Blazing Saddles where the applicant wanting to join Hedley Lamarr's army states his qualifications and repeats "rape" twice is stopped by Mr Lamarr, who asks why he said rape twice.

The applicant replied, "I like rape." We'd better get used to it too. 

 

Fri, 11/23/2012 - 09:17 | 3005952 therearetoomany...
therearetoomanyidiots's picture

Can I ask a question?   I agree, I tihnk with everyone's assessments and logic on why it will all fall down...it all makes sense.    I've been reading right here and elsewhere about the impending doom of financial crash and hyperinflation.   For years.  Yet...it hasn't come.  Well, a pack of english muffins are 4 bucks down here in SW FL.  Well, and gas is still 3.40 which is down from 410.  But, I still don't need, yet, wheelbarrows of greengacks to buy a loaf of bread.   I mean, gold and silver have been pop stars for like, at least 5-8 years.     It doesn't come...

 

Is it that maybe these people know what they're doing?   Or is it that artificially everything is being kept in check and that eventually the dam will become too weak and down it will come?

 

I'm not trying to be an ass like normal but after a while, you tire of waiting for the 'crest of the title wave'....shit, even my MREs are starting to reach their expiration date...that's how long I've been waiting for this crap to happen.  

Sat, 11/24/2012 - 09:04 | 3008256 Mediocritas
Mediocritas's picture

It will fall down overseas before it falls down in the States. The first nations to go are the weakest / poorest, those are your canaries in the coal mine. No need to load up on MREs until you see first tier nations in Europe starting to fall. France would be a good one to watch. Another tell is when India and Pakistan really look like going nuclear on each other over access to water.

Ie, you still have about 10-15 years to wait.

Fri, 11/23/2012 - 14:55 | 3007046 Lednbrass
Lednbrass's picture

Eventually the dam will become weak and it will come down.

Timing is another issue though- nobody knows exactly when, all you can do is observe the repeated instances of "No fucking way this can work forever" in finance and politics and make your best guess.  If you and I observe a car driving down the road leaking radiator fluid and oil, can you or anyone say for sure just when the engine will overheat and stop the vehicle? Is it possible to determine precisely how far it will travel before this happens? Not even a master mechanic can do that, there are too many interactions of too many parts and outside factors to say for sure. It is certain however that eventually the engine will seize up and the vehicle will stop moving.

Personally I think as few as 3 or as many as 12 years because many factors cannot be predicted, but its anyones guess.

Fri, 11/23/2012 - 02:59 | 3005802 willwork4food
willwork4food's picture

+1   Yea, that and the lack of  abundant  food, gas, electricity, water and virgins.

Ya might want to throw in 'civility' in that too, but that will come when people learn that respect might mean the difference between a warm shower & lodging for their family and selling your daughter for slim jims.

Thu, 11/22/2012 - 19:58 | 3005329 perchprism
perchprism's picture

 

Geithner urging an infinite debt ceiling is another example of your Evergreen trend.

Thu, 11/22/2012 - 19:57 | 3005328 Hulk
Hulk's picture

and so we continue to counter evergreen with evergold.

Happy Thanksgiving Bitchez!!! 

Thu, 11/22/2012 - 19:43 | 3005309 knukles
knukles's picture

.

Fri, 11/23/2012 - 02:40 | 3005795 willwork4food
willwork4food's picture

WTF? My favorite commentor has no quipsy comment?

The end is nigh folks

Fri, 11/23/2012 - 12:30 | 3006575 Hulk
Hulk's picture

He must of passed out drunk after his period...

Thu, 11/22/2012 - 19:43 | 3005308 Urban Redneck
Urban Redneck's picture

26' U-Haul truck rental... $40

Chinese 48" bolt cutters... $80

100 gallons of home heating oil... $400

4 tons of ammonium nitrate... $2800

knowing that detonation must occur lower on the dam and not on the road above... priceless

 

 

How many trillions of yours and everyone else's tax dollars have been wasted in the interim with non-solutions which merely inconvenience everyone and only provide complete idiots with a (false) sense of security?

Fri, 11/23/2012 - 08:03 | 3005915 ISEEIT
ISEEIT's picture

Relax citizen..........It's all part of going FORWARD!!

Thu, 11/22/2012 - 22:39 | 3005540 ceilidh_trail
ceilidh_trail's picture

How many trillions of yours and everyone else's tax dollars have been wasted in the interim with non-solutions which merely inconvenience everyone and only provide complete idiots with a (false) sense of security?

This is the sole purpose of "homeland security" - a powerplay. They tell you it's for your own good when anyone with a brain could find 50 ways to work around their "security". I have not forgotten or forgiven the pukes who pulled my wife and young daughter and myself out of the boarding line for a flight from Halifax to NYC- only to be passed by a bunch in burkahs chanting to allah as they went onboard and took over the luggage racks where our seats were. Total BS. This was not long after 9/11 occured. They are still worthless to this day- all they do is slow down us actual producers.

Thu, 11/22/2012 - 21:52 | 3005496 nmewn
nmewn's picture

It's incredible ain't it?

Kinda like airport security just has to be federally unionized, only in that way can they truely be called "professional" gropers & pickpockets.

(Mumbling to myself incoherently)

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