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Bernanke Just Admitted the Fed Failed... Not That More QE Is Coming

Phoenix Capital Research's picture





 

So Bernanke provided the “QE is coming crowd with hope again this morning, using the usual ambiguous language that stock bulls convert into a definitive declaration of more QE.

 

Here’s what Bernanke said:

 

"If this hypothesis is wrong and structural factors are in fact explaining much of the increase in long-term unemployment, then the scope for countercyclical policies to address this problem will be more limited.  Even if that proves to be the case, however, we should not conclude that nothing can be done.”

 

It’s the last phrase that has the QE crowd certain QE is coming. Never mind that Bernanke has been stating QE was no longer attractive as a monetary option since MAY 2011, or that the Fed has primarily been engaging in verbal, rather than monetary, intervention for nearly a year (Operation Twist 2 was just a reshuffling of the Fed’s Treasury holdings)… this one statement from Bernanke means more QE is coming.

 

My answer to these theories is the following:

 

            Gas prices already closing in on last year's high

 

At an average of $3.90 per gallon, Americans have never paid more at this time of year and prices are expected to keep climbing with two months remaining before the traditional kickoff of the summer driving season.

 

Prices peaked last year in May at an average price of $3.98 per gallon. The all-time record is $4.11, set in July 2008 as the economy went into a tailspin.
 

http://www.google.com/hostednews/ap/article/ALeqM5hw67PO7fkqoBAVkjhINAt2rgSVpQ?docId=7ee131c3d2ff415c9466e1d731cf2372

 

Global Food Price Rally Will Drive Investment, Nestle Says

 

Global food prices rose for a second month in February on higher costs for cereals, cooking oils and sugar, according to a 55-item gauge tracked by the United Nations’ Food and Agriculture Organization. Costs may remain near current levels in the coming months as demand absorbs increased supply, Abdolreza Abbassian, a senior FAO economist, said on March 8.

 

http://www.businessweek.com/news/2012-03-18/global-food-price-rally-will-drive-investment-nestle-ceo-says

So the Fed is going to unleash more QE when gas is at a RECORD high for this time of year and food prices are rising… during an election year?

 

Folks, the days when the Fed could just unveil whatever it wants, whenever it wants are over. Bernanke isn’t going into classrooms and staging town-hall meetings to talk about how great the Fed is because he wants to… he’s doing this because public outrage towards the Fed is growing by the day.

 

Re-read Bernanke’s actual statement above. He just about admitted that we’re in an environment in which the Fed’s policies can’t do much of anything (as if this was news to anyone). Do you think he’d drop a bomb like this and then simply say that the Fed’s hands are tied? Of course not. He HAS to say that the Fed has got everything under control. That’s essentially been the only thing holding the financial system together since 2008.

 

So taking Bernanke’s statement to indicate that QE is coming in April is wishful thinking at best. Bernanke’s actual words imply, if anything, that the Fed may have failed to fix the US economy. This is more of the Fed playing damage control because the reality is that Bernanke is well aware of this, by the Fed’s own data we’re clearly in a structural Depression, NOT a cyclical recession.

 

Don’t believe me? I’ve covered this before here.

 

Again, what’s happening in the US is NOT a garden-variety cyclical recession. It is a STRUCTURAL SECULAR DEPRESSION.  If I know this, you better believe Bernanke knows it too. The fact he’s starting to hint at it in public statements is more of him working in “damage control” mode.

 

As it becomes more and more clear to the world that the Fed blew TRILLIONS propping up the big banks and that the Fed’s policies haven’t actually done much of anything for the economy, Bernanke’s going to need some strong arguments to defend himself and the Fed.

 

This is why Bernanke’s already done the following:

 

  1. Opening the Fed to Q&A sessions.
  2. Going into classrooms to talk about how great the Fed is.
  3. Blaming Congress for the US’s poor financial condition.

 

Which brings us back to one of my central theses for 2012: that the triumvirate of Wall Street/ the Federal Reserve/ and the White House is breaking down. A wave of litigation is coming for the 2008 Crisis and its aftermath.

 

These three groups are going to be turning on one another in varying degrees. And of the three, it’s the Fed and Bernanke who are the prime targets: any Wall Street CEO can claim the Fed made him or her do what he or she did (see Ken Lewis and Bank of America).

 

Moreover, the politicians aren’t about to take the responsibility for their part in the Crisis either. Their best defense is also to blame the Fed. They can always plead ignorance “we’re not financial experts… we were just taking advice from the Fed!” being the most obvious argument.

 

Aside from this, Bernanke must be aware that the situation in Europe is reaching the point at which Central Banks cannot maintain control any longer. The Spanish and Italian bond markets are flashing danger again despite the ECB cranking up over $1 trillion in LTROs. And there’s already talk of a THIRD Greek Bailout.

 

Bernanke is well aware of this, guaranteed. So he could also be laying the groundwork for explaining why the Fed couldn’t stop another Crisis from coming. Regardless of whether or not this is the case, another Crisis IS coming and it’s going to be worse than 2008.

 

Which is why smart investors are already preparing for a global debt implosion. I recently published a report showing investors how to prepare for this. It’s called Surviving a Crisis Four Times Worse Than 2008 and it’s chock full of information on how to not only survive but thrive during if this particular black swan (or any of the others lurking in the system) comes to pass.

 

This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com under 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 a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.

 

And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com

 

 

 

 

 


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Mon, 03/26/2012 - 21:36 | Link to Comment YesWeKahn
YesWeKahn's picture

Bernanke is playing with fire, we need to fire him.

Tue, 03/27/2012 - 21:54 | Link to Comment LongBalls
LongBalls's picture

Will someone please ask Mr. Summers how the Treasury is going to fund the $1.2T deficit for 2012 without monetizing?

Mon, 03/26/2012 - 21:32 | Link to Comment rsnoble
rsnoble's picture

Now everyone remember.......the stock market IS the economy. LOL.  What kind of fucking idiot would pump stock prices thinking shit in the real world will get better because of it??? 

They are either fkn clueless idiots or there really is some NWO one world currency conspiracy going on. The farther this progresses the more it looks like a bunch of greedy assholes that have no idea how to fix what they fucked up.

Fuck the Fed.  Treason and appropriate penalties.  Biggest clown show ever. 

Mon, 03/26/2012 - 21:49 | Link to Comment Neo1
Neo1's picture

Returning to real money is the best way to punish the Banksters.

The real reason you pay an income tax, is for the privilege of using a private currency.

Also known As A:  Federal Reserve Note

Demand from your bank or brokerage, lawful money and the tax goes away, with a tax exemption on lawful money, all of your money is yours.

http://www.21silver.com/?show=merrill&read=federal_reserve_act_remedy

http://stormthunder.com/federal-reserve-act/

Tax Exemption: http://stormthunder.com/federal-reserve-act/#ixzz1pOYzDgEm

 Web search these three different phrases:

Redeemed in Lawful money  or

Redeemed in Lawful money Pursuant to Title 12 USC §411  or

deposited for credit on account or exchanged for

non-negotiable federal reserve notes of face value  

Tue, 03/27/2012 - 21:55 | Link to Comment LongBalls
LongBalls's picture

I'm in communication with my bank on 12 USC 411 right now! I hope to post the results.

Mon, 03/26/2012 - 21:10 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

I think most of us agree that the American standard of living is going down.  How do you think it will happen?  Inflation is a tried and true method.  $5/gallon gas is the end of Obama.  That's all.  When the banks need more money, and they will, it will get printed.  The mistake the FED made was creating and publicizing something called QE.  In the 1970s the FED just printed while everyone pointed at everyone else, and the politicos BS'ed the people mercilessly.

Mon, 03/26/2012 - 21:00 | Link to Comment WillieNelsonListener
WillieNelsonListener's picture

So what happens if the Congress doesn't renew the FRB's charter in 12/12?

They buy the stock for a few hundred million and cancel the debt?  Go back to interest free money?

Thanks in advance for thoughts

Mon, 03/26/2012 - 21:24 | Link to Comment marathonman
marathonman's picture

Not a chance in Hell Goldman gives up their priviledge to create money as debt.  War, FEMA camps, and overall martial law will reign before cockroaches like GS, JPMorgan, etc. lose their monopoly on issuing money as debt. These people are the money changers that had Jesus killed because he threatened their power.  My 0.02$  

Mon, 03/26/2012 - 20:40 | Link to Comment TeresaE
TeresaE's picture

How can he "be done" with QE when there are fewer and fewer non-Fed buyers of treasuries and CONgress continues to spend and grow and spend and grow while those that used to pay the taxes shrink and die and shrink and die?

He can't.

They may not "call" it, they may not announce it and they (are) doing everything in their power to hide reality, but the reality is we if don't print then the country grinds to a halt.

And NO WAY will that be "allowed" to happen.

We print and eventually die, or we die fast.

I know which one nearly all governments choose, what I don't know is why we think we would/could be the exception to the rule.

Mon, 03/26/2012 - 23:42 | Link to Comment lasvegaspersona
lasvegaspersona's picture

TeresaE

not to be difficult but could you name ONE country that chose NOT to print?

Mon, 03/26/2012 - 20:38 | Link to Comment optimator
optimator's picture

Fed Chairman Bernanke has been 100% successful in his goals to date. The Banksters, in and out of Government, have increased their bonuses, pay, while limiting their taxes. Fed Chairman Ben Shalom Bernanke has accomplished the age old dream of the alchemist. Ben is easily turning worthless paper into gold.

THAT should be the biggest headline the Wall Street Journal has ever had, but instead they keep it a secret.
Mon, 03/26/2012 - 20:31 | Link to Comment lakeside
lakeside's picture

Pfft! The world is collapsing.
Bullshit.

Psst! The galaxy is collapsing! No shit.

Mon, 03/26/2012 - 20:00 | Link to Comment Tic tock
Tic tock's picture

I'm not sure what Bernanke wants from the dollar?

Mon, 03/26/2012 - 19:36 | Link to Comment rguptatx
rguptatx's picture

Isn't the Bernank's recent dilemna and perplexity about Okun's law (only 3 or 4 days after it was touted on ZH - hehehe), and the entire "conondrum" of a significant lowering of the U-1 rate, without a commensurate growth in GDP all explainable by the hypothesis that we lost $80/hr manufacturing jobs, and are creating "Would you like fries with that" ($7.99/hr) jobs to replace them? So the huge number of new 8 dolla jobs don't create as much GDP as the manufacuring jobs did. Elementary Dr. Watson?

Mon, 03/26/2012 - 18:54 | Link to Comment ffart
ffart's picture

The U.S. empire is starting to look like Jodie Foster on the pinball machine. I'm sure all our former trade partners are already working out who gets first dibs, etc. I wonder how long until Obama starts broadcasting daily morale speeches preaching solidarity and shared sacrifice on national T.V.

Mon, 03/26/2012 - 23:40 | Link to Comment lasvegaspersona
lasvegaspersona's picture

ffart

You have IDed a MAJOR problem...Congress ratings at less than 10%, half the country HATES the President, a high percentage believe the US govt caused 9/11. There is no way Obama can unite this country, he can never call for unity...unless a resignation and sincere apology came first...so like I said...can never happen. This country is financially toast and hopellessly divided....amen

Mon, 03/26/2012 - 18:47 | Link to Comment Jacque Itch
Jacque Itch's picture

Benny and the Inkjets have one concern:  To keep the Plutocracy/Kleptocracy running at all costs.  He dudn't care bout no gas and food prices for us peasants.

 

Mon, 03/26/2012 - 18:38 | Link to Comment God Bless The V...
God Bless The Virtuous's picture

No way the working man / woman can stand anymore QE!

Bernanke is an embarrassment and a progressive / socialist who is hell bent on destroying the U.S. dollar!

If this fool unleashes anymore QE, all it would do is destroy the Dollar and drive already crippling gasoline through the stratosphere!

No way we get anymore QE!

Jerry

Mon, 03/26/2012 - 18:34 | Link to Comment Thomas Jefferson
Thomas Jefferson's picture

The author of this article is a moron.

Mon, 03/26/2012 - 18:31 | Link to Comment Winston Churchill
Winston Churchill's picture

He's shot his bolt.

I think he's truly perpexed that it has not worked.

Poor lost little Chairsatan,there, there.

Mon, 03/26/2012 - 18:26 | Link to Comment Lady Heather...UNCLE
Lady Heather...UNCLE's picture

Graham will be right one day...like a broken 24hour clock is right once a day. But ZH really needs to provide a more balanced universe of views. Too much bearishness since 2009's 666 low. Yes, we are all smart enough to know we are being gamed (666?  come on!) but this game can go on for alot longer (5 years possibly). A small break from ubergloom might be enlightening (albeit temporarily)

Tue, 03/27/2012 - 07:57 | Link to Comment Vince Clortho
Vince Clortho's picture

More balanced?  As in false optimism?  We have Bernanke and the MSM carpet bombing America with Optimism 24/7.

This is the place for reality.  If you want a break from reality, just turn on CNBC.

Mon, 03/26/2012 - 18:32 | Link to Comment Cdad
Cdad's picture

What a completely disingenuous comment.  The market is not functioning.  It cannot even arb out the dumbest trader in the world, rushing in to buy crap equities at that HOD as the closing bell rings as hedge funds dump any and all downside insurance they had [literally today].  ZH is not wrong.  The market is broken, fool.

Mon, 03/26/2012 - 22:29 | Link to Comment Bring the Gold
Bring the Gold's picture

The hedgies have been so consistently wrong for so long now that gives me some hope for my shorts. Also the increasing certainty around QE3 announcement in April also gives me hope along with VIX hitting new lows. I am certain it will all be monetized, I just don't think they have the cover for it. Oil is the key. If it gets much higher it all falls apart. That jagged plateau thesis of Peak Oil crowd (before everything truly breaks apart) sure looks more likely by the day...

Mon, 03/26/2012 - 18:22 | Link to Comment HellFish
HellFish's picture

No QE?  So who's going to buy that 1.5T US government debt this year at < 2%? 

 

Hint: The FED.

Mon, 03/26/2012 - 23:26 | Link to Comment lasvegaspersona
lasvegaspersona's picture

Hellfish

my thoughts exact...

there may not be a 'program' but unless the Earth stops spinning the Fed will fund the USG. If that does not happen...well I'll get back to you after I.ve cleaned the shit from my pants...

If the Fed did not fund the USG there would be pain, there would be unhappy former recipients of USG cash, politicians would have to explain why the system stopped working and that kind of pain will NOT be tolerated...not when all that has to be done to stop the pain is print 'just a little bit more'...you know...until the economy picks up...

Mon, 03/26/2012 - 19:31 | Link to Comment Quaderratic Probing
Quaderratic Probing's picture

They don't want to get stuck with that shit either

Mon, 03/26/2012 - 18:30 | Link to Comment Cdad
Cdad's picture

Lost in all the day to day insanity of this now completely out of control Fascist America, Ben Bernanke has DESTROYED THE BOND MARKET.  Tell me, who is going to rush in and buy bonds knowing that the Bernank can simply reverse the price/yield action with a casual comment or a vapid speech?

Of course the Fed is going to buy the debt.  Markets...all of them...are broken.  It is over, folks.  The nation is simply doing the headless walk just now...but it will fall over, I assure you.

Mon, 03/26/2012 - 18:51 | Link to Comment spinone
spinone's picture

Once you start buying Treasuries, you have to buy them all.

Mon, 03/26/2012 - 19:43 | Link to Comment hamurobby
hamurobby's picture

The Fed must get some easy flowing money (real estate loans) from WHAT EVER magic hat Ben wants to create and inject it into the economy. Seems all the cash on the sidelines will refuse to budge until its too late. It sucks that he is going to wait until we (meaning the US sheeple) beg him to kill the Dollar.

Mon, 03/26/2012 - 20:24 | Link to Comment Cdad
Cdad's picture

Why would the US sheeple beg Ben to kill the dollar?  That makes no sense whatever.  

Mon, 03/26/2012 - 23:32 | Link to Comment lasvegaspersona
lasvegaspersona's picture

cdad

Pain...is the answer to your question...everyone hates pain and simply will not tolerate it when printing will make the pain stop. Rick Perry threatened Ben Bernacke...something like 'don't you dare print just to save Obama...remember? If Perry were president  and the pain started he would beg Ben to print...if it got worse the TEA Party would beg Ben to print...if it got e even worse I would beg Ben to print. It is suicide but suicide is painless and quick, deflation is slow and painful...IT SIMPLY WILL NOT BE TOLERATED..simple

Tue, 03/27/2012 - 00:20 | Link to Comment StychoKiller
StychoKiller's picture

What makes you think that deflation will be slow?

Mon, 03/26/2012 - 20:37 | Link to Comment hamurobby
hamurobby's picture

Give it time. They will want him to create more easy money and lend it out into the economy to save the system. The inflation will destroy its value.

Tue, 03/27/2012 - 06:52 | Link to Comment hamurobby
hamurobby's picture

Once the fed really begins to print into a deflationary spiral (there is low currency velocity now, this is why we, including congress to get tax revenues up, want him to do something), the 8 trillion dollars sitting on the sidelines will suddenly decide at some point to join in and create an unintended (and of course unforseen by the Fed) inflation level that will wipe out the value of the currency (savings). Heck we have practically negative interest rates and still there is no money velocity, Ben can not get sitting (saved) money to MOVE, so he will throw in the towel at some point and create money to put into the system. People are bitching (unintentionally begging for the destruction of the currency) that they are not getting any help with their debt. Well it WILL happen once some level of perceived bank stability is reached. Otherwise the system will implode into a deflationary spiral very much like in 2008. There is only ONE way to relieve the debt burden. This isnt rocket surgery, but I trust that the Fed will be three steps behind the curve (just as they were from 2003 to 2007 with interest rates) once this process gets started. What are they going to do once the currency fire starts, raise interest rates with the national debt at (about that time) 20 trillion dollars? This will be interesting times for sure.

Mon, 03/26/2012 - 19:13 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

Just look at the Greek buyers. 

 

Gvts = paid in full

Not gvt holders = screwed in full

Mon, 03/26/2012 - 18:11 | Link to Comment Chartist
Chartist's picture

It doesn't matter what you own, just own something:  Wiemar Republic part deux coming.

Mon, 03/26/2012 - 18:18 | Link to Comment Doubleguns
Doubleguns's picture

Owning shit is not going to work. Own PM's.  It really does matter what you own. All the nic-nac's in the world are just shit.

Mon, 03/26/2012 - 21:11 | Link to Comment hamurobby
hamurobby's picture

Get some crappy canned foods, guns and bullets nic-nacs too.

Mon, 03/26/2012 - 21:52 | Link to Comment dark pools of soros
dark pools of soros's picture

aren't some of those MBS just piles of nic-nacs?

Mon, 03/26/2012 - 18:13 | Link to Comment Zero Govt
Zero Govt's picture

"He just about admitted that we’re in an environment in which the Fed’s policies can’t do much of anything (as if this was news to anyone).."

It's "news" to Paul Krugman.. send him a Memo written in crayon (another Nobel Economist that can only take-in the basics at a 5 year old level)

Mon, 03/26/2012 - 18:42 | Link to Comment Troll Magnet
Troll Magnet's picture

finally an article from Phoenix Capital that i can appreciate.  i agree.  the bernank is done with QE for awhile.  even if he wants to, and i'm sure he does, he just can't do it in this climate because i'm sure even he knows it'll break this country's back for good.  he needs the market to tank big time and it will eventually.  but not now.  do accumulate gold and silver but be conservative about it.  when the market tanks upon realization that ben won't print, we'll all be able to buy more PMs for less.  

Mon, 03/26/2012 - 23:08 | Link to Comment Randall Cabot
Randall Cabot's picture

Yep. Benny knows the bullshit seasonally adjusted unemployment numbers from the last couple of months are going to be vaporized next week so he's trying to dampen the reaction with alternate bullshit.

Tue, 03/27/2012 - 00:18 | Link to Comment StychoKiller
Mon, 03/26/2012 - 20:25 | Link to Comment Goner
Goner's picture

Serious question, not being /sarc

How will we be able to buy more PM for less once the market tanks? Wont everyone be racing towards anything safe (PM's) as soon as the market tanks and then prices go up?

Mon, 03/26/2012 - 22:02 | Link to Comment fasTTcar
fasTTcar's picture

Serious answer - you won't.

I am a PM dealer and starting to get professional money guys who have kicked tires for years starting to plunk down serious cash to buy some physical.

They are getting scared, because they see their customers getting scared. Money being pulled from the markets and going into hard assets, basic businesses that make money in any envrionment and cash.

And they are correct to do so.  A physical squeeze will not be far behind.  I already am thinking about raising my premiums.

Mon, 03/26/2012 - 22:23 | Link to Comment Troll Magnet
Troll Magnet's picture

been buying PM for awhile now and most recently added a few more gold buffaloes to my collection. the bottom line is the paper market sets the price and no matter who says what. i don't see that changing anytime soon unless some serious shit happens and TPTB are overthrown. watching this nation collectively lose its shit over trayvon martin as opposed to, say, central planning and/or executive power grab, we are FAR away from making any strides toward meaningful change. that having been said, when there is panic in the market, our fiat dollar is still the preferred choice for institutional money managers. we can all laugh at their idiocy but dollars still buy PM's the last time i checked. and lands, buildings, food, etc, etc. that may not last forever but it's not all going to come crumbling down next week, month or even a year either. the key is to slowly accumulate over time and then seize big when PM's crash again. and it most certainly will when everyone is either trying to meet a margin call or need to raise more capital or just generally rushes to the dollar to seek safety. anyone who tells you that PMs can only go up so buy buy buy is either misguided or just talking their book.

oh yeah, i know how some PM dealers work. every time i pick up a monster box of silver, the seller almost always buys puts to hedge his potential loss. that's how they sell their metals and lock in their gains. so if a PM dealer's talking up his biz, don't fall for it.

Mon, 03/26/2012 - 22:24 | Link to Comment Troll Magnet
Troll Magnet's picture

been buying PM for awhile now and most recently added a few more gold buffaloes to my collection. the bottom line is the paper market sets the price and no matter who says what. i don't see that changing anytime soon unless some serious shit happens and TPTB are overthrown. watching this nation collectively lose its shit over trayvon martin as opposed to, say, central planning and/or executive power grab, we are FAR away from making any strides toward meaningful change. that having been said, when there is panic in the market, our fiat dollar is still the preferred choice for institutional money managers. we can all laugh at their idiocy but dollars still buy PM's the last time i checked. and lands, buildings, food, etc, etc. that may not last forever but it's not all going to come crumbling down next week, month or even a year either. the key is to slowly accumulate over time and then seize big when PM's crash again. and it most certainly will when everyone is either trying to meet a margin call or need to raise more capital or just generally rushes to the dollar to seek safety. anyone who tells you that PMs can only go up so buy buy buy is either misguided or just talking their book.

oh yeah, i know how some PM dealers work. every time i pick up a monster box of silver, the seller almost always buys puts to hedge his potential loss. that's how they sell their metals and lock in their gains. so if a PM dealer's talking up his biz, don't fall for it.

Mon, 03/26/2012 - 23:38 | Link to Comment fasTTcar
fasTTcar's picture

Been a member here for quite a while and am not pumpin' and dumpin'.

Just relating some on the ground intel that I am seeing.

Not saying anything about potential shortages, price spikes or fluff.  Just relating my experience here FWIW.

You have to remember, I make money when I buy and when I sell.  Don't care which way the price goes as long as I make a margin.

Tue, 03/27/2012 - 00:59 | Link to Comment Troll Magnet
Troll Magnet's picture

hey fasttcar,
i didn't mean to imply that you were pumping and dumping although i did come off that way. my apologies. besides, i don't think you can pump and dump PMs right now anyhow since i believe PMs are undervalued. i just think people should research and make decisions on their own. i mean, i'm buying some PMs right now but i have a lot of cash waiting to be unleashed IF prices fall much further. anyhoo, good luck with your business!

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