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Bernanke - Spend More, I'll Buy The Bonds!
I think Bernanke broke the "rules" today. He was very clear in making recommendations about what Congress should do with the sequestration. Ben's very public position comes three days before cuts are due to hit. I've not seen a Fed head do this before; we'll see if the Chairman's words alter the outcome.
For sure, he has thrown his (and the entire Fed's) hat in this ring. He is taking the side of the Administration. For that he is going to take political heat. He deserves the heat - Ben's meddling where he shouldn't.
I heard Ben say, "Buy gold and short bonds".
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There is no way to win for Bernanke now: he has a debt mountain to pay off, a currency losing confidence by the day, and legions of drones on the payroll. Obama wants to raise the minimum wage, which will make even more youth / uneducated / untrained unemployable, therefore more drones. Harry Reid never saw a program he didn't want to fund, and hasn't set a budget in five years.
This cannot end well. I hope you have most of your preparations in place, it's tough to predict timing but the problems are clear.
..a drone for your blasphemy ..all of you...daddy b mad...
Ben's game is up unless congress borrows and distributes more, because in reality there isn't anything the Fed can do to directly promote employment, and the only money the Fed is issuing that is doing anything economically meaningful is that being taken in by Treasury and distributed to the masses via the government.
When the country enters a severe economic downturn whilst interest rates are effectively zero and the Fed is monetizing at a rate of > 1 trillion/yr, what will the Fed to to promote employment? What will they point to to demonstrate that their policies are promoting employment and helping the economy?
but the Fed has lots of tools---he said so
Yeah right,and I have a big penis,or are those the tools he's talking about.
History will not be kind to OBenny
Two words come to mind with this limp dick Bernanke,
F U C K Y O U
you rat bastard!
Ok,ok, it was 5 words!
THERE
IS
NO
OTHER
CHOICE
BUT
TO
PRINT
....other than to not print.
Ben's haunted by the Deflation nightmare. His whole policy has been built around reflating assets... at all costs includng a huge ballooning government balance sheet. Deflation would unwind all that in a heartbeat and keep the balance sheets bloated with no chance of servicing, let alone repaying the debts. It would culminate in a debt cut a.k.a. default. Not impossible given the circumstances but there is too much at stake for the US to go down that path. The US would lose face and its level of influence and control.
Look what's going on elsewhere. Japan is still reflating with dire consequences for their currency. It was chastized for trying to print away its debt by the G20. However, the US and EU are doing just the same but not as boisterous as Japan has recently.
Ben calls out Japan for starting the currency war which gives him COVER to engage in the same (because there's no other option) and defend his continued QE. "At least" he will say "we didn't start the currency war, we were forced into it".
The EU is a basket case. The Euro just had the plugs pulled from its life supporting machines. Italy will force the ECB to print massively to cover all budgets or threaten to leave. Spain may just do the same. Greece doesn't give a fuck and will support whatever policy promises to end the Euro diktat fastest.
In the end, the world will be saved by the money printers... or the world as you know it will end.
How can you inflate away debt when the goverment keeps adding ? Private debt ? We need jobs and high wages.
Spot on Bruce !
Bernank has been covering for the neo Keynesians failed policies (as did Greenspan) by his QE to infinity programs.
Basically Bernank issaying that if the neo Keysian policies don't work, then nothing will work all we ALL must suffer the consequences....so ....
No Sequester
Continue QE ($85B minimum / mth)
Continue the Great Society programs which have morphed into race based redistribution / illegal immigration policies.
No way the Head of the Fed should be anywhere near these topics. But he is.
We need to keep in mind that we alwayshear about $85 Billion mnthly, but the Banks Leverage even if just 20 to 1, makes that near $2Trillion monthly. That $85BB in margined
Now that's a number to remember. Does Benny know a vigina from Virginia? Me thinks not.
You don't understan Bruce. You need to lower rates to raise them
Signed,
Ben B-
Ben is definitely on thin ice! I think he knows it, too.
Yeah. He looked bad. Like real bad. Hadn't slept in fourteen days...
time to break out the 70's playbook. new Fed chief raises rates, gold takes off, potus resigns in disgrace, oil shipments stop, gasoline lines, housing prices rocket, malaise, a country in the ME takes Americans hostage, savings and loan crisis: SLs go insolvent paying double digit interest, while on one wants to borrow their money, McCain joins the Keating 5 for a reunion, house flipping becomes another bubble, credit cards get maxed out, home depot and lowes are most heavily capitalized DOW components. Fed MBS offsets losses in bonds, which they quietly hand back to the UST. Bernanke runs away to caribbean island (see Nixon Bebe Rebozo)
You might be on to something.
can't raise rates this time around. there is no playbook. hedge accordingly.
fonzannoon is right. Can't raise rates. Everyone wants to take the easy way out. Politicians are gutless and clueless. More QE, lower rates. That's all.
Indeed...he did look bad today. However, of greater significance is that today's testimony marked what I would call a complete failure. He literally spoke of telegraphing to the market his bond buying. Now...never mind that this has been implied since the beginning of QE. His comments today literally call into question whether or not we have a real market, driven by supply and demand.
Today...he set aside implication in exchange explicit commentary, and thus confirmed what most of us know...there is no market anymore.
he's starting to lose his hair.
Tyler Durden haunts him at night.
There are many sleepless nights for BB in the near future.
Could be many sleepless nights for all of us in the near future. This can't end well.
"Tyler Durden haunts him at night."
I await the Banzai visual.
+1, Wakanda.
My grandfather knew you. Looks like you aged better than him...
Surely Tyler can check IP addresses for how often the Mariner Eccles building checks into the site...
he should be resting up for the contrived diaster
the fed res "system" has been designed to create.
it only took 100 years to fully enslave a nation of free people to debt created from thin air,
and capture every asset with booms and busts its system creates.
Then I can only wonder about the hammering of the Aussie today. This is starting to not make a lot of sense....
:o
AUS economy is tightly correlated with China?
The reports out of Australia vis-a-vis China are that they have turned the corner and are improving rapidly.
(I'm not sure I am buying it but that's what Governor Glenn Stevens says...)
I hear that the housing bubble is bursting in Australia.
And I haven't heard any good news from China for a long while.
Well, that's not what I said...
http://www.forexlive.com/blog/2013/02/22/forexlive-asia-wrap-aud-strengt...
"RBA Governor Glenn Stevens appeared before a parliamentary committee during the Australian morning, While his comments were not any different to recent RBA statements (China showing signs of recovery, further interest rate cuts not in the offing at present)..."
Just stick to simple things. I know two of them. They are both metals.
Hammering of AUD ? near (not immediate) term AUD has been in a nice downtrend chanel since 1.05. vs USD technically. Fundamentally, with all of their Asian trading partners engaging the currency war, the AUD will not be left behind.
All currencies are now trading vs gold/silver. The USD provides liquidity vs other majors so....buy pms sell currency is becoming the near / mkid term move. It will be volatile however, making it difficult to trade.....butthat is what the TBTF want it to be like so they collect the bro on volume and allows them to get maintain their institutional positions.
IMHO.
"...AUD has been in a nice downtrend chanel..."
That's only half true. The AUDUSD pair has been trading in a wedge pattern since 1.10 in April of 2011. Since July of last year, the pair has only traded in the upper half of the wedge. It broke through the upper/lower boundary today at ~1.2243 and guess what? It has retraced and is sitting right on the line even as we speak.
"...buy pms sell currency is becoming the near / mkid term move..."
The Australian Dollar is gold. Which is my point: there is no way to reconcile it, especially when it was halfway done before Dr. Bernanke even sat down in the Senate, if he, in effect, said "buy gold."
I am thinking that this was designed to shake out the loose hands and we see a major, major move higher from here. I would be reluctant to put numbers on it because it is so outlandish. But, with the Euro in deep doo-doo and the yen selling off like mad, the most stable currencies are the USD and the AUD. And the AUD pays interest, so you can bet that it goes higher from here.
:D
"And the AUD pays interest, so you can bet that it goes higher from here."
So AUD is a = gold with a coupon attached. Nice idea and at times I have agreed with this....however, with China slowing and the rest of OZ's trading partners devaluing, I cannot see the Ozzie economy being able to withstand that. They might be the last currency to join the currency war....but they will have to. IMHO.
You're probably right. So, let me clarify my remarks.
To be clear (ha!), the Aussie moves from here, one way or the other, in a big, big way. I think it will be higher only because the Fed and ECB are still playing kick the can and will for the foreseeable future.
As it was said further down the thread, once the ECB starts monetising and everyone else has the need to debase, it is game over. With the backbone of the Australian economy most reliant on selling raw materials to other nations, you're right in that it would come to a screeching halt.
So it seems we are in basic agreement. I am just seeing a massive blow-off top in the final months of desperation of global central banks.
Less than a third of the resources Aussie sells abroad is iron ore, the rest is things like coal which the power plants of Asia will never stop needing, plus things like uranium, Asia is building 48 NEW nuke plants in the next five years. And of course gold. And Aussie's trade partner China is 30% of her trade, but even Japan is 22% trade with China, so a real China slowdown lowers them as well. Yes the wedge pattern means a bigger move is coming, my guess is that fund flows trump trade flows and AUD gets weaker. Which incidentally will boost Aussie's #2 industry, tourism. You should see the busloads of Chinese tourists, trying to look cool with their new clothes and bags and stuff but obviously just 1/2 generation out of the dirt village. The Lucky Country!
If you happen to hear one of them start babbling about "US 'american' citizenism", I would start watching where you step.
I like this exchange here between the two of you...the correlation of the AUD with hard commodities and PMs. However, during Chairman Bernanke's testimony today, he revealed in explicit commentary...that there is no real market anymore.
And as such, you're applying market metrics to your sense of how to be positioned...which is to be expected...but you are doing so within a market that does not exist.
Just sayin'
Perhaps to be more explicit, as the Chairman just was, the only logical response to his testimony today is to sell ___________________. And I would submit to you both that you can write just about anything within the space provided.
CDad - you are essentially agreeing with me....the market to buy/sell exists, however with all CB interference I agree the traditoinal market behavior (i.e. technicals) maybe in for an uncorrelated run.
BUT.... I maintain it is a race to the bottom for currencies vs pms. So I oposition for that. Orly likes AUD as a peoxy for mgold with a coup-on attached. I feel that coupon will shrink as Oz is forced to join currency war.
So it is that simple....unless one wants to step out opf paper mkts and hold phizz. Which I am silgyhtkly hedged for with phizz, but maybe looking for more.
A question of timing....good luck.
You're jus' sayin' and I'm jus' sayin'.
The correlations between what should be and the reaction to that are nearly random now. Makes me wanna go get a job.
:(~
(Almost...)
That is my point, exactly. You cannot reason yourself into a market position...when there is no market. Again, those are not just my words...or some sort of out of left field position that I have formed by opinion. Within the Q/A portion of today's Fed testimony, this revelation is made clear in the Chairman's own words.
The only logical response is to sell...to sell now, today, tomorrow, and forever until such time as the Chairman no longer believes that the FED IS THE MARKET. The only logical response is...not to be involved.
sell for what? or just gift it to charity?
Only supposed to listen BHO, he's got your back.
When does March Madness start?
As soon as Michelle sports a mini-skirt shopping at Tiffany's.
You are not supposed to understand. Heck, you aren't even supposed to read it. Just vote for it so the good times can roll again!