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Bernanke – “I’ve abandoned the dual mandate!”
I find myself this morning hoping for the failure of the Federal Reserve. This implies that I’m also hoping for a collapse in the equity markets and a severe recession. Coupled with that, I want to see that the massive increase in money supply and the endless interventions of the Fed bring us a round of much higher inflation. I want the Fed to fail so miserably that they are marginalized for the next twenty years. I want Bernanke fired. I want the Fed disgraced.
I’m not rooting for this to happen because I’m short assets. I’m not hoping for more pain for Americans. I don’t want to see a collapse in the economy. And I certainly do not want to see more inflation. But I’m convinced that the only hope for the country is to shut this Fed down. For that to happen there must first be a collapse.
This morning we once again we have the mouthpiece of Bernanke, Jon Hilsenrath at the WSJ, telling us what is coming next from the Fed. This is disgusting in so many ways.
Hilsenrath got a call from Benny yesterday. This time Ben Boy tipped his hand. A new LSAP plan is in the works. This time it will be directed at the Agency MBS market (a la QE #1).
What killed me is this quote from the WSJ:
Fed officials believe their past purchase programs helped to lift stock markets, by driving investors from low-risk investments toward riskier investments.
So we’re back to that old argument. Ben wants the S&P higher. He wants savers to do the heavy lifting by taking more and more equity risk. We have seen this plan again and again the past three years. It hasn’t worked. It won’t work this time either.
I’ll get what I want (chaos), but it will take some time. The new LSAP can’t happen till at least December. But sometime in the 1st Q it will be coming. In the past, articles like the one today in the WSJ lead to expectations of new Fed actions. This put a bid under equities. But as soon as the new monetary stimulus is announced the markets sell on the news. This time will be no different.
Core inflation is running at 2%. This is a level that Bernanke has repeatedly said he would respect when it come to more monetary gas. That he has initiated operation twist in the face of this inflation was the first evidence that he was abandoning his promise. In my book, Bernanke has flat out loud lied to the public on this. He should be fired for that.
CPI-U is a closer measure of actual inflation. That number is steaming along at 3.9%. We now have a situation where basic inflation is running at 8Xs the rate of short-term inflation. That ratio has never existed before in history.
Money supply is exploding over the past half year. Up over 30% (See Zero Hedge story). Inflation is the only possible outcome.
I’m not insensitive to the plight of the unemployed in America. There are some 20mm people who are either out of work or underemployed. I wish that something could be pulled out a hat and make that problem go away. But there is no magic solution. It’s time that Bernanke start to look at the other 280 million citizens that are paying the price for his actions. Ben is robbing savers. He is killing seniors who need predictable income (and should not be investing in risky equities). He is stealing from all of us with his push for more and more inflation as a cure to our problems.
I’m not happy with my position. I wish that I did not feel so strongly about this. But I’m convinced that the only thing that can actually help us out economically is that the Fed is completely marginalized. To have that happen there must be some big pain. Pain is exactly what we are going to get with Bernanke’s insane policies.
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On target as always Bruce - unfortunately Ben doesn't take suggestions from the 99%
Succinct and outstanding piece. The Federal Reserve has destroyed any semblance of functioning free markets. They tell us they are trying to save capitalism and the free markets, but they are lying and doing the opposite. They have made a farce of property rights and have now painted themselves into a corner where they have to print to infinity because it's now too late to save the bankrupt system. Greenspan and helicopter Ben have repeatedly raped monetary policy to the point of no return. The bond market is rigged, the housing market is rigged, the dollar is being purposefully debased and the equity market operates as a casino. Capital is purposefully and continually misallocated. Inflation has been rampant over the past several decades and all you need to look at is the monetary base explosion (st. louis fed or shadowstats.com websites) to know the game is over. If I were a doctor, I'd say the charts showed a dying man.
BTW, anytime a lawyer starts like Tarullo starts preaching economics, it's time to run. I've been a portfolio manager for 25 years and the last thing you want is a lawyer running a business...think Chuck Prince who happily kept dancing over the cliff.
Thank you for figuring things out on your own terms. and aknowledging the course change. Quite effective. Well done, Bruce.
"...the financial model presented by the Status Quo as "reality" is in fact an illusion that serves the interests of those controlling massive concentrations of wealth and political power. Simply put, the present-day financial Status Quo is unsustainable, and it will devolve or collapse under its own weight of internal instabilities and lies."
http://www.oftwominds.com/blogoct11/truth-going-global10-11.html
The problem is the currency. The Fed departed from any real money obligation, decades ago. The problem with the currency is that it is the lock on the corporate prison that we are confined in. The solution is to pick that lock and escape. We don't have the will to escape because the drugging effect of fiat currency keeps people standing right where they are, even if the prison gate were to fly wide open.
http://georgesblogforum.wordpress.com/2011/10/13/fiat-addiction-update-1...
Wow,the USA kills Moaamar Gadhafi.and lets Ben Bernanke live...???
UNBELIEVABLE.
Bad call.
Couldn't have said it better, Bruce. Well, maybe I'll add: KILL THE FUCKING FED.
Willkommen to the dark side, Bruce.
"I want the Fed to fail so miserably that they are marginalized for the next twenty years. I want Bernanke fired. I want the Fed disgraced."
Why not end it. Shut it down; stop the carnage and take back our freedom?
Why do we allow a private cabal to issue our currency; at interest?
It is a PONZI and everyone (except the vast majority) knows it.
The inflation is to fight off the deflation of vastly over leveraged and over priced assets.
If there is sound reason to augment an already over leveraged financial sector someone explain it to me; I am not an E-CON-omist. What long term value does it serve?
The only reason I can conger is engineered collapse.
Inflation gives Bernanke's masters time to further their pillage, increase control and enslave the people. Their subsidiaries; IMF, World Bank have been perfecting it for years. It is now our turn.
When the currency eventually collapses the money power will have privatized vast swaths of public services, fortified their monopolistic fiefdoms and paramilitary powers and moved themselves into hard assets.
From there they can realize their aspirations by issuing a new fiat global currency and consolidating control over a planetary economic gulag.
Of course their psycho scrum for energy resources may add an extra dynamic as these resources are also sought by growing BRIC economies, who are becoming closer by the day. Libya of course was part of a larger action. Far be it for their former leader to scoff at the West's ambition of mare nostrum to gain a strategic hold on energy assets of the Middle East and Northern Africa or to resist America's (Western money power) ambition to establish a African home for AFRICOM where it can coordinate efforts to exploit the continents resources - IN A FAIR AND FREE WORLD. And then the last straw may have been Gaddafi's plan to issue currency backed by gold. No the worlds central banks could not allow that. Free the people. Ya right! - http://www.youtube.com/watch?v=GuqZfaj34nc - LIBYA: THE INTENT OF WAR
We live and die in interesting times.
WAKE UP!
THE ROOT OF OUR SOCIAL, ECONOMIC, MILITARISTIC WOW'S IS AN EVIL MONETARY SYSTEM. EVERYTHING ELSE IS A SYMPTOM OR AN ACTION THAT SUPPORTS IT. AT THE HEART OF THIS SYSTEM ARE THE CENTRAL BANKS (THE FED), THEIR DISHONEST MONETARY POLICIES AND THOSE WHO CONTROL IT. SUCH POLICIES, LAWS AND THE CAPTURE OF REGULATORS ARE FOR THEIR BENEFIT. AN ACCOUNT OF THE PEOPLE HAS NO PLACE IN IT.
INDEED, IF THE PEOPLE WERE ITS PRIMARY CONCERN, THE WORLD WOULD BE MORE FREE, LESS VIOLENT AND MORE PROSPEROUS; PROVIDING PROOF OF MAN'S EVOLUTION BEYOND THAT OF TECHNICAL INNOVATION AND EMPTY SOPHISTICATION.
Let freedom be your master; END THE FED - Inflection Point
Anonymous Shines A Light On The Hypocracy Of Our Leaders
Evaporation of Wealth on a Vast Scale: How $Millions - Trillions Can Disappear WORD UP: 10 + 1 = THE UNITED STATES OF ABSURDITYOccupyWallStreet: The Kids Are Alright!
If you missed the first interview series with Ms Cathrine Austin Fitts and are interested in the depth of the Rabbit Hole and the psychopaths within, see the "Dillon Reed and Company: And the Aristocracy of Stock Profits" link at the bottom of: The Looting of America: Happy Labor Day
NATO's War Crimes in Libya: Sanctions against defianceIt's a TOTAL war, monsieur
Does any one know what Mrs Bernanke thinks of all this?
Anyone know where she plays bridge? (Do people still play it?)
I might join up.
Good rant!!
Good one Bruce, will happen, but not for a while.
Right on article... Ben is pumping the stock market, but what happens to these people when the market tanks! The market isn't rising on fundamentals! Period!
Ben's low interest rate policy has a another effect, bringing retired seniors back into the job market. I know a couple of them who have went back to work!
allow me to explain; to ben there is one and only one mandate dollar devaluation; it is something that is essential lest he has to return to princeton; cheer up bruce one day he will fail; oh yeah when that day comes best not be holding gold
And exactly how is the failure of Bernanke tied to the crashing of gold?
The problem with all these twists, LSAPs and debt reduction supergroups is that fundamentally they all miss the point. They do not and will not create an infrastructure that will allow us to return to a REAL 3-4% growth rate in this country. We have too much debt/entitlement to service, too large an infrastructure to maintain and much of the growth of the last two decades was a bubble induced mirage. Of course you can fix it with silly games like LSAP or hell, let's just convert everyone's 30 year mortgages to be 100 years mortgages, reduce the payment and we all head to the malls...this is a fools game on a fools errand perpetrated by a fool.
What percentage of America actually has savings? Maybe that explains why Bernanke doesn't give a fuck about them.
I'd guess at least 80% of America has no significant savings.
dear corn1945 - you are correct, some huge portion of the US has no savings, and bennie doesn't care about them.
and then, some other percent has a small amount of savings. and if they invest it in RISK - (and funny how this could happen) and lose most of it) - then guess what? they don't have FDIC cash - infact, they have nothing left at the banks. which means??
no banks runs. can't run to the bank if you lost it all in the casino.
you think they don't know/planned this?
dear corn1945 - you are correct, some huge portion of the US has no savings, and bennie doesn't care about them.
and then, some other percent has a small amount of savings. and if they invest it in RISK - (and funny how this could happen) and lose most of it) - then guess what? they don't have FDIC cash - infact, they have nothing left at the banks. which means??
no banks runs. can't run to the bank if you lost it all in the casino.
you think they don't know/planned this?
Considering that 50% of americans do not work, it isn't a stretch to believe that a large percentage of those who do not work do not have any savings to amount to more than a month or two of lost income from Social Security, WIC, Sec 8, and other transfer programs.
Of those who DO work, they may have a few months' expenses saved and that's it.
So the 80% figure seems believable, and those 80% aren't affected (they think) by the FED's activites, don't know who BenBenanke is---- unless he decides to appear in tights on, "Dancing with the Stars", with Mary Shapiro, as his partner.
Maybe we could hire some Mexican gangsta's to knock him off...
Carefull they are listening! Black suburbans will be coming in the night!
The drive black Escalades, not Suburbans.
You're right. Maybe Bruce could hire some Mexican hitmen... Thanks.
Welcome to the club Bruce. When a system is beyond the normal means of reform, collapse becomes the only means of reform.
I'm glad he's seen the light, but he's far too lenient: " I want the Fed to fail so miserably that they are marginalized for the next twenty years. I want Bernanke fired. I want the Fed disgraced."
Not me, Bruce. I want the Fed to be struck by a flaming asteroid the size of Guangzhou, China that hits so hard it goes all the way through the earth and exits at...Guangzhou, China.
Bruce, I whole-heartedly agree. The blatant manipulation that has been ongoing is something I cannot tolerate. As much as I hate to wish for very bad things to happen to equity and credit markets, there is no other choice than to see a collapse which will render the Fed irrelevant from here forward. I can only hope that the outflows of cash from investment funds means that "Joe Average" is liquid and not exposed, at least to the equity markets. Whether they jump at the upcoming buying opportunity for PM's will be on them or they will get hammered on the dollar's eventual collapse.
Although I agree with alot of what Bruce said I don't believe there will be any "runaway" inflation.
Bruce said: "Money supply is exploding over the past half year. Up over 30% (See Zero Hedge story). Inflation is the only possible outcome."
Unlike in the past when we had a very strong middle class (relatively speaking) very little of the liquidity ever trickles down to the little folks (working class). This increase in the money supply is being tightly controlled by the banks/PDs to control the markets and recapitalize by fleecing the retail traders. They are doing very little lending from what I have seen.
I would argue that most of the "inflation" we have seen is manipulated and/or caused by speculative trading in commodities, price fixing (oil), etc.
Of course there is speculation (especially in oil). That is exactly what Ben B wants!!
When money has no value (ZIRP) then money will go to hard assets. Gold,crude corn whatever. When interest rates are zero this will happen.
the fed is just a front man,... a shell game, and the ny branch controls 95% of the action - zippo - taylored made for the 'tbtf's', period!
ref: http://www.bigeye.com/griffin.htm
ps. this read has been out there a long time - short and sweet, to the point
dup.....
Would you agree that inflation is caused by increased demand and consumption or classically, too many dollars chasing to few goods? The increased liquidity is for the most part being contained and controlled and used specifically to recapitalize the banks. In general, the banks are not lending and people are borrowing less due to a number of factors. Consumption is way down.....the main reason we are seeing inflation in many consumer goods sectors (food items esp.) is because of higher energy and fuel costs(because of the price fixing that is occurring) not because of increased demand or consumption.
Look a little further ahead, this money will be allowed to flow into the real economy at the worst possible time.
Okay......looking....looking....nope, still don't see the runaway real inflation. Simply observe: The banksters get the 0% loans. They use all of it to invest in the markets (which they control). They rape the retail traders. They pay the loans back to the Fed and keep the profits. The executives and principals make their bonuses. They buy a new vacation house, hire another maid, buy a Bugatti, take a European vacation, buy some gold. Still not seeing the inflation.......
If the banks actually did what they were supposed to do (make small business and consumer loans) then we have middle-class growth, wage growth, increased demand/consumption, then we get the inflation. The inflation we are experiencing is due to MANIPULATION of prices.
Why is this so difficult to fathom? The MMs are manipulating everything else (the debt and equity markets), why not inflation?
You don't understand... you are talking about unrelated things. You sound like a tinpot conspiracy theorist, who just read the business section of their local paper and think's they're seeing something no one else has ever considered....
More homework is required. Go and read hussman's back catalogue for an explanation money supply and inflation, if you're interested in understanding what is going on...
Ditto! I couldn't have said it better!
I just started reading John Mauldin's book, "Endgame". He's confident that the politicians will "get it" and deal with the debt before a full-blown crisis! There's no evidence of that, given Emperor Obama's determination to double down on debt roulette!
Bring it one! Real change will require real crisis and real hardship! Plan and prepare accordingly!
Mauldin's book is a great read! I don't recall him saying the politicians will get it. However he does share that there are no easy choices and the longer one waits the more difficult the choices become. He recently met with some congressmen from both sides of the isle and was impressed by their openness, but this does not make the choices any easier.
His main theory is what he calls "the muddle through economy," where we essentially have stagnant growth for many years. I don't agree with this and it does not seem to harmonize with his whole "endgame" idea, which implies an actual end to all this BS. But who am I to question someone who has a long track record of correct calls.
John can paint some mighty bleak scenarios, but he is ever the optimist.
I would really like to see an analysis of how much more it will cost society by kicking the can down the road and financing the costs with the savings of the little people. Anyone can see the end game is coming so why are these supposed highly intelligent leaders lying to the masses to suck even more of their savings into the black holes of insolvent TBTF banks? Everyone know that restructuring is painful...ask anyone who has declared BK...but would you rather restructure while you have some assets left or when they are all gone? I don't get it...the only one's who gain are the politicians who extend their political lives and the bankers who continue to get big bonuses for gaming the system. Oh, I think I answered my question!
I believe they are trying to engineer a soft landing by muddling through for years using QE rumors, twisty things, toxic purchases, etc. the sand pile will pancake. They know it, but are simply out of bullets....
I believe Bruce is correct - this is going to get very ugly because once the avalanche starts there is no possible way to stop it.... The Fed may seem powerful but the market forces will completely overwhelm their policies.
Bruce: you are about to get exactly what you've asked for and it will be far more painful than you can even imagine... Sad, but inevitable...
" Anyone can see the end game is coming so why are these supposed highly intelligent leaders lying to the masses to suck even more of their savings into the black holes of insolvent TBTF banks?"
Because they don't want to loose there seats in the gov't, and because they profit from it. At this point there is no hope and no way to dig out of the problem. There are only two choices: Default now and let the crisis full manifest, or kick the can down the road, until the can falls off the cliff. There is no way entitlements, interest payments, and other non-discretionary items can be cut without plunging unemployment to the 30% to 50% range. Look what is happening in the EU where Austerity measures have been enacted: Riots, violence, and crime. As soon as the US turns to Austerity, we will also have riots. Any politican that votes for austerity will be voted out because the masses want thier old, unsustainable standard of living to return, Austerity would cause the opposite.
you'd have to start by prosecuting the theives and clawing back the ill gotten profits and bonuses.
Nassim Taleb gets to the heart of the intrinsic unfairness of crooked bankers plundering America-- and the world economy--- and his concern for what will evolve if they are not held accountable.
-- Time to Clawback $2.2 Trillion in Corrupt Banker Compensation – Nassim Taleb On #OccupyWallStreet A very interesting interview on the need for #OWS to focus on the "hidden tax" of obscene banker compensation and bailouts. Taleb: "You need something to break the bank cartel... They caused the crisis... and last year they had record bonuses... this is not rational. They are hijacking the American economy." ... Read More >>
http://ampedstatus.org/time-to-clawback-2-2-trillion-in-corrupt-banker-compensation-nassim-taleb-on-occupywallstreet/I have held the opinion for a while that in order for TPTB to "reconcile" this problem in the least disruptive fashion they have to inflate in order to adjust nominal Debt/GDP ratios back to a sustainable 100-140%. There is too much debt in the system compared to nominal GDP in any specific currency.
If they allowed a deflation it would destroy everyone since the entire world uses debt instruments as both money and collateral, and these uses far outstrip M1 type money. That would lead to widespread starvation and social breakdown.
Compared to that scenario, everyone losing 80 of their purchasing power might be what would be considered a "good thing" outcome.
If they allowed a deflation it would destroy everyone since the entire world uses debt instruments as both money and collateral, and these uses far outstrip M1 type money. That would lead to widespread starvation and social breakdown. Understand this, debt is the currency of slaves. TPTB are on the other side of the debt scam, deflation is fukn awesome if shitloads of people owe you shitloads of money. Any money you do hold you swap for real things, creating hyperinflation, devaluing what you spent, and inflating what you got.
Deflation is a bitch. Inflation is a MF. Pick your poison, or none at all. Find a way to be OUT of the system and have something of real wealth remaining to use in the new day that dawns. There will be a new day, even if it is filled with the bodies of the fallen. God help the poor, the children and the old. What we will be going through is beyond most of our imaginations, yet it will indeed happen. We will go through it together. How we go through it together is up to us, each one of us.
If what you propose is the answer, why don't they just crank up more printing presses and hand out 'allowances' to every American?
Well, first let me say that I do not "approve" of this. In fact I am just stating my opinion about the options they see before them.
In a prior published Kyle Bass interview (2010, Austin Texas on stage interview) he feels the folks in CB's pretty much world wide are a bunch of educated nitwits who do not understand the beast that is the market. His opinion (if I may summarize) is that markets WILL find the weaknesses in ANY market or plan and exploit it. That is what they do. His expectation is that they (CBs) will keep noodling around with half assed "solutions" to mis-perceived situations and eventually the system will destroy itself as the market finds bigger and bigger discrepancies to exploit.
I pretty much agree with that assessment. CBers such as BennyB believe they are in control, and are not. They will attempt to pursue policies that will end up not working and will also be run into the ground by the markets.
The nuclear option is the printing press. Benny has so spoken. I believe he sees that as the last option. I do not believe he has any other option. We will all be millionaires. Big woop.
this is exactly what they r doing - except they r handing out allowances to their firends - theres no need to get every amarican involved, it will trickle down eventually, u just have to wait long enough.
Thats pretty much what they do now for 40%+ of the population.