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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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i'm not sure if i believe this one just yet.
certainly not hard to believe, but their new strategy seems to just be making up rumors.
if the dollar can't assert itself soon though..
Bernank knows exactly what he is doing. Equities down 20% with persistence means public pension funds go BOOM ! He can't jump from that monetary bullet train now. Pension funds can't fake solvency forever. Sooner or later they must possess genuine annualized fiat growth of 8%.
None of the schemes will work, but I bet a virtual dollar this is his motivation for feeding the equity ramp.
It wont work. he is asking investment banks to put money into a market that is on the verge of collapse. All he wants to do is take the MBS off the balance sheet of the TBTF so when the MBS market tanks GS wont need a bailout. It's a preemptive bailout in the face of a major dive in everything not USD.
The Fed always takes the losing side of every exchange, because it is owned by the TBTF. TBTF sell MBS, buy short term TBills, then convert to equities at the bottom, not the top. The market can't stay up till Q1, I give it a week at most.
not sure its his motivation, but its his EXCUSE. if equities do become less attractive than bonds, Pensions Funds can reallocate, but where are the commissions and management fees in that. i don't think anyone running a Pension FUnd really believes in 8% YOY as far as the eye can see, so right now they're running sub 5%. you could match that performance with 30yr TIPS probably, if you knew the Fed chief would stick to his inflation target scheme of 2% a year, (currently 3.9% ex food energy).
the equity ramp is campaign 2012. remember Bush Paulson pulled gasoline from the Goldman equity index in 2006 to bring down gas prices ahead of the election. and he already had equities on the ramp up with Iraq War spending. enough player haters will push the button for barry, if enough arrows are aligned in the right direction.
Couldn't agree more.
The next step is to realize that the same thinking can be applied to the size and scope of our current government in general. It's too big, too intrusive and huge chunks of it are essentially in business for themselves at this point. Talk about abandoning original mandates.
It's simply unsustainable, and just like The Fed won't be able to pull off what it thinks it can. Collapse is inevitable and the sooner it happens the better off we and future generations will be.
It's also probably politically impossible to turn the ship around at this point (reincarnated Reagan, Ron Paul, whatever) so....likewise with the Fed I think it's actually better to encourage the quickest path to demise.
OBAMA in 2012!
The risk of course is that when TSHTF, governemnt, including The Fed won't be the biggest target for public anger and blame (esp. if OWS is a leading indicator). The government will essentialy begin seizing private property on a very large scale in a desperate attempt to keep the leviathan alive and the country will bifurcate into pro-government and anti-government camps.
Obama!? Sheez, how many more half way programs from someone whom is one of the most appeasing, conciliating, conciliatory, disarming, mollifying, pacifying,, placating, placatory Presidents we've ever seen? Taking the "change" platform he was voted in for into account, he's the worst. Right, wrong Policy descisions aside, all I've seen from this guy is a desire toplay nicely with others, every time he gets stone walled.
If a Pres wants substaiantial change, he must be willing to use VETO, so far he's been willing to use "lets make a deal", making him just another Political, not a true leader.
"all I've seen from this guy is a desire to play nicely with others"
This canard infuriates me.
Never listen to what a pol says, look at what they do and ask, "cui bono?"
O is complicit. This, "Obama is too nice/too reasonable" meme is just political ass-covering to fool sheeple like you.
O is just another banker bagman
You've misunderstood. It doesn't matter, it's too late, interests are too intrenched. It's time to get out from under the load as best you can and let gravity do it's thing.
Amen and well put
It may get to the point where the Fed owns most of the housing, most of the T Bonds and most of the S&P 500 either directly or through their subdivisions known as banks. Any companies that can or have received bailouts are basically comprised government employees. The Federal Reserve system may have worked but the greed and bailouts of bankers have made it un-defendable.
I assumed that the article was 'tongue-in-cheek, that it was the banker's wet dream. I never thought anyone could actually seriously entertain the reality of it!
This echos my own thoughts of the last three years. Why wasn't this your assessment long ago? I've enjoyed many of your posts, but this is somewhat surprising, given that it makes you sound a tad.... well... out of touch. Have you never watched Zeitgeist Addendum http://zeitgeistmovie.com/ ? If not, but don't have time to watch the whole thing (who does?) --just move the cursor up to the 4 minutes, 20 seconds mark and watch the next ten to fifteen minutes.
That link above for Zeitgeist doesn't seem to work, at least here in Western Europe, but these are on YouTube, with millions of views each:
Zeitgeist - The Movie: Federal Reserve [in 5 short parts - perhaps a part of the full film below]
http://www.youtube.com/watch?v=_dmPchuXIXQ
Zeigeist Addendum [the full 2 hour movie]
http://www.youtube.com/watch?v=EewGMBOB4Gg
Wow, welcome back Bruce. Again, while many of us agree, the question is how long will it be? Seems like the markets, especially when manipulated can remain irrational for a lot longer than you or I can remain solvent. A long period of "do nothing" policies and lies, while the printing press (or keyboards) run silently in the background could go on for a very long time as we all slowly slip into chaos.
hedge accordingly.
He abandoned the mandates long long ago when he made it clear he wanted the stock indices stabilized whatever that takes. The Fed is not intererested in a stable dollar. They are attempting to maintain a stable S&P. That's a world of difference, and yes, it is leading us to disaster.
The Fed stole most of America's wealth back in the 30's. Since then it has been a game of managing that wealth and protecting their territory....a la Godfather. This is all that Bennie is doing for his masters now - he could give a damn if we all died of hunger as long as his master's privilaged position is protected.
Same thing waqs done to Japan, and next up is China. That will be interesting to watch.
indeed, the american financial system,... that being 99.9% of us, has or very shortly, will have been sucked dry of our wealth - what's left is a discarded cadaver's skeleton ready for incineration -
the mortician 'fed', has done its diabolical deed for the oligarch -
tis time to relocate to china -
i'm with ya bruce, come rain or shine
ps. if their secretly plotting to leave the u.s. by methodically, and deliberately screwing things up for their exodus, thus leaving us holding the bag - so be it - better to take our medicine now jmo
Spot on BK. The system is diseased beyond cure. Only its demolition and the ground-up rebuilding of a new system offers a chance of avoiding decades of creeping impoverishment and societal decay.
The system will crash one way of another. Might as well get it over with quickly.
Did the fed get to google?
In google news, if you try to search for news on "occupy the fed"......nothing comes up.............i find it very hard to believe given what is going on in NY and other cities that there is no news on this topic.........
Please correct me if i am wrong.......
http://occupythefednow.com/
Google's Deep CIA Connections
http://english.pravda.ru/world/asia/14-01-2010/111657-google_china-0/
http://www.wired.com/dangerroom/2010/07/exclusive-google-cia/
The global cybergame has begun
http://www.cbsnews.com/stories/2011/10/19/opinion/main20122503.shtml
(make no mistake the level of detail that Goog etc have on users is staggering)
Tyler periodically posts WH video here - WH changed their privacy policy back in June such that it drops LSOs with two year expiry and LSOs are more difficult to delete than standard cookies
White House Tracks Users
http://epic.org/2011/06/whitehousegov-to-track-users-f.html
NSA Chief Plays Offense on Cloud, Cybersecurityhttp://www.informationweek.com/news/government/security/231901327
(only time before USCYBERCOM pivots to domestic threats )
Further Google - CIA information links:
'Ex-Agent: CIA Seed Money Helped Launch Google', retired intelligence agent Robert David Steele interviewed by Paul Joseph Watson on Alex Jones' Prison Planet site, and speaking of the CIA's Dr Rick Steinheiser and his connections with Google:
http://www.infowars.com/articles/bb/google_cia_seed_money_launched_googl...
Live Photo: Google Inc. Caught Censoring EU Search Results (for USA - CIA)
Google Internet Censorship - Censure d'Internet par Google - Internet censuur door Google
http://www.flickr.com/photos/22325431@N05/6100668211/in/photostream
Report to the EU Parliament and the Commission of the European Union
Anti-Competition Crimes of EU Internet Monopoly Google Inc. (with CIA) and Wikipedia (with CIA), to Erase EU Journalism, to Slander and Murder EU - Polish Citizen, Writer, Journalist
http://www.indymedia.nl/nl/2011/07/77181.shtml
Original in pdf format:
http://eureportsnonzionistjews.hostfile.nl/file/0zndj5ea3v/410/nzjd-eu-r...
Google Agrees to Assist CIA, Blocking Belgian Journalism Websites to Help Murder US Dissident, non-Zionist Jew, in Brussels
http://www.indymedia.be/en/node/31259
One of the early journalists to expose just how Wikipedia - Google is used by the US political mafia, and by agencies such as the CIA and Israel's Mossad, to plant false information - this is journalism which Google Inc. has long criminally blocked world citizens from finding on Google search:
http://www.banned-in-america.net/wikipedia-cia-answers-com.html
yep,... their so corrupt, that they won't give up assange's political affiliates or where his donations come from -
god bless you julian assangethe 'irs' did,...
I know of a number of businesses that are seeing an unprecidented amount of work right now. Very odd and very uncharacteristic of the last year or so. Haven't been able to connect the dots yet, but something is happening beneath the surface.
What types of businesses CL? It would be interesting to hear and we might be able to help you connect those dots.
AD
From my perspective, and despite the recent scandal with the solar company, I know that the Fed has been pushing huge sums of money through venture capital firms and the SBIR and STTR mechanisms at government agencies such as DOE, DOD, USDA, NSF, and NIH in order to fund start-ups that will "save us all"
People might bitch about the government programs, but hey at least the government programs don't extract a 300% pound of flesh, regardless of whether or not the company succeeds or fails like venture capital fucks do. All paper going exponentially to zero.
Good luck with that.
Oh yeah, so these companies are mostly comunication and technology companies, many of the latter are in agriculture and energy. Time to reinflate that bubble.
Here is a $60 Billion fraud perped on the American taxpayer............Private contractors in Iraq/Afghanistan........
Where is the outrage.........
http://nakedempire2.blogspot.com/2011/10/60-billion-of-206-billion-spent-on.html
The outsourcing of the American Military, Iraq, Afg and in due course the homeland.
A virtual secret state: the military-industrial complex 2.0US reliance on private contractors is seeing a sinister focus on surveillance of citizens instead of defence against cyber attack
http://www.guardian.co.uk/commentisfree/cifamerica/2011/oct/09/virtual-s...
Naomi Wolf (Shock Doctrine, et al) arrested by NYPD in peaceful Wall Street protest . . . Homeland Security closes the entire street prior to her arrival at PD, warned that if arrested there again photo and prints will be entered in national database that lasts "forever."
http://blogs.marketwatch.com/specialreport/2011/10/21/huffington-post-bl...
Yes, unmitigated printing and venture capital allocation via those in the know via many Federal programs that are not subject to full disclosure and taxpayer/congressional oversight. Double secret probation if you will. All still ignoring the true cost of creating capital. Since energy is really the only thing that matters, the ME is being resecured and you will see massive exploration in extremes of both hemispheres in the near future, environment be damned. The can is being kicked, there is no other choice aside from pandamonium the world over. Probably too late to really hedge for the coming inflation if you haven't already.
there is always time to hedge for inflation until they cut off all lines of credit.
Chief like this idea:
www.SouthGaRealEstateReport.com I am The ChiefHow would this be much different than what we do now? Specifically, we dump pallets of cash out of C130s. The local tribal warlord get all that money delivered to them or they kill the people who found it. Then they buy a residence in washington D.C., send thier kids to college and vacation here. Then when they stop sending that money back, simply because they have no more need for education or housing we ... uhum ... yeah. we all know what happens.
I like Ron paul's idea. Dont send them the money in first place. Send them food and implements if anything.
all correct. I pray daily every evening for him to have heaert attack, but there are thousands of him to just follow in line like a machine. it's an ideology that has no basis in fact, but at the whims of the banklers
I am wondering what "hole, pipe or bunker" will be where we find Ben hiding.
No doubt he'll be cornered in the print room, protecting his beloved Heidelbergs to his dying breath.
I see the picture, ink all over his hands, smeared across his shirt and tie and on his face. His comment will be "I didn't".
Central Banks only have ONE mandate. To loot the wealth of its host country, all other so called mandates are but distractions.
Know your enemy
Amen Bruce. Amen.
It's actually closer to 60 million if you include those with less than 20 hours a week but who's counting.
PM's. nuff said.
+ 1
Everyone should have at least 5% - 10% in PMs. Even the mainstream financial advisers say that's OK. And yet, only 1% - 3% of Americans have physical gold in non-jewelry form.
EDIT:
Great piece Bruce.
You'll have no job, food cost will go up exponentially, but the average americans $6000 401K will go up 100%. What a plan, what a country.
It's a nice day in NYC today. Get your ass down to Zuccotti Park and spread the word.