$10 TRILLION Liquidity Injection Coming? Credit Suisse Hunkers Down Ahead Of The European Endgame
When yesterday we presented the view from CLSA's Chris Wood that the February 29 LTRO could be €1 Trillion (compared to under €500 billion for the December 21 iteration), we snickered, although we knew quite well that the market response, in stocks and gold, today would be precisely as has transpired. However, after reading the report by Credit Suisse's William Porter, we no longer assign a trivial probability to some ridiculous amount hitting the headlines early in the morning on February 29. Why? Because from this moment on, the market will no longer be preoccupied with a €1 trillion LTRO number as the potential headline, one which in itself would be sufficient to send the Euro tumbling, the USD surging, and provoking an immediate in kind response from the Fed. Instead, the new 'possible' number is just a "little" higher, which intuitively would make sense. After all both S&P and now Fitch expect Greece to default on March 20 (just to have the event somewhat "priced in"). Which means that in an attempt to front-run the unprecedented liquidity scramble that will certainly result as nobody has any idea what would happen should Greece default in an orderly fashion, let alone disorderly, the only buffer is having cash. Lots of it. A shock and awe liquidity firewall that will leave everyone stunned. How much. According to Credit Suisse the new LTRO number could be up to a gargantuan, and unprecedented, €10 TRILLION!
Here is how the strawman is now put in place for what may the biggest liquidity injection in modern history in just under two months.
February’s second 3-year LTRO looks set to be extremely large. Really extravagant claims (we have heard reports of €10 tn) are probably wide of the mark because this will not be a complete collateral free-for-all (unless NCBs choose to make it so, which for some of them is admittedly an open question; again, see rational player section below). But the idea of path-finder lightning springs to mind (High-speed cameras reveal that lightning evolves “bang BANG”, essentially); the last LTRO has removed any stigma, making managements who do not exploit the value on offer arguably careless at best. This is, on the face of it, very cheap protection indeed against any possibility of a liquidity crisis for three years.
Naturally, if indeed there is anything even remotely resembling a €10 trillion expansion in the ECB's sub €3 trillion balance sheet, all bets will be off as the ratio of the ECB to the Fed assets, a correlation which would imply a sub parity level on the EURUSD would gut corporate earnings in the US, all merely to prevent the disintegration of the Eurozone. And while this event will be welcomed by the Fed initially as it will send stocks exploding to potentially all time highs (and gold to well over $2000/ounce), it will cripple the US manufacturing model unless the Fed immediately responds in kind, and prints outright, and unsterilized, a non-trivial comparable amount. In other words, the world could very well enter the final round of global coordinated currency devaluation, aka FX war, together. Yes, that means coordinated printing by the SNB, BOE, PBoC, BOJ, etc, etc. Simply in a last ditch attempt to preserve the status quo. Which, unfortunately, after the knee jerk reaction, will fail. CS explains why:
But there are many problems, particularly at the systemic level. So, although an eye-catching number may trigger a rally (to be clear: 29 February is an eternity away in the current environment), Greece is a salutary reminder that treating a solvency problem as a liquidity problem, including buying time for solvency to be addressed and other dubious concepts, is a disaster for existing creditors, who are subordinated throughout by the senior rescue funds. It also shows that three years is an eternity and that timescales (such as the possible introduction of resolution regimes) are flexible. It remains unclear to us where the new capital for the European banking system is going to come from if not from existing bondholders and that, in some cases, that must involve senior, in our view. So the LTRO is another example of reducing idiosyncratic risk at the expense of systematizing risk, in our view.
The participating bank needs a plan for refinancing the LTRO; the lack of a plan means that financing will not be forthcoming, in a death spiral. So the massive provision of official liquidity will act as a long-term triage and increases the pressure (albeit over a longer period) to raise capital. It is a free lunch only for stronger banks, in some sense, and at the systemic level is anything but. Rather, it is paid for by those with senior exposure to weaker banks.
In fact, Credit Suisse is openly hunkering down as it now see the "endgame taking shape" - "We do not expect the downgrade of France to have an immediate impact, but it highlights very clearly to us the ultimate issue that has to be tested in the euro area. Will Germany hold together the euro as, when and if France becomes part of the periphery?"
Here is how the European endgame will look, through the prism of game theory.
The Nashing of teeth
We continue to analyse the euro area sovereigns in game theoretic terms, with the game looking from outside like a CDO where value allocation is a function of expected losses and of correlation (distribution of those losses in a tranche structure).
In simplistic terms, we have stated that Portugal cannot rescue Greece (i.e., Greece's creditors), Spain cannot rescue Portugal, Italy cannot rescue Spain, France cannot rescue Italy, but Germany can rescue France.
In equally simplistic terms, we have stated many times that “crises are baked into the cake”.
With the CDO and game theory analysis, we have formally modelled both statements. In the game theory, we concluded that the most likely outcome is a series of ever-deeper crises and relief rallies culminating in a definitive moment. Before that definitive moment, our analysis suggests that both core and periphery parties playing hard-ball leads to an escalation of the crisis, but not calamity. Only at the decisive moment does a “collision” in our game of chicken model lead to catastrophe. We remain convinced that the decisive crisis has not been seen yet.
What we have not done before is put the two statements together. To do so, it strikes us that each “wave” of the series of crises represents the transition of a country or countries to the periphery. We started with the “Greek crisis”, still under way with, at the time of writing, both parties threatening hardball. Then we had the rest of the outer periphery, with Ireland “swerving” rather spectacularly and Portugal not so clear. This led to a set of rescue plans that made the implicit assumption that the periphery would broaden no further.
But the outer periphery was followed by Italy and Spain as the crisis emerged in the summer as truly systemic. The resulting crises have been forestalled, for now, by ECB action (SMP and 3-year LTRO). Now, the (well-flagged) action by S&P hints at the final crisis.
Current news on Greece raises the question of whether the (existing) core wants to “rescue Greece”, amid the usual nonsensical debate about laziness and doctors’ swimming pools. But our analysis suggests a steady narrowing of the core and broadening of the periphery as we head to the ultimate question. Would Germany want to rescue France? And – see the below section on the rationality assumption – would France want to be rescued? We are not gong to futurize French politics, but we note that we are already in a situation where it is not impossible that Le Pen eliminates Sarkozy in the first round, according to the polls. By definition, France finding itself on the periphery would damage France’s leadership position in Europe and risk a change in politics. Of course, we think the ultimate answers are “yes” and “yes”, but that frisson of doubt, in light of the consequences of the implications, will keep the market well on its toes.
Putting it all together: the rational national player assumption.
News agencies try to reconstruct the internal national debates of the euro area, which are often carried out fairly openly, it has to be said. But a country often has a simple choice to express to the world, and we model this in our game theory as “hard” or “soft”. We make, thereby, a key assumption, that a country acts in a way that appears rational when viewed externally as a single entity in that single action.
We have complained for years that countries cannot be seen as monoliths. We need to consider the possibility that the outcome of the internal game, since it is not fully transparent to the outside, can superficially seem irrational. Circumstances could be envisioned where a player chooses to play hard in a situation where he knows that it will damage national interests, i.e., playing hard will be worse for it than playing soft. For example, it might be rational for a player within France, lets say le Pen or Sarkozy, to play uncooperatively in the European context, if that is beneficial from a French or individual perspective. Even within the European context, a country playing "irrationally" aggressively can be part of a rational strategy of brinkmanship behaviour. For example, by trying to make a threat look more credible. We could be seeing this in German attitudes to Greece, as we explore below. The corollary is that this can only work up to the penultimate stage of the crisis, as only that way one can try to force the other player to do the right thing in the final stage. Overall, we see the risk to be vigilant with the rational monolithic player assumption in the euro area. And, of course, flexing it does not invalidate our conclusions, it merely points out that getting it wrong is a key risk in the analysis. This is framed by the historical context, where Europe has achieved disastrous outcomes under the incentives of the time.
The risk of the simplification can be highlighted by a simple example. The rational action of the College of Cardinals under the post-13th century papal conclave is collectively to fill the vacant Papacy immediately. Individually, as well, the cardinals have the same incentive; no matter how beautiful the ceiling of the Sistine Chapel, they can see it anytime. So any sensible rational expectation of the smoke colour, based on treating the conclave as a single rational entity, is white at all times, including on the first day. That assumption would have led our observer astray by 82 rounds over 50 days between 1830 and 1831. Similarly, as we head into elections in France, already referred to above, and to Germany, the assumption is likely to come under some stress. We think that understanding of the internal “game” is most central in these two countries, particularly Germany. This is because, in our view, the periphery playing “soft”, rationally or irrationally, cannot make the crisis resolve on its own. Or, austerity is not sufficient. The central question, now hoving into view, is whether France and Germany, when the time comes, can co-operate. By then France may be in an embarrassingly inferior position, possibly forcing a Nationalist response that is apparently irrational when viewed externally but rational when viewed in consideration of internal incentives.
Between Greece, French elections and the downgrades, the situation remains as deeply uncertain as ever. The effect of the LTRO may last a while longer, buoyed by a negative market, but we are on the alert for a turn.
Finally, CS' appendix on why what started with Greece, will likely end with it:
We no longer publish views on Greece because the situation is too fluid to permit it, but we would observe that a key is whether sufficient voluntary participation can be induced to enable a CAC to be credibly introduced. In this case, “free-loading” on anything other than the 20 March bond becomes dangerous if a further restructuring is thought necessary, which we regard as the market’s expectation. In a game-theoretic sense, which is still the only way we can look at it, the dominant strategy, if a restructuring on more burdensome terms is expected with probability 1, is to volunteer now. The exception is the basis holders but, as we have pointed out many times, CDS are a tiny fraction of bond outstandings so basis holders are unlikely to tip the balance. Free-loading on March is a much more subtle game given that there is not time for a second round and the authorities would still like to avoid a hard event. What would they be willing to pay for this? How much 20 March is held outside the ECB and banks which are under official influence? etc. As we write, both parties seem to be playing “hard”, suggesting a suboptimal outcome of a hard default. As examined above, at this relatively early stage of the game we should expect a “swerve”, most probably by the core. But continued playing hard might be the outcome of rational behaviour by either party, given the multi-stage nature of the game. What message would paying the 20 March in full on Greece’s behalf give to the rest of the periphery?
The last bolded sentence is precisely what we warned about last week when we said that should Greece devolve into a full out coercive restructuring, the one real question would be: "who is next?"
Needless to say, if Credit Suisse is even 20% correct in its estimates, and the more we think about it, the more plausible it is that 20 days ahead of the Greek default the ECB will bend over to provide every last penny European banks may need, and then some, to firewall exposure fall out (since none except for UniCredit actually did a capital raise and we all saw what happened then), then all bets are truly off. Should the ECB indeed escalate events to this degree, then we are about to leave the paradigm started with the late 2008 bailout of Lehman, and enter one in which every incremental swing in the global socio-economic sinewave could well be the last.
As such, attempting to predict what happens after becomes futile.
Incidentally, those curious what a €10 trillion expansion to the ECB's balance sheet without a proportionate response by the Fed, would do to balance sheet correlation, and implicitly, to the EURUSD pair (the correlation was explained previously here), this presents it vividly.
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Why not just say infinity bitchez....
Yea that works
March is the event horizon.
Incredible how the sheeple still don't react.
And they will never react.
It's like a smoker who KNOWS smoking is deadly yet keeps on puffing.
Survival of the fittest.
Yes, it will be March.
Been saying March 4th and the Spring equinox as inflection points for.....months.
Buy GOLD, Bitchez ...
Buy anything you can bitchez!
Buy, buy Bitchez!
Hey, didn't I tell you guys it did not matter? Froth off a venti latte in the grand scheme of things.
That Quadrillions were a-slosh in the sewers of the global financial under-world? I'm sure people said, no way...
The official audited text above is part of paragraph 132 on page 18 (here) of a Committee of 300 élite Secret Government document signed on Wednesday 10th February 2010 on page 106 (here). Page 19 of this same document can be viewed here.
The three signatories on the document are H.E. President Robert Zoellick (President of The World Bank), H.E. Vice President Lars Thunell(Executive Vice President and CEO of the International Finance Corporation) and HM Queen Alexandra Elizabeth Mary Windsor II (Chairman of The Committee of 300, The British Royal Family).
The full text of Paragraph 132 flagged in the yellow panel above reads as follows: "The Hongkong and Shanghai Banking Corporation (London, UK and Hong Kong, PROC) Account no. 0567105267802012 with account name of White Spiritual Boy and with standing balances per account worth US$ 1,030,000,000,000,000,000 with reconfirmed and reconsidered matured earnings audited by the Financial Institution of the Committee of 300 for the month of January to April 2010 worth of US$ 434,000,000,000,000,000 in the total of US$ 1,464,000,000,000,000,000 (US$ 464,000,000,000,000 had deducted automatically for bank charges and services for the first quarter of audit maturity) in the net balances of US$ 1,000,000,000,000,000,000."
Well? Ehhhhhh? That is Quadrillions and hundreds of quadrillions and thousands of quadrillions.
So pure. So White.
Relax, this will not hurt one bit...
ori
/1460-days-ago-
As you all well know, I concur, except for the part about it being the final round.
10 Trillion Euro?
Hey SNB: peg THIS, bitches.
So this is what the "endgame" looks like? Printing to infinity, with the central banks' balance sheets ballooning to infinity.
Let the history books take notice that on January 17, 2012, we ZHer's predicted the endgame scenarios.
one Euro will =92cents LOL
It sounds even better if you say it like Elmer Fudd
Ten Twillwion Euwows!
Thanks dude. That was a great laugh!
This $10 trillion seems like a bull shit number. Are these fuckers real?
Now you are starting to see the big picture.
Thanks for the info ORI.
Infinite justice is about to be delivered.
Sure Ahmee, so many NUMBers out there, makes one's head spin.
But I think everyone might be under-estimating the scale of the reset.
Here's the link, Caveat Emptor and all. Nuts though...
http://alcuinbramerton.blogspot.com/2012/01/global-banking-crisis-what-global.html
ori
Aren't "thousands of quadrillions" (FTA) quintillions?
I mean, it's not like sugar coating it makes it any easier to swallow.
Whoever faked that 'document' floating around the internet must be getting a good chuckle.
Anyone who sees the numbers in it and thinks 'zomg I've stumbled onto the secretz of the elitez' like ORI, please give your head a fucking shake.
Canaduh,
Shake your head all you want after you read this...
http://www.rumormillnews.com/pdfs/11%20civ%208500%20Keenan%20Complaint.pdf
That's a rumor lawsuit in NY, NY. Everyone feel free to do their own due diligence. A little help from ZH's in NY?
http://www.youtube.com/watch?v=Z1-btrWznJM
That's a report on the US bonds seized by the Italians that barely made it to the US airwaves.
IFester
LOL, my favorite part- "the Notes were printed to appear as if they were not produced from official origin and bear obvious imperfections,therefore easily deniable."
(BTW, if 'the Dragon Family' were real, they would be the biggest fucking idiots in the world)
Printing that amount of money is just as effective as wiping the debt clean if you were after an honest result! But rape is only honest when.....
Thanks Ori, a very good read!
Thanks ORI for the link.
There it has among other further reference to bibliotecapleyades.net
Two pertinent standout links at bibliotecapleyades:
Conspirators' Hierarchy - The Story of the Committee of 300
TOC
The Committee of 300
The "Committee of 300" now call themselves "World Government Founders for the NWO".
TOC
This horsecrap claims sums of over a QUINTILLION dollars. Horse pucky!
Committee of 300, my pimply ass.
300 more gallows will be needed at the hills of Tyburn.
and guys with heavy unkempt beards go to the head of the line
What in the world is that about? Those numbers simply aren't believable. Most people don't understand Very Big Numbers, but my BS meter goes of the chart with that one. Can you give some context to that document for us?
Shhh, you read it on the internet so it must be true.
It's written on the WIKIPEDIA...so it must be true! Further YOUTUBE, FACEBOOK, GOOGLE all have it. Thus they must be true :)
National Endowment for Democracy (NED); George Soros' Open Society and Media Development Loan Fund (MDLF); Rockefeller Foundation; Heinrich Böll Foundation; Freedom House; Human Rights Watch; Amnesty International; International Federation for Human Rights, et al all are giving hands, said it, so it must be true :)
What i have NO DOUBT as TRUE are that LIBYA are raped! Syria and Iran are the next target! Gaddhafi was screwed and assasinated! Iran's nuclear scientists were murdered by the collaboration of M0$$AD & the 3-Letter-Agency!
and well, a long list to go here... just fill in
Shhh, you read it on the internet so it must be true.
of course he can't
Do you have a link for all the pages?
Right here patience. AS I said above Caveat Emptor.
And by the way, all naysayers need to brush up on their history of a man called Christopher Story.
Link
ori
Nice link, lol.
How does this have anything to do with Christopher Story?(another prominent bullshit artist who specializes in seperating fools from their money)
He's Dead Canaduh, Duh! Murdered. Con Artist? I'll take a 30 year published intelligence career over your dumb anonymous ass. And of course it is related. Duh! Keep yoru blinders and earplugs firmly plugged brother canaduh.
ori
10 to the 17th power dollars Scientific notation now needed to sum up balance sheets. LOL WTF!
who will be appeared his signature herein below.
Buy this
http://www.amazon.com/Muffinsaurus-Rachel-Rebecca-Fuess/dp/1466313730/re...
WTF? The Muffinsaurus? I'll only buy it if the pages are made of silver.
Let's buy a vowel!
P_ ss _ff H_p_ _m Sm_k_rs!
Vowels / consonants.... they're all confusing.
This idiot is priceless:
http://www.youtube.com/watch?v=FMghvnqDhT8&feature=related
The revolution will be close when I see this bumper sticker on a prius...
http://www.zazzle.com/hopium_feels_good_until_it_wears_off_bumpersticker-128322983042758459
Buy Wheat BITCHEZ
Too many bitchezoids here.
Survival of the Fitness, boys!
TRAILER PARK BOYS "Survival of the fitness" - YouTube
Just Reverse Split the Euro. A 1 for 10 reverbo should do the trick. Look how well they work for stocks. Cough.
Don't give them any ideas ;)
The shithawks are circling
And a shitstorm is developing quicker than you can make a shit sandwich Randy.
Or a liquorball sandwich. TPB - Liquorball Sandwiches (Lost Interview) - YouTube
Can you feel the way the shit clings to the air? Shiticane comin!
The shit blizzard approaches from behind as we stand on the edge staring into the shit abyss.
The shit snowflakes fall into my open mouth as I lie on my back making shit angels.
Shitflakes falling from the sky, or something you piss on to eat for breakfast?
Life is like a shit sandwich, the more bread you have the less shit you have to eat.
It's all aboot "Supply and Command"
Buy some bitches, bitches! They will be easy to pimp out for food.
Why not Pimp out yourself?
I don't think you fully appreciate the benefits of dumping 10T into the system.
Sure, you destroy the currency and likely set the world up for a live action rendition of Mad Max, but hey, YOU GET A LIFETIME SUPPLY OF TOILET PAPER! HOORAYYYY!
Thunderdome bitches; Gold vs. Fiat, 2 men enter, 1 man leaves........
Who needs toilet paper?
http://www.youtube.com/watch?feature=player_embedded&v=R8jCP_-oBgQ#!
In the near future, the rich will have robotic mates too.
I disagree completely that the end is near. It's obvious that short-term market reaction to massive money creation is joy. The new normal has evolved - massive printing & funding of banks (central banks taking on increasingy worthless toxic assets) then the banks buying sovereign debt without worry (repeat cycle). In a way, thats how it words now since no one declares the emperor has no clothes. It can go on and on.
Trees don't grow to the sky.
Exactly. 'It can go on and on....this is the new normal'....is the favorite thing being bleeted there in the sheeple pen.
HH and sheepdog. Here is the problem why is this different why will the rules not be broken this time, why will the event horizon be passed this time? It never has and some of us think it will not be at least in terms of rules, laws and economic guidelines it just will not happen until physical considerations make it happen; hunger.. That consideration is years off as the oil producers will take something over nothing and trav is right we in essence eat oil nothing else will matter..
I agree, it is going to take obdurate physical limits (Too much pollution we can't deal with, too much radiation where we can't live on a lot of the land, not enough food, not enough water) before anything substantially changes.
Meanwhile the psychology of this thing guarantees radical ups and downs. That is what I am preparing for for me and my family. It is not proactive, it is crisis management. Crisis, failure, intervention, up, new crisis based on intervention, failure, etc. charting into infinity until the water fall of resource depletion catches up to our asses. And yeah, that is probably not this year (but I want to be ready for that one, too, JIC).
Apparently the same troll found us both lol.. Still the question remains no one can claim that if the law had eben properly followed this would not all have ended by now, Paulson, MF Global etal.... But when you make the point that the PTB will just tell the laws, rules and regulators to pound sand and nothing will happen all I hear is crickets.. I do not and have never pretended to have the finance background to answer these question in other areas I kick ass but this is not one of those..
So answers or just red arrows?
The sheep don't even know to bleat that.
They don't know because they don't pursue it. They don't know to purse it because they have been conditioned to trust the authority figures out there or, if they have shaken that one off, they do not feel empowered to do anything about "business as usual."
People are knocking the sheep pretty hard. Before 2005 I was a major sheep, big time. The consciousness I had then could not grasp what I take for granted now. Even in 2009, I did not understand just how corrupt the Fed was. This web site, Mish, and even Denninger (yeah he has his problems but would you rather people read him, or no one?) helped me piece it together.
So the first thing I want to put out there is that it takes a lot of time to get here, to get what this kind of printing even means.
The second thing is this, and I hope I don't sound arrogant:
Those of us here have some abilities that other folks don't have. It comes to some of us more naturally than others. Does that make them stupid or bad or deserving of a killing?
Don't put me on a basketball court against a highschool basket ball team, never mind an NBA team. Those are not my talents. I would hope that you wouldn't call me stupid/bad/lazy/inferior because I cannot play basket ball well. Not everyone can. But my husband has taught me some about that and football. Takes time, but I can enjoy them as a spectator now.
I have to do the same for him for this economy stuff. On his own, he would never go this deeply into the material. He is not that interested. He glazes over if I talk too long about it. He glazes over on nothing else we discuss, just economic stuff. I am careful to give him predigested chunks which he swallows. I am lucky he is ex military, he has a lot of websites he goes to which mention these issues. So when I bring up something an old military buddy mentions, he is real interested. Or Global Guerrillas, or, well, I hope you get the idea.
Short version-- lighten up.
I am working on cracking the paradigm to as large an audience as I possibly can. It's and endless task, thankless, and it seems hopeless sometimes. Here's my last "-less": you have to be relentless.
Living in the mountains back in the woods since the mid 70's I couldn't care less about what "teh Rothschild's" et al. were doing. I live in a different world. After the "crash" I decide to start watching CNBC to see if any Wall Street peeps were going to jump out of buildings. Bummer, they didn't.
Now I read ZH because I see this is the best place to watch Armageddon happen in slow motion. I don't "get" much of the jargon but I do get the direction.
Thanks for the nice view of the coming shit storm. At least I'll have my umbrella ready.
Best explaination I have read to date. Bravo. Bravo! We can't survive without all different types of people. This does not make them less important. People like you just have a nose for it. I don't understand everything posted here. But only because I have trained myself via countless hours of reading and research can I pick up on what is bad and what is good and how to prepare my house.
Give the sheeple some slack. The end result is going to be the same for everyone. Make sure you reach out to help. Strength has been and always will be in the numbers.
I need to be careful. I am not an expert, but I am relative to most of the people around me. They don't know what derrivatives are, shadow banking, what the fed does, how the fed buys our bonds after primary dealers swallow and hold them for two weeks, or hell two days (and collect a billion dollars a year to do so). They don't see how the whole system has come down to a giant check kiting/ponzi operation. You do. You are probably more expert than me, but in the land of the blind, those of us who even have one eye have a serious advantage over everyone else. And (sigh) a responsibility. It is frustrating when they don't get it, or don't believe you. And I do think some of them don't want to know because they don't want to deal with the stress of knowing-- willfully ignorant. Those can really make me mad at times.
I agree, we will need all kinds and the more the merrier.
Thanks for the kind words.
nice, ms_C
++++>>>U&yerz
Yes MsCreant, you're so right... not everyone can digest it even though (s)he is presented with ZH and the likes :D
and such awareness doesn't come to one's realm suddenly, it's a kind of process, taking time and gradually... backed to few years ago i might know nothing about all these rigs and scams...what's that BANKSTERS??? TPTB? TSHTF? PRINTING PRESS? MIC? BILDERBERG? ILLUMINATI? COMMITTEE OF 300??? simply too much for the sheeples :)
thanks for hinted to the site Global Guerrillas
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” — Charles Mackay (1814-1889)
I don't care how much they print but I wish they'd give some of it to me.
That in essense is the kind of honesty you don't find in this world. The problem is that people have the power to print money and force people to use their printed money. Take that power away and this warped world gets put through the planer.
Yep, and people would be astounded as to how much farther their money would go if constant inflation was halted in its relentless nipping away at everything people have.
Think of all the productivity gains and how we are all working longer than ever.
Shit should be cheaper now, and wages should be going alot farther. But that is never the case.
Thank YOY increase in the money and credit supply for that.
One can only hope that when this system comes tumbling down that the next bankster that starts to tell the joys of fractional reserve banking gets strung up from the nearest light pole.
pods
Yeah, Schiff does a good job pulling the dress off that skank called inflation. I want a bumper sticker that says simply: Inflation is tyranny; Deflation is liberty.
But anywho, the bigger point I was making is that, if I was given the power, I'd print too. Totally. That is simply too much power for some lowly human to resist. I'm not going to pretend I'd resist it if the populace was willing. I know my limitations. We need to undermine that one power to print and that will be like putting the warped world through the planer. Everything else will straighten out.
Absolutely agree. You just cannot have that power.
Fractional reserve banking is like the f*cking ring that Tolkien wrote about!
pods
No it isn't!
But good analogy!
Good literature is like that. Not that Tolkien was a prose master - he was a mythological master.
I would say it fits quite well.
The power was initially sold to the people as a means to improve their lives.
In reality, it was a way to enslave them.
And nobody can resist the kind of power that fractional reserve banking holds.
Another point, someone always thinks that it can be used for good, if only it was in the correct hands.
If you have some valid arguments as to why this does not hold, have at it.
pods
No, my bad. I misread your post as
"Fractional reserve banking is the f*cking ring that Tolkien wrote about!"
Read that way, my response doesn't look totally retarded.
Sorry.
I'm totally geeking out right now.
Paraphrased by someone on ZH: "One dick to rule them all, and in the darkness fsck them!"
Ah, but some day there will be no one to build wealth. Can everyone "work" for the govt? Bailiff, tell the defendant with the blunt end of your revolver that "no, it can't go on and on" - what's that? He was just kidding? There is no new reality in this courtroom, beat him like a dog.
Maybe ECB really stands for Earth Calling Ben.
Cue Dr Evil "$10 Trillion Dollars"
We're at about $53 trillion in the total credit market today, so the Fed's $1.8 trillion printed so far has been a drop in the bucket compared to the shadow credit market decline that Tyler continues to provide us with. If the Fed takes that QE number up to $3 to $6 trillion to keep the dollar devalued against the euro then we are starting to talk about some real money (and inflation). Good discussion in the following link about bank reserves. If banks started to move those deposits out into the market in anticipation of higher rates, then things could get real interesting.
http://www.ftense.com/2012/01/us-money-supply-and-credit-running-on.html
Terminal velocity.
there must be a jury out there deciding if UBS or Credit Suisse have won the prize for "swamp them with drivel, complete with pseudohistory and some game-theory sprinkled to it". and those guys were taken so seriously a few years ago? or even now?
the stress-timeline looks kinda cute, though... sinewy, sinuous, red, alluring...