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The Bernanke-Obama-Keynes Toxic Triangle Dead End

Tyler Durden's picture


By Universa's Mark Spitznagel; posted originally on Forbes,

The choice for the status quo made in last week’s presidential election was an uninformed one—at no fault of the voters—made in the fog of monetary distortion and Federal Reserve Chairman Ben Bernanke’s continuous campaign of disinformation.

President Barack Obama managed to overtake Republican challenger Mitt Romney on the exit poll question “Who is better for the economy?” and a strong majority of Obama voters felt that the economy is better off than four years ago. Indeed, anyone (particularly Bernanke) would concede that without the Fed’s zero interest rate policy we would be experiencing a far worse economy—the true Obama-Keynesian economy.

The danger here, as we have seen in every other bust for a century or more, is that we can only suspend the laws of economics for so long. And in general we are only good at considering immediate consequences, while being very, very bad at considering later consequences. As 19th century French economist Frédéric Bastiat observed, “The bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a small present evil.”

In the short run (and this is what is so insidious about the Fed’s artificially low interest rates), all we are seeing is an illusion of economic progress. Specifically, the Fed has manufactured a distortion intended to trap both consumers into spending more and entrepreneurs into investing more, or lengthening their production periods (becoming more “roundabout,” as the Austrian School economists said), as if savings were more plentiful. This combination would never occur in an unhampered, noninterventionist economy for the simple fact that higher consumption would mean higher interest rates (from less savings), which would discourage longer production.

Thus, investment in this illusory economy is malinvestment, or investment that always unravels with the intervention’s inevitable end, due to either untenable credit levels (such as today’s corporate debt-to-asset ratio, still at historic highs) or a resource crunch (rising commodity prices) that eliminates any advantage from printing money; and one or both of these scenarios is unavoidable.

Economic progress requires a chain reaction from lower time preferences: foregone current consumption and a higher pool of savings lowers interest rates and triggers a natural entrepreneurial response, greater productivity, and subsequent economic growth. (The “Paradox of Thrift” that warns of the hazards of higher savings is the nonsensical stuff of the ivory tower.) By circumventing this process, as we have today, we have built but a temporary façade.

This leads to another unfortunate kind of malinvestment, of a higher order, if you will: the malinvestment of an electorate in its political class and their policies. Just as entrepreneurs cannot differentiate between real economic information and monetary illusion, so too the electorate cannot differentiate between the effects of Obama’s fiscal policy (of his historic assumption of debt) and that of Bernanke’s loose monetary policy—and without the latter the former wouldn’t have even been feasible. Both Obama and Bernanke pursue a great economic evil to come, but Bernanke keeps them both cloaked as a great present good.

As the Austrian economist Ludwig von Mises noted, laboratory experiments cannot be performed in an economy; “We are never in a position to observe the change in one element only, all other conditions of the event remaining unchanged.”

This is our grievous position in the United States today, trapped in the status quo by first consequences, by what we can see, due to a cause that we cannot even see. And so we are left to learn from experience, an eventual tragic unfolding of our collective malinvestment. As Bastiat said, “Experience teaches effectually, but brutally.”


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Thu, 11/15/2012 - 12:28 | 2984348 Shizzmoney
Shizzmoney's picture
The Bernanke-Obama-Keynes Toxic Triangle Dead End

They shoudl replace, "Obama" with "POTUS", because ALL presidents will continue these neoliberal, neokeynesian policies no matter what.

Even Keynes himself, who gets a bad name IMO because of assholes like Summers and aloof academics like Krugman, wouldn't approve of whats going on.

Even Keynes couldn't price in fraud.

Thu, 11/15/2012 - 12:28 | 2984350 jcia
jcia's picture


Thu, 11/15/2012 - 12:36 | 2984387 TruthInSunshine
TruthInSunshine's picture

 "In the short run (and this is what is so insidious about the Fed’s artificially low interest rates), all we are seeing is an illusion of economic progress."


Maybe it's just me, but I can't even see an illusion of economic progress with near-ZIRP, even if I squint really hard, anymore; just the opposite, with an ominous credit/debt/leverage crisis re-building on ye horizon.

I should go see the optimistologist b/c maybe my eyes need to be re-calibrated.

Thu, 11/15/2012 - 12:39 | 2984396 BaBaBouy
BaBaBouy's picture

GOLD My Bitchies... $50K is Nice and FAIR...

(PHYSICAL And Not The Shredder Feed) ...

Thu, 11/15/2012 - 12:47 | 2984425 MillionDollarBogus_
MillionDollarBogus_'s picture

Bernanke and Geithner should send out treasury checks to boost consumer spending.

With wage increases flat and the all important Christmas spending spree in front of us, this would go a long way toward boosting the economy and consumer confidence.

Bernanke could put on a Santa suit to sweeten the deal...


Thu, 11/15/2012 - 12:56 | 2984444 BaBaBouy
BaBaBouy's picture

Exactly Mr. MillionDollarBogus ...

Send Out $10K Cheques to EVERY Citizen, And Not To The Usual JMP And Sacks Bankers...

After All, Who Cares If Its $16 Trillion Or $25 trillion Fiats Debt, Its Only Digital Paper...



Thu, 11/15/2012 - 13:13 | 2984535 Enslavethechild...
EnslavethechildrenforBen's picture

MDB suddenly on our side?


Thu, 11/15/2012 - 13:18 | 2984552 nope-1004
nope-1004's picture


ummm....     Oh the hell with it.


Thu, 11/15/2012 - 23:57 | 2986722 Michaelwiseguy
Michaelwiseguy's picture

Fiscal Cliff = $700 Trillion Derivatives Blowing Up!

I'm getting real sick and tired of the Illuminati and secrete societies pulling their shit on us century in and century out.

Lets get this party started.

Fri, 11/16/2012 - 00:05 | 2986738 ebworthen
ebworthen's picture


Fri, 11/16/2012 - 00:28 | 2986784 markmotive
markmotive's picture

We had our last chance.

Ron Paul's final speech to Congress

Fri, 11/16/2012 - 02:16 | 2986879 ebworthen
ebworthen's picture


Allready over the cliff we are.

Fri, 11/16/2012 - 03:02 | 2986898 ilion
ilion's picture

What the fuck is this?

google translate does the work 

Fri, 11/16/2012 - 04:32 | 2986937 Michaelwiseguy
Michaelwiseguy's picture

I just realized something about myself while currently watching the movie Office Space on Comedy Central. I'm a lot like the character Peter Gibbons. My favorite thing to do is nothing just like him, and I also enjoy contributing nothing to society as well. I've had at least 20 jobs in the last 40 years, and wound up quitting virtually every one of them, telling my employers over the years to go fuck themselves. I really did this.

I seem to be doing Ok, my newer 2,750sf home is paid off.

Fri, 11/16/2012 - 06:00 | 2986984 Michaelwiseguy
Michaelwiseguy's picture

So how many bombs have the TSA found stuffed up womens vagina's in the past 11 years of their existence? I'm not talking about the possibility.

Fri, 11/16/2012 - 07:59 | 2987044 GetZeeGold
GetZeeGold's picture



Well...none, but there's always hope for tomorrow.


Quick....slam silver....we'll think of a reason for it later.


Thu, 11/15/2012 - 13:17 | 2984557 BaBaBouy
BaBaBouy's picture

Hehehe .. Read The Handle Carefully...

Thu, 11/15/2012 - 14:24 | 2984852 emersonreturn
emersonreturn's picture

obama, ben and timmy should publically declare they made a mistake...recant giving banks 16 trillion, demand repayment and start giving every printing to tax payers, small business and the 40% on food stamps.

Fri, 11/16/2012 - 08:12 | 2987055 tango
tango's picture

What many ZH posters absolutely refuse to concede is the public's guilt in this fiasco. They keep whining about banks as if they were the ones who voted in these "have it all free" idiots over and over. The public clamors for more spending, more control, more programs without an atom of critical thought.

In fact it is the immediate public furor that greets attempts to stop even the RATE of growth (much less actual outlays) that makes those serious about our problems hesitant to speak. So let's stop giving the not so innocent public a pass.

Thu, 11/15/2012 - 15:50 | 2985268 venturen
venturen's picture

How does that benefit Lobbyists and investment bankers? Printed money with a FED buying their bowel movements is much more a sure thing!

Thu, 11/15/2012 - 23:20 | 2986658 lynnybee
lynnybee's picture

'Bernanke and Geithner should send out treasury checks to boost consumer spending.'    yea, send me some of that fake fiat money, i'd love that.   take it straight to the coin guy & swap it out for the real money and more food plus if there's any left over, off to the gun show i go.    

Thu, 11/15/2012 - 23:32 | 2986685 Oracle of Kypseli
Oracle of Kypseli's picture

Nice to see you arround Lynny. You and many of us have learned a lot on this site the last three years.

Thu, 11/15/2012 - 23:42 | 2986699 lynnybee
lynnybee's picture

i received the education of a lifetime on this website.   me, an older person who couldn't even fill out a check to pay bills, can hold her own in a sophisticated conversation regarding finances.    i am now empowered thru knowledge.   & bless your heart for the kind words.

Fri, 11/16/2012 - 00:50 | 2986805 caconhma
caconhma's picture

Few notes from the Russian Revolution history.


From the beginning, Lenin has instituted a monopoly on the entire financial system. His first step was to create a runaway inflation. Becoming a dictator, Lenin used the printing presses for the destruction of people's savings, redistribution of wealth people in the pocket of the State and to equalize everybody in poverty.


During the period from 1921 to 1923, Lenin used the printing press, to increase the number of rubles in circulation in about 20,000 times! In fact, the amount of monthly issued rubles has been so stunning that even Communists were unable to determine the exact amount of issued money.


The resulting inflation raised the overall price index by 160,000 times compared to 1913.  It had achieved the desired effect. In Russia, the middle class has been eliminated.


Note this method. This is a standard Jewish method. They have used his method before hundreds of times before in various countries, especially during the transition times when the Jewish Mafia has seized the power and property. Everywhere a corrupt MEDIA deliberately tells lies and false stories that supposedly the causes of inflation are the economic decline, economic devastation, the Government errors, and/or other like nonsense. And in fact, there are two reasons for inflation: objective economic problems (the significance of this cause is quite negligible) and the main reason for the inflation is targeted issuance of money by the Government and the Central Banks.


Inflation is not the result of economic problems. Inflation is a deliberate redistribution of power, property, and money.


To understand this, just look at the distribution of powers, property and money before and after the inflation. The picture is very clear. After this redistribution process reaches the desired level, it instantly stops as if by a magic. And inflation, and financial pyramids, and financial fraud suddenly disappear.


The Jews were always unrivaled masters of igniting hatred and confrontation between people and countries, especially using religious and class demagoguery. After the destruction of the Russian elite, Jews continued their hatred mongering between various segments of the Russian society using the class-war demagogy. Lenin understood the necessity to crush the peasantry who were a bastion of anti-communism. So, what did he do? Did he organize a Jewish army and send them to fight the peasants? No, the Jews almost never like to fight by themselves. They always prefer to fight with other people hands.


Read the Lenin’s work about the grain monopoly and the food dictatorship. The technology of suffocation through hunger is discussed quite openly. In Moscow and Petrograd, Lenin put armed roadblocks to prevent peasants’ food from reaching towns and cities. As a result, the deliberate mass hunger and starvation were created in Moscow and Petrograd. The famine was artificial, intentionally created by the ruling Jewish Bolshevik thugs. Then, using their MASS MEDIA monopoly, the rabid propaganda campaign against the kulaks (well to do farmers) and the peasants was initiated accusing them for allegedly creating the famine. After pumping workers with hatred to the kulaks and peasants, Lenin created the workers food expropriation armed units and threw them against the peasants. This became the main driver for igniting the Civil War in Russia.



Fri, 11/16/2012 - 08:19 | 2987063 GetZeeGold
GetZeeGold's picture



Why can't we be more like the Soviet Union......oh wait.....we are!!!

Fri, 11/16/2012 - 03:05 | 2986900 q99x2
q99x2's picture

I want a great big QE beneath my tree.

Thu, 11/15/2012 - 13:38 | 2984664 TideFighter
TideFighter's picture

Negative rates unlikely to give you 20/20 either.

Fri, 11/16/2012 - 01:32 | 2986840 reader2010
reader2010's picture



Did you back up your truck for AAPL?

Thu, 11/15/2012 - 12:29 | 2984355 aint no fortuna...
aint no fortunate son's picture

Bastiat bitchez

Thu, 11/15/2012 - 13:28 | 2984616 Stoploss
Stoploss's picture

“Experience teaches effectually, but brutally.”

Ah yes, the school of hard knocks.

Black and blue their colors.

Thu, 11/15/2012 - 14:08 | 2984792 Obadiah
Obadiah's picture

This is some good copy  thx ZH

Thu, 11/15/2012 - 14:16 | 2984822 Titus Flavius C...
Titus Flavius Caesar Vespasianus Augustus's picture

At a basic level - and I'm not being glib, I'm maybe advertising my ignorance of academic economics - I don't understand how guys like Krugman {who may be a secret fascist and probably into deviant sex, but probably is more misguided/full of Kool-aid than evil} see no problem with printing lots and lots of money to have government spend, spend spend, or to give to banks in the hopes that they'll lend lend lend  {all of course representing more debt - not more innovation or manufacturing, etc}... but would never suggest simply printing the equivalent sum to simply pay off the debt {and 'extinguish' debt held by the fed, which is not only make believe money, but probably unConstitutional - not that anyone gives a particular fuck about that anymore}.


In other words, since Krugmanites {it's not really Keynes he's channelling, is it??} think it doesn't matter how much you print, and since they think that the economy is literally a kind of pump that can and should be primed via additional fiat/debt money...


How is it they'd summon an objection to using the fiat/debt money to simply pay off the debt, and perhaps pass a balanced budget amendment, put a reasonable tax on financial transations, close loopholes, reward corporations that retain or keep jobs in the US with tax breaks {maybe - so long as govt. is  fucking with every single aspect of the economy, anyway, at least}, make fica progressive, yadda yadda.


I'm asking - why is money printing both good and necessary when you give it to government to spend to 'create demand' but bad when you do it to pay off debt and ergo the needlessly wasteful billions squandered on interest paid to ... the... banks...


...  did I just answer my own question?  Is Krugman in fact evil, and not stupid?  Is the Fed really a cartel controlled by mostly foreign banking dynasties??



Thu, 11/15/2012 - 15:25 | 2985156 odatruf
odatruf's picture

Titus - your confusion is one of agency. It is the Fed that is "printing" by simply adding ones and zeros to her books and then using those new funds to buy (lend) government treasuries. Which puts the government further into debt.

It is the government and not the Fed that is in debt. And it is the Fed and not the government doing the printing. 

See the problem?  No matter how you slice it, in order for the government to have the money to pay off debt, it has to get it first and that can only come from taxes or borrowing or asset liquidation.

Conceivably, the Fed could cancel the debt owed by the government, but then it would have a massive balance sheet issue since for every dollar that exists (including the digital ones) there is a corresponding liability of the Federal Reserve Banks, which is also backed as an obligation by Uncle Sam. See the circle jerk rabbit hole we are in?

Oh, it gets worse.  In fed land, any loss booked by the Fed (say as a result of a certain Soverign being unable to make good on the vig) will simply be reflected as a negative liability. Yup, that's a double negative if you are keeping score, which means...  Hmm... And since all net earnings are passed (weekly and weakly) on to the Treasury, a negative liability would translate as negative interest (and flow) due to said Sovereign.


Thu, 11/15/2012 - 16:28 | 2985447 Titus Flavius C...
Titus Flavius Caesar Vespasianus Augustus's picture

Right - I understand the basics of the Fed, etc. - what I'm asking is a little bit different.


Krugman says print away to increase demand without fearing inflation, right?


So why would he not favor simply having the Fed print the money {i.e. conjure it our of electrons}, and give that money to owners of the public debt {apart from the Fed itself} directly, to extinguish the debt, than to the banks?


I know its a basic question - but if the Fed can print and give to banks to help the economy - why not print and give to us government creditors, or maybe more simply - print, give the $ to the government epxressly for the government to give that money to holders of the public debt?


What I'm really wondering is why if we can print ad infinitum to "create demand" why we can't print to extinguish debt. 


To me, nothing is more wasteful to the system than compounded interest.

Thu, 11/15/2012 - 23:08 | 2986644 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"What I'm really wondering is why if we can print ad infinitum to "create demand" why we can't print to extinguish debt. "

This is simple to answer: What is being printed is debt, not money! Why? Because all of our currency is borrowed into circulation at interest, and debt can't be retired by paying it off with debt!

Money is not encumbered with interest (it is interest-free) and therefore can be used to retire debt.

Do we have any money? Only our coin even though it is counterfeit (made to look like silver but it's not) all of our coin is placed into circulation debt-free and is therefore money (the difference between the two is value, but both are money).

Lincoln solved this problem by issuing "greenbacks" (US Notes) debt-free into circulation- pissed of the banksters so much he was assassinated.

Title 33 of the Federal Reserve Act empowers the government to replace FRN's with US Notes which would enable cancellation most of the federal debt but don't hold your breath as noone has the knowledge, brains or balls to do it!

Fri, 11/16/2012 - 00:25 | 2986778 nope-1004
nope-1004's picture


Fri, 11/16/2012 - 01:07 | 2986822 Newager23
Newager23's picture

I don't buy the argument that the Bernanke and the POTUS are both working in concert to crash the economy. I think they are trying to do the right thing to bring it back. The problem is that as politicians they only know the status quo. And the current status quo is about protecting our way of life. We are playing defense, when we should be playing offense (new systems, new ideas).

They both believe in what they are doing and truly think that their policies will work. They believe that America has the best economy in the world and that we are just going through a cyclic downturn. Unfortunately they are being influenced by people whose lives and beliefs are predicated on economic growth. That is all we know. We all hail the almighty dollar.

We are like the Romans at the end of their era. They became full of hubris and could not see that that their beliefs were diametrically opposed to reality. Now it is our turn to be ignorant.

Most of us here on this site are not ignorant. We can see exactly what is happening and how close we are to the fall. The sad thing is that this could have been prevented, but that time has past (perhaps as far back as the 1960s). Our innocence was lost and it will not be found again until after this nation falls.

We are now hearing talk of secession, which is not surprising (and something I expect to see unfold). The end is nigh. We are in a countdown and there is nothing that can be done to stop the downfall of this great nation. How much longer do we have? At what point does everyone realize that we are screwed and that our way of life is going to change for the worse? One year? Perhaps three? Tick tock.

What is about to transpire will be nothing short of a complete transformation of society. Every day I enjoy what we still have, because I know that “easy street” is not going to last for much longer. Enjoy those full shelves. They won’t be there much longer.  

Got gold? (for gold & silver mining stocks)



Fri, 11/16/2012 - 02:14 | 2986875 Oldwood
Oldwood's picture

If you believed that the only thing that could ultimately save the common man, that is preserve your concept of economic justice, was a complete and absolute controlled economy, how would you go about achieving it? It think are watching it happen. Its not about Obama being evil, its about his beliefs in what the world should look like and how to bring it about. The kind of world that many think he sees as ideal is one of socialism or communism or Marxism. We know that his upbringing was surrouded by this thinking. We know that his college activism sees the world this way and we also see it to some degree in his writing. And his association with black nationalism in rev Wright's church for twenty years surely can leave little doubt. He knows the tax increases he wants will do little to fix our deficit as well as he knows it will do untold harm to our economy, but he is dedicated to the "fairness" of it. The only way he or anyone else can gain the control they desire of the economy, without military, is through crisis and with every new crisis the government and its powers become greater. No one wants to think that the father that spanks their child is evil. We just know he's doing it for the childs own good. Obama's just getting the paddle warmed up!

Fri, 11/16/2012 - 07:26 | 2987028 samcontrol
samcontrol's picture

Do you work for fox?

Fri, 11/16/2012 - 01:11 | 2986827 ozzz169
ozzz169's picture

Keynes just followed a path in economics, not the right one but non the less there was logic in it.  It the responsibilty of those to come after to realize the errors and correct them or to twist them into how they are used today.  Most of the leaders today think they are "smart" cause they read a book or 2 and dont have a critical thought of there own (at least one that has any sound analysis behind it).  must be some validity to what Keynes thought, I think it just breaks down when you take it out of the scope he intended.  I dont think he ever intended to use G like it is used today.  a lot of things work for a narrow range and break down on the extremes, and I think any sane person would agree what they are doing today is going to the extreme.

Fri, 11/16/2012 - 08:34 | 2987093 Translational Lift
Translational Lift's picture

The only thing worse than a keynesian is a Kenyan keynesian...........

Thu, 11/15/2012 - 12:28 | 2984351 firstdivision
firstdivision's picture

This toxic environment provides the prefect short toxic crap for paper, and turn that paper into metals

Thu, 11/15/2012 - 12:29 | 2984353 negative rates
negative rates's picture

You got a table for that problem?

Thu, 11/15/2012 - 12:30 | 2984363 TideFighter
TideFighter's picture

Clearly the market is being "walked" down.

The question is how many flights of stairs. 

Thu, 11/15/2012 - 12:33 | 2984375 francis_sawyer
francis_sawyer's picture

Keep digging down until you get to China...

Thu, 11/15/2012 - 12:58 | 2984462 X86BSD
X86BSD's picture

China Syndrome? Meltdown to the core of the earth?

Thu, 11/15/2012 - 13:32 | 2984622 TruthInSunshine
TruthInSunshine's picture

During times of significant market corrections, markets never take the stairs. It's always the elevator.

When the underlying problems are as serious & foundational as those they currently labor under, it's the express elevator.

Oh sure, the official talking heads & super-imposed "authoritative" figures will try to slow or ease the descent, but they'll sooner fail when competing with a dawning mass realization of reality.

Remember:  Escalator up during credit-fueled, crack-up booms, and express elevator down when the foundation gives way.


Some people call such statements pessimistic, but I swear that they are only reflective of reality as proven out by history, over and over again. Keepers of the truth never let emotion nor confirmation biases cloud their statements or obscure truth.

Thu, 11/15/2012 - 13:34 | 2984644 TideFighter
TideFighter's picture

Not when Carlton the Elevator (Doorman) is Bernanke. 

Thu, 11/15/2012 - 13:56 | 2984727 GreatUncle
GreatUncle's picture

Elevator? Stairs?

Quickest way to the lowest level is to jump out the window.


Thu, 11/15/2012 - 14:23 | 2984848 TruthInSunshine
TruthInSunshine's picture

There's that, too.

Thu, 11/15/2012 - 12:37 | 2984394 Dr. Engali
Dr. Engali's picture

S&P 400 is the bottom floor. All of the 90's leveraging up has to be wiped out.

Thu, 11/15/2012 - 12:39 | 2984404 fonzannoon
fonzannoon's picture

If this thing hits 400 and I buy in and it turns out to bottom at 375 I will never forgive you.

Thu, 11/15/2012 - 12:46 | 2984424 Dr. Engali
Dr. Engali's picture

That has been my long term call since one of my first posts on this site. I don't know how long it will take, but I'm sticking to it.

Fri, 11/16/2012 - 00:09 | 2986748 I think I need ...
I think I need to buy a gun's picture

no way we go up up and away, ya see they have to get everyone in the bond market before they blow it up,,,,digestion problems going forward gold 36k

Thu, 11/15/2012 - 12:41 | 2984412 Spastica Rex
Spastica Rex's picture

Ballsy call.

Thu, 11/15/2012 - 13:06 | 2984512 TideFighter
TideFighter's picture

My call was 666, but the devil is in the details.

Thu, 11/15/2012 - 13:20 | 2984575 Spastica Rex
Spastica Rex's picture

Sinister call.

Thu, 11/15/2012 - 13:27 | 2984606 Monedas
Monedas's picture

I call your sister ?

Thu, 11/15/2012 - 14:11 | 2984800 Alhazred
Alhazred's picture



she already has too many PUT options outstanding.


(((unless your up for some naked shorting)))    :)


also,  end the fed

Thu, 11/15/2012 - 16:51 | 2985544 falak pema
falak pema's picture

more like tits to floor call. Droopy the poodle; can you see his ears sweep the floor of fallen autmun leaves? 

Man the oligarchy will scream to high heaven like they were being tortured in a GEstapo movie! 

S&P 400! Nein, Nein, Nein...vee are like greek swine.

Fri, 11/16/2012 - 07:44 | 2987032 samcontrol
samcontrol's picture

my call is , they will print and tax for decades to come.

When i lived in the states in 79 , steak and lobster $5.99
today,s price. around $ 59 correct me if i,m wrong...
in 30 years ir will be $5900 .

maybe we correct to 1000.

S&P 4000 in ten years.

in any south american markets that is the norm.....

Thu, 11/15/2012 - 13:13 | 2984536 Diplodicus Rex
Diplodicus Rex's picture

Of course, if you're right, momentum will cause it to overshoot below that before it finally comes back up to that level.

Thu, 11/15/2012 - 12:52 | 2984440 Winston Churchill
Winston Churchill's picture

"thrown' down the stairs.

Just rolling across the landing right now.

Watch out below..........

Thu, 11/15/2012 - 12:38 | 2984382 khakuda
khakuda's picture

I think I just heard Bernanke screaming, "Noooooooooooooo!" as he watches trillions of dollars of money printing go down the drain as the stock market deflates.  Housing's boost from insanely low interest rates could end with a run on the dollar and higher rates, just as the FHA's 3.5% down payment folly comes home to roost.

Thu, 11/15/2012 - 12:45 | 2984422 TruthInSunshine
TruthInSunshine's picture

"Please Spell Bernank."

"Could you please use it in a sentence?"

"Of course":

"Despite Einstein's admonition on insanity, some people will never listen, and Bernank their way through a crisis."


"Okay, Bernank. B-E-R-N-A-N-K. Bernank."



Thu, 11/15/2012 - 12:35 | 2984385 catacl1sm
catacl1sm's picture



but not uganda

Thu, 11/15/2012 - 12:36 | 2984390 haskelslocal
haskelslocal's picture

We all watched and read how the market was being rampped up into the election. Now it's being walked down. That's news? No, it's what was expected.

Thu, 11/15/2012 - 12:44 | 2984419 Spastica Rex
Spastica Rex's picture


I would also like to know: did "rich" people really want Obama, or did they want Romney?

Another question: what percentage of the top 20% are makers vs. takers? 99%? 80%? 50%

I am so fucking confused.

Thu, 11/15/2012 - 12:41 | 2984414 Flaming Ferrari
Flaming Ferrari's picture

BTFC  ( C=Crater) is the new BTFD!!

Thu, 11/15/2012 - 12:41 | 2984415 tradewithdave
tradewithdave's picture

Yes, but the Petraeus-Putin-Bush triangle remains intact thanks to the twins (and Kevin Bacon).

Thu, 11/15/2012 - 12:44 | 2984420 Madcow
Madcow's picture

The “debt-is-money” central-bank-driven economic system that we have in the West is fundamentally dependent upon periodic wipe-outs of the middle class (of people who borrow the money into existence in the first place). 

Growth, growth, growth, growth, growth, growth, TOTAL COLLAPSE.

Growth, growth, growth, growth, growth, growth, TOTAL COLLAPSE.

Again and again and again.

If bankers did not believe they would be able to collect assets during the (inevitable) deflationary wipe-out, they would never agree to extend credit during the growth (inflation) cycle.

So basically, we have a financial system that REQUIRES complete destruction of civilization once every 3 or 4 generations in order to exist. What is happening now should not be a surprise to anyone.

Thu, 11/15/2012 - 14:23 | 2984851 Titus Flavius C...
Titus Flavius Caesar Vespasianus Augustus's picture

Well said.

The economic system is totem-pole theft, and the taxes you pay is a jack.


But the thing is - they've successfully lulled the public into a stupor, and it's not going to change unless the Marines take over the NY Fed and start arresting some of these guys - which ain't gonna happen.


I don't think Ron Paul was perfect, and disagreed with him on a number of things - but I do think he was this country's best and very last political hope for genuine change and reform and Constitutional law-and-order.


One wonders at the bankers though - all they need to do really, is give us a couple of sacrificial lambs.  Arrest and prosecute a Blankfein or two and even most of the existing criticism will be mollified - all without changing the underlying.

But a funny thing happens when you have a 2 party system in which many prominent appointees are former Goldman execs...



Fri, 11/16/2012 - 09:01 | 2987171 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

+ 1,000

Thu, 11/15/2012 - 12:47 | 2984429 youngman
youngman's picture

It really will not matter if your Apple stock is $2,000 a share..if unemployment is 55%...

Thu, 11/15/2012 - 12:57 | 2984458 Spastica Rex
Spastica Rex's picture

This is what's important. Our language - our systems of coding meaning - are being radically changed, and not in an organic way.

"Middle Class," "Dow 20,000," "GDP," "Growth," Recovery," etc., mean whatever we're told that they mean. There are no absolutes, not that there ever were, but propaganda is everything now.

Want to really reform public education? Teach children to question authority. Fat chance.

Thu, 11/15/2012 - 13:20 | 2984573 Oh regional Indian
Oh regional Indian's picture

Indeed SR. First there was the word and it was with AND ---


Thu, 11/15/2012 - 13:29 | 2984627 Spastica Rex
Spastica Rex's picture

That was an excellent piece, Vivek. I acually really like the abbreviated style. I'm passing it on.



Thu, 11/15/2012 - 23:00 | 2986631 Oh regional Indian
Oh regional Indian's picture

That is high praise coming from an English teacher BobD/SR. Grazzi.


Thu, 11/15/2012 - 19:42 | 2986167 GernB
GernB's picture

The irony is that the ones who grew up in the 70s on the mantra: "question authority" are now the establilshment and not only do they not want people to question authority, they want to indotrinate children in school, from a very young age, so they are conditioned not to question the liberal establishment.

Fri, 11/16/2012 - 04:31 | 2986948 Snidley Whipsnae
Snidley Whipsnae's picture


Those that were questioning authority in the 70s (and 60s) were mainly protesting the war in Viet Nam and lack of civil rights for minorities.

I grew up in that era and can recall little if any protests against economic policy until the era of stagflation... Until stagflation we were schooled that 'it' could not happen by the economists that were writing the text books.

Now we know that stagflation can happen and it seems to be the preferred course vice deflation.

No matter in the end... we seem to have entered the express elevator but are still searching for the button thats labeled 'hell'.

Fri, 11/16/2012 - 07:39 | 2987033 samcontrol
samcontrol's picture

stupid, it depends if you own the stock or a job , or both , or none ,...

Thu, 11/15/2012 - 12:57 | 2984454 MFLTucson
MFLTucson's picture

There should never be anyone that questions the anti semetic rhetoric and hate for this group, they have lied, cheated and manipulated this economy to a crash all to benifit each other, at the expense of the populous.  Disgusting group of shit they are and that not not mean the Jewish people, it means the Jewish money changers.

Thu, 11/15/2012 - 13:05 | 2984485 virgilcaine
virgilcaine's picture

Slicing appl into little sections for the baggies.. easy to carry.

Can we keep a list of the Hedgies and CB's down for the count?  so far we have...

1 .Rochdale Securites.

2. Bank of Israel.






Thu, 11/15/2012 - 13:05 | 2984507 dbTX
dbTX's picture

I am convinces that Obama and the FED working in concert with each other are bound and determined to bring this great nation to it's knees. There can be no other rational explanation.

Thu, 11/15/2012 - 22:51 | 2986609 klockwerks
klockwerks's picture

dbtx, best I have read here as far as just old plain truth. Funny how very few people pick up on this but the bottom line is, planned complete destruction and it won't be long now. At 67 I never thought I would live to see this, then again I may not. Very sad

Fri, 11/16/2012 - 04:45 | 2986956 Snidley Whipsnae
Snidley Whipsnae's picture

klockwerks... I'm a year past you and of similar mindset.

The America of our youth in no way resembles the current America. Stunning is not a strong enough word for the changes we have seen.

After much observation I believe that the 'changes' were planned long ago. What is SOOO different is the willingness of the pols/economists to let their manipulations come out of the dark of the closet and into broad daylight for all to see... TPTB certainly liked info bottled up in the dark closet better.

Perhaps this isn't really different but a consequence of the internet? The next objective of TPTB must be a way to control this sudden access to the thoughts and insights of others... TPTB will certainly try to curtail our access to information that is not preapproved... and soon.

Thu, 11/15/2012 - 13:18 | 2984554 yogibear
yogibear's picture

Bernanke, Evans, Dudley and Yellen all idolized a false profit with Keynes. 

They along with Greenspan stripped the depression safeguards from the US financial system.

All of them will get what they deserve! These people show arrogance instead  of shame for ruining the US economy. 


Thu, 11/15/2012 - 13:20 | 2984577 Monedas
Monedas's picture

Toxic Triangle .... menstruating pussy !

Thu, 11/15/2012 - 13:45 | 2984683 Titus Flavius C...
Titus Flavius Caesar Vespasianus Augustus's picture

This website seems to labor, mostly, under the misconception that Bernanke et al. are stupid.


They are not stupid - they are evil.


They fucking know that their solutions aren't going to repair anything, or even lead to the status quo ante of say 2005.

All the shit you guys {rightly} indicate will happen as a result of their policies is, to be blunt, obvious to pretty much anyone who even casually studies economics outside the Academy with its 'schools' and pseudo-science.


In sum - the fuckers are doing it on purpose, and they're going to get away with it. The war has already been fought and lost.  Americans voted for economic slavery and the security/entitlement/war profiteering state.


It doesn't help that much or most criticism of the Fed presumes that they are misguided and dumb, rather than cunning and evil.


They're doing it on purpose.  It's actually pretty fucking admirable - a theft of this scale. 


If I may reference Denethor from the Lord of the Rings {junk away - I know... I know} Go now and die in what way seems best to you.

Thu, 11/15/2012 - 14:14 | 2984813 Hubbs
Hubbs's picture

Berrnanke and the Politicos main goal is to enjoy their status of power. They would much rather be able to do this by fooling and quietly robbing the masses. Crooks who steal from you really don't want to confront you, they just want your money with as little hassle as possible.


But now, it is becoming a hassle for Bernanake and the politicians to keep their hedgemony. They are screwing us now more openly because they have to, and it makes them appear more evil.


Of course they know it won't work, or last. But they are not doing this kind of monetary/fiscal crap now because of a desire to screw us over worse than they were doing prior to this unwinding, they are doing it out of their self interest and preservation.  


With dwindingly options, desperation might indeed be confused with stupidity.

Thu, 11/15/2012 - 22:40 | 2986588 toomanyfakecons...
toomanyfakeconservatives's picture

Governor Tarkin: Princess Leia, before your execution, I'd like you to join me for a ceremony that will make this battle station operational. No star system will dare oppose the Emperor now. 

Princess Leia: The more you tighten your grip, Tarkin, the more star systems will slip through your fingers. 

Fri, 11/16/2012 - 01:54 | 2986856 gwar5
gwar5's picture

Of course they are evil, that is why millions of rational people are hoarding food and ammo. But, after a while, you get past the shouting from the rooftop phase and just settle into commenting on the daily nuances of Lucifer's machinations as we watch him brew up his toxic Armageddon against mankind. Might find a weakness!


And there are smart and good people calling them out every day. Here's a classic speech by Robert Wenzel to the FRBNY back in April 2012.

Excerpt, from his concluding remarks:

....I will now give you more warnings about the economy. The noose is tightening on your organization, vast amounts of money printing are now required to keep your manipulated economy afloat. It will ultimately result in huge price inflation, or,  if you stop printing, another massive economic crash will occur. There is no other way out. 

Again, thank you for inviting me. You have prepared food, so I will not be rude, I will stay and eat.

Let’s have one good meal here. Let’s make it a feast. Then I ask you, I plead with you, I beg you all, walk out of here with me, never to come back. It’s the moral and ethical thing to do. Nothing good goes on in this place. Let’s lock the doors and leave the building to the spiders, moths and four-legged rats.



Fri, 11/16/2012 - 08:54 | 2987155 new game
new game's picture

Rad maryjane nailed it! societies are a cabel of liars! the power structure evolves from honest at reset-1776, then degrades as liars promiss something and the majority literaly or figuratively buy it;germany after ww1-perfect example.- by this transaction physically/mentaly we become owned by the transaction. millions of these transactions get us incrementaly to where we are-flase promisses and acceptance by millions, collectivly-collectivists by peer pressure, acceptance over time that the government is good and will provide a better health plan or whatever and easily sold as people look for path of least resistance. the debt seals the deal in most cases, except for the rare cash and carry no strings attached buyer or the person that rejects a lie as a promiss that can not be fulfill-social security!

summation of concept: he who lies and decieves the best ends up with spoils-it is universal.

your mission:question everything and don't back down to these liars...

and remember everybody lies-it is self preservation whether monetary or ego centric.

little lies, big lies all the same; to get some sort of advantage-THINK ABOUT IT as you listen to RON P'S truth of society exit speech...


Fri, 11/16/2012 - 09:00 | 2987168 new game
new game's picture


is just that;just my fucking opinion...

so go easy, as we all know opinions are like the asshole you wipe every day-some clean, some with a dingle ball, but for sure they fucking stink-eh

Thu, 11/15/2012 - 23:00 | 2986630 gwar5
gwar5's picture

Central Banks are really buying countries and people. Natch.


Question is, how will they monetize it now that people can no longer pay their rents? What becomes of useless breadeaters when the natural resources are the only things left of value and the breadeaters are not allowed to touch it?





Fri, 11/16/2012 - 04:57 | 2986959 Snidley Whipsnae
Snidley Whipsnae's picture

gwar5... "What becomes of useless breadeaters when the natural resources are the only things left of value and the breadeaters are not allowed to touch it?"

TPTB long ago decided that ~ 7 billion mostly useless eaters were way more than was needed by them to provide for all their desires. Technological advance has made most useless eaters redundant. Robot factories building more robots are quickly replacing almost all manufacturing jobs and are encroaching on the service sector.

We have entered the 'get rid' of phase.

Thu, 11/15/2012 - 23:29 | 2986679 Jam Akin
Jam Akin's picture

Seems to me some of this piece is just a wee bit overthought. The normal folks are acting perfectly rationally by stocking up on cheap shit from elsewhere while their debt coupons are still worth something.

Thu, 11/15/2012 - 23:33 | 2986687 Cabreado
Cabreado's picture

"all we are seeing is an illusion of economic progress."

No, we're not seeing that.

"we can only suspend the laws of economics for so long."

This isn't an economic thing, and certainly not one of laws.

We can only suspend the fallout of a broken government for so long.

Fri, 11/16/2012 - 02:01 | 2986862 tickhound
tickhound's picture

Government is just reacting as any idiot entity would when it doesn't understand the flaws in the economic growth model. There is little difference at how China, the US, the UK, the Eurozone, Russia are handling the NEED for growth under the weight of inflationary monetary policies.

Your "broken" government is just a symptom of a much bigger problem.

Fri, 11/16/2012 - 00:06 | 2986744 realtick
realtick's picture

Throwing Shit At Wal-Mart: iPads, Strikes and Shortfalls

Fri, 11/16/2012 - 00:11 | 2986753 FleaMarketPete
FleaMarketPete's picture

The next four years will be unimaginable for Obama supporters.  Reality is a bitch.

Fri, 11/16/2012 - 00:17 | 2986764 ebworthen
ebworthen's picture

Ben Bernanke is a financial terrorist.

Fri, 11/16/2012 - 01:44 | 2986849 IridiumRebel
IridiumRebel's picture

Or "fucking dipshit who has done EVERYTHING WRONG"....either works.

Fri, 11/16/2012 - 00:34 | 2986792 mademesmile
mademesmile's picture

Just saw this headline, if it means what I think it means, wow. "US housing department says audit of FHA mortgage insurance fund found capital reserve ratio fell to -1.44%, representing negative economic value of USD 16.3bln"
We're in corzine negative land now

Fri, 11/16/2012 - 00:42 | 2986804 Future Jim
Future Jim's picture

I agree that large long term gains were sacrificed to achieve small short term gains, but I disagree that there have actually been short term gains.

None of the lost jobs have been recovered. There has been no recovery.

Fri, 11/16/2012 - 01:10 | 2986825 IridiumRebel
IridiumRebel's picture

......and it is getting worse.

Fri, 11/16/2012 - 02:10 | 2986873 luckylongshot
luckylongshot's picture

According to Gary North we are also being given a vastly optimistic view of the the Fed leaves unfunded liabilities out of its calculations..making the result as meaningless as the official unemployment figures...rather the $16 Trillion it is over $220 Trillion and rising at nearly $1 Trillion a month...meaning all taxpayers, who earn on average $50,000, would need to pay over $200,000 per annum for 20 years to sort this out...

Fri, 11/16/2012 - 02:13 | 2986874 chump666
chump666's picture

*US FHA faces USD 16.3 bln deficit; capital adequacy negative Audit suggests housing insurer could need taxpayer funds Agency backs 1/3 of US mortgages - Obama admin plans new steps to resist taxpayer bailout

Great job a-holes. 


Fri, 11/16/2012 - 02:24 | 2986883 polo007
polo007's picture

Blinded By Convention

Crucially (this being the key point that we have been wanting to make) just as societies can change their consensus views with respect to new fads and morals (no one makes a big deal about long hair and facial piercings any more these days), so the accepted norms of monetary protocols. Most certainly, this changing of the "monetary morals" is already well underway. Many don't see this as they assume that central banks will someday unwind their interventions. Moreover, they are blinded by the accepted conventions of central bank accounting.

To demonstrate this optical occlusion, consider this question: If the U.S. Federal Reserve (Fed) buys up U.S. treasury bonds, is the debt-to-GDP ratio of the U.S. actually being lowered? We predict yes. How so? The Fed pays for the U.S. treasury that it buys with new created money. It simply adds a liability to its balance sheet and shoves money out of thin air into the banking system. The Fed has a cost of capital that is virtually nil. Yet, it now collects the interest payments earned by holding the U.S. treasury bonds. What happens to this income? It is added to the profitability of the Fed. At the end of every year, this central bank transfers its profits to the federal government.

What has happened? Net, net, the interest cost of this debt has been lowered to the U.S. government (effectively, getting it rebated back). And, if the Fed never, never again sells down its treasuring holdings (maintaining them at the same level) isn't this virtually the same as lowering the U.S. federal debt burden?

Yes, of course. It would be the equivalent of these bonds being retired. Yet, the accounting convention of the central bank will be to still show these bonds as an asset. What you see therefore promotes a structural illusion. Of course, it all depends upon the question of whether or not the Fed will ever sell down its treasury position back to the private sector. Yes ... or no?

Fri, 11/16/2012 - 02:30 | 2986887 Clowns on Acid
Clowns on Acid's picture

Tyler- The game is not over until it is over. The Fed, BOJ, ECB, etc...will print money, and eventually (if they have not already) buy equities / eq indices.

Yellan etc will not be put off by reality. They will continue to conjure up new Keynsian schemes.

They have 4 years to continue thids madness. Well, Marc Faber says they have less than 4 years....we'll see.


Fri, 11/16/2012 - 03:58 | 2986934 bluebare
bluebare's picture

I haven't heard the words Credit Default Swaps spoken in quite some time.  I guess they weren't a problem after all.  sarc/

Fri, 11/16/2012 - 06:56 | 2987011 fijisailor
fijisailor's picture

Even after the bailouts of 2008 it was a salvageable economy if the banks had been broken up and the guilty parties prosecuted for FRAUD.  Instead we've gotten bigger banks and the fraudsters continue unchecked.  It is truly a hopeless scenario.  We will crash and burn

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