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The Final Round In The Fed's Arsenal

Tyler Durden's picture





 

Today's speech by Bernanke should not have come as much of a surprise to any market realist; aside from his somewhat more truthy than we expected admission that growth potential may have become impacted long-term by the crisis. Most people believe they know the Fed's plan. Five of the Six 'Deflation-Fighting' steps have been extensively discussed in the media, and Bernanke has been very vocal about their use (and even expanded their scope repeatedly). The only one he has been shy to mention is the purchase of foreign bonds. A mere nine months ago we first exposed the fact that the Fed did indeed hold foreign bonds (courtesy of Dudley's slip perhaps) and while he suggests there is a 'high bar' for additional purchases; in our extraordinary world of experimental monetary policy, this absolutely means a non-zero chance (or perhaps the Fed's 'other assets' is Europe's little piggy-bank? and its already started to 'diversify').

Bernanke (exactly 10 years ago) in a speech outlined a 6 point plan for preventing deflation...

 

He has completed all of them.

We can only wonder what the Fed's 'Other Assets' consists of - given the shyness of discussion of this point relative to the trumpeting of the other steps...

 

 

(h/t @GreekFire23)

 


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Tue, 11/20/2012 - 15:59 | Link to Comment PUD
PUD's picture


Fed's Bernake says Fed doesnt take view that tighter is always better

There ya go...Time's man of the year! Say hi to mrs ben for me.

Tue, 11/20/2012 - 16:04 | Link to Comment idea_hamster
idea_hamster's picture

Did we ever find out what these "other assets" really are?

IIRC, there was an instance where someone actually got a response from the Fed, but the list of components included things that would likely fall under normal categories and then ... wait for it ... "other assets."

More likely than Greek debt, "other assets" will turn out to be pocket lint, smoke, and unicorn farts -- but I repeat myself.

Tue, 11/20/2012 - 16:07 | Link to Comment TruthInSunshine
TruthInSunshine's picture

The Bernank could always monetize PIIGSFUK debt by paying JPM & Goldman huge commissions to flip those bonds to The Bernank.

 

Marc Faber keeps a picture of Bernanke in his toilet.

Now, I don't know how that relates to anything other than the fact that this is probably the best place for anyone to keep a picture of The Bernank, but I just wanted to share that with everyone:

Marc Faber: "I Keep a Picture of Mr. Bernanke in My Toilet."

Tue, 11/20/2012 - 16:09 | Link to Comment kaiserhoff
kaiserhoff's picture

Why not?  Perhaps it is the prospect of a long drop attached to a short rope.

Tue, 11/20/2012 - 16:10 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

Our Federal Reserve should start by purchasing Euopean peripheral debt. Spanish and Italian bonds look particularly attractive, with 10 year yields approaching and occasionally exceeding 7%. Not only this, but the European crisis has largely blown over and green shoots are finally appearing across the global economy. This is the time to be brave and take advantage of bargain prices while they still last. As Warren Buffet (Obama Presidential Medal of Freedom winner) says, “buy when there’s blood in the streets”.

Tue, 11/20/2012 - 16:15 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Don't you mean when Warren is naked and bleeding from the butt?

Tue, 11/20/2012 - 16:36 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

What's a little colon cancer, eh Charlie?

Tue, 11/20/2012 - 17:25 | Link to Comment knukles
knukles's picture

You didn't get that cancer yourself.

Tue, 11/20/2012 - 17:29 | Link to Comment Vagabond
Vagabond's picture

Currently, the GAO is prohibited from auditing: 1. transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization; 2. deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations 3. transactions made under the direction of the Federal Open Market Committee; or 4. a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to clauses (1)-(3) of this subsection of US Code.

 

Doesn't #1 imply that the FED could have been buying foreign bonds off balance sheet and unaudited for years/decades?

Tue, 11/20/2012 - 17:43 | Link to Comment knukles
knukles's picture

Yes, absolutely, unequivocally, without a doubt and no shit, Sherlock.
Which leaves the entire GAO function with respect to the FED to ensure the inventory stickers are on all the equipment and the "Do Not Remove Under Penalty of Federal Law" tags have not been removed from all the padded furniture.

Booyah!

Increase the Budget!

Tue, 11/20/2012 - 16:15 | Link to Comment Michaelwiseguy
Michaelwiseguy's picture

Re-Upload America and Restore the Original USA Constitution.

Tue, 11/20/2012 - 18:03 | Link to Comment vast-dom
vast-dom's picture

the pathological printer kleptomaniac 

Tue, 11/20/2012 - 22:05 | Link to Comment klockwerks
klockwerks's picture

My wife just came up with a great money maker. Toilet bowls with Bens, Obama, and reids picture on the bowl. Online sales and a great conversation opener. I can see it now,"can I use your bathroom" then afterwards it time for the education to start

Tue, 11/20/2012 - 16:11 | Link to Comment Catch-22
Catch-22's picture

@hamster

I noticed you put your foot in the door with that “c” earlier… kept your place in line til the idea was on paper. Nice move.

Tue, 11/20/2012 - 16:45 | Link to Comment JPM Hater001
JPM Hater001's picture

Jimmy Hoffa was listed in the footnotes.

Tue, 11/20/2012 - 16:51 | Link to Comment JPM Hater001
JPM Hater001's picture

As was AIDS

Tue, 11/20/2012 - 17:39 | Link to Comment knukles
knukles's picture

idea_....

No we have not formally gotten any confirmation of the notorious "Other Asset" category on the FED's BS is.. or is not...
Other than it keeps fucking growing rather healthily.   My guess is that's where the gold and silver manipulations are run out of with JP HSBC et al as agents, stocks, stock futures, anything else and anything else futures, option, options thereupon the thereupon and anything elses, FX swaps, FX interventions as well as activities reflective of on behalf of the Treasury's Slush Fund, the Foreign Exchange Stabilization Fund.
So it is therein where non-dollar non-US entity debt obligations could well be lodged.
And as always, Deloitte and Touche says it's all A-Fucking-OK by standard non-public accounting standards which are beginning to make as much sense as leaving Little Tommy with Jimmy Savile and Uncle Ernie.  

Tue, 11/20/2012 - 15:59 | Link to Comment fonzannoon
fonzannoon's picture

my guess is stawks. although if they really want to blow my mind they will admit they bought kruggerands.

Tue, 11/20/2012 - 16:15 | Link to Comment kaiserhoff
kaiserhoff's picture

Bennie could get the same effect by printing a trillion dollars, pouring gas on it, and burning it.

Oh wait.  First he would give Lloyd and Jamie a 10% spiff for their JEWISHNESS, and then burn the rest.

Voila!  The perfect model, simulation, crapola game theory, brain fart explanation of all things FED.

Tue, 11/20/2012 - 17:17 | Link to Comment TruthInSunshine
TruthInSunshine's picture

 "...although if they really want to blow my mind they will admit they bought kruggerands."

 

Do you mean Krugmanrands?**

 

**Krugmanrand: A gold colored powder-coated round, composed of 3% tungsten and 97% compressed sawdust, bearing the slogan "In Diocletian We Trust" and "To Infinity & Beyond!" on one side, alongside "CTRL+P," and having the other side enscribed with "What, Me Worry?" alongside an engraved likeness of one Ben S. Bernanke (Shakey McShakester).

Tue, 11/20/2012 - 17:18 | Link to Comment Poetic injustice
Poetic injustice's picture

to kaiserhoff: Sorry Sir, I am arresting you for disclosing State secret!

Tue, 11/20/2012 - 16:01 | Link to Comment Long-John-Silver
Tue, 11/20/2012 - 16:02 | Link to Comment Big Ben
Big Ben's picture

Great! Let's just buy some nice Japanese bonds. Or maybe some Spanish or Greek bonds.

If the Fed feels it must to buy something, it should buy gold and silver. But that's the very last thing that the Fed would ever buy.

Tue, 11/20/2012 - 16:03 | Link to Comment ptoemmes
ptoemmes's picture

Audit the FED.

 

Upon further consideration...Eliminate the FED.

Tue, 11/20/2012 - 16:10 | Link to Comment Wolferl
Wolferl's picture

Which is most likely the same.

Tue, 11/20/2012 - 16:03 | Link to Comment Nostradamus
Nostradamus's picture

Bernanke loses it on reporter. Tries to rip mic away http://www.economicpolicyjournal.com/2012/11/hot-bernanke-loses-it.html

Tue, 11/20/2012 - 16:06 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Luke is the man.

Tue, 11/20/2012 - 16:12 | Link to Comment TruthInSunshine
TruthInSunshine's picture

The young man is exemplary. If we had more people like Luke, the bastards would really be nervous.

Tue, 11/20/2012 - 17:11 | Link to Comment JLee2027
JLee2027's picture

LOL

"Do you plan to replace my damaged microphone with newly created money or will you simply make balance sheet adjustments and label it a toxic asset?"

 


Tue, 11/20/2012 - 16:08 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I can't wait until Ben starts buying Beanie Babies.

<Finally my 90's investment will pay off.>

Tue, 11/20/2012 - 16:16 | Link to Comment Sauk Leader
Sauk Leader's picture

The vaults under the federal reserve bank of New York are full of baseball cards. Not gold but Boxes of Upper Deck, Fleer and Donruss stacked to the ceiling.

Tue, 11/20/2012 - 16:34 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

At least their supply can't be deluded.

....unless they are being rehypothecated.

Tue, 11/20/2012 - 17:51 | Link to Comment TruthInSunshine
TruthInSunshine's picture

I emailed The Bernank and asked him if he would buy my Darryl Stawberry Rookie Card & received a wire transfer of 485,000 federal reserve fiatskis within seconds!

Maiden Lane is awesome!!!

Tue, 11/20/2012 - 16:26 | Link to Comment Cognitive Dissonance
Tue, 11/20/2012 - 17:02 | Link to Comment ChanceIs
ChanceIs's picture

Would they have been destroyed in Sandy the way the bearer bond's were?  I sure hope so.  I have a boatload of old cards, and it's a supply and demand thing.  Baseball cards the next gold?

Tue, 11/20/2012 - 16:38 | Link to Comment gillimus
gillimus's picture

Did you buy those presidential plates, too?  I always kick myself for not charging those on my credit card and selling them at the flea market.  Ritches, bitchez!!

Tue, 11/20/2012 - 16:14 | Link to Comment youngman
youngman's picture

It will come down to the last Central bank printing....if the ECB quits ..Japan quits..GB quits..and only the Fed is printing and buying the foreign bonds......what next....kind of scary huh??? So what we own the world without firing a shot????  Or does the debtor country just say...see ya..we are not paying anything....and flush goes the toilet...since its all electric money....will it matter...

 

Tue, 11/20/2012 - 16:15 | Link to Comment Smegley Wanxalot
Smegley Wanxalot's picture

Bernanke is the intellectual Twinkie in our baked economy

Tue, 11/20/2012 - 16:21 | Link to Comment pragmatic hobo
pragmatic hobo's picture

that is an insult to twinkie.

Tue, 11/20/2012 - 16:30 | Link to Comment Smegley Wanxalot
Smegley Wanxalot's picture

I'm just picking on the dead guy

Tue, 11/20/2012 - 16:21 | Link to Comment pragmatic hobo
pragmatic hobo's picture

in a world of competitive devaluation, that #6 will be problematic.

Tue, 11/20/2012 - 16:30 | Link to Comment firstdivision
firstdivision's picture

ES1 ain't free to acquire.

Tue, 11/20/2012 - 16:37 | Link to Comment Jim in MN
Jim in MN's picture

Until he says that CORRUPTION is destroying US growth prospects, there's nothing truthy enough to merit the term.

 

It's not 'the crisis.'  It's fucking CORRUPTION.  Important people would lose money via mark-to-market/writedowns, so instead we take the road to Japanification and saddle my babies with hundreds of thousands in extra debt and tax burdens. 

 

Not to mention permanently degrading the earnings prospects of the earnest investor class here on ZH--sorry, bitchez.

 

It is immoral, evil and criminal.  Not 'the crisis'.  Criminal corruption.

 

Truth that, Ben.

Tue, 11/20/2012 - 16:52 | Link to Comment kaiserhoff
kaiserhoff's picture

What he said;)

Arrest John Corzine.

Tue, 11/20/2012 - 17:07 | Link to Comment Beam Me Up Scotty
Beam Me Up Scotty's picture

Taxes and laws are only for little people....

Tue, 11/20/2012 - 16:37 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

Interesting it has a small quarterly wave pattern until 2009.

Tue, 11/20/2012 - 17:09 | Link to Comment ChanceIs
ChanceIs's picture

What about the swap lines to infinity??  Aren't they at least $1.5 trillion.  You know...the "other assets."  The Bernanke printed US bucks and Mario Draghi printed a bunch of Euros and they swapped them.  Doesn't that count as the Fed holding foreign bonds - if Draghi used US bucks to buy those soverigns (after money laundering them through whatever means necessary)?  Want to bet if The Bernanke wanted to repatriate his bucks from the swap (you know, like Germany wanting to repatriate its gold) that The Bernanke wouldn't end up with a pile of Greek, Spanish, and Italian sovereigns with an apology note from Draghi stating that they were just as good.  Kind of like standing for delivery on a gold future and getting a pile of cash from the CME.

Tue, 11/20/2012 - 17:48 | Link to Comment John Law Lives
John Law Lives's picture

How about adding these bullets:

Obumble announces sweeping mortgage debt relief for people with mortgages under $150K... and the Fed replenishes any "losses" by the TBTF banks...

Obumble announces sweeping student loan debt relief... and the Fed replenishes "losses" by Sallie Mae...

Obumble announces a bailout of the FHA... and the Fed prints...

Obumble announces a bailout of the USPS...  and the Fed prints...

Obumble announces a bailout of (FILL IN THE BLANK)... and the Fed prints...

Ad nauseam... ad infinitum...  and the Fed prints...

There is no telling how far these Machiavellian cabalists will go to gain complete control of our lives now that they are fully ensconced in power.

Tue, 11/20/2012 - 18:46 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Good points, and quite possible after they do away with the debt ceiling altogether.

http://cnsnews.com/news/article/treasury-secretary-geithner-lift-debt-limit-infinity

Tue, 11/20/2012 - 17:57 | Link to Comment woggie
woggie's picture

the beast is on the gobble and all that matters is we're all headed for it's belly
http://youtu.be/ntmthFyaYzY

Tue, 11/20/2012 - 18:27 | Link to Comment luna_man
luna_man's picture

 

 

I know this much...If you are not following MY MAIN MAN, just the same as being born BLIND!!...

 

who else, got your back?

Wed, 11/21/2012 - 06:59 | Link to Comment GFORCE
GFORCE's picture

When all else fails... invade!

Do NOT follow this link or you will be banned from the site!