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Time For Bernanke To Retract His Sworn Testimony To Congress

Tyler Durden's picture


Three months ago, as part of our ongoing explanation of what happens next to the Fed's balance sheet (which is now established as official canon in advance of the December 12th FOMC, when Bernanke will effectively announce QE4 consisting of $40 billion in MBS and $45 billion in unsterilized TSY purchases as we predicted the day QE3 was announced), we said that "the Fed will continue increasing its 10 Yr equivalents by roughly 12% (of the total market) per year, for at least the next 3 years, at which point it will own 60% of the entire Treasury market. It means that the Fed will monetize all gross long-term issuance every year for the next 3 years." Most looked at the bold sentence without it registering just what it means. Perhaps, now that the "serious" media has finally taken on the topic of applying a calculator to the one driver of all marginal risk demand, it will register a little better.

In a Bloomberg story titled, appropriately enough "Treasury Scarcity to Grow as Fed Buys 90% of New Bonds" we read that "the Fed, in its efforts to boost growth, will add about $45 billion of Treasuries a month to the $40 billion in mortgage debt it’s purchasing, effectively absorbing about 90 percent of net new dollar-denominated fixed-income assets, according to JPMorgan Chase & Co." Actually that's incorrect and it is more like 100%. What is however 100% correct is what the bolded means in plain language: it is now accepted that the Fed will outright monetize all gross US issuance. Let us repeat this sentence for those who just had flashbacks to Adam Fergusson's "When money dies." The Fed is now monetizing practically all net new debt. So what did the Chairman say about this absolutely certain eventuality back in 2009 to Congress...

Our only question: was the Chairman simply lying of lying under oath?

And finally, because it appears it takes the MSM between 3 and 36 months to catch up to Zero Hedge, there is another relevant question that we posed 3 months ago:

Another way of visualizing this is how many assets as a percentage of US GDP the Fed will hold on its books. Currently, this number is 18%. By the end of 2013, the Fed's historical flow operations will be accountable for 24% of US GDP.


Why is this important? Simple: when the time comes for the Fed to unwind its balance sheet, if ever, the reverse Flow process will be responsible for deducting at least 24% of US GDP at the time when said tightening happens. If ever.

Hence no unwind. We are confident to state this, just as we were confident with our other forecast from three months ago:

What is scariest, is that as of this moment, all of this is priced in. Any incremental gains in the stock market will have to come from additional easing over and above what Bernanke just announced.

What Bernanke implicitly, and in one week explicitly, has announced is that it now takes $85 billion in monthly Flow injection from the Fed just to keep the market from collapsing. Oh, yes, and the market still has to surpass the highs seen the day after QEternity was announced.


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Mon, 12/03/2012 - 22:28 | 3031439 Samsonov
Samsonov's picture

If it was getting dumped, yes, but it's being unwound slowly to ensure there is no blowout, which would defeat their purpose.

Mon, 12/03/2012 - 22:31 | 3031446 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

They are being dumped.

Mon, 12/03/2012 - 22:30 | 3031443 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The Fed is selling short term USTs to PDs in an exchange for the cash from the MBS purchases.

Mon, 12/03/2012 - 22:32 | 3031447 ekm
ekm's picture

Fed has its own accounting methods = no accounting.

There's no such thing as a Fed balance sheet.

Mon, 12/03/2012 - 22:40 | 3031462 Unprepared
Unprepared's picture

I have to admit, two years ago, Iwouldn't have thought the Chinese had a way to unload their treasury holdings without triggering a war or booking a huge loss. Turns out I was not imaginative enough and the Bernank is presenting them with a golden opportunity, however marginal, to "pull"...

... or is it the other way around? Chinese were going ahead with their plan anyways and the Bernank had to pick the slack and all this monetization was not to save the banks but to save the Treasury. Fuck it, I'm lost.

Mon, 12/03/2012 - 23:10 | 3031540 Dr.Engineer
Dr.Engineer's picture

The Chinese are not stupid.  They trusted the US banksters once.  They were wrong.  Now they want blood.  They are going to take it slowly.

They are operating according to plan.  The ChairSatan has no plan -- QE <n> is not a plan.

Tue, 12/04/2012 - 00:09 | 3031648 Boxed Merlot
Boxed Merlot's picture

I was not imaginative enough and the Bernank is presenting them with a golden opportunity...


A golden opportunity in more ways than one.  With the Feinsteins in bed with China for decades and the Bernanke's phd disertation "Long-Term Commitments, Dynamic Optimization, and the Business Cycle" being reviewed and approved by his thesis adviser, the future governor of the Bank of Israel, Stanley Fischer, imagination isn't as difficult as one might think.

Mon, 12/03/2012 - 22:52 | 3031486 youngman
youngman's picture

I too think there was a deal cut...Keping treasuries high was one.....I also  think the $1720 price in gold was one of them.....

Mon, 12/03/2012 - 23:34 | 3031580 Let The Wurlitz...
Let The Wurlitzer Play's picture

The FED wont have to worry about unwinding the portfolio.  In the near future the portfolio will be worthless.  I have some Zimbabwe bonds that I purchased for their yeild and safety, would anyone like to buy them from me?

All US federal debt with duration over 2 years will go to junk.  Do you want a guarantee of US dollars 5, 7, 10, 15 or even 30 years from now?  Only someone managing another persons money would take that bet.



Mon, 12/03/2012 - 22:20 | 3031417 escargot
escargot's picture

All things aside, you've got to admit that the Bernanke has a sweet beard.  In fact he's quite a bit more handsome than the Greenspan. 

Mon, 12/03/2012 - 22:27 | 3031435 imbrbing
imbrbing's picture

Yea, he sure has a purty mouth, more so than that smeagle looking guy

Mon, 12/03/2012 - 22:28 | 3031436 Ookspay
Ookspay's picture

True, if he tilts his head his mouth looks like a hairy pussy! Fuck 'em!

Mon, 12/03/2012 - 23:26 | 3031442 Monedas
Monedas's picture

You are the snails in my vomit !  Do you have a crush on Anderson Cooper ?    Greenspan undid what Hemingway worked a life time to give us:   Plain Monedian English !

Mon, 12/03/2012 - 23:32 | 3031574 akak
akak's picture

Monedas, really, for the last time, the punctuation marks go DIRECTLY after the last word, with NO space in between.

Just look at everyone else's posts for examples.

Mon, 12/03/2012 - 23:57 | 3031627 Monedas
Monedas's picture

I'm reinventing the language .... the way it is has led us to confused Socialist thinking .... nothing to lose ?

Tue, 12/04/2012 - 02:14 | 3031738 Snidley Whipsnae
Snidley Whipsnae's picture

I used to think punctuation was important... Then I read a few Cormac McCarthy novels. After the first few pages I was so absorbed in the stories that I forgot the punctuation.

Tue, 12/04/2012 - 03:49 | 3031787 Clashfan
Clashfan's picture

Punctuation affects credibility whether one wants it to or not.

Tue, 12/04/2012 - 08:29 | 3031917 Urban Redneck
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So do names;

so do job titles;

so do memberships;

and to a lesser extent college degrees.

Ideas are important, credibility is suspect, especially in Fight Club.

Mon, 12/03/2012 - 23:55 | 3031625 bunnyswanson
bunnyswanson's picture

It's amazing really how healthy and happy these men and women in Congress, banking, govt appear.  Sleep deprivation from the stress and pressure is not an issue with these people.

Tue, 12/04/2012 - 02:29 | 3031748 Things that go bump
Things that go bump's picture

Please, he is hiding a weak chin.  

Mon, 12/03/2012 - 22:21 | 3031418 besnook
besnook's picture

here is the way out. based upon the premise that when you consider money already spent by you money you borrowed from yourself you actually don't owe anyone anything or, at least, never really have to pay it back. this is like operation twisted greenback. if the fed owns all the debt it has effectively borrowed money from itself which it can effectively put off payment of forever or simply forgive it all with very little effect on the real economy. it looks like the strategy chosen to buy time for .gov to get it's fiscal house in order not to mention create a more realistic illusion that the tbtf banks are actually solvent. it looks like it could actually work but i am not betting on it yet.

Mon, 12/03/2012 - 22:26 | 3031434 fonzannoon
fonzannoon's picture

since the gov has absolutely no plans at all to get it's fiscal house in order how does that fatcor into your theory?

Mon, 12/03/2012 - 23:02 | 3031518 riphowardkatz
riphowardkatz's picture

there is still a lot more wealth to be redistributed

Mon, 12/03/2012 - 22:36 | 3031457 ekm
ekm's picture

What matters is the real economy. The congress has appointed the Fed to fix the economy (very wise in order for congress not to get blamed).

If money goes from Fed to Treasury to Fed to Treasury, the economy won't get any better. The congress will wait until it gets way worse and then.............blame the Fed. They want to be reelected.

Mon, 12/03/2012 - 22:45 | 3031470 fonzannoon
fonzannoon's picture

That is interesting ekm. i always saw it the other way. i saw the fed sticking around while a stupid group of poloticians take the blame and get put out to pasture while a new group of assholes gets ushered in. same as it ever was. i have to think that one over.

Mon, 12/03/2012 - 22:55 | 3031492 besnook
besnook's picture

what is interesting is the last two fed chairman changes came just before a huge fiscal and monetary mess. volcker came in to fix the first mess and bernanke the most recent mess. if bernanke resigns i expect another huge mess to ensue.

Tue, 12/04/2012 - 01:02 | 3031691 ekm
ekm's picture

Makes sense

Tue, 12/04/2012 - 02:46 | 3031757 andrewp111
andrewp111's picture

Yup. Greenspan's retirtement was the clue that the house bubble was about to implode. When Bernanke gets the hell out of dodge you know something is about to blow up.

Mon, 12/03/2012 - 22:49 | 3031477 besnook
besnook's picture

if the fed is buying all the debt then it clears the congress to grant every citizen 10,000 dollars to do with whatever they want....the bernanke helicopter in a literal way allowing the congresscritters to get reelected and the fed to raise interest rates effectively, at least nominally, allowing retirees to retire comfortably and the rest of us to create some wealth.

don't misunderstand me. i have not bought into my own bs. i came to this conclusion as the only reasonable explanation for what they are doing because i can't believe they are purposely destroying the dollar expecting some good to come of it.

Mon, 12/03/2012 - 23:33 | 3031579 XitSam
XitSam's picture

It would let Congress give everyone some FRNs, yes, but the banks would then not get first use of the newly created FRNs.

Congress and the Fed are in a game to blame each other. I think Congress will lose in the battle of public opinion because they are not a unified voice. Note Bernanke's clear statements in the last 2 or 3 press conferences: "Monetary policy is not a panacea." I predict he will say it next time.

I am troubled at how many otherwise clearly thinking people, assume that all these powerful agencies (Fed, POTUS, Congress, IMF, etc) use logic or attribute they have good intentions for the country. Without even getting into conspiracy theories, these agencies' goals are not what we think they are, and their logic is sick, twisted and based on faulty premises.  /rant

Tue, 12/04/2012 - 00:48 | 3031683 ekm
ekm's picture

Not correct, I'd say.

If it goes to that point, it'd mean that people will riot to just find some bread to it. Fed people better hide in bunkers.

Congress would throw all the mud they can on them.


I don't remember who, but one or two Fed board members are openly saying that congress should take away the 'employment mandate'. They are sensing the fear.

Tue, 12/04/2012 - 08:29 | 3031918 XitSam
XitSam's picture

Most people don't understand the Fed. You, me, ZH, even CNBC viewers, but we're the minority. If it got to the point of food riots, the rioters would be blaming the people that they think could do something immediately: pass a law to get them some food. They don't understand secondary effects or causes.  When hungry, watch them turn on Obama too. They have a ObamaPhone, how about some ObamaFood.

Tue, 12/04/2012 - 03:50 | 3031790 Clashfan
Clashfan's picture

It's a Luciferian cabal that wants nothing less than the destruction of America and a one world government with a global tax.

Tue, 12/04/2012 - 04:02 | 3031793 Ghordius
Ghordius's picture

way too complicated for me.

do you have a simpler version?

something that does not involve the "Pax Americana", of course, or what foreigners want /s

Mon, 12/03/2012 - 23:14 | 3031549 TonyCoitus
TonyCoitus's picture


Mon, 12/03/2012 - 22:25 | 3031431 XitSam
XitSam's picture

<- Blows up before Bernanke leaves the Fed

<- Blows up after Bernanke leaves the Fed

Mon, 12/03/2012 - 22:42 | 3031468 Unprepared
Unprepared's picture

<- The Bernanke blows up before the Blowup

Tue, 12/04/2012 - 08:53 | 3031945 FreeNewEnergy
FreeNewEnergy's picture

Bernanke Blow Up Doll.

Pump him and he shits hundred dollar bills.

Thanks for that horrible visual so early in the morning. Ughh!

Since it's my birthday, and I will probably be drunk by noon, consider this as one of the more cogent comments by me today.

Booze. It's what's for breakfast. LMAO.

Mon, 12/03/2012 - 23:50 | 3031607 XitSam
XitSam's picture

I was just wondering exactly when Bernanke's term was up. According to this article I think it will be January 31, 2014. Which only gives 14 months to blow up. It also says something I didn't know ... "his 14-year term as a member of the board ends Jan. 31, 2020." 

And there's something else ... he took an oath. What oath did he take? An oath to promote the interests of a private banking cartel?

Mon, 12/03/2012 - 22:26 | 3031433 Monedas
Monedas's picture

Don't bother me .... I'm watching the CNN Hero Awards with Anderson Cooper !  

Mon, 12/03/2012 - 22:33 | 3031452 Mr Lennon Hendrix
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Anderson Vanderbilt Cooper

Mon, 12/03/2012 - 22:39 | 3031461 Monedas
Monedas's picture

You know why Obama only wants to raise taxes on the 1% .... because the upper middle class is mostly overpaid government bureaucrats !  Most of the 1% are bundlers for Obama .... and can afford it !

Mon, 12/03/2012 - 22:30 | 3031441 chinaboy
chinaboy's picture

If they can buy out the treasury market, may be they can buy out the fiscal cliff. Can someone please explain why they cannot?

Mon, 12/03/2012 - 22:34 | 3031455 Cdad
Cdad's picture

Sure.  It's called West Texas crude.

Tue, 12/04/2012 - 02:33 | 3031749 CrazyCooter
CrazyCooter's picture

Commodity specs will get Corzined if they get too excited. Food and fuel have to stay cheap to keep the ponzi alive ...

The end will come, no arguement about that, but only when things fall apart and not because of spec money. Don't belive me? Try a custodian account at MF Global. Or, who ever the next MF Global is ... or the next ... until folks get the drift.



Mon, 12/03/2012 - 22:37 | 3031458 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

They are trying. 

The "Fiscal Cliff" will be known as "The Grand Bargain" in History.  After the WS bought Congress and WH come to terms on how to best fleece Americans they will raise the debt ceiling.  The Grand Bargain will go on for months, but as soon as it is wrapped up the debt ceiling will be raised in a matter of days.

Mon, 12/03/2012 - 22:33 | 3031453 venturen
venturen's picture

Time to take the keys to the printing press away. 

Mon, 12/03/2012 - 22:34 | 3031456 Monedas
Monedas's picture

Coming to a theater of war near you soon .... SYRIA ! 

Mon, 12/03/2012 - 22:40 | 3031463 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Libtard media is really pushing this as the next war.  It is unbelievable that these fucking libtards can push war when they are in house but go against it when the GOP is in office.

Libtards are the manic psychopaths of politics while the Republinuts are just batshit crazy.

I will take batshit crazy any day.  At least you know what you are up against.

Mon, 12/03/2012 - 23:00 | 3031489 Monedas
Monedas's picture

I'm just "Biden" my time .... until the world implodes ! I'm sure glad I spread some of my stashes around !  I'm like a spawning salmon .... if 90% percent of my "seed" is lost .... I'll still have enough to live a quiet, anonymous existence !  If half my seed survives .... I can engage in a little bureaucrat trophy hunting ?  Sarc: OFF/off

Mon, 12/03/2012 - 22:56 | 3031496 surf0766
surf0766's picture

Who wins when the U.S. liberates Syria for the Brotherhood..

Mon, 12/03/2012 - 23:01 | 3031511 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The Huxley family.

Tue, 12/04/2012 - 00:14 | 3031652 jomama
jomama's picture

and here i had always thought you'd eaten the red pill.

Mon, 12/03/2012 - 22:41 | 3031466 Joebloinvestor
Joebloinvestor's picture

It's a wonderful life when you are the worlds reserve currency.


Mon, 12/03/2012 - 23:35 | 3031582 alfred b.
alfred b.'s picture


    Yess, I agree fully; but the smallest of caviat would be that  'it's a wonderful life WHILE you are the world's reserve currency.    Nothing is forever...loll

Tue, 12/04/2012 - 00:51 | 3031684 Joebloinvestor
Joebloinvestor's picture

They don't care about the future and never did.

Mon, 12/03/2012 - 22:45 | 3031471 PLove
PLove's picture

Mongols At The Gate

Mon, 12/03/2012 - 22:54 | 3031490 JuicedGamma
JuicedGamma's picture

I have been trying to understand what QE means for about 3 years now and still don't fully understand.  And if you think you do you're probably wrong; Bernanke has gone native.

It's sort of like a dog eating it's own tail.  The question is how much can the dog swallow before it either chokes, dissappears or explodes.  The Japanese have managed to disappear.

The US, on the other hand, is too big to dissappear and most likely explodes.

How will we know the end game is afoot.  Look for interest rates to rise, maybe gold goes completely parabolic.  We still don't know what lights the fuse, but when it goes this one will be fantastic, and not the good fantastic.


Mon, 12/03/2012 - 23:15 | 3031555 Dr.Engineer
Dr.Engineer's picture

The neo-fascist criminals are working to plan.  They are just too stupid to figure out all the black swans that are migrating and circling for a landing.  There are just too many of them and one will land.  You and I may see it land but the neo-fascists won't because it isn't in their models!  If it was in their models they would have seen it.

It might be Japan takes a pounding on any of several fronts.  It might be that Switerzerland just went negative interest.  It might be Brazil has a hard landing. 

So, the end game is afoot.  You are looking for which fuse is going to light first.  I recommend you prepare for the end because this is the end game.

The government is not the solution.

Tue, 12/04/2012 - 09:16 | 3031997 FreeNewEnergy
FreeNewEnergy's picture

Dr.Engineer, thanks for mentioning "black swan." I've been thinking about this since seeing a few news stories (one by CNBC's Jane Wells, an awesome MILF if ever there was one) about the strike at the ports of LA/Long Beach.

Some ships are sitting in dock, most are just sitting out in the ocean, waiting to go to another port - if possible - or wait out the strike.

Obama was asked to intervene. He's said and done NOTHING, according to plan. In 2002, feckless leader, George W., invoked a provision of Taft-Hartley to effectively re-open the ports throughout the West Coast.

So, Black Swan? Which by definition is "unexpected." Did anyone expect a walkout by roughly 800 clerical workers to trigger a wider work stoppage and shut down the ports? I'd say probably not.

The economic impact of this strike, if it continues for more than a few weeks - and today is now day eight - could make the insanity of the fiscal cliff look like chickensh-t, because this is real money, real goods not being delivered, disrupting the supply chain, and, ya know, winter is coming, a slowdown is coming regardless. This strike could easily tip the US into recession (if we're not there already).

You want a black swan? As mob people might say, "I got yer black swan right here."

Supply shortages. It's what's (not) for dinner.

Mon, 12/03/2012 - 22:55 | 3031491 blindman
blindman's picture

Greenspan Admits Philisophical Error in "The Warning"
" i found a flaw but i have been very distressed
by that fact .. .a flaw in the model that i perceived is
the critical functioning structure that defines
how the world works, so to speak.." alan greenspan
ben will have the same realization and find the same flaw. it is pathetic and criminal that a 5 minute
conversation with nearly anyone on the street would
reveal the flaw if these people would just come out
of their offices and ivory towers and listen, look
around a little bit, climb a dumpster or two and
see what is in there. take a look in the basement
if you don't want to leave the building.

Mon, 12/03/2012 - 23:03 | 3031520 besnook
besnook's picture

greenspan was not wrong. he simply has to flesh out his idea of self interest a little further. he thought rational self interest was the controlling factor in preventing the banks from self immolation. self interest leads to self destruction if self interest is allowed to be taken to the extreme. that is the essential problem with the current course. self interest in saving the banks is destroying the basic fabric of the economy which will destroy the banks anyway.

Mon, 12/03/2012 - 23:07 | 3031530 blindman
blindman's picture

that is interesting and insightful.

Tue, 12/04/2012 - 00:02 | 3031636 dognamedabu
dognamedabu's picture

Self interest works the best when you don't have others self interest enforced on everyone else. Give people the power to overrule your self interest and they will, in their own self interest. If they had no power, which Anarchy proposes then your self interest and their self interest would be more equal. Give one group a gun (government) and of course the one with the gun will win. Solution? More government? More rules? Of course not. More guns.

Tue, 12/04/2012 - 00:13 | 3031653 besnook
besnook's picture

in the end the omnipotent power(unchallenged selfinterest) of .gov results in it's own destruction by the powerless. freedom is just another word for nothing left to lose.

Mon, 12/03/2012 - 22:58 | 3031501 q99x2
q99x2's picture

You mean Bernanke lied? He lied. He actually lied. What a scumbag.

Tue, 12/04/2012 - 02:26 | 3031745 knukles
knukles's picture

No.  He merely misspoke himself.  Got carried away with a tad too much literal translation and colorful language.  Often the deeper politically correct terms might be somewhat rarefied and as such cause problems for the lesser educated.  But Lied?
No, Ben would not Lie

Matters of omission and commission perhaps, but not lying.

Mon, 12/03/2012 - 22:58 | 3031502 surf0766
surf0766's picture

Again what is the tipping point?

When does the stampede start?  

Mon, 12/03/2012 - 23:16 | 3031556 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The Fiscal Cliff charade is nothing but a smokescreen to keep everyone's eyes off the bigger issues such as 'How long will printing dollars to buy bonds work?" and "How far can the world go into debt before people realize that no one will pay it back?".

Tue, 12/04/2012 - 02:41 | 3031754 andrewp111
andrewp111's picture

It has been working in Japan for over 20 years. It works until it doesn't.

Mon, 12/03/2012 - 23:18 | 3031559 Everybodys All ...
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Personally, I think the stampede could happen any day now that the Fed is openly monetizing beginning in January.

Mon, 12/03/2012 - 22:59 | 3031504 earleflorida
earleflorida's picture

'wary of repeating a battle like the one between jackson and biddle, [2nd bank of the u.s.] fed reserve founders designed a decentralized c.b. to prevent the concentration of power. they were concerned that the new central bank [fed. reserve act 1913] would be run by, and for, wall st.. thus the system was decentralized into twelve district banks [redeeming money in gold].

today the fed is best known for monetary policy, but that wasn't an original role of the institutions [humphrey-hawkins act 10-27-78__ dual mandate]. ny fed. pres. ben strong began conducting open-market-operations in the 20's , and many today blame the fuck'd-up monetary policy for the severity, and length of the great-depression [the one were in now?]. fdr took the nation off the gold standard in 1933 [executive order 6102] and supposedly that is when the monetary policy really coalesced, or sadly matured [manured]! the nation was now explicitly using the fiat money for the first time [camel nose/ mission creep]! in 1935, congress created the fomc to be the fed's arm.

the federal gov't. took more control over the fed. reserve during the great depression, and wwii, but since 1951,  and the treasury dept. resolution of a 'fabricated, bullshit kabuki theatre' [banks didn't want but wall st. loved or vice-versa? you decide?]... the cb has operated largely independent to the political process.

next comes the nixon shock [1971 and defaults on bretton woods-- nice!] that now explicitly places the u.s on a fiat system backed by nothing...

and here we are today monetizing our own debt by the frb and not a fucking question has been raised by congress! and to pour salt on the wound... the ny fed controls 90%+ of the cb decisions!!!'

quotes and add-on [sic] from minneapolis fed papers/ history... and mauh  

thankyou tyler 

Mon, 12/03/2012 - 23:00 | 3031510 Pumpkin
Pumpkin's picture

I think the fed should buy all the debt.  And then we could just blow the MFr up.

Mon, 12/03/2012 - 23:04 | 3031524 IamtheREALmario
IamtheREALmario's picture

Lol ... one assumes that the plan is NOT for the US corporation to default on their debt to the Fed (exclusively) at the appropriate time.... and so what? The Fed writes off a debt that they created out of thin air, anyway? At that point, there is no net effect.

Mon, 12/03/2012 - 23:37 | 3031572 earleflorida
earleflorida's picture

look at it this way... its has always started over an unaffordable conflict /war.  the civil war... not a great example, but the time slot is relevant for a unbiased empirical example-- the terrible recession of 1873-- the worse depression in u.s. history, the year of 1893, and, then the 1907 severe recession. what follows is wwi [1914/18 & FRB Act 1913... coincidence?] .

currently we had the dot-com bubble of 2000 and the housing collapse of 2007 and that's only 8 years apart. but, as i see it, the next big bubble will be monetization by the fed-- bank runs, defaults.

the parallels are simple-- deviate from true fiduciary prudence of a sound currency backed by hard assets, whether in times of war, or financially distressed geopolitical turmoil you get depressions via recessions.

we've had operation desert-storm, iraq #41-- operation shock and awe #43 [iraq & afghanistan]... and the continuation of bush's policies by obama [afgahistan, syria, libya]! wtf! 


Mon, 12/03/2012 - 23:07 | 3031531 Mr. Magniloquent
Mr. Magniloquent's picture

Considering the charter of the Federal Reserve is set to expire in slightly over one year, perhaps this balance sheet expansion is deliberate for ulterior reasons? Should the charter not be renewed, a vast amount of debt would vanish, and all of the "assets" owned by the Federal Reserve would likely be liquidated at a miniscule fraction of their cost. At that point, a "new" institution could be created after several months of the subsequent depression, coming to the rescue of a United States without the benevolence of a central bank.

It works on several levels. Permits wild defecit spending in the short term and absolves all debt accrued by it, moves tangible assets to connected elites, provides an acceptable frame for the inevitable depression, along with re-establishing the absolute and vital role of a central bank. Furthermore, any new institution created would likely be granted a far more broad charter, codifying powers beyond what it has usurped within the last century.

Mon, 12/03/2012 - 23:50 | 3031613 Boxed Merlot
Boxed Merlot's picture

It works on several levels...



So tell me, do y'all really have a full hospital under those meeting rooms in Basel?

Tue, 12/04/2012 - 00:04 | 3031642 Dr. Engali
Dr. Engali's picture

The federal reserve charter is not set to expire in 2013. That is only a myth. In 1927 The original Charter was amended To read "To have succession after February 25, 1927, until dissolved by Act of Congress or until forfeiture of franchise for violation of law." This means the 20 years never ran out it should have ran out in 1933, this is due to the fact that the first two Federal banks of the United states ran out due to charters not being renewed. This was the only way to combat it.

Mon, 12/03/2012 - 23:08 | 3031532 Catullus
Catullus's picture

If the banks run out of treasury bonds, then what will they hold on to as Tier 1 capital? Cash? That's seems pretty inefficient.

Tue, 12/04/2012 - 02:22 | 3031742 knukles
knukles's picture

Foreskins of newly born undrerpriviliged, mentally ill, physically deformed, lame, blind and otherwise unsightly children.

We'll call it the T4 project.

Tue, 12/04/2012 - 02:38 | 3031750 andrewp111
andrewp111's picture

With interest rates of zero, Treasury Bonds ARE cash. There is no difference besides the duration, and the Fed has no choice but to keep rates at zero forever.

Mon, 12/03/2012 - 23:09 | 3031535 azengrcat
azengrcat's picture


Mon, 12/03/2012 - 23:09 | 3031536 uno
uno's picture

I'm amazed they just don't keep up the Caribbean and UK charade

Mon, 12/03/2012 - 23:10 | 3031542 LawsofPhysics
LawsofPhysics's picture

So, he lied to congress. So what? There isn't any rule law. Got physical?

Mon, 12/03/2012 - 23:15 | 3031553 Everybodys All ...
Everybodys All American's picture

This would set a precident. No longer could anyone be prosecuted for this wthout this example being used as a defense.

Mon, 12/03/2012 - 23:47 | 3031608 Boxed Merlot
Boxed Merlot's picture

As the principal member of Corzine's retainer in Chief's law firm famously contended before the American public, what is the definition of "is"?

Mon, 12/03/2012 - 23:13 | 3031543 buzzsaw99
buzzsaw99's picture

the boj holds about 1/3 worth of japan gdp on their books but i am betting that the bernank (and whichever joo banker follows him as chairsatan) can outstrip that portion of usa (bullshit jacked up number) gdp before owebama's second term is up.

Mon, 12/03/2012 - 23:19 | 3031561 Monedas
Monedas's picture

Remember when they used to say .... National Debt .... we just owe it to ourselves ?

Mon, 12/03/2012 - 23:41 | 3031583 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Is Shirakawa a joo? 

Mon, 12/03/2012 - 23:53 | 3031623 jomama
jomama's picture

only in spirit

Mon, 12/03/2012 - 23:13 | 3031544 Everybodys All ...
Everybodys All American's picture

-->Lying before Congress is no big deal.

-->Lying before Congress is a big deal and Bernanke will be taken to task.


Mon, 12/03/2012 - 23:21 | 3031564 besnook
besnook's picture

lying to congress is a big deal if you are roger clemmens. bankers and other members of the ruling class have a permanent get out of jail free card. the loophole is the card does not give them freedom from the guillotine.

Tue, 12/04/2012 - 02:40 | 3031752 smart girl
Tue, 12/04/2012 - 08:01 | 3031889 blabam
blabam's picture

When things get serieus, abandon ship!

Mon, 12/03/2012 - 23:31 | 3031573 Paracelsus
Paracelsus's picture

I am very upset that two issues are not being widely discussed in the media (any media).

A. Fukushima

B. The Icelandic solution to debt

I am also very uneasy that so many GS alumni are in VIP positions around the globe.

Oh,and F--- Bernanke with 2 Megavolt power line....                

Mon, 12/03/2012 - 23:44 | 3031603 literarybeer
literarybeer's picture

the media is there to control the sheeple, not to enlighten them in any way. sorry, but you should stop being upset.

Mon, 12/03/2012 - 23:35 | 3031575 Monedas
Monedas's picture
  1.  ---> BATF Agent Trophy                                                                                                                                           2. ---> Federal Marshall Trophy  
Mon, 12/03/2012 - 23:34 | 3031581 dognamedabu
dognamedabu's picture

No worries ZH. We here all know how well you are able to provide forward looking information. Look at it this way, if MSM did this as well as you do we'd all wouldn't feel so lucky to have this site. We'd have Good Morning America going - wake up America. You're fucked!! Now during a hyper inflation event we have a great dish we will show you how to prepare after these messages....

Mon, 12/03/2012 - 23:52 | 3031621 jomama
jomama's picture

did you just say forward looking?

Mon, 12/03/2012 - 23:39 | 3031591 Wolf in the Wilds
Wolf in the Wilds's picture

Ah but its more than that now.  The Fed has already crossed the Rubicon and entered the world of Weimar.  It was always arguable that QE1 and QE2 were not really printing money (excess reserves and all that).  However, now, it is not the excess reserves that are funding the Fed balance sheet expansion.  It is real (or as real as modern electronic money can be) money printing.


Mon, 12/03/2012 - 23:39 | 3031593 Bernankenstein
Bernankenstein's picture

<- Fuck Me Me?

<- Fuck Me You?

Tue, 12/04/2012 - 00:07 | 3031596 Monedas
Monedas's picture

  --->                                             --->        How do you do that ?     AKAK ?  How do you do the up/down polls ?

Mon, 12/03/2012 - 23:42 | 3031601 Kreditanstalt
Kreditanstalt's picture

...and what is the "gold price" doing in response to these revelations?  Dribbling downward in the after hours as usual...the gameplaying will go on until it doesn't.

Mon, 12/03/2012 - 23:43 | 3031602 Never One Roach
Never One Roach's picture

Does the $85 billion include the secret billions bailout of EU banks?

Mon, 12/03/2012 - 23:45 | 3031605 alfred b.
alfred b.'s picture


     Barnanke has no other options left....there is no other way  Period!

  Once one embarks on this QE stuff, there is absolutely no turning back...the dye is cast!   The sooner we reach the exit...and fresher air, the better.

   Buy physical gold and silver.



Tue, 12/04/2012 - 00:11 | 3031650 yogibear
yogibear's picture

Get out of US dollars. Bernanke says he will devalue (monetize) and that's exactly what he's doing. It will lead to a US currency crisis when it's looses the reserve currency status.

Mon, 12/03/2012 - 23:49 | 3031612 Seasmoke
Seasmoke's picture

You must admit , it's impressive he hasn't blown his brains out yet.

Mon, 12/03/2012 - 23:50 | 3031614 quasimodo
quasimodo's picture

Can someone wake me when this clown show is over? For fucks sakes, I am running out of peanuts and popcorn over here.

Tue, 12/04/2012 - 00:03 | 3031639 Antifaschistische
Antifaschistische's picture

What happens in this scenario:

Social Security Trust Fund "borrowing" debt gets a 50% haircut

Fed owned Treasuries (only) get wiped off the books.

What happens?   (please don't just say "dollar collapses."   I'd like to know from someone who knows how this would play out)


Tue, 12/04/2012 - 00:06 | 3031645 yogibear
yogibear's picture

It's clear the debt and the fed buying/monetizing keep climbing.

Any country that will take US treasuries or debt is a fool!

It's a clear sign to get out of US dollars as the fed intends to make them worthless.

Tue, 12/04/2012 - 00:26 | 3031664 dognamedabu
dognamedabu's picture

See the idea is other central banks want to lower their dollar so they are forced to buy USD and tresuries. Soaking them up. Once the sponge gets full - then Ameicans are not going to be very happy. And there will be nothing the Fed could do to stop the giant rushing sound of USD hitting your shores.

Tue, 12/04/2012 - 00:08 | 3031647 cxp
cxp's picture

TICK Watch covering RBA cut this morning said thatr a 25 bps cut will mean a AUDUSD to rally from the strong demand zone at 1.04. Tick Watch now available for retail traders as a premier technical feed network.



Tue, 12/04/2012 - 00:13 | 3031649 steve from virginia
steve from virginia's picture


The central banks are all lending for all their worth! All of them, around the world. What is the outcome?


The flow is barely keeping the economy above water, like bilge pumps on the Titanic. Soon enough something is going to break. The 'Market' is taking a holiday but when it returns it is going to kick ass and take names. A mere 3% on short-term Treasuries would render the Fed insolvent and break the FedGov w/ interest costs.


The Fed has to 'buy' all of the public- and private sector debt, all $55 trillion of it. Then it has to lend more to 'restart growth'. The Fed starts deep in a hole, it can never dig itself out as the effect of the Fed's actions is to accelerate deleveraging beyond its immediate reach. If the Fed does not promote deleveraging its efforts are wasted, if it does it acts against itself. Whatever happens over the next few months the Fed will lose!


Bernanke does not understand: because our crisis is caused by unproductive economy and fuel depletion central bank efforts must be permanent without pause as far into the future as the eye can see. It will never 'get better', there will never be any recovery. Bernanke is hoping for growth that is never going to arrive ... ever.


To keep deflation risks at bay for a little while the Fed entertains default risks. These could emerge anywhere: in private sector bonds, currency swaps or munis. Look at it this way: the Fed is piling up a big surplus of bonds. The cost of managing any surplus increases faster than the surplus itself and exceeds it at some point. Costs are going to emerge where they can do the most damage. A good place to look is at the Fed itself.


Imagine our credit crisis without an effective lender of last resort? You won't have to imagine for long ...



Tue, 12/04/2012 - 00:15 | 3031656 cxl9
cxl9's picture

I sure am glad the Internet was invented early enough that we could all watch the collapse play out in real-time.

Tue, 12/04/2012 - 01:53 | 3031725 knukles
knukles's picture

Dinner at the End of the Universe?

Tue, 12/04/2012 - 00:39 | 3031673 ebworthen
ebworthen's picture

Ben Bernanke confession: 

"The FED is a Ponzi.  We monetize debt, purchase the bonds of our own government, debase the currency, punish savers, reward bankers, float equities to reward hedge funds for gambling and punish pension funds and investors because the robots always leave the building before the humans.

We have made 'buy and hold' a sad joke, the markets a travesty, the nation a bankrupt shell; all while pretending to create employment and control inflation while doing the exact opposite. 

Please forgive me."

Not sure if God will have enough mercy for him, considering.

Tue, 12/04/2012 - 00:39 | 3031677 EARLPEARL
EARLPEARL's picture

lets see who loses based on article and all these comments...everyone with cash or bonds lose...that would be the top 2%...who wins? that would be the 98% who have no bonds or cash.....where have i read similiar plan.....and all those gold bugs get their gold seized by the government....

Tue, 12/04/2012 - 01:11 | 3031692 newengland
newengland's picture

Chairsatan will do as he is told by the Trilateral Commission, led by Rockefeller in the U.S., and founded by the rootless cosmopolitian monarchist freaks Rothschild, Oppenheimer et al who funded Marx, Hitler, Lenin...anything raving loony party that would bow down to their insane idea of a new world order, ruled by technocrats, bureaucrats, academics and inbred Zionists.

Newcomer Obama and Romney are equally captured ambitious servants.

Buy physical gold, silver, land...and any other metal or food. Don't be a victim of the old world Brit/European order of  inbred freaks; the money masters who plot a new world order run by their scared technocrats, bureaucrats, academics - the plot of the Trilateral Commission.

Their plot is failing. Leave them to it. 

Tue, 12/04/2012 - 01:12 | 3031701 Lord Of Finance
Lord Of Finance's picture

This calls for a bond market rebellion!  

   Oh wait. The fed is the bond market.

Tue, 12/04/2012 - 01:25 | 3031702 newengland
newengland's picture

:-),, Lord of Finance.

We don't need experts like the Fed or big government. We are perfectly capable of losing money or messing up nations on our own - without the added expense of TBTF banks, central banks, big government and their bureaucratic minions.

And that way would cost us less, and more people would live.

Sack 'em. They fckd up  - and bill us for endless wars.

The Fed is the war machine along with its bribed politicos and bureaucrats. That's why they back each other, and bail out each other with other people's money or digital counterfeiting.

Never in the history of the USA have servicemen been placed so long in continuous war abroad. Never in the history of the USA have so few politicians seen active service.

They are precious freaks, stealing from taxpayers on behalf of their big bank masters who pay NO tax but screw the USA by shipping jobs abroad to slave labor nations, and import ignorant slave labor from dirt poor nations.


Tue, 12/04/2012 - 01:50 | 3031723 knukles
knukles's picture

Nothing is right, nothing works, there is no honor, there are no ethics, no morality, no laws, no conscience, no caring, no helping, no empathy...... nothing.

All's left is the Null Set.

For those of you who don't fully grasp the implications, the strength of the statement;
No vacuum, no solutions, no absence of solutions, no emptiness, no space, no residual, no matter, no being, no thought, no time, not even nothing.

Way the fuck past the New Normal....

Welcome to the Null Set, your New Future of Less than Naught

Tue, 12/04/2012 - 02:02 | 3031730 newengland
newengland's picture

Fear not. There is honor, loyalty and commitment in genuine communities. 

The freak inbred central bankers and their political/media/academic/bureaucratic minions want you to despair. Don't give them that advantage.

Better to die on your feet than your knees, in my opinion. Fear not. Never give your enemy an advantage.

Tue, 12/04/2012 - 01:52 | 3031724 Bastiat009
Bastiat009's picture

This seems to be very bearish for gold which is about to get to the level it was before QE3 while the US$ has yet to crash.

I am not saying it makes sense, but facts are stubborn. 

Tue, 12/04/2012 - 02:06 | 3031733 newengland
newengland's picture


It's a shake down. Criminals do that.

Look at the fundamentals: the Fed prints like an insane inbred counterfeiter, so therefore, gold will rise in real terms.

Tue, 12/04/2012 - 02:21 | 3031741 Lord Of Finance
Lord Of Finance's picture

There will be a true inflation adjusted adjustment. Then a little later on, a whole lot more.

Tue, 12/04/2012 - 02:54 | 3031761 newengland
newengland's picture

I own gold, silver, land and live in a genuine community which looks after each other.

Central banksters and their followers can  die, for all the misery they have caused. The sooner, the better. We are prepared, and waiting. Bring it on, the sooner, the better.

The sovereignty of states is true and will prevail.

And in true ZH style, I'll say this:


Tue, 12/04/2012 - 05:17 | 3031818 Bastiat009
Bastiat009's picture

It's not because it's "criminal" that it's not happening, like everything that governments do. Taxes can considered "criminal" but I still have to pay them.

Tue, 12/04/2012 - 02:00 | 3031728 epwpixieq-1
epwpixieq-1's picture

NO worries. As long as the Oil IS priced in $$$ everything is under (ever loosing) control.

As long as the OPEC baron-morons, go along with this game, and their countrymen do not rebel, there will be a nice sliding downwards, witch at some point, of course, will blow up one way or another.

Tue, 12/04/2012 - 02:22 | 3031743 Milton Waddams
Milton Waddams's picture

Why would BB ever retract anything when his predecessor, when given the opportunity to offer a mea culpa, pleaded quasi-insanity?

Tue, 12/04/2012 - 02:41 | 3031753 wisefool
wisefool's picture

The way the story was told to me is that Ben got 1600 on his SATs. Anybody with the internet knows that turbo timmay is a clinical retard.

I will miss you all after december 15th. That is when timmays IRS says I am no longer allowed to have internets. Also write your senators to get a 43 nm press.

Tue, 12/04/2012 - 03:13 | 3031771 resurger
resurger's picture

Here is my bank account , iwant some of that free QE

+5 Tylers

Tue, 12/04/2012 - 03:35 | 3031783 devo
devo's picture

Fire up a bag of popcorn.

Tue, 12/04/2012 - 03:48 | 3031788 unirealist
unirealist's picture

When will it all blow up?  Oh, hell, I've known for years.  The global financial system will collapse by 3/27/2013.

Because that's when I'm supposed to receive my first Social Security check.

Mark it on your calendar and plan accordingly. 

Tue, 12/04/2012 - 03:55 | 3031791 bobthehorse
bobthehorse's picture

Ben Bernanke is a sexy beast.

His man tits are beautiful.

Bunch of haters.

Peace on Earth, and good will to man.

Tue, 12/04/2012 - 04:08 | 3031792 BlackholeDivestment
BlackholeDivestment's picture

...if you want me to arrest them, don't dial 666-ADD-Debt or call 911 for help, I am not an AmbASSador for the Antichrist. I am alive and waiting with the Saints. We will be marching in shortly, but there's a delay on the line right now. The number is not in the Yellow pages, the other Book. Look Up, it's about to get off the hook. That ain't no Lame Duck Dance, it's the end of perfectly bad charecter time ...bitchez. Zero the Heroshima.


Tue, 12/04/2012 - 04:08 | 3031795 q99x2
q99x2's picture

That's great. I enjoy all the Rothschild's money I can get. YeeeeeHaaaaa. Who's got the acid.

Tue, 12/04/2012 - 04:23 | 3031800 TheObsoleteMan
TheObsoleteMan's picture

Who didn't see this coming? I saw it {as did some of my inner circle of friends} four years ago! As the rest of the world diversifys out of US debt, who else was left to pick up the tab? This was the bargain struck between the US Gubmint and the Federal Reserve many years ago. Make no mistake, this is a very lucrative business for the Fed, and in return, the Gubmint is enabled to kick the can a while longer. This is what the end of the road looks like. The MSM and the pundits will claim this is a good thing, much like Japan owns much of it's own debt. However a closer look will reveal the truth: "Bad money drives away the good". This is not investment purchases. it is desperation purchases, as no one else will want to buy them, especially when there is no yield for the risk. And there is a risk, you can bet the farm on that. Wait until real yields turn negative, that is when things get "interesting". The creditworthiness of the US Gubmint days are numbered, and are few.

Tue, 12/04/2012 - 05:03 | 3031813 Super Broccoli
Super Broccoli's picture

how can we monetise such huge amounts of debts without creating zimbabwean-style hyperinflation ????

Tue, 12/04/2012 - 08:08 | 3031894 smacker
smacker's picture

Somebody may correct me...but I believe the reason it has not caused inflation/hyperinflation "yet" is that Banana Ben's funny munny is going into assets, not into consumer demand/spending.

Tue, 12/04/2012 - 05:12 | 3031817 slvrizgold
slvrizgold's picture

Don't forget, not only will the Fed end up owning all the Treasury debt, they'll also own a lot of houses too!     lol

Tue, 12/04/2012 - 05:25 | 3031821 smacker
smacker's picture

Banana Republic.

Tue, 12/04/2012 - 08:07 | 3031822 Radical Marijuana
Radical Marijuana's picture

Another excellent article, demonstrating why I read Zero Hedge.

And, after skimming the comments, I liked these remarks best,

by TruthInSunshine:

"America, of the bankers, by the bankers and for the bankers."

The monetary system is the American state religion. Bernanke is the "infallible" pope of that religion. Therefore, it was symbolically appropriate which image and caption this article started off featuring, of Bernanke praying. However, by and large, virtually ALL of the other comments were based on reversions to various alternative old-fashioned religions or ideologies. This is the tremendous irony of the breakdown of the globalized Neolithic civilization: awesome scientific progress in every area, except for basic human ecology, because we generally refuse to think about ourselves more scientifically. Almost nobody wants to do that, and especially the ruling classes do not want other people to do that! That paradox is now an insane runaway situation, since we are building a scientific dictatorship, based on applying science in the most anti-intellectual and unscientific ways possible, i.e., science is primarily employed to be better at being dishonest. Our paradoxical situation is that everything was based on historical triumphs in war, through deceits, developing to make FRAUD KING.

Thus, we are rushing forward at exponential rates, with the development of more knowledge in every human endeavour, while, at the same time, everything is controlled by an insane state religion, which is totally entrenched in the system, until it practically IS the system. Money controls almost everything, however, that money itself is nothing but legalized lies, backed by legalized violence. The established systems deny those facts, and almost all the "alternatives" want to continue to deny WHY those are the facts. The ruling elites benefit from the lies, and they work hard to force everyone else to agree with or accept FRAUD as the basis for their society. The more that the ruling classes benefit from their frauds, the more powerful and wealthy they become. Everything becomes more and more controlled by the monetary system, while that system automatically becomes more and more insane ...

The most important thing for a technological society is the philosophy of science. I recommend two books about the philosophy of science, which I think are relevant to understanding how the American monetary system is a state religion.

The Structure of Scientific Revolutions

Darwin's Blind Spot: Evolutions Beyond Natural Selection

Tue, 12/04/2012 - 05:27 | 3031824 tok1
tok1's picture

what matruities are they likely to buy .. didnt they just sell all their 2-4ys as part of operation twist so might it not be same are where they can then roll them down (ie future twist)... ie if they long end.. then their really going to have large high duration risk out there..

Tue, 12/04/2012 - 05:53 | 3031831 EscapingProgress
EscapingProgress's picture

Jamie Dimon told me that this is how a free market works...

Tue, 12/04/2012 - 06:44 | 3031849 GreatUncle
GreatUncle's picture

A point of observation for all commentators.

If you own any gold, silver or the like and if I was you I would not state it. Ordinary people are not what you have to worry about but those able to figure out who you are one day knocking on the door to confiscate it.

Now these people will be fully armed, bit like Rambo on steroids so your puny little peashooter to defend what you claim is yours is not really going to be much use is it?

Tue, 12/04/2012 - 08:35 | 3031911 Radical Marijuana
Radical Marijuana's picture

YES, GreatUncle! And even worse, the thing that shows up at your door to demand your guns and gold is probably going to be a literally remote controlled robot, with automated defence capabilities. The nightmare science fiction situation that is emerging at an exponential rate far, far outruns the old guns and gold stuff!

The THEORY of a democratic republic is the best thing we have. The PROBLEM is that enough people are already Brain Dead Zombie Sheeple, that enable the elites to turn that theoretical system into a cruel joke! The problem is that the theoretical system makes lots of sense, and is the best possible which can be imagined, as far as I can tell. However, the reality of that has been a runaway take over by the covert best organized criminals, enabled to do that because enough people are mainstream morons, brainwashed to believe in bullshit.

There is no better theory than to make a democratic republic actually work. However, I can not imagine any practical solutions to the already runaway triumph of the ruling classes having dumbed down the masses to the point which has already been achieved. Given that fixing those problems appears realistically impossible, I understand why people pick personal alternatives as their own solutions, which involve attempting to opt out of the established systems, as much as possible, and try to forget the old, while building the new! Given how bad the realities ARE, I sympathize with those who no longer bother to vote. However, I still cannot think of any better theoretical solutions, overall, than to make a democratic republic actually do what it was supposed to do!


Attempts at any armed resistance of the runaway system of computerized/machine police and army forces are being left in the dust, way too fast! Unfortunately, as far as I can tell, nothing will actually work. We will have to go through some kind of insane collapse to chaos, and that will be so insane that being prepared will only have made one a target of the systems that will already know who you are, and where you are, and that you prepared. Some god damn computer will send some god damned robot, to tell you what to do. If you resist, a whole bunch of other god damned robots will soon show up! What is worse, as we all gradually let that system get bigger, and more out of control, it will finally turn against those who made it too. Even the ruling classes will find that they too become the targets of the monsters that they made. When the rule of law gets utterly destroyed, and replaced by computerized robot police, we are all doomed! All the evils that some men did to other men shall be replaced or superseded by the machines that some men made turning against all men!

The only theoretical solutions are to make human beings competent citizens ... which has been deliberately subverted by the ruling elites, for their own short-term interests.  However, tragically, what they did to others will later come back against them, and they shall find that the monsters that they created, by destroying the constitutional rule of law, will become monsters that later destroy them too!

Tue, 12/04/2012 - 09:31 | 3032019 toomanyfakecons...
toomanyfakeconservatives's picture

RM, despite all your great posts, this latest one of yours is a real clunker.


"Attempts at any armed resistance of the runaway system of computerized/machine police and army forces are being left in the dust, way too fast! Unfortunately, as far as I can tell, nothing will actually work."


Guerilla and asymmetric warfare isn't on the wane, it's still on the rise and far from it's potential peak. On the other had, you've already seen the heyday of smart weapons. From the Warsaw ghettos, to the jungles of Vietnam, to the mountains of Afghanistan, determined boots on the ground will always grind the mechanized, smart weapons-equipped oppressor into dust. Pushed to the brink, millions of armed Americans would make Red Dawn (the original) look like a walk in the park for any invading army, foreign or domestic.


The idea of door-to-door confiscation in America of guns, gold, or food is so laughable I don't know where to begin. I hate to sound like a broken record, but just watch Red State to get an idea of the heavy, unsustainable losses the bad guys would take against armed Americans.


Snipes: We're safe around here.

Connery: You call this safe?

Snipes: Rough neighborhoods may be America's last advantage.

Connery: May I suggest a strategy?

Snipes: Don't stare at these guys. Keep your hands down. These guys don't like big arm movements. They might shoot you. Keep your voice calm. Better still, don't say shit.

Tue, 12/04/2012 - 14:47 | 3033116 Radical Marijuana
Radical Marijuana's picture

I hope you are right, toomanyfakecons!

One of the real possibilities, which I find the most difficult to estimate, is the potential fragmentation of the chain of command, after sufficiently insane orders are given to people who finally refuse to obey them. That could become one of the real triggers of some revolution, and that could happen before what I was speculating about happens.

What I was saying is obviously not real, yet! However, I believe that it is becoming more and more really possible at an exponentially accelerating rate. But neverthless, like everything else in the grab bag of trick or treat futurological speculations, it is impossible to predict which other events might happen first, in order to make whatever else one was worried about happening occurs before that.

It is an astonishing fact that there are more privately owned weapons in the hands of Americans than in most of the other combined public armies in the rest of the world.  America makes up more than half of the world's military expenditures, and private purchases are equally awesome in magnitude. Furthermore, there is an abundance of weapons of mass destruction distributed throughout America, and any kind of real revolution could see the break down of the chain of command over some of those, which is another wild card beyond comprehension.

What I was saying in my comment above would require that nothing else change, while the exponential fascist police state kept on growing and growing, long enough to have developed advanced computer/robot entities, which became the primary front line of the police and military. That may well be a silly science fiction, that will not have time to develop as far as I imagine, before other events preempt that, with their own imperatives, which change everything beyond our imagination.

However, so far, I see nothing from the outside but enough Americans continuing to do nothing, until it is too late. I hope I am wrong, and you are right!

Tue, 12/04/2012 - 06:59 | 3031859 Monedas
Monedas's picture

McAfee wanted for questioning in the murder of a neighbor over a dog dispute ?  You don't need to move to a tropical Cay in Belize to do that !  White people can be so complicated !  

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