This page has been archived and commenting is disabled.

Hong Kong Fed's Epiphany: Is Bernanke Wrong About Everything?

Tyler Durden's picture


It seems not every nation's head of central banking believes in the Bernanke Doctrine of moar QE is better QE... Hong Kong Monetary Authority Chief Executive Norman Chan said Monday that quantitative easing is not a panacea, and added:

...there is a possibility that the process of deleveraging is disrupted by quantitative easing, leading to sharp increases in asset prices in the first place. Yet, since such increases are not supported by economic fundamentals, any increase in wealth will be seen as transient... (and asset prices might drop sharply and remain volatile). As a result, households are unwilling to increase spending and in the end, the real economy fails to rebound.


Via CRI English:

Hong Kong Monetary Authority Chief Executive Norman Chan said Monday that if the process of deleveraging is disrupted by quantitative easing, asset prices might drop sharply and remain volatile.


When delivering a speech entitled the Global Deleveraging: The Right Track at the Hong Kong Economic Summit 2013, Chan said that excessive leveraging, or over-borrowing, in major industrialized countries was the root cause of both the global financial crisis and the more recent sovereign debt crisis plaguing Europe.


Chan said quantitative easing is not a panacea, but it is the exact opposite of deleveraging. In the past three years, quantitative easing had limited stimulating effect on the real economy. "In order to solve the structural imbalances built up in the past two decades, we must get to the bottom of the problem."


There is a possibility that quantitative easing produces the desired results, which is a very desirable scenario as global economy will return to its normal growth path, he noted.


However, there is a possibility that the process of deleveraging is disrupted by quantitative easing, leading to sharp increases in asset prices in the first place. Yet, since such increases are not supported by economic fundamentals, any increase in wealth will be seen as transient.


As a result, households are unwilling to increase spending and in the end, the real economy fails to rebound, if inflationary pressure builds up alongside asset price increases, central banks may consider exiting the market and raise interest rates, the authority's head said.


When economic performance, inflation or monetary policy falls short of market expectation, asset prices might drop sharply and remain volatile, he added.


Chan said he was certain that since the outlook for macro economic and financial environment is very uncertain, it is highly possible that large fund inflows and outflows as well as sharp fluctuations in the financial markets will continue to be seen.


"We should all take precautionary measures and get to the bottom of the problem, learn from others' experiences and avoid overstretching ourselves. Otherwise, we may find ourselves being trapped in the debt abyss with no way out," he said.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 12/11/2012 - 21:56 | 3054259 Chuck Bone
Chuck Bone's picture

Ben's been saying it's transient this whole time...

Tue, 12/11/2012 - 22:07 | 3054307 ACP
ACP's picture

He may have been talking about middle-class savings. That's definitely transient.

Tue, 12/11/2012 - 22:18 | 3054348 TwoShortPlanks
TwoShortPlanks's picture

Shut the fuck up Chan and stack boy, stack!

Tue, 12/11/2012 - 22:23 | 3054354 Kitler
Kitler's picture


"We should all take precautionary measures and get to the bottom of the problem, learn from others' experiences and avoid overstretching ourselves. Otherwise, we may find ourselves being trapped in the debt abyss with no way out," he said.

Too late Norman, we are light years past the event horizon of the "black holes" that are our financialized economies...

Tue, 12/11/2012 - 23:03 | 3054481 knukles
knukles's picture
The whole losses "thingie" that go along with bad debts being realized during a deleveraging cycle....
We are in a deleveraging cycle and as per reality, far too much debt both good and of a highly dubious nature was created as a end result of too much money being made available, read central bank policies. During a deleveraging, debts, bad debts have to be written off
Somebody somewhere has, if any sensible type of accounting is pursued, must take a loss.  Whether the originator, secondary holder or as we are seeing in the EU model (as opposed to the Iceland/Swedish models) it is passed along to the taxpayer. 
Which in and of itself is suspicious as it mitigates, in fact dissolves the contractual relationship between borrowers and lenders.  (At the point of a spear...)   So where we stand now (particularly with regard to the EU and using it as a template for purposes of illustration including whatever dozen or so alphabet organizations related thereto) the desire (in order to preserve what, I might ask, but that's another story, entirely) is to make the debt load disappear without realizing losses, right?
That's the bottom line.
So they have (in this case for example) the Greeks buy back their own debt at a discount to face/original sale.... makes economic sense.
But in order to do so... 1.) somebody has to pony more good funds up for the purchase since by definition, the Greeks have no funds or else the bonds would not be trading at a steep discount.
So therefore somebody is making a new bad loan to supplant the original bad loan and
... if the new loan is so favorable as to make the purchases economically viable, their price would likewise need to be marked down substantially and thus, a loss realized And, 2.) the holder selling the severely discounted (as in credit risk/spreads as the entire global term structure of rates has collapsed as is part of the deleveraging,... the flight to quality) debt has to realize a loss.   So, somebody somewhere has to take the hit to capital to make the stuff work in a world of reasonable accounting. Or the books are being cooked.   So, why is it that the whole bloody financial community has just not given up on the charade?

There's something deeply wrong with the whole picture that will not change from one day to the next, will not go away, will not work out in a reasonable manner.   This is not going to end well.
Is not in the process of getting to the end, well. There is something terribly wrong with this whole picture.
That printing, shoving paper about alphabet organizations, whatever else, will solve.
Bad paper has to be written off and losses realized some where by some body at some time.....
Period.   I'm loosing interest in the topic of the EU, EBC, Euro, etc.
It's bad, failed and only being papered over with Ponzi type, three card Monti (get the pun?) policies (official, by the way, set out by the very same organizations sworn to prohibit such)and essentially worthless money creation.   Being long anything in the EU is like owning all those Chinese stocks that upon visual inspection have no physical plant, etc.... But people keep going back to them and.....  

  Bad juju a comin' in size....   One day ... One day, people are gonna wake up to this whole miasma, quit pretending and all the elephants gonna try to squeeze through the keyhole at once....  

Tue, 12/11/2012 - 23:12 | 3054545 ACP
ACP's picture

You forgot the conclusion!

Tue, 12/11/2012 - 23:27 | 3054579 economics9698
economics9698's picture

Fucking Chicoms are like the Borg, just keep getting smarter and smarter. 

Tue, 12/11/2012 - 23:52 | 3054646 FL_Conservative
FL_Conservative's picture

That's because they can sit back and watch our inept leaders and think, "How fucking stupid is that"?

Wed, 12/12/2012 - 00:08 | 3054678 ACP
ACP's picture

I've often thought a good name for a political reality show would be:

"It Sounded Like a Good Idea at the Time."

Wed, 12/12/2012 - 00:11 | 3054680 economics9698
economics9698's picture

"It Sounded Like a Good Idea at the Time" is when you get drunk and fuck the dog in front of your brother in law. 

Wed, 12/12/2012 - 00:14 | 3054689 akak
akak's picture

"It Sounded Like a Bad Idea at the Time" is when you get drunk and fuck your brother-in-law in front of the dog.

Wed, 12/12/2012 - 08:23 | 3055156 Thamesford
Thamesford's picture


...but someone at the FT said the debt was "sustainable".


Wed, 12/12/2012 - 09:02 | 3055224 trav777
trav777's picture

the "root" of the problem is that oil peaked.

All this debt bs is just a sideshow.  Households cannot INCREASE spending without an INCREASE in income- real income.

Sun, 12/16/2012 - 02:51 | 3068189 MeelionDollerBogus
MeelionDollerBogus's picture

hold the phone, trav, Robert Mix's Blog: Precious Gas!

See, natural gas can be used to fuel vehicles, is cheap & clean, and is also used for making fertilizer.

So why do we need to care about peak oil?

In fact, garbage can be made into oil and hemp can be made into plastic without oil, so why do we need to care about peak oil?

Tue, 12/11/2012 - 22:38 | 3054418 Oleander
Oleander's picture

I am watching NCIS and the agents just drilled a gold bar ..... tungsten!  LoL! Someone pulled a switch. 

Tue, 12/11/2012 - 23:14 | 3054555 The trend is yo...
The trend is your friend's picture

he keeps talking like that and he's gonna get whacked

Wed, 12/12/2012 - 04:56 | 3054993 old naughty
old naughty's picture

He was whacked earlier...


Hey he can always unpeg...Or, appreciate.

Wed, 12/12/2012 - 10:10 | 3055449 Cast Iron Skillet
Cast Iron Skillet's picture

he must not be from Goldman Sachs.

Wed, 12/12/2012 - 00:22 | 3054706 Stoploss
Stoploss's picture

Black ball cap with WWIII logo.

Any body seen it?

Tue, 12/11/2012 - 22:10 | 3054317 vast-dom
vast-dom's picture


Wed, 12/12/2012 - 11:37 | 3055865 whatsinaname
whatsinaname's picture

He's worried now cause parking spots in HK are costing more than NYC apartments.

Tue, 12/11/2012 - 21:57 | 3054266 Jason T
Jason T's picture

well, there is no way out.  Watch how Japan fairs next year.  

Tue, 12/11/2012 - 21:58 | 3054270 LongSoupLine
LongSoupLine's picture

Hmmm, it seems exporting inflation is not popular...with the unwanting importers.


Fuck you Bernanke...your fucking game of middle class asspump is nearing an end.  I hope you and all involved die a horribly painful fucking death you fucking stinking asshole.

Tue, 12/11/2012 - 22:31 | 3054391 GOLDTRADERRR

Come on now LSL... 

Tell us how you REALLY  feel!

Wed, 12/12/2012 - 07:54 | 3055131 sumo
sumo's picture

It's an arm-wrestling contest

"No Risk" Geithner is in the arena, his arm shaking, his veins bulging, his voice hoarse from shouting "get off the peg ... or we kill you with inflation ... get off the peg", His Chinese opponent silently curses, under his breath, "first we own you, then we fuck you, with gold dildo, bitch"

Wed, 12/12/2012 - 09:04 | 3055229 trav777
trav777's picture

STFU idiot.

The Bernank saved the financial system by papering over the collapse of the compound interest animal.

It is not HIS fault that the US middle class was a cheap oil aberration.  He's not responsible for the insane sense of entitlement that Americans have, either.

His job was to prevent a financial collapse that anyone with a basic understanding of compound growth knew was inevitable.  And he did so.

Wed, 12/12/2012 - 10:31 | 3055549 fuu
fuu's picture

"His job was to prevent a financial collapse that anyone with a basic understanding of compound growth knew was inevitable.  And he did so."

Bwahahahahahahaha GTFO.

Sun, 12/16/2012 - 02:39 | 3068179 MeelionDollerBogus
MeelionDollerBogus's picture

"It is not HIS fault that the US middle class was a cheap oil aberration."
That's the entire last 60 years. Maybe more.
What is Bernanke's fault is the spurring on of the housing price bubble & the crash that directly resulted. Previous layers of crash & non-recovery can be blamed on Alan Greenspan for the same reasons.

"His job was to prevent a financial collapse that anyone with a basic understanding of compound growth knew was inevitable.  And he did so."

No, the crash is proceeding, city by city, bond by bond, commodity by commodity, ever showing the dropping wages vs real cost of living, the dropping labor participation rate. Bernanke failed if anything about inflation or employment is his job, anything about preventing the on-going collapse which is certainly ongoing.

Wed, 12/12/2012 - 10:02 | 3055421 yogibear
yogibear's picture

Don't forget the other Fed assholes.

Tue, 12/11/2012 - 22:00 | 3054276 tooriskytoinvest
tooriskytoinvest's picture

America’s Economic Future Is A Disaster: Government Benefits Killing Incentives for Jobless To Find Work, The Fed Paying Banks Not to Lend, Now The Government Have To Cut Spending And Raise Taxes For Next 10 Years.


Tue, 12/11/2012 - 22:04 | 3054293 machinegear
machinegear's picture

I think I just read the entire article from the URL.

Tue, 12/11/2012 - 23:38 | 3054611 Schmuck Raker
Schmuck Raker's picture

That's what makes tooriskytoinvest a moderately more palatable shill than snakeeyes - no click required.

Wed, 12/12/2012 - 09:07 | 3055234 trav777
trav777's picture

ANY article that claims the banks aren't lending because they're being paid to is, a priori, horseshit.

There are NO MORE qualified fuckin BORROWERS and MORE LENDING AT INTEREST is not the fucking SOLUTION.  it is the PROBLEM.

America's future is a disaster because of Americans.  This is 25% a 3rd world country did people EXPECT from changing the population from high 80s % white to "diversitopia"???  Due to birth rate differentials, it will only GET WORSE.  It cannot be saved at this point especially when cretins out there don't even know what the hell the problem is.

Wed, 12/12/2012 - 10:47 | 3055629 MachoMan
MachoMan's picture

The other issue is loan demand from credit worthy borrowers...  I can't go get a loan at present interest rates (historically low), invest the proceeds, and actually make a spread worth my while to take the risk...  oops.

Sun, 12/16/2012 - 02:35 | 3068175 MeelionDollerBogus
MeelionDollerBogus's picture

Funny how in Canada we have even more diversity & yet we have no such massive problems as the US. The population mix-up is not the problem. The problem is the central controllers. That means Fed Reserve & that means proxy banks that issue loans with the same special privilege for state-sanctioned counterfeiting.

Tue, 12/11/2012 - 22:10 | 3054318 williambanzai7
williambanzai7's picture


Tue, 12/11/2012 - 23:00 | 3054492 bugs_
bugs_'s picture

Hong Kong Feddie?

Tue, 12/11/2012 - 23:35 | 3054595 disabledvet
disabledvet's picture

it's ironic that there is a "sort of complaint" since with the HK dollar pegged to the greenback has created one of the greatest speculative real estate bubbles in all history in the HK. We all know what will be done in the coming certainly makes no sense either here OR there. "it is just done and that is that." Truly great stuff WB..."there's a point where this isn't funny anymore"...and you remind us all of that. Was it ever a good thing to begin with?

Tue, 12/11/2012 - 23:47 | 3054633 williambanzai7
williambanzai7's picture

The real estate boom/bubble is primarily benefiting two classes: (a) mega-tycoons and (b) Mainland billionaires.

Ordinary Hong Kongers are furious because the dream of owning a decent home is evaporating for most of them.

Meanwhile, the main shopping areas, such as the one in this picture, are totally inundated with mainland shoppers. This is supposed to be the quid pro quo. You get to be a shop employee for mainland tourists. I suppose this is happening everywhere.

The RMB has appreciated significantly against the HK dollar which is pegged to the USD (the most manipulated currency on this planet). 

Wed, 12/12/2012 - 12:33 | 3056100 Element
Element's picture

It's nice to see the Chinese also celebrate the birth of the Lord with a little trip to the shops.


That's some serious Asian mind-fucking going on, right there.

Tue, 12/11/2012 - 22:19 | 3054321 Central Bankster
Central Bankster's picture

DING DING DING!  We have a winner.  How hard was this to figure out in all seriousness!?

Wed, 12/12/2012 - 00:09 | 3054664 Al Gorerhythm
Al Gorerhythm's picture

For Keynesians? Remember, that's a discipline that they're using for proforma responses to inputs, straight out of the text book. The gall of economics  professors and TV talking heads completely refusing to acknowledge the failure of their doctrine by admitting; "THEY ARE PRINTING MONEY to save their system"! Frauds.

"Different strokes for different folks", seems the rule of thumb in that school.

Tue, 12/11/2012 - 22:10 | 3054324 Aquarius
Aquarius's picture

As I have said before, Bernanke is serving different Masters which appear to be destroying and or seconding the rest of the World to the powers that control the fiat and asset holders and as such his priority is not saving the World per se, au contraire, it is a focussed attempt to have the rest of the World destroy themselves - by leveraging their belief in his Economic Theory.

Oh what fools they all are but this is exactly what Economists do - just remember, that Bernanke has an entirely different and hidden (not so hidden) agenda.

But these Masters of the Universe are just not as intelligent as they think they are - fiat does not mean intelligence - they have over-stepped broadly and we will all soon pay the price, demographically speaking - Mileage will vary.

No warning, anytime, your future will arrive and it will not be embraced warmly, thanks to Ben and the global cult of Economists.

Ho hum (from the steppes of Krakatoa - its safer here)

Wed, 12/12/2012 - 09:08 | 3055239 trav777
trav777's picture

really, wtf could have been done???

You think you can replace the people and the system will somehow become viable?

Tue, 12/11/2012 - 22:26 | 3054351 buckethead
buckethead's picture

I have it on good authority (a contributor's post at Business Insider) that we owe the Bernakster a debt of gratitude for saving the economy.


Tue, 12/11/2012 - 23:51 | 3054643 NoDebt
NoDebt's picture

Right.  Because some quick improv by the Fed in late 07/early 08 will wash away YEARS (decades) of debt/fiscal insanity and make everything shiny and new again.  No unintended consequences, of course. 

We'll all be wishing this Fed stick-save never happened in the longer run.  If too many believe we have an "un-crashable" system we'll just keep driving it into bigger and bigger ditches until we finally find one so big the Fed can't pull us back out.  We're in the late innings of that process, in case you haven't noticed.


Wed, 12/12/2012 - 09:55 | 3055390 buckethead
buckethead's picture

I thought the sarcasm was apparent... but then text doesn't covey it well. I'll add the '/sarc' tag next time, but that kinda ruins it.

Tue, 12/11/2012 - 22:25 | 3054370 Cdad
Cdad's picture

Aaaahhhhh...the Chinese chucking "transient" back at Uncle Ben.  Nice...and so OBVIOUSLY TRUE that even a jr. intern to a big wig criminal syndicate Wall Street banker could confirm the "transient" nature of our ridiculously broken markets.

But let's go ahead and gap the SPY up tomorrow, anyway.  Santa Claus Rally, you see.  And I hear that the fiscal cliff things is almost solved.  Oh, and equities, when compared to bonds, are HISTORICALLY CHEAP.  And no recession next year.  Etc...etc...

Tue, 12/11/2012 - 22:35 | 3054412 GOLDTRADERRR


That's what we are all going to be after it all collapses.

Tue, 12/11/2012 - 23:08 | 3054413 TomGa
TomGa's picture

Where have we heard this before? Let's see,  Oh yeah, NYTimes article published in April 1930 titled

 "Cheap Money a Costly Panacea"  

"Cheap money is a stimulant, but also an intoxicant," the article warned. "If the dose is large enough, a very substantial temporary effect can be brought about, but the headache will follow. It is not the way to do it. It is a costly means to buy temporary prosperity."

-- Special to the NYTimes, April 13, 1930, p.9

The article  warned that the 1930 Fed's pumping of cash into banks would quickly be used by bankers to speculate in the markets and for capital appreciation, rather than being directed to business loans for the purposes of re-igniting the productive base of the economy as intended.

Yeah, history really does repeats itself.


Article Text:

Dr. Anderson of Chemical Bank Says Remedy for Business Slump is Only Temporary

"Cheap Money is a stimulant, also an intoxicant," warned Dr. Benjamin M. Anderson Jr., economist of the Chase National Bank of New York City, in an address here tonight. "If the dose is large enough," he said,"a very substantial temporary effect can be brought about, but headaches will follow. It is not the sound way to do it."

Dr. Anderson, who is author of several books on finance and economy, said States and municipalities increased their debts with great rapidity in times of cheap money, borrowing more than was necessary because it was easy to do. This, he said, was a costly method of buying temporary prosperity.

Dr. Anderson's Address.

After saying that cheap money was a costly and temporary panacea for business depression, Dr., Anderson said:

"It is definitely undesirable that we should employ this costly method of buying temporary prosperity again. The world's business is not a moribund invalid that needs continuous galvanizing by an artificial stimulant."

"The Federal Reserve System and the central banks of Europe are under heavy pressure from advocates of the cheap money panacea, Dr. Anderson said. The matter is exceedingly simple in the minds of its advocates, he added."

"Cheap money makes good business, firm interest rates make bad business, and the whole thing is in the hands of the Federal Reserve System," Dr.Anderson said. "If the matter really were as simple as this, everybody could be an economist, and only the perversity of the central banks would keep us from being endlessly prosperous. But when we analyze the reasoning upon which this doctrine rests, difficulties present themselves."


"Cheap money will not induce manufacturers and merchants to increase their borrowings in an unsatisfactory business situation, Dr.Anderson declared. He cited the figures for commercial loans as reported by member banks of the Federal Reserve System in support of this contention."

"But if merchants and manufacturers will not use cheap money, he said, speculators will. They will use cheap money in buying stocks, for the prospect of capital appreciation. Security loans of the reporting member banks stood on April 2 at the highest point in history, with the exception of the stock slump period ended Nov. 13 last and the year-end week ended Dec.31."

"In the second place, such methods are extremely costly in their effect upon the quality of bank credit. The ideal employment of bank credit is in financing the movements of goods, in financing short, self-liquidating commercial transactions. We have gone much too far in the substitution of bank investments in bonds, collateral loans against securities, bank holdings of real estate mortgages, and bank holdings of instalment finance paper for the normal bank credit that represents goods in movement and that adjusts itself automatically to the volume of trade."

NYTimes, April 1930


Tue, 12/11/2012 - 23:11 | 3054539 surf0766
surf0766's picture

Great find. thanks

Tue, 12/11/2012 - 23:41 | 3054618 sangell
sangell's picture


or as Frank Zappa put it in 'Trouble Coming Everyday"

You can cool it, you can heat it, cause baby I don't need it!

Wed, 12/12/2012 - 09:11 | 3055244 trav777
trav777's picture

Jeezus H Christ...they were worried the money would go to speculation instead of something LOANS?

LOANS ARE THE FUCKING PROBLEM.  There is one in a hundred who understands that there is a world outside this fishtank.

All these people ever talk about is LOANS and GROWTH...failing to understand that these two words together imply a mathematically INEVITABLE brick wall at some point.

All the bankers talk about is growing credit, the economists growing production, grow grow grow.  Growth is limited.

Wed, 12/12/2012 - 17:46 | 3057411 akak
akak's picture

The only thing in nature that grows without limit, eventually dooming itself in the process, is cancer.

Is that REALLY the model we want to follow as a society?

Tue, 12/11/2012 - 22:49 | 3054455 centerline
centerline's picture

Remind me again whose property market is going ape shit right now?

Tue, 12/11/2012 - 22:50 | 3054459 MFLTucson
MFLTucson's picture

I suggest the American people look at what this whole group of Jewish bankers has done to the world and to America and ask yourself, how much more of this shit are you prepared to take because I for 1 have had enough of these gangsters and want someone other than another Jew in like Dimon or another decision by a Jew. They cannot be trusted and have not proven they are worthy of our trust if history is any guide. From Rome to Germany to the US, it is the same group of people that have bankrupted each and every country to further their own agenda and steal from the working man.

I don’t care what Bernanke says and trust nothing he says or does, he is a liar and a con man and he is just another member of the Rothschild TRIBE!  Go on and call me any names you want and make fun of me but facts do not lie!!


Wed, 12/12/2012 - 00:37 | 3054734 Ident 7777 economy
Ident 7777 economy's picture

Idiocy on display.

Wed, 12/12/2012 - 09:32 | 3055304 Athenian
Athenian's picture

Jamie Dimon is not Jewish. He comes from a Greek background.

Wed, 12/12/2012 - 13:04 | 3056213 Element
Element's picture

Oh gezus h krist!  There's the problem right there!


Evil-twin Darth Socretes took up banking!

Tue, 12/11/2012 - 22:57 | 3054477 Seasmoke
Seasmoke's picture

No Shit , Ichiro !

Tue, 12/11/2012 - 22:59 | 3054487 ApollyonDestroy
ApollyonDestroy's picture


Tue, 12/11/2012 - 23:41 | 3054619 mayhem_korner
mayhem_korner's picture



Think of it as supporting 40% of someone else's SNAP card. (The other 60% is being sponsored by your grandkids)

Wed, 12/12/2012 - 07:58 | 3055132 Cloud9.5
Cloud9.5's picture

Because the IRS has guns and prisons.

Wed, 12/12/2012 - 13:07 | 3056227 Element
Element's picture

According to MMT Ben could pay everyone's taxes, ... even timmahs!


I'm on for MMT bitchez!


"No chance of that!"

Thu, 12/13/2012 - 12:07 | 3059561 e-recep
e-recep's picture

coz you dont wanna live next to bubba in jail.

Tue, 12/11/2012 - 23:01 | 3054495 IridiumRebel
IridiumRebel's picture

So they agree with us that he is a fuckhead....great minds think alike.

Tue, 12/11/2012 - 23:09 | 3054522 Aquarius
Aquarius's picture

Perhaps we should consider that the Great Depression of the '30's was a lesson to be learn't,


which we preferred to ignore?

so, we get to repeat the course courtesy, of our ignorance?

Will we do our homework this time?

Ho hum

Tue, 12/11/2012 - 23:14 | 3054553 ApollyonDestroy
ApollyonDestroy's picture

Ignorance and absolute arrogance. Except this time it's going to make the '30s look like a cake walk ; )

Honestly speaking, how many can produce for themselves, let alone live dozens of miles outside of a city. Fun to joke about and "predict". But when shtf maybe 1% of people are adequately prepared. So many guns and so little food; that's going to be pretty

Wed, 12/12/2012 - 13:09 | 3056246 Element
Element's picture



"so, we get to repeat the course courtesy, of our  E N G I N E E R E D  ignorance?"


Fixed it for you. :D

Tue, 12/11/2012 - 23:10 | 3054531 surf0766
surf0766's picture

Is this the part where they start telling the truth and no one believes them because they have lied for so long? Are all the pieces in place for the staged gradual decline in the dollar as the GRC

Tue, 12/11/2012 - 23:11 | 3054535 booboo
booboo's picture

Chan missed out on one of our fine Ivey League Edjukashuns. 

Tue, 12/11/2012 - 23:20 | 3054567 Weyland_Yutani
Weyland_Yutani's picture

I'm Swedish but live in Hong Kong since 2 years and the inflation rate here is off the charts because the HK dollar is pegged to the US dollar. Of course, the politicians are blaming all price increases on lack of supply, increase in demand from China, the crisis in the Middle East and everything else except the fact that the HK Central Bank is printing money like mad men.

House prices are up 100 % in 3 years.

The price of electricity will be raised 6 % in January.

The price of a fucking cake at my local bakery is up 18 % since last year.


Back in 2008 I could buy a litre of milk for 10 HKD. Now I have to pay 17 HKD. It's absolutely ridicilous.

Tue, 12/11/2012 - 23:52 | 3054600 akak
akak's picture

Weyland, thanks for the interesting perspective, which as an American living in my oh-so-insular culture I am always glad to hear.

On a different note, and just trying to be helpful, you should know that the phrase you used, "since 2 years", while for some reason a VERY common construction among northern Europeans who speak English as a second language, is incorrect and meaningless on the face of it.  What you should say here instead would be either, and preferably, "for the last two years", or alternately, "since two years ago".  For some reason, many foreigners seem to have a very hard time with the "ago" part of expressing time duration from the past into the present in English.

Wed, 12/12/2012 - 00:01 | 3054660 Cthonic
Cthonic's picture

Any foreigner, northern European or not, willing to take a swing at learning the bastard language English is already half good in my book*.  Akak which would you prefer to puzzle over, a post in perfectly understandable (if not perfectly correct) English, or a post in Swedish or friggin' Chinese!?


*AnAnonymouse excepted

Wed, 12/12/2012 - 00:16 | 3054692 TheFourthStooge-ing
TheFourthStooge-ing's picture


*AnAnonymouse excepted


Wed, 12/12/2012 - 00:32 | 3054720 akak
akak's picture

Proper 'american' grammaticalism is the mattering thing, the crustiest bit of an important semantic something.

In US 'american' citizenism, correct conjugationalisticalism is a middle class thing, as the middle class is the spelling class.  But grammatical nitpickingism is part of US 'american' eternal nature, just have to bear with it.

Wed, 12/12/2012 - 00:22 | 3054702 akak
akak's picture

Oh, I totally agree Cthonic --- I have always said that I am SO glad that I did not have to learn English as a second language!  The spelling alone is an abomination, and the many odd sounds that are almost unique to it must be a never-ending headache for non-native speakers.  In fact, I was just discussing this very subject with a group of Poles yesterday, and some of them, even after 30 or more years living in the USA, have problems with various aspects of English spelling, grammar or pronunciation --- and I blame them not at all.  I was merely trying to offer a bit of friendly constructive advice to Weyland above, as I have seen so many non-native English speakers (and writers) make that same mistake.

Wed, 12/12/2012 - 00:11 | 3054681 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

in French it's "depuis deux ans" (since two years) so I see where they get it

Wed, 12/12/2012 - 00:25 | 3054715 akak
akak's picture

In Spanish, it is even more strange yet --- they say "hace dos anos", literally meaning "it makes two years".

Wed, 12/12/2012 - 00:47 | 3054755 Weyland_Yutani
Weyland_Yutani's picture

Duly noted. "Since 2 years" is basically what we say in Swedish so it was a bad translation.



Wed, 12/12/2012 - 18:24 | 3057541 falak pema
falak pema's picture

since two years or mother never spoke to me about how broke she would be if the price of bread climbed over the roof. As she doesn't like climbing on to roof tops since two years ago. 

Tue, 12/11/2012 - 23:50 | 3054644 fattail
fattail's picture

please shut up and keep importing our inflation, because we can't afford to keep it.


Wed, 12/12/2012 - 06:57 | 3055097 Ghordius
Ghordius's picture

+1 LOL - duly noted, but please nevertheless stop exporting it because we are getting FED up, too

on a different note, why always Bernanke? Is the great "Maestro" completely blameless because in his youth he wrote some nice comments on gold?

Tue, 12/11/2012 - 23:29 | 3054582 Mike Cowan
Mike Cowan's picture

He forgot the Fed's mandate to create bubbles.

Tue, 12/11/2012 - 23:34 | 3054591 Milton Waddams
Milton Waddams's picture

99& of zerohedge has never read bernanke's monetary policy at the zero bound  

(here's a hint, your is too late).

Wed, 12/12/2012 - 00:40 | 3054741 Ident 7777 economy
Ident 7777 economy's picture

"your is too late"



Wed, 12/12/2012 - 00:50 | 3054761 akak
akak's picture

Your nipple piercing at age 54 is too late.

Wed, 12/12/2012 - 13:19 | 3056287 Element
Element's picture

ah, wise werds of onahable man of sage exspearwiencesness.

manwy fwanks

Wed, 12/12/2012 - 01:16 | 3054800 lasvegaspersona
lasvegaspersona's picture

It appears the BB was setting us up back then. He was preparing us with an explanation and technical details of what might be done at 'zero'. In actualality he saw the end coming and knew he would be forced to fund the government and thought 'hey. I'd better have some BS reason for doing this or the crowd will just say 'he is just monetizing debt'". In reality all the 'reasons' are just polite distraction from the main keep the US government alive a little longer and the global, dollar based economies of the entire world breathing. Eventually it will stop working when the right party says 'enough' or something goes horribly wrong. I say it will be the former....China? the Saudis? The BIS? the ECB? maybe Japan will commit suicide by dollar explosion. This HAS to be getting near endgame! 85B$ a MONTH!!!! The Fed is introducing the market cap of Cisco EVERY MONTH!!! If that works much longer I will begin to believe Bernacke is an evil magician.

Tue, 12/11/2012 - 23:34 | 3054592 Flakmeister
Flakmeister's picture

QE or not, it will be deflation until the $ no longer is legal tender for international oil. Then all hell breaks loose....

Tue, 12/11/2012 - 23:37 | 3054607 mayhem_korner
mayhem_korner's picture



Deflation in what?  Leveraged, long-lived "assets", yes; staples/commodities, no chance.

Wed, 12/12/2012 - 00:47 | 3054756 Flakmeister
Flakmeister's picture

Yes, primarily paper assets... Stables and commodities have not kept pace with any reasonable measure of Money supply so while their prices have gone up, it is not nearly as much as one would expect...   There is collapse in credit that is only being countered by the Fed, i.e. classic deflation, moreover there is grotesque overcapacity in manufacturing... 

And that is the conundrum....

Or in other words this time it *is* different....

Wed, 12/12/2012 - 00:55 | 3054771 akak
akak's picture

I am frequently disgusted by the rising price of stables.

And have you seen the price of mangers lately?!

Wed, 12/12/2012 - 01:14 | 3054799 Flakmeister
Flakmeister's picture

Hay, I had to call ahead to make reservations for some guy called Joseph 2 weeks from now. Couldn't believe what they were asking...

Wed, 12/12/2012 - 02:09 | 3054874 akak
akak's picture

At least you made reservations in advance.  Hallelujah that you found one!

That makes you a wise man.

Wed, 12/12/2012 - 00:42 | 3054743 Ident 7777 economy
Ident 7777 economy's picture

'The oil ... the oil.'


Always with 'the oil' ...

Wed, 12/12/2012 - 00:47 | 3054758 Flakmeister
Flakmeister's picture


Tue, 12/11/2012 - 23:36 | 3054599 mayhem_korner
mayhem_korner's picture



Sum ting wong?

Tue, 12/11/2012 - 23:45 | 3054620 Caviar Emptor
Caviar Emptor's picture

The Fedheads and economists are slowly waking up to smell the coffee: yes, there can be both inflation an deflation in the same economy at the same time. It was not supposed to happen or be possible according to musty textbooks. It wasn't anticipated, just like they never saw 2008 coming. And yet it isn't subtle or deniable anymore since it's on display every day for the whole world to behold. 

This article just scratches the surface of the hows and whys of biflation. The rabbit hole runs deep, it's been getting dug for 4 decades. All of the tricks, fixes and remedies that the global central bankers cobbled together during the era of globalization and credit bubblation are the direct cause of the deflation side of this dilemma. And the current fixes to the post-bubble depression are definitely exacerbating the problem through inflationary pressure on assets and raw materials prices. 

Watch your buying power crumble 

Wed, 12/12/2012 - 00:08 | 3054656 akak
akak's picture


yes, there can be both inflation an deflation in the same economy at the same time.

CaviarEmptor, with respect, that is a nonsensical statement, and no, there can NOT be inflation and deflation at the same time.

You are making the classic mistake of confusing cause and effect here.  Inflation is NOT rising prices --- that is just the typical symptom of inflation, which is actually an increase in the money supply over and above the organic growth of the economy.  Likewise, deflation is a decrease in the money supply, generally leading to falling prices (which has by the way, unlike inflation, been vanishingly rare in monetary history).

Sure, we can have rising prices in some things simultaneously with falling prices in others, but it is simply wrong to call either one by itself "inflation" or "deflation", much less claim that they are happening at the same time.  The two phenomena are mutually exclusive --- it would otherwise be like saying "The sun is rising but it is also setting".


PS: While disagreeing on the terminology of what is happening, I otherwise agree with your analysis and observations.


Wed, 12/12/2012 - 01:43 | 3054835 Eally Ucked
Eally Ucked's picture

You know, who really cares what the definition of inflation or deflation is. Obviously there is more money around to bid up prices of real things, that's my inflation and not symptom. If prices for some imaginary paper shit are going down then I don't call it deflation, I call it "welcome reality". If prices for real stuff will start to go down I will call it deflation. Money supply, velocity of money is good for you guys, economists and governments. You guys can't really agree even what "money supply" is so if that's not clear how can we use it in any definitions. 

Wed, 12/12/2012 - 02:20 | 3054873 Flakmeister
Flakmeister's picture

Actually the sun is *always* rising and setting simultaneously, just not for the same person.....

Sun, 12/16/2012 - 01:39 | 3068103 MeelionDollerBogus
MeelionDollerBogus's picture

Pardon the -1 but I would have refrained if you mentioned this:

massive inflation of m0, m1 and m2 are possible from minions of the Fed & other central banks, and from the central banks themselves. Simultaneously various giant assets from corporate balance sheets (HP) to central banks (toxic MBS & other assets) can vaporize in seconds to minutes... thereby affecting money supply directly by some measure, rather than the byproduct pricing of inflation/deflation.

Further down the rabbit hole: will the Fed (& others) vaporize billions in toxic assets at will to deflate "if needed" from "high inflation", and will rehypothecation (infinite) of US Treasuries (and other governments' paper) play a role?

Tue, 12/11/2012 - 23:48 | 3054632 oldman
oldman's picture

The Chinese are smart and diplomatic enough to state the obvious while buying pms with both hands. Maybe, we are closer to a big change than we think we are----and it may not be in the for of one the long-awaited black swans of which we have had so many.

We are no longer in charge---is what he is saying        om

Wed, 12/12/2012 - 00:45 | 3054714 sasebo
sasebo's picture

Lets see --- what can you buy with money?

Goods & services --- produced by companies, like food, clothing, shelter, electricity, health care --- you know.

A company's stock --- only worth something if company is producing a good or service at a profit.

A company's bonds --- only worth something if company is producing a good or service at a profit.

Government bonds --- only worth something if gouvment is able to collect enough taxes to pay interest & principal.

Where can you get some money?

Working for a company who produces a good or service at a profit. From the money collected from selling their good or service or money borrowed from a bank, etc.

Working for a gouvment if they're able to collect enough taxes or borrow money from someone who has some.

From interest on bonds, savings accounts (rots of ruck), buying & selling assets at a profit, investing in hedge funds, etc at a profit.

If you're a bank you can just create the money with a computer & put in someone's loan account for interest. Or you borrow money from depositors. And where do the depositors get their money? They help produce a good or service, inherit it, borrow it, steal it, whatever.

If you're the federal reserve you can create money with a computer & use it to buy assets. You don't have to print it.

So what is the objective of all these activities? Improve the standard of living of whom by whom? 

Of the fat cats by those who actually produce stuff.

So the big question is "can the producers produce stuff without the federal reserve, banks, hedge funds, gouvment, etc?"  I'd sure like to find out. Anyone got any ideas about how to give it a try? I'm sure working on it day & night.  



Wed, 12/12/2012 - 02:03 | 3054865 Eally Ucked
Eally Ucked's picture

No, you can't produce anything without banks, FED, Gov and others. 

Why? First if you had good product and you somehow went through first startup fase you have to accumulate funds to proceed with developing your business. That means you have $$ and good product, no debt but you're not growing fast enough. And at that point you're target of hedge funds or bigger companies in your field.

Second, there is not really second because that's the end. If you want to keep your business you have to go in to debt to the degree that nobody wants to touch you and you grow fast, that's the fase where banks come in.

Wed, 12/12/2012 - 01:27 | 3054813 ReactionToClose...
ReactionToClosedMinds's picture

is it me or does HKMA CEO Norman Chan sound just like Paul Singer of Elliot Capital per recent two ZH postings?

I mean this is uncanny resemblance in 'policy-speak' .....

Wed, 12/12/2012 - 01:54 | 3054854 newengland
newengland's picture

Central banks and their shills all sing from the same sheet. Psychopaths, all.

Long rope. Short drop.

Wed, 12/12/2012 - 01:32 | 3054815 lasvegaspersona
lasvegaspersona's picture

It has always been the plan that the Fed will buy, for cash, all the assets of every bank, pension fund, municipality (favorites first of course) and well whatever it has to buy because deflation must not be allowed to happen. Deflation looks bad and gets politicians fired. Inflation seems, well, less painful.

This is all fairly simple....the Fed funds the government and keeps the dollar and the financial alive as long as it can. The currency is just a currency, it can be replaced. Currencies come and go. The dollar will 'go'. It won't be the end of the world. These guys know this and most here know this. 

I do not see why there is any surprise or shock. This is the way dying fiat currencies behave at the end of their lives. It is a natural process and the Fed is the funeral director. We will be comforted and when the time comes we will be given a new fiat. In the next round we will see some differences. The whole world has seen the role of reserve currencies used and abused and will demand a different structure to the new system. THAT is worth watching. The players are putting out their spokespepole. The SDR? China as a reseve? gold settlement? We will see. We live in interesting times......... unfortunately.....but it will be a thing to watch!

Wed, 12/12/2012 - 01:31 | 3054820 resurger
resurger's picture

no one buys that sht

Wed, 12/12/2012 - 01:53 | 3054853 newengland
newengland's picture

HK central bankster plays devil's advocate, and pockets the change and money whores.

Fuck off.

Wed, 12/12/2012 - 01:58 | 3054858 q99x2
q99x2's picture

Awh BS. There's a reason why Milton had Satan fall out of heaven into China.

Hey Max Keiser says the BIS is issuing warnings about a 300 year bond bubble that is starting to burst. Any truth to that?

Wed, 12/12/2012 - 03:01 | 3054925 AynRandFan
AynRandFan's picture

One way to estimate how far the Fed will go in easing monetary policy is to guess how long Americans and the ROW will cling to the U.S. dollar. We have a very long way to go following Japan down the rabbit hole.

Wed, 12/12/2012 - 04:38 | 3054990 Coldfire
Coldfire's picture

With the HKD pegged to the US Peso and Bermonkey printing like a madman on speed Hong Kong property prices were going through the roof. The recent speculation tax (15% on foreign buyer initial purchase; 20% on resales within 3 years) has stopped prices rising. But they are at nosebleed levels and not falling fast enough. Because the cost of everything is derived from property here, all other prices are rising. (Except salaries). Yes, as Weyland_Yutani says, the price of a "fucking cake" is up 17% (I see 35%). And the cost of staples rises almost weekly. A Coke in a restaurant is more than USD5. It's like the 70's, with expectations of price increases built in. What Norman Chan is doing here is deflecting blame for his inaction on the effects of Bermonkey's QEternity. The solution is to de-peg but Hong Kong has to wait until China is ready for a more advance stage of RMB normalisation. Beijing holds the key. In the meantime for the middle-class living in Hong Kong feels like the oxygen is being turned off a little at a time everyday.

Wed, 12/12/2012 - 04:52 | 3054997 NuYawkFrankie
NuYawkFrankie's picture

This Hong Kong Fed statement sponsored by "Susie Wongs House of Massage & Oriental Pleasure..."


Come to Susie Wongs for all of your  "Easing" needs.... and dont forget - mention this HK Fed Statement to qualify for Susie's "QE Rub'nTug SpRecial" (Limit 3 per Day per cRustomer - so solly). Chow.



Wed, 12/12/2012 - 05:40 | 3055037 Sandmann
Sandmann's picture

Mervyn KIng said it the other day - Currency Wars. They are all debasing their currencies to steal growth from other nations and trading blocs. It is a global currency game at the expense of domestic savings. The problem is that Hyperinflation in not an "inflationary" problem per se but an Exchange Rate Problem as the external value of a currency collapses. They are all playing Sorcerer's Apprentice without understanding the spells. If this does not end in war it will be surprising. It did in the 1920s and 1930s when competitive devaluations destabilised - Weimar Inflation was caused by France targeting the Reichsmark so Germany could not accumulate Gold to pay Reparations.......the Bruening Cure was Deflation - that changed the dynamic since he ruled by Emergency Decree long before Adolf

Thu, 12/13/2012 - 11:57 | 3059518 MeelionDollerBogus
MeelionDollerBogus's picture

It's time we stopped just pretending to be enthralled to evil...

vote CTHULU for Fed Chairsatan

Wed, 12/12/2012 - 06:02 | 3055050 nevket240
Wed, 12/12/2012 - 06:28 | 3055069 Cycle
Cycle's picture

The only way to get out of a liquidity trap is to liquidate. Anything else defies natural law #1: there is no such thing as a free lunch. Bernanke does not understand free markets. But he does understand politically driven corrupt markets.

Wed, 12/12/2012 - 06:34 | 3055072 q99x2
q99x2's picture

He wead zwoe hesh.

Wed, 12/12/2012 - 06:46 | 3055082 smacker
smacker's picture

Well, Mr Norman Chan is a rare person who's prepared to speak the truth. So he will be completely ignored by the Western powers-that-be.

We now live in a fantasy world where the Central Banks' solution to excess debt is to issue more debt. One-trick ponys and all that...

"I borrowed enough money today to pay off all my debts." .....Banana Bernanke.

Wed, 12/12/2012 - 07:11 | 3055102 fukidontknow
fukidontknow's picture

‎"Woe to you, Oh Earth and Sea, for the Devil sends the

beast with wrath, because he knows the time is short...

Let him who hath understanding reckon the number of the

beast for it is a human number, its number is six six six."


opps sorry no need to be alarmed I got it wrong today is twelve twelve twelve

Wed, 12/12/2012 - 07:52 | 3055115 MagicMoney
MagicMoney's picture

The point of QE is to re-leverage. It's not meant as a deleveraging policy. Bernanke knows that credit is shot, which is a product of real savings. That is why he is printing money. There is a reason why lowering interest rates only works to a certain extent. Psychology is one, the other, well, when you are broke, you are broke. Contrary to what I consider propaganda, the Fed is simply ensuring the government spends more money, because spending money is wealth to him, but also the reason is a political one. He doesn't want the depression to be felt in it's enormomity, because that would require less spending, americans tightening up their belts, jobs will have to be lost, economy going through a painful restructuring. He is basically doing what Gideon Gono, former Zimbabwe Central Banker did and for the same reasons, and methods when he destroyed the Zimbabwe dollar. Bernanke knows he can't raise interest rates, because the economy will go back to recession. That's why they extend ZIRP. Bernanke seems to know that the 30 year bull run on treasuries is under threat too, so might as well be ahead of the pack, & start buying bonds before the market decides to unload just in case.

Wed, 12/12/2012 - 07:35 | 3055116 spanish inquisition
spanish inquisition's picture

Ben points finger....and says... "HERETIC! Burn him!"

Wed, 12/12/2012 - 07:52 | 3055125 luckylongshot
luckylongshot's picture

HKs central bank is a public bank that is state owned and thus can be expected to act in the best interests of the people while the Fed is privately owned and so can be expected to act in the best interests of the private banks that own it.Naturally what is good for the public and what is good for the bankers differ and this is why the two central banks have different approaches..The issue this raises is why America allows a central bank that clearly has a conflict of interest issue with regards to  acting in the best interests of the American people. The people should own their central bank!

Wed, 12/12/2012 - 08:42 | 3055183 Blind
Blind's picture

He fucking earn more than The Fed Chairman for just maintaining the HK dollar peg to US dollar. He just care for himself, don't be fooled.

Wed, 12/12/2012 - 08:39 | 3055178 Blind
Blind's picture

yeah right, he still keep the peg to US dollars to screw everyone in HK.

Wed, 12/12/2012 - 09:34 | 3055312 caShOnlY
caShOnlY's picture

Otherwise, we may find ourselves being trapped in the debt abyss with no way out

"We are find ourselves been trapped in the debt abyss with no way out"

Wed, 12/12/2012 - 09:38 | 3055321 riphowardkatz
riphowardkatz's picture

Like these guys know anything. Bernanke is an expert in Depression. They should defer to him.

Thu, 12/13/2012 - 11:51 | 3059489 MeelionDollerBogus
MeelionDollerBogus's picture

You must owe at least 2 people a glass of spat out scotch plus at least 2 more for coffees for that one.


Wed, 12/12/2012 - 09:56 | 3055387 chinaboy
chinaboy's picture

That's why the chairsatan wants to rob the capitalists of  their market. His scheme would not work as long as markets function. As a result, as long as chairsatan presides, the market will not function. Smart traders, please keep believeing you can beat everyone in this market.

Wed, 12/12/2012 - 10:09 | 3055446 yogibear
yogibear's picture

Only thing that will work is when other countries agree on another currency and stop accepting the US dollar for trade.  When that occurs the US Federal Reserve can try and deal with an angry population. 

The US Federal Reserve has abused it's reserve currency status, and countries like China are the fools.

The Federal Reserve is showing it's middle finger to each and every exporting country with each QE.

Wed, 12/12/2012 - 11:11 | 3055758 Stuck on Zero
Stuck on Zero's picture

Chan may be right about QE but he hasn't successfully stolen $20 trillion dollars from the West for the bankers.


Wed, 12/12/2012 - 19:37 | 3057742 Dareconomics
Dareconomics's picture

If you put all the charts and articles from ZeroHedge detailing the diminishing returns of printapalooza, you come to a very scary conclusion:

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