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QE 4: Folks, This Ain't Normal - What You Need To Know About The Fed's Latest Move

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Submitted by Chris Martenson of Peak Prosperity

QE 4: Folks, This Ain't Normal

What you need to know about the Fed's latest move

Okay, the Fed's recent decision to boost its monetary stimulus (a.k.a. "money printing," "quantitative easing," or simply "QE") by another $45 billion a month to a combined $85 billion per month demonstrates an almost complete departure from what a normal person might consider sensible.

To borrow a phrase from Joel Salatin: Folks, this ain't normal.  To this I will add ...and it will end badly.

If you had stopped me on the street a few years ago and asked me what I thought would have happened in the stock, bond, foreign currency, and commodity markets on the day the Fed announced an $85 billion per month thin-air money printing program directed at government bonds, I never would have predicted what has actually come to pass.

I would have predicted soaring stock prices on the expectation that all this money would have to end up in the stock market eventually.  I would have predicted the dollar to fall because who in their right mind would want to hold the currency of a country that is borrowing 46 cents (!) out of every dollar that it is spending while its central bank monetizes 100% of that craziness?  

Further, I would have expected additional strength in the government bond market, because $85 billion pretty much covers all of the expected new issuance going forward, plus many entities still need to buy U.S. bonds for a variety of fiduciary reasons.  With little product for sale and lots of bids by various players, one of which – the Fed – has a magic printing press and is not just price insensitive but actually seeking to drive prices higher (and yields lower), that's a recipe for rising prices.

Then I would have called for sharply rising commodity markets because nothing correlates quite so well with thin-air money printing as commodities.

That's what should have happened.  But it's not what we're seeing.

Instead, stocks initially climbed but then closed red.  Gold was mysteriously sold in the thinly-traded overnight markets and again right after the announcement in large, rapid HFT blocks that swamped the bids. U.S. Treasury bonds actually sold off on the news.  The dollar hardly budged. Commodities were mixed across the board but more or less flat on the day, with the exception of the metals, and especially the precious metals, which were sold vigorously.

The markets are now well and truly broken.  Not because they don't conform to my predictions, but because they are no longer sending useful price signals.  Instead, my hypothesis here is that the markets are now just a giant and rigged casino, where a relative handful of big firms and other tightly coupled players are gaming their orders to take advantage of this flood of money.

When your central bank badly misprices money and then bids up everything related to bonds, nothing can be reasonably priced.  Risk is mispriced; the few remaining investors (as distinct from speculators, which are now the majority) are forced to accept both poor yields and higher risk – so we know the price of everything, but the value of nothing.


So what exactly is this new thin-air money printing program all about?  Well, unlike any prior Quantitative Easing (QE) announcement, this one was tied to a fuzzy and quirky government statistic: the unemployment rate.

QE4 is Just-In-Time Fed Policy to Avoid Calamity

Dec 13, 2012


We got the most thunderous Just-In-Time monetary policy today that is a substitute for the absence of any degree of stimulative fiscal policy.


You might say that QE4 is now going to act as both monetary and fiscal stimulus– another $85 billion worth of Fed accumulations of Treasury bonds and mortgages- that is meant to keep stock prices moving higher and residential home sales climbing briskly.


The goal is to drive economic activity, especially residential home building, so that unemployment drops from 7.7% to 6.5%. The surprise move is meant to signal the Fed’s awareness of the softening economy; it sees the gritty numbers before we do.


Getting unemployment down to 6.5% without inflation rising to a level higher than 2.5% is not expected to happen until 2014 at the earliest. And it could go longer if there is no deal and we go over the cliff.


But, you should know that the only reason unemployment is 7.7% is because hundreds of thousands of males have dropped out of the search for regular work. A very depressing tale.

The key point here is that the Fed is now actively running both monetary and fiscal policy because it will now be in the business of funding nearly 100% of all the new government deficit spending in 2013.  And it is pumping a bit more than $1 trillion of hot, thin-air money into the economy as it does so.

The odd thing here is that by tying their policy to the unemployment rate, we could be in for a very long wait for the stimulus to end.  The reason is that the unemployment rate has a couple of moving pieces, one being the number of people who are unemployed, and the second consisting of people who have given up looking for work, which is tracked in something called the 'participation rate.' 

As more people leave the labor force and the participation rate goes down, the unemployment rate goes down, too.  Somewhat confusingly, as more jobs are created, the unemployment rate goes down, too.  As you can see, these numbers work in opposition to each other because as more jobs become available, more people re-enter the work force.

Before the crisis struck, the participation rate was around 66.5%. But now it sits at just 63.6%, meaning that, at roughly 1.4 million jobs for each percent, a bit more than 4 million jobs would have to be created just to absorb the folks who left the labor force but presumably would like to work again. As those 4 million folks come back to work, the unemployment rate will not budge at all.

It will require two full years of 150,000 jobs per month just to absorb the 4 million missing workers, which means that this QE effort will be with us for a very long time.  Three to four years is my best guess, and that's only if the economy magically recovers.  And I have very strong doubts about that.

This means that the Fed is most likely on track to increase its balance sheet by another $3-4 trillion.  Ugh.  That's 300% to 400% more money created in the next year than was created than during the entire 200 years following the signing of the Declaration of Independence.

The other part of this new QE policy is that they will continue this as long as inflation remains below 2.5%.  Again, this is a very fuzzy government statistic subject compared to the usual massaging and political biases, but it has top billing as the one that is most likely to force an early termination of the thin-air money printing efforts.

However, I remain convinced that the Fed will change any rules and move any goalposts it needs to in order to continue its mad money printing experiment.  Because there really isn't any other alternative at this point.

Secretly in the Open

Once upon a time, it would have been considered in bad taste to suggest that the world was being centrally managed in secret by a small-ish cabal of bankers whose actions served to either prop up the excessive spending habits of the very governments that conferred upon them the power to print money, or to bolster the health and profits of the banks they mainly serve.

That was then. Today you can just read about it in the Wall Street Journal:

Inside the Risky Bets of Central Banks

Dec 12, 2012

BASEL, Switzerland—Every two months, more than a dozen bankers meet here on Sunday evenings to talk and dine on the 18th floor of a cylindrical building looking out on the Rhine.


The dinner discussions on money and economics are more than academic. At the table are the chiefs of the world's biggest central banks, representing countries that annually produce more than $51 trillion of gross domestic product, three-quarters of the world's economic output.


Of late, these secret talks have focused on global economic troubles and the aggressive measures by central banks to manage their national economies. Since 2007, central banks have flooded the world financial system with more than $11 trillion. Faced with weak recoveries and Europe's churning economic problems, the effort has accelerated. The biggest central banks plan to pump billions more into government bonds, mortgages and business loans.


Their monetary strategy isn't found in standard textbooks. The central bankers are, in effect, conducting a high-stakes experiment, drawing in part on academic work by some of the men who studied and taught at the Massachusetts Institute of Technology in the 1970s and 1980s.


While many national governments, including the U.S., have failed to agree on fiscal policy—how best to balance tax revenues with spending during slow growth—the central bankers have forged their own path, independent of voters and politicians, bound by frequent conversations and relationships stretching back to university days.


If the central bankers are correct, they will help the world economy avoid prolonged stagnation and a repeat of central banking mistakes in the 1930s. If they are wrong, they could kindle inflation or sow the seeds of another financial crisis.

If it feels like you are part of a very grand, high-stakes experiment, congratulations!  You're exactly right. We are all collectively prisoner to whatever outcomes are in store.

The rather politely ignored truth right now, at least by most news outlets and politicians, is that the world's central banks have wandered very far off the reservation and are running an experiment that really has only two possible outcomes.  One is a return to what we all might call 'normal and stable' economic growth.  The second is the complete collapse of the fiat money and their attendant financial systems and markets.

While it is technically possible to achieve some other middling outcome, that possibility has been receding to ever more remote territory with every passing month and new round of money printing. 

The basic predicament here is that more and more money is being printed while the world economy, predictably for those who follow the net energy story, has been entirely stagnant and constantly threatening to slip back into economic retreat. Of course, more money + the same amount of (or even less) hard assets = the perfect recipe for inflation.

So the rise of inflation will signal the beginning of the end of this slow-motion tragedy.  I use the term 'tragedy' here because it doesn't have to end this way.  We have other options; we could make other choices and use our time and resources to try and do something other than maintain a broken financial system that desperately needs to be changed.

In Part II: It's Better to Be a Year Early Than a Day Late, I explain the facts behind why I am more convinced than ever that this all ends in one of the most disruptive financial and currency events ever seen on this planet.  And while the repercussions will be felt by all, taking prudent action while there is still time can greatly improve our individual odds of weathering them safely.


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Fri, 12/14/2012 - 20:22 | 3065127 RopeADope
RopeADope's picture

There is no inflation if it goes to the top 0.25%. Rather you will have deflation of civil liberties and property ownership.

Fri, 12/14/2012 - 21:21 | 3065320 ball-and-chain
ball-and-chain's picture

People claim there's no inflation.

Yet I can't afford gas.

I can't afford food.

I can't afford insurance.

If inflation does hit one of these days, I'm completely screwed.


Fri, 12/14/2012 - 21:31 | 3065351 markmotive
markmotive's picture

I'd have to agree with Barry Ritholz...QE as far as the eye can see.

Sat, 12/15/2012 - 00:44 | 3065474 rbg81
rbg81's picture

Yup.  QE as far as the eye can see indeed.  Because, in the eyes of the Elite, stagnation is better than the chaos that would occur if real market forces were unleashed.  Central bank printing is a straight jacket on the Market, and by extension, the World Economy.  They are doing it because the structural economic imbalances are too great to cope with politically.  Too many people in the West & Japan are enjoying too high a standard of living for what they actually produce. 

How do these Central Bankers imagine they will get away with it?  Easy, they are ALL doing it in unison.  Since they control the world, where is anyone going to go?  If "The Market" starts to act up, they have sufficient power to smother it until it behaves itself again.  It will only end when either the excess population has died off or all production is automated and becomes free.

Sat, 12/15/2012 - 02:20 | 3065778 saturn
saturn's picture

Crucify The Bernank, will ya?




Sat, 12/15/2012 - 03:10 | 3065819 AldousHuxley
AldousHuxley's picture

fed prints according to taylor and mankiv rule.


QE until unemployment < 6.5%

and 6.5% unemployment isn't all that great

Sat, 12/15/2012 - 07:23 | 3065959 negative rates
negative rates's picture

Has Ben been to the shrink to talk about his buying and spending bad habit. No, oh the shrink his his best friend is he? Let him know he and I don't think alike.

Sat, 12/15/2012 - 07:58 | 3065989 GetZeeGold
GetZeeGold's picture



Well it all seems pretty normal to me.


So what did you think was going to happen when the wirld decided to go full tilt stupid?

Sat, 12/15/2012 - 08:57 | 3066040 negative rates
negative rates's picture

It's not as if they didn't have plenty of ample warning. Perhaps America will never get around to doing the right thing, yea we heard the thing about given enough time and all, there's been plenty of time, and verdict is? Gulit beyond a reasonable doubt, and nothing but the consequences to be paid.

Sat, 12/15/2012 - 09:43 | 3066076 GMadScientist
GMadScientist's picture

6.5% according to them is what 10-12% real world UE?

And aggregate income still trumps "seats filled".

So it's obvious they're printing as long as they want since they've chosen a completely bogus metric to use as a yardstick for "success".

Sat, 12/15/2012 - 11:16 | 3066192 DoChenRollingBearing
DoChenRollingBearing's picture

+ an almost uncountable number!

You are completely correct.  By using bad metrics and by not well defining their policies they can whatever they want.

Ding, ding, ding!  You rang a bell with the clearest tone I have read in a while, H/T.

Sun, 12/16/2012 - 00:42 | 3067985 AldousHuxley
AldousHuxley's picture

6.5% UE is the number they determined keeps masses busy enough with jobs that they won't come out to protest in the streets and overthrow the status quo.


don't need to count. If there are bunch of youngsters protesting in the streets, then unemployment is too high. Time to start a war to send the young males to die off or get them back into educational debt servitude.

Sat, 12/15/2012 - 03:09 | 3065817 kito
kito's picture

Rbg you are clearly not as smart as ray dalio......its all part of the "beautiful" deleveraging.....settle down....its just cyclical.....a few cuts here...a few trillion printed there.....mix in some mass killings......all will be fine soon.....ray says so.......

Sat, 12/15/2012 - 09:48 | 3066086 GMadScientist
GMadScientist's picture

You're right. Crack open the Chateau Latfite and fist a hooker.

"Merry Christmas everybody!!" - George Bailey

Sat, 12/15/2012 - 13:15 | 3066436 Ness.
Ness.'s picture


Where's that money, you silly stupid old fool? Where's that money? Do you realize what this means? It means bankruptcy and scandal and prison! That's what it means! One of us is going to jail; well, it's not gonna be me! 


Sat, 12/15/2012 - 13:33 | 3066477 rbg81
rbg81's picture

It'll be uber interesting to see how long the Central Bankers can maintain unity and keep this farce going for.   Of course, most probably know better but the Politicans may have given them no choice.  Some, like Rick Santelli and Kyle Bass, have ultimate faith in the Market; in Bass's case, he's bet his company on a hedge (collapse of the JPY bonds) that looks increasingly unlikely.  The Banksters just won't let it happen.  And anyone capable of throwing a monkey wrench into the System has surely been co-opted by now.  Right now the Game is so rigged at the highest levels that its hard to see how classical Market mechanisms can reassert themselves.  It will probably take some Black Swan event that catches the Smartest-Guys-In-The-Room by total surprise and even the most distractable Sheeple can't ignore.  Luckily, these do happen from time to time.  But, even so, the Powers-That-Be will be desperate to keep a lid on things.  How will we know the end is near?  Look for Nay-Sayers (like Santelli) to suffer freak accidents that make those in "The Omen" look plausible and sites like ZH stay down due to "technical difficulties".

Sat, 12/15/2012 - 07:09 | 3065951 Captain Kurtz
Captain Kurtz's picture

It will only end when either the excess population has died off or all production is automated and becomes free.

Pretty much.


Ironic, isnt it? Unemployment isnt for the unemployed.  And a prolonded "Crisis" is always preferred over Uprising.  This is straight out of the handbook of the "managing" elite central bankers.

Sat, 12/15/2012 - 11:01 | 3066187 Carp Flounderson
Carp Flounderson's picture

this may be the most intelligent thing I've ever seen on zerohedge... too many hedgies swear by the hyperinflation party line.  Not going to happen guys.  You could double the money supply from here, I'll take the extra money and bury it in my backyard (which happens to be in an offshore tax haven.)  Your prices wont go up.

Sat, 12/15/2012 - 12:17 | 3066303 dmger14
dmger14's picture

IDK, I tend to think there will be a loss of confidence in the dollar and commensurate spending/velocity scramble for all things real and not paper.  Confidence and velocity are key.  I think China's decrease in treasury ownership and purchase of the AIG segment is the tip of the iceburg.

Sat, 12/15/2012 - 12:20 | 3066309 Bobbyrib
Bobbyrib's picture

Do you prefer the economic advise of Krugman, Bernanke, or Obama? Go to a grocery store, gas station, or buy health insurance, then lay on the bullshit that prices won't go up...

Fri, 12/14/2012 - 20:26 | 3065136 EmmittFitzhume
EmmittFitzhume's picture

Labor participation down.  Wages down. The economy is shrinking. Products are still being made at a pace too fast for this. This points to deflation no matter what the Fed does.  Market forces will reset this madness

Fri, 12/14/2012 - 22:02 | 3065423 CH1
CH1's picture

Market forces will reset this madness

Sadly, those have been overcome. All is regulated, which means "controlled by the state."

This is a Bernays Tyranny. Any remaining "market forces" that get in the way will be "removed for your safety."

The only answer is to quit the game and look up Agorism.

Fri, 12/14/2012 - 22:06 | 3065435 kaiserhoff
kaiserhoff's picture

The real economy is shrinking, yes, maybe diving. Market forces?

The drunken expansion of government still can't keep up with the depression in the productive economy.

The Fed has little or no effect on the debt crisis.  Too much stuff under water, and nothing that is left is really interest rate, or liquidity sensitive.  In foreign trade, we are still the best looking horse in the glue factory.

Still, something big will break soon.  When Ben destroyed the free market in long bonds, he messed up all sorts of prices, wages, and feed back mechanisms.  The errors are cumulative.  Central planning always fails.


Sat, 12/15/2012 - 04:02 | 3065849 zhandax
zhandax's picture

Far more that half of the productive activity in the country has been driven offshore.  Around half of US GDP is derived from FIRE.  The bailouts were specifically to preserve/sustain the FI side and much of this QE nonsense has been in hopes of resuscitating the RE portion.

The bulk of what remains are services.  Food service continues to see headwinds, but content creators are dealing with manageable declines.  Medical services are, for the most part, fat, happy, and increasingly benefiting from federal largesse.  If your business is writing code, do you really care if your next contract is with Deer or Raytheon?

I don't disagree with you, but these are some of the reasons I am short one contract instead of 50.

Sat, 12/15/2012 - 11:55 | 3066259 slovester
slovester's picture

The FIRE acronym leaves off another elephant in the economy - medical.  Toss that one into the mix and you get FIREM.

Somehow seems appropriate for the times...

Sat, 12/15/2012 - 12:28 | 3066322 Bobbyrib
Bobbyrib's picture

You forget that the United States does not produce most of the items we use. We have a huge trade deficit for a reason. If China decides to give its workers a wage increase  and so does Brazil, Vietnam, and all the other EM's that produce our goods. How do you think inflation doesn't occur? It will take the multinationals some time to find a new country to produce their products for pennies on the dollar (in terms of price). If less products are produced and less of a supply is available it could keep prices from going down. Bascially the idiots who buy I-Pads could be fighting over an even bigger supply shortage, or they will pay more for their I-Pads. You are right about market forces adjusting, I just think they will eventually (2-3 years) go to the upside.

Fri, 12/14/2012 - 20:44 | 3065141 cranky-old-geezer
cranky-old-geezer's picture



Getting unemployment down to 6.5% without inflation rising to a level higher than 2.5% is not expected to happen until 2014

It will never happen, (real) inflation is already 15%.

And buying MBS by the boatload won't help home prices, just banks.  

Reducing home prices would help home sales and help the unemployment rate drop, pobably not enough to measure, but whatever.

So QE4 is just nonsense ...unless you realize it's another step in the big looting spree ...then it all makes sense.

See, you just have to understand what they're really doing.  Then it all makes perfect sense.

Fri, 12/14/2012 - 21:37 | 3065367 TheSilverJournal
TheSilverJournal's picture

The Federal Reserve is on a pace to own every single MBS in the US within ten or twenty years. Likely, this pace will increase too but even now, that is a maddening pace...and yet the majority don't even know what QE3 is. The largest asset (or liability nowadays) that most people own is their home, and the Federal Reserve is about to become the largest landlord on the planet. How does this not bother people more?

The inflation target of 2.5% is simply ludicrous too. As you pointed out, real inflation is much higher than 2.5% already, but it gets better. The 2.5% inflation target isn't just on the government's measure of inflation, but it's on the expectations that the government's measure of inflation will be at 2.5% ONE OR TWO YEARS FROM NOW. So that means the government's measure of inflation could be 3%, 4%, 5%, or maybe even 6% and as long as they say they expect inflation to come down to 2.5% in a year or two, the Fed will still be within its current guidelines.

Fri, 12/14/2012 - 22:07 | 3065436 cranky-old-geezer
cranky-old-geezer's picture



The Federal Reserve is on a pace to own every single MBS in the US within ten or twenty years.

...and the Federal Reserve is about to become the largest landlord on the planet.

Nope, don't think so.  My understanding is MBS trusts hold notes but not mortgages, so there's really no collateral in them, just expectation of cash flow ...which isn't happening of course.

This is where banks screwed MBS trusts.  Banks kept the mortgages ...or turned them over to MERS, which still doesn't give MBS trusts any legal claim to properties.

And yes this is where homeowners can take action, note separated from mortgage, MBS trust can't foreclose, they don't have the mortgage, bank can't foreclose, they don't have the note.

And Fed is completely fucked.  MBS is just a share of an MBS trust, like stock of a company.  Fed has no legal access to the note, much less the mortgage.

Fed is buying MBS just to keep the MBS market from collapsing and banks from taking huge losses.  Taxpayers will bear those losses as MBS lose value sitting on Fed's balance sheet.

Fri, 12/14/2012 - 22:21 | 3065475 TheSilverJournal
TheSilverJournal's picture

Very nice explanation. Thank you.

Fri, 12/14/2012 - 22:57 | 3065549 mewenz
mewenz's picture

Good information but don't at all understand how the Fed is completely f@@@ed.  Say they buy 1 trillion of MBS and ultimately it is only worth 25% of what they paid.  Where did they get the $1 trillion to "pay" for the did they "lose" $750 billion or simply obtain $250 billion in assets for effectively nothing.  Further, what is to stop them from just creating another $750 billion if they feel like it anyways.

Fri, 12/14/2012 - 23:22 | 3065579 cranky-old-geezer
cranky-old-geezer's picture



Where did they get the $1 trillion to "pay" for the MBS(?)

They created it out of thin freikin air, just conjured it into existence like magic, what we call "printing", like printing it up on a printing press ...which they could also do, but who wants to mess with paper currency when you can punch a few keys on a computer and have the 1 trillion paid for those MBS magically appear in some bank's reserve account.

Oh yes, it's all a big fucking fantasy. 

Imagine that.  The world reserve currency just a fucking fantasy now, just numbers in computers.

Fri, 12/14/2012 - 23:31 | 3065609 Big Slick
Big Slick's picture

I think that was mewenz's point, posed in a rhetorical question.

The whole thing is sick... beyond reality... and unsustainable.

Sat, 12/15/2012 - 04:35 | 3065878 TheSilverJournal
TheSilverJournal's picture

Yeah, it was unsustainable starting way back when the first counterfeit gold note was printed. The banking cabal grew until it engulfed the world with the Bretton Woods System...and then the world grew, allowing the central banks of the world to suck in the dollar like it ain't no thang. When the dollar goes, all fiat goes. How long until QE5? February? QE6 in March? QE7 later in March? Maybe it'll just be a one time zap of $800B in March. And then in May they have to do another one time zap of $800B, on top fo the QE3 and QE4, of course. And then in June they have to do a $2T zap. The entire deal is so noticeable that critical mass is arriving shortly.

Sat, 12/15/2012 - 07:40 | 3065970 negative rates
negative rates's picture

Who says they can't already do that and adjust the numbers by a factor of ten.  The Feds job was to control price inflation, which it failed miserably at once taken over by Wall Street in the 80's. The politiicans have done everything in their power to keep prices low and they are currently balancing a $1700/oz gold and $80 bbl/oil. It struggles to come down and rises at each and every small crisis. A big crisis like a war in the ME or injury from a fall off the cliff is all it takes to furthere increase the load on American lower classes. It will soon turn into class warfare in the developed world as the emerging world does not have to support future emtitlements and can more easliy complete with us each and every day. 

Sat, 12/15/2012 - 15:35 | 3066611 TheSilverJournal
TheSilverJournal's picture

The ONLY goal of the Fed is to retain power over their printing press meaning keeping the fiat ponzi going so the fiat that they create has value. When fiat collapses and the printing press becomes meaningless, the Fed becomes powerless. EVERY other other reason they give, like controlling price inflation, helping unemployment, helping homeowners, etc., are not real reasons for their actions, they are just the reasons that sound good that they tell the public so they can justify their actions of perpetuating the ponzi. The real truth is that it is impossible for the Fed to help the economy. Stealing value from dollar holders and centrally planning the redistibution of those stolen resources leads to the destruction of wealth with there being no profit motive, no check on efficiency, and no real penalty for waste.

The Fed will adjust the numbers by a factor of 10. We've had rates held too low for decades, and 0% rates + QE for years, a credit based / service sector / entitlement dependent system in which the debt, unfunded liabilities, and contingent liabilities are out of control and the only way to keep this beast going is to rapidly speed up the rate of printing. The printing won't stop when another 0 is added to the currency. It's a ponzi and a ponzi must inflate or die. The real problem is that the printing will start reaching for infinite in a hurry, and then by definition, currency loses any aspect of scarcity and becomes worthless.

The fiscal cliff is a fiscal farce. All the fiscal cliff is an attempt to cut the deficit and it's this cutting of the deficit that's seen as the threat. The real threat is the deficit and the debt. What the fiscal cliff shows is how impossible it is to cut the deficit. There never will be a cutting of the deficit. The US is bankrupt. The only way to postpone realizing bankruptcy is to pay the credit card with more credit, leading to an even more impossible situation. The mind boggling piece of this puzzle is that even as the US teeters on the verge of bankruptcy, suckers are loaning the US money, which clearly can never be paid back, at negative real interest rates.

The emerging world will feel a sigh of relief when currency collapses. Right now, they ship us their goods and we sheep them currency created through keystrokes. When currency collapses, they'll actually receive real goods in exchange for the goods they ship us.

I, for one, can't wait. The central planning of money is destroying productivity because the mispricing of interest rates and counterfeitting causes resources to flow into unrproductive areas. Being productive and feeling useful is a key component to the human spirit. Not only is this fiat ponzi stealing the benefit of techonological improvements leading to gains in productivity and therefore falling prices, but the system is also literally destroying the human spirit as being productive and gaining a feeling of usefulness is increasingly difficult. spirit...did somebody say Zombie Apocalypse?

The dependency on government is enormous. You want to start a small business? better work your ass off, bypass all the regulations, and hope you don't sued...speaking of that, you may not want to hire anybody either and especially don't hire more than 50 people with Obamacare rolling out. If you employ 80 people, you may want to fire 31 of them. You want to make it to the top of a large company?...then they better be well connected in Washington, or at least have an infuential lobbyists, to make sure they remain in existence. I wouldn't recommend coal because the government doesn't like that one, but put on a facade to make it seem like you know what you're doing in solar and you're good to go, mandates to burn our food and subsidies to grow the food that's burned, endless bailouts for the banks, government takeover of cars, blatant theft by Corzine and no consequences because he's well connected, complete and total manipulation of the media to benefit the government...think fiscal cliff which came out of left field and now that's all we hear just in a effort to convince the public of how dangerous it is if there's a smaller deficit next year than there is this year, or Hilsenrath's reporting, Liesman's reporting, how about the Reuters article on Sunday talking about in no uncertain the coming announcement of QE4 on Wednesday, Cramer puts on his "we need the central bank to save us" hat every night, $2B centralized data center being built to monitor CITIZENS, Warren Buffett putting out hit pieces on gold when it's not what he truly believes and he knows very well exactly what gold is and touting for higher taxes just to be in favor of the government, Obama telling the public to not concern themselves with the inner-workings of the bond market and go back to worrying about their daily grind and leave the concern of the bond market to the "professional politicians." 17% on food stamps. 7.7% receiving unemployment, 8% work directly for government, 63% labor participation rate, social security / medicare / medicaid are enormous and growing rapidly. 104% debt/GDP (and those are the official numbers, poke around a bit and see how favorable those numbers are being made), almost every newly issued mortgage is backed by the federal government, and the Fed is monetizing what percent of our long term debt? 70% or is it 90% now? Regardless, the debt is no longer a burden to the tax payer, but it's now much moreso a burden on dollar holders because is largely paid for through the inflation tax. It may help to avoid large US cities when this debt/credit/fiat/government/servic sector bubble pops. Very few are prepared, most are clueless, and  many refuse to prepare no matter the evidence put forth simply because they are afraid to go against pop culture.

However, this is not a time to blame other or depend on others or to get angry at friends and family that seem to not care that their entire life savings may soon vanish and they may be left with no means to survive themselves, much less support their family. You can only control your own actions and personal responsibility must be taken now. Without resources or the ability to create value, you are a help to nobody and a burden to everybody. Now is the time to make money. This is the time when vast fortunes will be made very rapidly, vast fortunes will be lost, and the tremendous amount of malinvestments that have occured due to the central planning of the monetary system will be realized. The greatest, swiftest transfer of wealth in history is unfolding before our eyes.

Sun, 12/16/2012 - 07:36 | 3068318 samcontrol
samcontrol's picture

good reading but you could give some examples of how to be on the right side of those fortunes .

An Example. I recently sold an apartment in Buenos Aires and bought farming land in patagonia.
Another. When buying paper gold i prefer phys and sgol over gld.

Sun, 12/16/2012 - 13:32 | 3068777 TheSilverJournal
TheSilverJournal's picture

The best play is to buy physical silver. There are very few better investments on the planet than gold, and silver will crush gold's performance. Gold is set to hit at least $10,000 in the next few of years and the silver to gold ratio will sink to at least 10 to 1, meaning silver will be worth at least $1,000 an oz in real terms. There are also riskier ways to play silver that may offer even more tremendous returns, but the risks of being wiped out may be greater. Then there's other goods necessary to be prepared like food, water, arms, toiletries, energy, and a plan to skip town/country if necessary.

Of course, these are all assets that can be purchased, but there's also preparing for better ways to create value with your time. Your farm land is a great example. Rule of thumb is don't depend on anything from the government (including money in the bank, government job, pension, entitlements), and get out of the US service sector.

Sat, 12/15/2012 - 06:07 | 3065925 trebuchet
trebuchet's picture

Printing is taking a negative interest loan against future savings. 

Future REAL goods/Wealth is pledged to redeem current unproductive application of wealth and represents a transfer from future to present. By smart money from dumb money.

Paid back in future via inflation (if the economy is lucky)   or  riots/expropriation/system reset. 


Get yourself a loan, buy a house, borrow against the house, deposit the money get a loan against the deposit, etc... if you do it efficiently you should be able to match the financial systems "asset" to core liability of 10 to 1

Then buy somethign likely to hold value (gold) bury it and then let the banks/fed take the hit. You pay it back (after bankruptcy court) via future taxes any way


Sat, 12/15/2012 - 14:48 | 3066705 TheSilverJournal
TheSilverJournal's picture

Purchasing a house isn't that much of a gimme. Housing prices are set to fall at least 75% in real terms. If going this route, the key is to have a very low down payment and a fixed interest rate. It is largely the down payment that's being put at risk while future payments will be wiped away from inflation. The other key is to commit to keeping the home through at least very high inflation because between now and then, the property may be underwater.

A home is no longer the appreciating asset it once was while interest rates were being dragged down and the government backed the entire mortgage market. There are costs to owning a home like maintenance and repairs and renting may be a better option. Housing may have little value after currency collapse. Housing is simply way overbuilt. A prospering new business during currency collapse may be tearing down existing homes.

Fri, 12/14/2012 - 23:14 | 3065582 TheSilverJournal
TheSilverJournal's picture

'Tis true. Losses don't effect the Fed because they can print whatever they please. Gains aren't a concern for them either. Neither is the economy or the public's well being. The only concern for the Fed is to retain power at the Fed.

Any losses at the Fed aren't born by the tax payer, they are born by dollar holders. Same with the debt. The debt is no longer serviced through future taxes, it is now being serviced by taking value from dollar holders.

Fri, 12/14/2012 - 23:42 | 3065623 cranky-old-geezer
cranky-old-geezer's picture



Any losses at the Fed...

Fed really doesn't have any losses, they can say the trash on their balance sheet is worth whatever they wana say it's worth, and nobody is gonna say otherwise, Fed's "assets" are never audited.

If MBS lose value on the market, so what?  Fed can still say MBS on their balance sheet is worth full par, even more.

And if they do book a loss for whatever reason, it's passed on to the govt via less interest refunded to Timmy.

Man I'd love to be a central banker.  Ruling a nation by controlling its currency has gotta be fun.

"Give me control of a nation's money and I don't give a flyin fuck who makes their laws, nor what fuckin laws they make, they can all kiss my ass ...and they do, every fuckin day :)"   ---  Amschel Rothschild

Fri, 12/14/2012 - 23:57 | 3065646 TheSilverJournal
TheSilverJournal's picture

Any marginal increase in federal government spending no longer effects the tax payer, going deeper into debt now only effects dollar holders. If they give Timmy less money, all that means is Timmy has to ask the Fed to print more money to purchase more bonds, so Timmy and the tax payer are never really effected.

Sat, 12/15/2012 - 09:25 | 3066064 rwe2late
rwe2late's picture

 theoretically no effect, but

practically speaking, will not

1. taxes increase in an attempt to mitigate inflation, as well as increase because of inflation;

and more importantly,

2. increase to give dollar holders the appearance that the fiat dollar is sound and no scam, but is backed by the full faith and credit of the US taxpayer?

Sat, 12/15/2012 - 15:00 | 3066754 TheSilverJournal
TheSilverJournal's picture

My guess is that even if tax rates increase and more assets are taxable due to inflation pushing up asset prices, there won't be a real increase in tax revenues. Many working professionals will be pushed into paying over 50% into federal state and pay roll and what not which is not a good formula to incentivize people to produce.

Sat, 12/15/2012 - 00:11 | 3065672 edb5s
edb5s's picture

Yeah, not to mention agencies are backed by the full faith and credit of the fed gov't, so if the SHTF they can repay themselves the principal.  Brilliant.  They can't lose!

Fri, 12/14/2012 - 23:17 | 3065586 jvetter713
jvetter713's picture

Yes, thank you for clearing that up.  I was afraid Ben owned my house.  Course if he came to take it from me...

Fri, 12/14/2012 - 23:45 | 3065631 cranky-old-geezer
cranky-old-geezer's picture



...and had 20 cops with him, he'd get it, no problem.

Sat, 12/15/2012 - 07:54 | 3065698 tip e. canoe
tip e. canoe's picture

excellent point, however here's a question:  if one entity could collect all the MBS slices that comprise an individual mortgage, it would in essence, own that mortgage (and the underlying asset in a foreclosure proceeding), yes?

Sat, 12/15/2012 - 03:05 | 3065811 A Nanny Moose
A Nanny Moose's picture

If I understand you here...the Fed is just buying a bunch of paper, backed by no assets whatsoever.

Sat, 12/15/2012 - 11:03 | 3066188 FEDbuster
FEDbuster's picture

"If I understand you here...the Fed is just buying a bunch of paper, backed by no assets whatsoever."

The irony is they are buying the worthless paper assets with worthless electronic currency backed by nothing, created on a FED computerIt doesn't get more fraudulent than this.

Buy real assets (land, food, metals, tools, etc...), ones you can stand in front of and defend with an AR-15.

Sat, 12/15/2012 - 08:17 | 3066011 Winston Churchill
Winston Churchill's picture

Sorry Old Geezer.

The loan is the Note.The Mortgage or Deed of trust is the INCIDENTAL security instrument

to the promissory Note.

MERS was the vehicle that allowed the banks to sell the Notes ( on average) ten different times

to  REMIC trusts.All that money is sitting offshore somewhere.

Most of the RMBS trusts are hollow shells,by math 90% of them.

The FedRes needs to buy those securities to cover the fraud.

The servicers,all subsids,of the trust depositors are still on the hook to pay the income

stream to the RMBS investors,and the money stolen cannot be brought back,to pay,

without admitting the original frauds.Robosigning was just a continuation of the original criminal

theft.An ongoing conspiracy to defraud with Govt., as a now willing partner.


Sat, 12/15/2012 - 10:09 | 3066111 oldschool
oldschool's picture

There are many things about the CDO debacle that are costing us and the banks dearly, but I don't believe splitting notes and mortgages is generally one of them.  Banks didn't keep the mortgages.  Mortgages without notes are worthless.  They didn't "give" them to MERS either.  MERS is merely a registering agent whose legal effectiveness as agent of the note-holders is sometimes questioned, but generally upheld. 

I suspect you're right about the Fed (and ultimately us) losing money on many if not most MBSs, but not for the reason you cite.

Fri, 12/14/2012 - 22:10 | 3065444 lakecity55
lakecity55's picture

Well, owning everything by the "Fed" is just another way to spell "communism."

"We are own everything. Report to your bank or credit union for your new job assignments."

Fri, 12/14/2012 - 20:35 | 3065156 Zer0head
Zer0head's picture

We are all collectively prisoner to whatever outcomes are in store.

economically and politically

Police State America is about to be welcomed by the great unwashed

Fri, 12/14/2012 - 22:05 | 3065426 disabledvet
disabledvet's picture

"prisoners dilemma" has been bandied about a lot o late. I would not disagree. Having said that I don't think the idea of a "police state" will be "welcomed." prisoners very rarely "welcome" anything...

Fri, 12/14/2012 - 22:14 | 3065442 cranky-old-geezer
cranky-old-geezer's picture



It's here now, and "prisoners" don't seem to be complaining much, certainly not doing anything about it.

Go watch sheeple at airport security checkpoints, not much complaining about sexual groping by govt goons.

Sheeple never will do anything about it.

Sat, 12/15/2012 - 03:10 | 3065818 A Nanny Moose
A Nanny Moose's picture

FWIW...for years, I would fly roughly once a month for work. Haven't flown now since Aug of last year, and am busier than ever (for the momemnt). Am doing what I can to avoid flying. Period.

Fri, 12/14/2012 - 20:37 | 3065163 Hohum
Hohum's picture

When WTI hits $115 or Brent $135/barrel, the game will end.  Not before that.

Fri, 12/14/2012 - 20:43 | 3065185 A Lunatic
A Lunatic's picture

If the sun burned out it would take just over eight minutes for us to realize that the game was actually over eight minutes ago. Our present monetary situation is a lot like that..................

Sat, 12/15/2012 - 00:23 | 3065685 logically possible
logically possible's picture

Our monetary system burned out about five years ago. It's just further from realization to most sheeples understanding, than the distance it takes for light to travel from the sun.

Fri, 12/14/2012 - 20:38 | 3065166 UP Forester
UP Forester's picture

Is this what passes for "new and improved news" nowadays?

Fri, 12/14/2012 - 20:38 | 3065169 Seasmoke
Seasmoke's picture

I went to Marshall's for the first in a very long time. I saw nothing but rows of clothes for 29.99 and up. I used to be able to buy so many shirts for 9.99 I couldn't wear them all in a year. We are being slowly boiled !

Fri, 12/14/2012 - 21:19 | 3065307 MajorWoody
MajorWoody's picture

Some really great if not disturbing stuff coming out lately,


One day you walk into WalMart and you look at the prices and think you walked into NiemanMarcus


Remember when QE used to goose gold prices? Now it doesn't? Just a little bit closer to full HTF

Fri, 12/14/2012 - 22:12 | 3065452 Dr. Sandi
Dr. Sandi's picture


One day you walk into WalMart and you look at the prices and think you walked into NiemanMarcus

Then you'll look around and think you're at your in-laws family reunion.

Sat, 12/15/2012 - 06:09 | 3065926 trebuchet
trebuchet's picture

Coz they all got their iPhones from WalMart??? 

Fri, 12/14/2012 - 20:40 | 3065174 ramacers
ramacers's picture

fact is this will end in anarchy folks and most folks (INCLIUDING MANY WHO COMMENT ON THIS SITE) just can't come to grips with it. unimaginable horror comin'.

Fri, 12/14/2012 - 21:04 | 3065246 riphowardkatz
riphowardkatz's picture

just like when? oh never

Fri, 12/14/2012 - 21:56 | 3065405 formadesika3
formadesika3's picture

Read some history.

Sat, 12/15/2012 - 10:43 | 3066160 GetZeeGold
GetZeeGold's picture



They don't teach that in school anymore.

Fri, 12/14/2012 - 21:07 | 3065258 Lost Wages
Lost Wages's picture

Then again, some are looking forward to it. 

Fri, 12/14/2012 - 22:20 | 3065472 Northern Lights
Northern Lights's picture

Like me

Sat, 12/15/2012 - 11:32 | 3066220 jerry_theking_lawler
jerry_theking_lawler's picture

Amen! The true test of evolution.

Fri, 12/14/2012 - 21:31 | 3065353 Hangfire
Hangfire's picture

Liberia here we come!

Fri, 12/14/2012 - 22:04 | 3065425 CH1
CH1's picture

this will end in anarchy folks

I dearly hope so!

The word you're looking for is "chaos."

Fri, 12/14/2012 - 22:15 | 3065458 Dr. Sandi
Dr. Sandi's picture


Anarchy: no monarch, no patriarch, no plutarch, no oligarch.

Chaos: Black Friday without the mall cops.

Sat, 12/15/2012 - 07:45 | 3065975 negative rates
negative rates's picture

Cops are real involved and con clue ing the carnival crime in Connecticut, so it's a good time to get busy there.

Sun, 12/16/2012 - 03:17 | 3068211 Just Ice
Just Ice's picture

Perhaps nothing at all wrong with chaos! (link is to short blog intro with Orlin Grabbe's 1993 speech "In Praise of Chaos")

Sat, 12/15/2012 - 06:28 | 3065931 quadcap
quadcap's picture

You say "anarchy" like that's a bad thing.


Fri, 12/14/2012 - 20:43 | 3065180 Citxmech
Citxmech's picture

Props for the Salatin reference!

Fri, 12/14/2012 - 20:42 | 3065182 fbrothers
fbrothers's picture

Their numbers are fraud. Their banks are fraud. Let us watch. None of the janitors jumped out of windows in the last depression.

Fri, 12/14/2012 - 20:46 | 3065200 Ignorance is bliss
Ignorance is bliss's picture

I feel like we are inches away from food inflation in the U.S. I never hear about the 2012 drought anymore, but it was apparently pretty bad. If we hit real food inflation...what happens when families start to feel really squeezed? My prediction...boom.

Fri, 12/14/2012 - 21:47 | 3065390 klockwerks
klockwerks's picture

We already have very high food inflation. I do the grocery shopping as I'm a prepper so I try to find deals. The prices have gone up as the size of packaging has shrunk unbelievably. I have kept track for the last 4 years and each week that I go my head tries to explode. 2 months ago bought 35 lbs of dog food (have to prep for the dogs to) then went back and the bag seemed light and it was a 30 lb bag for $11 more in cost. That's only one example. It is going to get worst

Sat, 12/15/2012 - 00:38 | 3065705 tango
tango's picture

Since the inflation counters omit highend products ("Filet mignon is $21.99/lb - forget it, they'll use sirloin") the crunch is coming from smaller and smaller quanties for the same price.  I am a cook and this is an epidemic.  From bagged greens (halved in size over the past year) to chocolate, cheese slices, candy, juice- it's a continual drop in quantity (i.e. inflation).   There are about ten items I track - milk, steak, chicken, lettuce, eggs, cheese, cereal, bread and soft drinks.  In the past four years these have undergone an incredible rise in cost. 

I too have the longterm food supply and like Publix for all the 2 for 1 items.  One i use, the other goes into storage/freezer.  Last week I got oil, flour, ribs, cereal and beans this way.  Good luck and keep stocked up.

Sat, 12/15/2012 - 02:42 | 3065796 snblitz
snblitz's picture

dove soap was 4.5oz now 4.  (though is started out long ago at 8)

whipped cream was 14oz, now 13oz. (was 16 long ago)


Fri, 12/14/2012 - 21:52 | 3065401 seataka
seataka's picture

"Hunger has no conscience" Charles Chaplin

Fri, 12/14/2012 - 22:19 | 3065467 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

I’m not worried and neither should you be, I have learned so much on ZH allow me;

The Federal Preserve --the last baker of choice. Determines what baked goods and how many are allowed to circulate. Charged with creating bread and circus*. Headed by Chairman Boweeval.

The Central Baker – issues dough to all the subordinate bakers and provides a source of liquid bread.

Your Local Baker -- produces and provides a place for you to find all kinds of baked goods and provides loafs to help small businesses grow;  like starting up a bread delivery business.

Quantitative Yeasting – making dough out of thin hair.

IMF – International Mouth of Flapjacks – sets the standard by which all dough is cooked.

Golden Wheat – the nemesis of the Federal Preserve, stored and valued by Central Bakers around the world.

*Circus- no one is every unemployed at the circus, no matter how freakish.

Fri, 12/14/2012 - 20:48 | 3065203 ZFiNX
ZFiNX's picture

It's all organic in the end, guys, just remember that. We're all formed out of the same stuff. The free market is whatever nature decides it is today. We are just making it up as we go along, whether what it appears this crazy society is doing is 'lassez faire' or 'socialism' (made up words about human interactions) it's all part of the same petri dish, forming just as organically as any other phenomenon in the universe. Step outside for a second and watch this happen like you were an alien without any understanding of economics.

Fri, 12/14/2012 - 21:11 | 3065279 cossack55
cossack55's picture

Where did I read this lately: Nature always bats last!!!

Fri, 12/14/2012 - 22:06 | 3065432 CH1
CH1's picture

"Reality bats last."

From a gentleman named Cooper, as I recall.

Fri, 12/14/2012 - 22:16 | 3065464 Dr. Sandi
Dr. Sandi's picture

Yeah, D.B. Cooper.

I wonder if he and his cash were ever reunited.

Sat, 12/15/2012 - 09:34 | 3066068 GetZeeGold
GetZeeGold's picture



Thanks to D.B. we all have jobs - The TSA

Sat, 12/15/2012 - 11:52 | 3066252 Mike7.62
Mike7.62's picture

I believe it was Col. Jeff Cooper. Great man.

Fri, 12/14/2012 - 23:24 | 3065590 NeedtoSecede
NeedtoSecede's picture

Wave after wave will flow with the tide, And bury the world as it does, Tide after tide will flow and recede, Leaving life to go on as it was...

Fri, 12/14/2012 - 20:53 | 3065214 Dannyb2b
Dannyb2b's picture

You need to stimulate the economy directly without going through the banking system. The banks only lend money if they think it will profit them. A non debt based system where the monetary authority deals directly with the citizenry to conduct monetary policy is needed.

Fri, 12/14/2012 - 21:30 | 3065346 cranky-old-geezer
cranky-old-geezer's picture



You need to stimulate the economy directly without going through the banking system.

No, you don't understand, it's not about helping the economy, that's just a cover story. 

It's really about looting the economy, and banks are doing the looting, ok, Fed doing the looting for banks, why QE all goes to banks.

I'm surprised how many refuse to see it, even many here on ZH.   Everything the Fed has done last 4 yrs is looting the economy, giving it to banks ...and the government for playing along.

Fri, 12/14/2012 - 21:57 | 3065407 seataka
seataka's picture

Perhaps the concentration of wealth has some upside, the line to the gallows will be shorter.

Fri, 12/14/2012 - 22:47 | 3065521 cranky-old-geezer
cranky-old-geezer's picture



What line to what gallows?

Never gonna happen.

Sat, 12/15/2012 - 07:49 | 3065978 negative rates
negative rates's picture

I beg to differ, I already posted that I would give plenty of notice when it is time for the constitutional convention to arrive to your state and country. It will happen, you just have to be patient enough to wait for it.

Fri, 12/14/2012 - 22:12 | 3065449 disabledvet
disabledvet's picture

Not sure how much "government" can play along right now. Unless and until a sensible tax policy is elucidated (I've called for a national sales already have one on gas and cigarettes). Obviously "be good for farming" of course as people will come up with all sorts of productive ways to avoid "the dread retailer." who cares anymore anyways...right?

Sat, 12/15/2012 - 06:33 | 3065933 quadcap
quadcap's picture

Oh, you've "called for" a national sales tax, have you?   Who the fuck are you to call for the banksters to get another slice of the pie?  Dipshit.


Sat, 12/15/2012 - 07:03 | 3065949 overmedicatedun...
overmedicatedundersexed's picture

King Corzine says:" it's legal and there is no controlling authority, so whats the problem??"

Sat, 12/15/2012 - 10:47 | 3066163 GetZeeGold
GetZeeGold's picture



If you've got Eric Holder on your's not a problem.


No...I'm not going to explain what a Rolodex is.......Google it.

Fri, 12/14/2012 - 22:28 | 3065490 DeadFinks
DeadFinks's picture

Looting the economy is the reward for our current "leaders'" and bald faced propagandists' (fronted by the most unabashed and over-exposed liar) management of the decline of our country.  Priority 1 for them is save their own asses; priority 2 is to slowly, incrementally administer the pain that is inevitable to the "rest" of us.

Sat, 12/15/2012 - 00:58 | 3065724 tango
tango's picture

The problem with your thesis is that it contradicts reality and makes no sense economically. Investment banks need capital and business activity to exist and you don't get that by having a poor populace.  Although FED actions have helped large investment banks, Tyler has pointed out repeatedly that Bernanke has done everything except except fornicate in public to get money OUT of banks and into the hands of citizens.  

FED actions are dangerous, harmful and irrational but I don't think there's any grand plan - simply last gasp reactions by the "experts" to keep the thing going until they are out off the hook.  They know, you know and I know that we are utterly bankrupt but as long as folks pretend the emperor has clothes, the show will go on.

Sat, 12/15/2012 - 11:39 | 3066235 Absinthe Minded
Absinthe Minded's picture

Do you really think Bernanke gives a shit about you or I? Nonsense. He will say whatever it takes to keep the populace believing. If he really cared he would stop bullshitting and talk straight about our situation. The spending has to stop, we have to follow Ron Paul's plan to reduce spending. Just because you shut down some of these sectors of government doesn't mean they are gone forever. Do it until we get our deficit under control and then bring them back in accordance with need. I'm of the opinion we need to not bring some of them back at all. Our corporations sold us out by moving manufacturing overseas. Until we can bring it back we are screwed.

Fri, 12/14/2012 - 20:52 | 3065215 q99x2
q99x2's picture

Nicely written article. They have to have 1.5 min. growth or SHTF. An outside (drunken black swan) could collapse the entire thing. So if you are a corporation with enough money and power you can bring the whole thing down if "they" don't pay up. The worse it gets the less likely it is to survive.

Fri, 12/14/2012 - 21:09 | 3065264 Ignorance is bliss
Ignorance is bliss's picture

System blackmail by Greece, Spain, Porugal, Ireland. Cyprus, California, Indiana, and so on and so on...

Fri, 12/14/2012 - 20:56 | 3065223 sangell
sangell's picture

Would like to hear Martenson's take on what would be happening if there was no globalized money printing taking place, not that I like it. One thing that is fairly clear would be most of the developed world's governments would have fallen.

Fri, 12/14/2012 - 22:05 | 3065430 formadesika3
formadesika3's picture

I think this is related to your question.’t-money-good-no-more

When MMFs are no longer considered to be "money."

Sat, 12/15/2012 - 00:28 | 3065689 dexter_morgan
dexter_morgan's picture

"One thing that is fairly clear would be most of the developed world's governments would have fallen."

You say that like it's a bad thing.


Fri, 12/14/2012 - 21:01 | 3065235 The Miser
The Miser's picture

There are not enough buyers of our debt now.  Went went over the fiscal cliff in 2008 and we have not hit the bottom.  It will not end well.  Splat!

Fri, 12/14/2012 - 21:09 | 3065270 Atomizer
Atomizer's picture



Gang of Four, Chinese (Pinyin) Sirenbang or (Wade-Giles romanization) Ssu-jen-pang,  the most powerful members of a radical political elite convicted for implementing the harsh policies directed by Chinese Communist Party (CCP) chairman Mao Zedong during the Cultural Revolution (1966–76). The group included Mao’s third wife, Jiang Qing, and Wang Hongwen, Zhang Chunqiao, and Yao Wenyuan. Their backgrounds were similar in that prior to 1966 all four were low- or middle-ranking officials who lacked leverage within the existing power structure. Shared traits included their ability to manipulate the mass media, their good standing with Mao, and their dislike of and subsequent desire to overthrow moderate government officials who clustered around Liu Shaoqi and Deng Xiaoping.


The group came into prominence in 1965 when Wu Han’s play Hai Rui Dismissed from Office was banned as a direct result of an investigation by Jiang into its political character, which resulted in a published denunciation of the play by Yao. This case set a precedent for radicalizing the arts and, in effect, signaled the beginning of the Cultural Revolution.


As the Cultural Revolution intensified, the members of the Gang of Four advanced to high positions in the government and the CCP. Manipulating the youthful Red Guards, the Gang of Four controlled four areas: intellectual education, basic theories in social sciences, teacher-student relations and school discipline, and party policies regarding intellectuals. After the initial turmoil of the Cultural Revolution subsided in 1969, the Gang of Four maintained their power through control of the media and propaganda outlets and by their seeming adherence to Mao’s policies and wishes. With Mao’s death in 1976, however, the Gang of Four lost their remaining power and were imprisoned and later tried in 1980–81 for their activities during the Cultural Revolution. Jiang and Zhang both received suspended death sentences (both reduced to life imprisonment in 1983); Wang was sentenced to life imprisonment, and Yao to a 20-year term.

Gang of Four - Love Like Anthrax


Fri, 12/14/2012 - 21:55 | 3065404 Bicycle Repairman
Bicycle Repairman's picture

When people ask me, "Why do you oppose gun control?", I like to point to the cultural revolution.  If a group of college drop-outs show up in my town playing a squeeze box and looking to put a dunce cap on my head, there will be immediate consequences.

For them.

Sat, 12/15/2012 - 04:20 | 3065858 Freddie
Freddie's picture

Gang of Four - Armalite Rifles

Armalite rifle police and ira
Armalite rifle use it everyday
Breaks down easy fits into a pram
A child can carry it do it no harm
Armalite rifle and the holy trinity
It’s used against you for irish jokes and the bbc
Armalite rifle please skew the aim
Armalite rifle use it everyday
The rifle does harm it shoots for miles
If a bullet gets you in the heart destroys your insides
Armalite rifle police duty eh?
Armalite rifle use it everyday
It’ll do you damage it’ll do you harm
Blow your legs off blow your guts out
I disapprove of it so does dave
It’ll do you damage it’ll do you damage
Damage damage damage damage damage

Oddly enough - Gang of Four was a fairly marixist band from bloody Leeds.

This was a crackin tune:

Sat, 12/15/2012 - 13:29 | 3066476 Atomizer
Atomizer's picture

Without a doubt, it definitely was Freddie. Too this very day, I cannot see how average joe managed to emerge from the scene unscathed. For the period of that time frame, it was about raw noise, stage diving, moshing and trying to understand other walks of life. My story is as old as the present Bernanke ponzi scheme.. It’s no wonder the music industry is moaning about low sales, the propaganda mission has run its course..



Fri, 12/14/2012 - 21:10 | 3065274 CashIsTrash
CashIsTrash's picture

POSSIBILITY OF A CURRENCY CRISIS?? I would say it's a guarantee!

Fri, 12/14/2012 - 21:30 | 3065344 michael_engineer
michael_engineer's picture

Looks like exponential attempts to catch up or to cover with the knee of the curve to the left of us. It's growing quickly now.

Fri, 12/14/2012 - 21:49 | 3065396 russwinter
russwinter's picture

Announcements are one thing, but just wait until this money printing (from numerous central banks) actually flushes into the system week after week. They will have little control over where it goes, and that will mostly be where they don't want it. 

Fri, 12/14/2012 - 22:18 | 3065469 Dr. Sandi
Dr. Sandi's picture

Huge amounts of money in a system emptied of its wealth.

You're soaking in it.

Fri, 12/14/2012 - 22:00 | 3065418 lakecity55
lakecity55's picture

Jeez, you can't do anything but hoard cash and PMs.

All I want is a reasonably honest market, where guys like Corzine go to jail, where Taxpayers don't fund failing car companies.... and where bondholders don't get burned.  I guess that's too much to hope for.


Fri, 12/14/2012 - 22:23 | 3065478 Dr. Sandi
Dr. Sandi's picture

You poor bastard. You must have gone to the same schools I attended as a child.

Here's the problem that a lot of people like me seem to have. When we figured out that they were lying to us about Santa Claus, the Easter Bunny and the Tooth Fairy, we kept on believing the other shit they fed us, for no adequately explained reason.

Sat, 12/15/2012 - 00:07 | 3065665 DoChenRollingBearing
DoChenRollingBearing's picture

@ lakecity55

+ 1, nicely said.  An honest system, now too much to hope for.

Fri, 12/14/2012 - 22:08 | 3065437 realtick
realtick's picture

The S&P Will Go Negative - The Recession Will Be Official

Sat, 12/15/2012 - 04:25 | 3065865 Freddie
Freddie's picture

Apple will save the S&P 500.  ;-)

Fri, 12/14/2012 - 22:16 | 3065465 ISEEIT
ISEEIT's picture


I'm sorry, but anyone who doesn't see what's going on needs to change the channel. This is in fact all part of the 'plan'.

Fri, 12/14/2012 - 22:38 | 3065507 blindman
blindman's picture

stealing is the word. it is systemic stealing
because the idiots think they can. don't
dignify it with attempts at intelligent
conversation and analysis. it is fucking, broad daylight
stealing at the highest levels. period.
it is a massacre and ..
"There is nothing intelligent to say about a massacre."

Fri, 12/14/2012 - 22:42 | 3065514 Pejorative Requiem
Pejorative Requiem's picture

Everything seems so absurd right now..... maybe they're right. Maybe no one ever tried it on such a a grand scale. Maybe the unique nature of the dollar. Maybe there is a new dynamic born from the new and unique concept of a global economy. Maybe they'll fill a straight flush on the river.

Fri, 12/14/2012 - 23:10 | 3065577 Stuart
Stuart's picture

it's no mystery at all, these markets, central authorities have them locked up tight.   We're all not that stupid to to fail to get what intuitively should happen so wrong.  We got it right, that is is what should have happened...i.e. the dollar, gold, treasuries....  Gravity was turned up side down and we knew it shouldn't have happened.   HFT bombing the gold market is an absolute tell that the markets are being centrally forced to behave.   The markets are the equivalent of public outcries of emotion in North Korea.   One staged event after another by central planners.   

Fri, 12/14/2012 - 23:12 | 3065580 gould's fisker
gould&#039;s fisker's picture

The market isn't broken, it's been bought and paid for and is bending over as far as it can while rythmically chanting may i have another.  It goes on like this until it falls on it's head--anyone's guess when--and then the Fed Chairman and all the ass hats in DC that he's covering will have no more clothes. Banzai Bitchez!

Fri, 12/14/2012 - 23:26 | 3065601 Jack Burton
Jack Burton's picture

This simply confirms what ALL the evidence since the 2008 collapse has shown! Let's be real, we know what banks were playing at and it blew up the financial and market systems.

Of course markets don't now send accurate price signals. I've been screaming that since 2009!

I have tried to accept that the bailouts were necessary to prevent total collapase. But on the face of everything I have seen, we have built a new system of money printing that goes to a top elite of traders, banks, trading firms, hedge funds and speculators smart enough to be on the right end of the money printing machine.

This is a giant rip off for well over 99% of us whose earned dollars are being destroyed while trillions flow straight up.

This is not a free market. It is not even a market. It is too corrupt to be called capitalism where everyone has their chance to win. Come off that idea! I said way back in 2009, "Give me 1 billion dollars at ZIRP" and I will pay back the principle and make myself rich without risk and without work." That is what the connected financial elites are doing!

And I am sick of being called a socialist for pointing that fact out. THEY are socialists, not me! I want the market and market risk, and price discovery back in the system. Right now it is gamed for a tiny elite minority who play a no lose game with the FED.

Sun, 12/16/2012 - 06:07 | 3068291 resurger
resurger's picture

risk lol, what risk ... just buy buy buy Q#W$ERW$%@$%!#$

Fri, 12/14/2012 - 23:38 | 3065625 Serfs Up
Serfs Up's picture

My is coming....

Fri, 12/14/2012 - 23:56 | 3065644 tip e. canoe
tip e. canoe's picture

to borrow another quote from Joel Salatin : “Realize that agendas drive data, not the other way round”

to borrow another : “The stronger a culture, the less it fears the radical fringe. The more paranoid and precarious a culture, the less tolerance it offers.”

and another : “When faith in our freedom gives way to fear of our freedom, silencing the minority view becomes the operative protocol.”

one more : “How much evil throughout history could have been avoided had people exercised their moral acuity with convictional courage and said to the powers that be, 'No, I will not. This is wrong, and I don't care if you fire me, shoot me, pass me over for promotion, or call my mother, I will not participate in this unsavory activity.' Wouldn't world history be rewritten if just a few people had actually acted like individual free agents rather than mindless lemmings?”

chris & joel podcast

bonus : "we ask for too much salvation by legislation. All we need to do is empower individuals with the right philosophy and the right information to opt out en masse.”

Sat, 12/15/2012 - 00:00 | 3065654 mogul rider
mogul rider's picture

you know what

20 little kids died today while you fucking degenerates act like the basement dwelling dicks you are.

look at today as $1700 gold

imagine what your world is gonna be like at $4500.

It's time to shut Zero Hedge off for good

you guys have droned for 5 years now and it is still the same shit just regurged for clicks...

You're so yesterday

Sat, 12/15/2012 - 13:35 | 3066496 Pareto
Pareto's picture

hey ass clown!  what the hell r u talking about?  Which is it, my being short, or being long that somehow inadvertently caused a butterfly to flap its wings in Japan, or, a 20 year old psychopath to go batshit crazy?

Sat, 12/15/2012 - 14:05 | 3066573 Ness.
Ness.'s picture

Slow your roll.  15 people were shot within 1/2 mile of the POTUS' home last night.  It happens every night.  There will be 50 shootings and 10 dead within a square mile of the 'community' this weekend.  I doubt you'll see a tearful response from those in charge about those 'little kids'.  It's time for you to grow up.  Santa isn't the guy who eats your cookies and drinks the milk.

If the truth is too difficult for you to handle, you're not ready yet.  

Sat, 12/15/2012 - 00:01 | 3065659 RobotTrader
RobotTrader's picture

Martenson dead wrong again.

Gasoline prices in Los Angeles now in a full fledged collapse.


Sat, 12/15/2012 - 05:43 | 3065919 Element
Element's picture

That's due demand destruction ... hardly something to be cheered up by robo.

What the hell did you think was going to happen at those elevated levels in a crapped-out US and global ekonomie?

Stabileetee? Growf? Higher gas consumption? Increased savings and investments by broke-ass peasants?

Sun, 12/16/2012 - 12:58 | 3068696 LawsofPhysics
LawsofPhysics's picture

Compared to when?  what was the price in 2000 again?  idiot.

Sat, 12/15/2012 - 00:05 | 3065663 Westcoastliberal
Westcoastliberal's picture

IMHO, QE=worthless money.  It has to work that way either slowly over time, or at some dramatic point when some event requires society to "get real".  This malarky has been going on for much too long now, and my gut tells me we're just about out of runway.  Either this buzzard somehow launches and rights itself, or we skid off back into the dark ages.  Where's that damn galactic federation of light?

Sat, 12/15/2012 - 00:07 | 3065666 toomanyfakecons...
toomanyfakeconservatives's picture

Hard goods and commodities... you can't create fiat kerosene or fiat canned chili, but both will keep you warm in the winter.

Sat, 12/15/2012 - 00:15 | 3065671 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

An Experiment

Economic science in its perverse form was create a century ago at round tables by well meaning nerds and rich business men to better the situations of everyone, meaning the business men first and foremost.  It may have evolved from crawling on four legs or maybe it just grew eyes in the back of its head but any way we look at it it has morphed into a half brained monster that will eat its own children just to survive one more day. 

Morphing from child monster it grew another head when it was adopted by those who used the Keynesian method (however true to Keynes form it really was).  Soon debt was seen from the monsters third eye as beautiful; petals on a flower - the sun dipping into the dusk of the ocean.

Rules were written that would become presciption:  the "Rational Consumer" thoery being one of utmost importance however seldom spoken.  These would act as guidelines through bad times but ignored through the good.  People would be told to spend through catasrtophe by politicians who had inherited a fortune when economic data was ignored.  It wouldn't matter if retirement savings had just been decimated.  "Can I borrow a dollar?" ....the billionaire would ask. be continued....I am out of beer.

Sat, 12/15/2012 - 00:30 | 3065695 Yen Cross
Yen Cross's picture

 The Fed. has managed to piss off every sane American with 1/2 a brain, and now moved overseas to Asia and the E/Ms to put the screws to their economies... Take a look at this article.

 RBA has reason to fear ‘currency wars’

  Is Australia the next Japan or Switzerland? The betting window is open/

Sat, 12/15/2012 - 05:44 | 3065911 Element
Element's picture

Glorious isn't it Yen, the uncompetitiveness you're having, when you're not being uncompetitive.  All that driving up the AUD and restricting mineral and energy supply does is to shovel input-price inflation back into Asia in a big way. CB devaluation and hot-money is not going to solve anything.

A necessary part of the competitiveness answer for Asia (and for Australia) is to let the AUD collapse, make it collapse, so the better purchasing-power in commodities flows more freely into lower production input prices, therefore into better affordability, and therefore into better export-competitiveness for Asia.


We're going in reverse at the moment. Time to get smart about this.

Sat, 12/15/2012 - 17:02 | 3067043 Yen Cross
Yen Cross's picture

 Missed your reply element/ great comment as usual ;-) The reason I used Japan and Switzerland as examples, is because they have both re- written the book on intervention.

  The swiss chose to use negative interest rates(currency peg) and endless CHF printing, whereas Japan has printed endlessly(unsucessfully). Japan has decided to print even more, but under the quise of offshore asset purchases rather then a currency floor.

   Both of those endeavors were extremely expensive from National Debt perspectives. Australia is an export economy, via resources, and I agree with you. I think Australia should diversify more into manufacturing, and like Japan start using is foreign currency reserves to aquire more assets abroad while their currency is strong.

   Australia needs a more diversified GDP or they are toast! ;-)

Sun, 12/16/2012 - 08:14 | 3068322 Element
Element's picture

Manufacturing is struggling now Yen, the conditions for expanding manufacturing aren't too good. The only thing in our favour is Australian products work and last a long time, people trust them. High tech and heavy-engineering products we can get good at. It would be a "build it and they will come" thing though, as banks are getting gun-shy on this stuff. Con-fidence is not as high as it was. Things are slowing and unemployment is rising a little.

As to using foreign currency reserves to aquire more assets abroad while the currency is strong.

Good idea, the old fiat system is a little bit too slippery these days. ;)

Sat, 12/15/2012 - 01:30 | 3065750 blindman
blindman's picture

the wars are fought on three fronts.
the physical, emotional and the
intellectual. choose your battles
wisely, know your adversary and your cause.
the adversary will attack on all three fronts.
power comes from integration of
seemingly disparate elements, allthreefronts,
making connections that go unnoticed,
crude imitations of the natural cause.
defend your self on all three fronts

Sat, 12/15/2012 - 17:04 | 3067047 Yen Cross
Yen Cross's picture

Excellent post BlindMan! I did a screenshot as a reminder. :-)

Sat, 12/15/2012 - 01:34 | 3065752 pfairley
pfairley's picture

Former Fed William Poole says money is NOT being printed...only bank reserves being increased by the QE's...A John Hopkins professor said similar..saying it is 'state money' being printed...and that more meaningful  money supply definition is actually down 8% since QE's started.  Poole says inflation or money printing will only take place when banks start lending in force...multiplying the increased bank reserves by more lending in the fractional banking system.,,that means more cmbs and mbs and other NEW loans not just bidding up of prices of existing debt securities as investors move away from low yield Treasuries  and buy other debt

 If you want to get confused try to read the economists at Pragmatic Capitalism's website....they say  money is only created thru gov deficits?  I go with more traditional views of money creation increased by bank lending and the fractional banking system....and that govt deficits are like commercial loans to  businesses of questionable value.


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