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Santelli And Schiff On Bernanke's "Roach Motel Of Monetary Policy"

Tyler Durden's picture


From the government-induced structural unemployment malaise to the implosion of our entire 'artificial economy', Peter Schiff and Rick Santelli explore the dark side of monetary policy in this brief clip. On the Fed's new policy and potential exit strategy, Schiff notes that "the Fed is constructing goalposts so it never actually hits them; the Fed is never going to tighten." While Santelli tends to agree with Schiff on the eventual collapse of the USD under this never-ending Fed easing scenario, he notes that getting a fix on that USD weakness is hard given everyone is racing to debase. Schiff notes, oil prices, gold prices, food inflation, and real assets all send the signal that Bernanke chooses to ignore and on the topic of 'monetization' which Bernanke seemed so 'put off' by during the press conference last week, Sch-antelli both seemingly (obviously) conclude that the mere mention of an exit at some point in the future by the great and powerful Oz does not preclude the fact that 90% of current Treasury issuance ends up on the Fed's books... leaving the fact that selling any of this "would make 2008 look like a Sunday picnic."



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Mon, 12/17/2012 - 16:13 | 3072308 ekm
ekm's picture

"Roach motel" is from Seth Klarman's Margin of Safety book.


I call it straigtly "insect trap". This is what I've been preaching so far, gents.

It's an insect trap. You can get in, you can't get out.


One more proof that the Fed is tool, not the boss. If Fed were the boss, they wouldn't done things to self destruct.

Mon, 12/17/2012 - 16:16 | 3072342 economics9698
economics9698's picture

When this shit hits confiscate all banker assets.  Then hang eh high.

Mon, 12/17/2012 - 16:20 | 3072367 Pladizow
Pladizow's picture

So Peter has burnt through all the CNBC puppets and now they have him talk to the only one that sides with him!

Mon, 12/17/2012 - 16:24 | 3072382 redpill
redpill's picture

All the rest are worried about showing up on future installments of "Peter Schiff was right" videos in a few years...

Mon, 12/17/2012 - 16:38 | 3072454 Dr Paul Krugman
Dr Paul Krugman's picture

I'm not worried.  The boobs at cnbc only have one goal - to make as much money as their grubby hands can get ahold of.

Finance will be upset with politics and economics when the latter dares to question the motives of making money in the face of a a stricken system.  Doomsday preppers will cling to their guns while innocent lives are lost daily.  Gold bugs scream at the top of their lungs for a standard for finance as barbaric as the daily shooting sprees.  When will people see it is not about them, it is about the greater good.

Also, note that the above men have been wrong on their calls for a collapse due to increased debt.  Wrong.

Mon, 12/17/2012 - 16:52 | 3072515 Bay of Pigs
Bay of Pigs's picture

Big Blue, McDonalds and Travelers all leading the market higher.

What could possibly go wrong?

Mon, 12/17/2012 - 17:02 | 3072550 Dr Paul Krugman
Dr Paul Krugman's picture

I am pleased that Bernanke has decided to set precise targets with the economic stimulus because it shows that the Fed is making progress learning that they shouldn't do anything stupid - like raise rates, like the ECB.  At the same time the policy is a flatline continuation of past policy:  it isn't a game changer.  What is needed is a major policy that will end this depression now!

Mon, 12/17/2012 - 17:20 | 3072610 Michaelwiseguy
Michaelwiseguy's picture

So now everyone agrees with me and what I said many yeas ago. Peter Shiff articulated it beautifully.

There is going to be a complete and total worldwide economic collapse at some time in the not too distant future.

Complete and total bond market collapse. Check

Complete and total derivatives market collapse. Check

Complete and total dollar collapse. Check

Any questions?



Mon, 12/17/2012 - 17:37 | 3072698 Al Gorerhythm
Al Gorerhythm's picture

Yes. What's the December rainfall average for Monrovia?

Mon, 12/17/2012 - 17:41 | 3072713 pods
pods's picture

What is the air speed velocity of an unladened swallow?

Mon, 12/17/2012 - 17:53 | 3072755 Al Gorerhythm
Al Gorerhythm's picture

I don't know, but will it carry me to Monrovia fully laden?

Mon, 12/17/2012 - 21:56 | 3073474 Muppet of the U...
Muppet of the Universe's picture

What's the color of fragility?

Mon, 12/17/2012 - 20:36 | 3073237 Turin Turambar
Turin Turambar's picture

African or European?

Mon, 12/17/2012 - 21:13 | 3073347 chump666
chump666's picture

That was quite amusing.

Mon, 12/17/2012 - 21:14 | 3073348 Michaelwiseguy
Michaelwiseguy's picture

Four foot one.

6.8 liters.



Mon, 12/17/2012 - 17:38 | 3072700 Harry Dong
Harry Dong's picture

I was re-reading one of Shiff's book last night. This is before ZIRP. I like how all of his "there's no way the FED will do x, y and z 'cause it'll destroy the dollar" have come and gone. 

Now it's getting so easy, I can even understand it. 

Disclosure: I'm long nickels.



Mon, 12/17/2012 - 17:41 | 3072708 Texas Ginslinger
Texas Ginslinger's picture

Does Schiff ever talk about federal taxes..??

The non-payment of the same is why his dad chooses to live in prison..

Odd choice... 

Mon, 12/17/2012 - 21:17 | 3073365 SmallerGovNow2
SmallerGovNow2's picture

nebbish like no true Texan i know....

Mon, 12/17/2012 - 18:39 | 3072919 Landotfree
Landotfree's picture


Schiff is an idiot.  The Fed could hike the overnight rate up to 10% and their will be the equilavent of financial mushroom clouds tomorrow morning when none of the ATMs work.  The problem is simple, the system is no longer growing at an exponential rate, yet you need exponential rate for it to sustain itself.   

Yes, it will collapse but certainly not for the reason specified by Schiff.   Heck, love his dad, but his dad was a legal idiot, had no idea how sustain his God given rights.

Mon, 12/17/2012 - 21:19 | 3073372 SmallerGovNow2
SmallerGovNow2's picture

you are not very bright michael....

Mon, 12/17/2012 - 21:20 | 3073376 Michaelwiseguy
Michaelwiseguy's picture

The Fed will not hike rates for the rest of their history.

The Fed will not stop buying US Treasuries for the rest of their history.

The Fed will be history.

Tue, 12/18/2012 - 00:33 | 3073829 All Risk No Reward
All Risk No Reward's picture

Folks, you have to do the research first - then you can identify contradictions and fallacies.  You aren't on to reality until there are no contradictions.

Here are some key information points that believe to be facts:

1. The international banking cartel controls the biggest banks in the world, including in the US.

2. The Federal Reserve Board is made up of people who represent the interests of the international banking cartel.

3. The international banking cartel created Debt Money Tyranny to loot host nations in a way that most won't understand they are being looted. 

Debt Money Tyranny

4. The MAJORITY OWNERS of the big money center banks use the Federal Reserve to protect their own self interests.

5. The MAJORITY OWNERS and their corporate fronts own trillions in debt olbigations and trillions in cash.

6. The MAJORITY OWNERS' front banking corporations are lending 30 year money at 3.2% right now.

7. The MAJORITY OWNERS control monetary policy NOT GOVERNMENT.

8. "Government" has been a "monetary beggar to MAJORITY OWNERS for 100 years.  The borrower is SERVANT to the lender.  Duh.  The hand that giveth is greater than the hand that receiveth.  Duh.

9.  The MAJORITY OWNERS out finance and out promote any and all competititon to their political operative class. 

If you believe each of these points...  it is NOT in the self interest of the MAJORITY OWNERS to hyperinflate UNTIL they bankrupt everyone they can and roll up REALITY undeer their front corporation control.

That means it is in their interests to allow the Ponzie to collapse while using their control over government to protect their trillions in cash and debt assets.  They will then convert it all, for pennies on the dollar, into ownership of REALITY - and the fact your family will be starving doesn't bother them a bit.  Remember, 3rd world Africa and 30 million malnutrition and starvation deaths are the result of their POLICY DECISION.  No, America is not better, we were just allowed to have resources and the policy was to deny resources to much of Africa.

Turn off the electricity in America and leave it off - third world Africa will look like the height of civilation compared to what America would devolve into.

The end result will likely be hyperinfation.  That will balance the books, as it were.

But before they do, a RESOURCE GRAB is almost assuredly going to take place.  Bailing out debtors won't do it.  Busting debtors will.




Mon, 12/17/2012 - 18:45 | 3072937 analyzer_66
analyzer_66's picture

Sorry Kruggy, you got us here and you cant get us out.  Only a matter of time before foreign holders of our debt refuse to tolerate the negative real interest rates on our bonds and the USD is kicked aside as world reserve currency and petro dollar.  Zero interest rate policies have never produced any jobs, and after 4 years, no one at the Fed seems to have noticed.

People with large Cd's have tho and soon they will go overseas for returns or stack more gold and silver and take back their money from the greedy banks paying a fraction of negative interest on savings.

Mon, 12/17/2012 - 17:35 | 3072687 Al Gorerhythm
Al Gorerhythm's picture

Even his namesake is an idiot. Does the Name Krugman have a gravitational pull of its own, where the core of idiocy resides?

Mon, 12/17/2012 - 17:56 | 3072765 Al Gorerhythm
Al Gorerhythm's picture

   'Also, note that the above men have been wrong on their calls for a collapse due to increased debt.  Wrong.'

What's your numeraire or yardstick that you apply to measure collapse?  The US dollar, no doubt.

Mon, 12/17/2012 - 18:25 | 3072880 hairball48
hairball48's picture

"Also, note that the above men have been wrong on their calls for a collapse due to increased debt. Wrong."

up to ain't over till it's over. Like him or not, Schiff has made a lot more correct calls than incorrect over the last 5-10 years.

Tue, 12/18/2012 - 00:44 | 3073847 All Risk No Reward
All Risk No Reward's picture

Schiff has made some good calls and some bad calls.  Is he better than bankster propaganda "news" channels?  Absolutely.  I don't think Schiff lies for aliving like almost all the MSM.  Lie to benefit Big Finance Capital that ultimately pays their check and owns/funds their networks.

But I think his "straight to hyperinflation" argument is patently and obviously wrong when one understands the basics of the system.

Let me break society into two camps - the DECISION MAKERS and everyone else.

The DECISION MAKERS control Fed policy.  Everyone else lives with the results.

WHO are the decision makers?  WHAT are the interests of these decision makers?

My research yields the following to answers...

WHO - the private international banking cartel

WHAT - to increase their true wealth and control over society

So, this international banking cartel or, if you will, Big Finance Capital, owns trillions in cash and trillions in debt instruments.  They are also the DECISION MAKERS.

Would you go straight to hyperinflation when you own more cash and debt instruments than any other similar group on the planet - BY A LOT?

Would you be telling your front banking corporations to lend 30 year money at 3.2% just ahead of your decision to hyperinflate?

Do you really think these people who own and control the world to a large degree are so STUPID that they don't know lending 3.2% money for 30 years ahead of thewir hyperinflation will hurt them badly?

If so, you've been had - the propaganda has worked.

Tue, 12/18/2012 - 00:52 | 3073863 I think I need ...
I think I need to buy a gun's picture

depends on your definition of hyperinflation, you don't have to lose your currency albeit it values at a lot less, schiff cannot say everything he wants to on financial tv,,,,absolutley not he knows where we are going (aka argentina not zimbabwe) he has to talk his austrian book or he wouldn't be allowed on period i even think he knows gold is going higher than some of his predictions but would never be allowed to say what's really going on and how it finally ends but he has slipped little things in there and he is just an awesome teacher,,,,,,,,,

Mon, 12/17/2012 - 21:10 | 3073334 chump666
chump666's picture

I only listen to traders, market players (or used to be) like the "above men". We are doomed, the market is showing that with disconnect trades all over the place.  More so with equities and inflated FX via GBP, CAD, AUD and of course your friend Abe just selling off the YEN, as Japan is literally finished as a economic country. 

"The greater good" is arrogance personified - every human, crony system has argued that exact point, and if you followed the ebbs and flows of natural systems, arrogance has no place.  The system needs a flush, a painful deflationary flush, but necessary.  What Bernanke is doing is self destruction, I'm betting next year, 2013, the market will cannibalize thanks to HFTs running the whole index trades.  Thus causing the liquidity addicted institutional traders (Wall Street cartel which runs the Fed) to panic like we have never seen before.

The punch bowel should have been taken away...


Mon, 12/17/2012 - 16:43 | 3072475 I am more equal...
I am more equal than others's picture

leaving the fact that selling any of this "would make 2008 look like a Sunday picnic."


"Hey Booboo...?"

"Yeah Yogi, looks like picnic season is about to start...."

"Range Smith is going to be really mad if you steal those baskets."

Mon, 12/17/2012 - 16:44 | 3072483 ATM
ATM's picture

They shouldn't have to worry about that. All those segments will have been scrubbed from the internet by the Google Nazis.

They control history because they control the content.

Mon, 12/17/2012 - 16:56 | 3072527 Fish Gone Bad
Fish Gone Bad's picture

They rewrite history.  Those who control the past control the present, those who control the present control the future.

Mon, 12/17/2012 - 16:53 | 3072497 DaveyJones
DaveyJones's picture

it is a sick dark comedy isn't it. I love the Bernanke line that he isn't monetizing cause he intends to sell it back at some point. You honor, my client is not stealing because he intends to give it back at some point which is yet to be determined. 

Tue, 12/18/2012 - 00:19 | 3073792 All Risk No Reward
All Risk No Reward's picture

The monetary system is a fraud. 

Debt Money Tyranny Exposed:

Reviewing that chart, the only way to truly fix this problem is to confiscate those ill gotten gains at the top and use it to pay off the mirror debt imposed upon society.  The international banking cartel's personal monetary wealth and their corporate front monetary wealth IS OUR DEBT.

Read that however many times you need to in order to understand it.

The criminal bankster class Jefferson fought, Jackson fought, Lincoln fought, etc...  rigged the system so that socioety has to rent its money from them and their front corporations.  No debt, no money.  No ever accruing interest to them, no money.  Their money is our inextinguishable debt.


The traitor is the plague...  and the traitor is using its false monetary wealth and societal constraints to control the nation states and bomb or threaten tot bomb all those that they don't control.

While this might appear to be some kind of joke...  so did John Wayne Gacey...  and we will find out what those kids eventually found it...  and it ain't gonna be nice.

The system is working beautifully.  It isn't broken.  It is efficient.  They sinply lie to you about the purpose of the system.

Just like they lie to you and say that Obama is spending the nation when the Republican controlled House is where the national buck stops.

Oh, did I just expose a key Big Finance Capital false narrative to the masses?

They aren't worried - they don't think you will understand.

Tue, 12/18/2012 - 11:05 | 3074614 TruthHunter
TruthHunter's picture

"When this shit hits confiscate all banker assets.  Then hang eh high."

The hard ass Stalin types that accomplish it will have you wishing for the good ole' days

Mon, 12/17/2012 - 16:24 | 3072377 eatthebanksters
eatthebanksters's picture

Hotel can check in anytime you like, but you can never leave!

Mon, 12/17/2012 - 16:29 | 3072400 ekm
ekm's picture

I'd like to think that both Schiff and Santelli have read my posts on ZH about roach motel and insect trap during last 3 weeks.


I was reading Margin of Safety and I was posting different quotes from the book here. I finished reading it 3 days ago.

Super outstanding book.


One other quote I'll never forget from Seth Klarman:

If you buy a security to sell it to a greater fool, if there are no greater fools around, then you are the greater fool.

Does it ring a bell?

Mon, 12/17/2012 - 16:41 | 3072462 americanspirit
americanspirit's picture

Hotel California - you can check out but you can never leave.

Mon, 12/17/2012 - 18:48 | 3072944 Remington IV
Remington IV's picture

. Schiff and Santelli ... are either of these CHIMPS ever right ???

Wed, 12/19/2012 - 06:12 | 3074170 Al Gorerhythm
Al Gorerhythm's picture

Where have you been all this time, CHUMP, following Snooki on Twitter?

Mon, 12/17/2012 - 20:24 | 3073212 ball-and-chain
ball-and-chain's picture

I love Schiff.

He's smart and has a great sense of humor.

But there's no collapse coming.

Just a slow bleed till the baby-boomers die off.

We are the new Japan.


Mon, 12/17/2012 - 16:10 | 3072311 Bryan
Bryan's picture

The video you are trying to access is unfortunately unavailable at the moment.

A message has been sent to our customer care team so that we may fix the problem.

We apologize for any inconvenience.

Error Code VID : 504

Mon, 12/17/2012 - 17:18 | 3072614 zerozulu
zerozulu's picture

You need to enable flash block and no-script options in your browser or right click the video and open it in new tab and allow all to view it. 

Mon, 12/17/2012 - 18:52 | 3072954 NeedtoSecede
NeedtoSecede's picture

Bryan, let me finish that for you:

"Now that we have your position fixed thanks to our NSA database and the drone stationed in your sector, we will "solve" your "problem" shortly. The Hellfire missile is inbound to your location. Have a nice day. Impact in 3, 2, 1..."

We have assumed control! We have assumed control...

Mon, 12/17/2012 - 16:11 | 3072313 economics9698
economics9698's picture

Schiff notes that "the Fed is constructing goalposts so it never actually hits them; the Fed is never going to tighten."


Mon, 12/17/2012 - 17:47 | 3072737 bagehot99
bagehot99's picture

You can't tighten if tightening requires you to sell shitty debt that nobody wants to buy. And that is where the Fed has put itself. Bernanke is a criminal or a complete fool, I'm not sure which.

His study of depression era Fed policy has taught him all the wrong lessons.

The practical result of this is identical to printing money. Absolutely fucking identical. It's just done with a mouse click and is slightly cheaper than using De La Rue, but the rest is the same.

The idiot in the White House doesn't realize that he's going to end up making Hoover look like a candidate for Mount Rushmore.

Mon, 12/17/2012 - 16:12 | 3072318 Cognitive Dissonance
Cognitive Dissonance's picture

We have not hit peak insanity yet.

<Not even close.>

Mon, 12/17/2012 - 16:48 | 3072501 DaveyJones
DaveyJones's picture

that's crazy talk

Mon, 12/17/2012 - 17:02 | 3072549 Fish Gone Bad
Fish Gone Bad's picture

I have said this a few times and its bears repeating.

Just when you think things can't get any more fucked up, just when you think there is no hope in sight, just when you think the financial world is coming to an end...  Things get a little more fucked up.

We all know how this story will end, just not when it will end.

Tue, 12/18/2012 - 07:30 | 3074172 Al Gorerhythm
Al Gorerhythm's picture

We all know how this story will end, just not when it will end.

You might try asking Vast Dom.

Mon, 12/17/2012 - 18:28 | 3072891 hairball48
hairball48's picture

agreed, but we're working on it

Tue, 12/18/2012 - 11:15 | 3074645 TruthHunter
TruthHunter's picture

"We have not hit peak insanity yet."

All in on insanity?

Mon, 12/17/2012 - 16:12 | 3072320 auric1234
auric1234's picture

But I'm already short on Bernank.


Mon, 12/17/2012 - 17:26 | 3072646 TheSilverJournal
TheSilverJournal's picture

The best way to short the Bernank is to go long silver. He can literally create as many dollars as he pleases and can and will keep rates low straight into hyperinflation.

Mon, 12/17/2012 - 16:14 | 3072331 buzzsaw99
buzzsaw99's picture

He just now figured that out? LMAO!

Mon, 12/17/2012 - 16:24 | 3072376 Central Bankster
Central Bankster's picture

You either have a listening or reading problem. Schiff has been a gold bug for over a decade and he was one of the first to say the fed will never exit, back in 2009.

Mon, 12/17/2012 - 16:57 | 3072523 buzzsaw99
buzzsaw99's picture

gold bugs will get crushed and all of schiff's funds have under-performed the bond market and every other market there is.

snake oil salesman imo

Mon, 12/17/2012 - 18:16 | 3072845 jerry_theking_lawler
jerry_theking_lawler's picture

as of when...state your time frame (past and future)....

Mon, 12/17/2012 - 21:30 | 3073400 SmallerGovNow2
SmallerGovNow2's picture

Buzz, you have one hell-of-a-buzz, what you smokin?

Mon, 12/17/2012 - 16:17 | 3072344 EscapeKey
EscapeKey's picture

Meh, a bit tired of Schiff, he's bit of a broken record.

Oh ok then, I'll give it a listen.

Mon, 12/17/2012 - 16:55 | 3072526 DaveyJones
DaveyJones's picture

what else can you sound like when you're recording a broken system?

Mon, 12/17/2012 - 18:35 | 3072913 hairball48
hairball48's picture

Schiff's message is the same because the problem hasn't changed. Too much consumption, too little production, too many regulations, taxes increasing, Gov't spending out of control, and too much intervention by the Fed. etc. etc.

What do you want fom him? Want him to keep changing his story like that liar Bernanke? :)


Mon, 12/17/2012 - 16:17 | 3072345 fonzannoon
fonzannoon's picture

Schiff is maybe the last man standing who just tells it like it is.

Mon, 12/17/2012 - 16:26 | 3072388 FL_Conservative
FL_Conservative's picture

It caught my attention to have both Santelli and Schiff in the same video.  The only thing better would be for Lauren Lyster to interview both of them.  Then I'd both listen AND watch.

Mon, 12/17/2012 - 16:23 | 3072373 1100-TACTICAL-12
1100-TACTICAL-12's picture

schiff was right and will be again.

Mon, 12/17/2012 - 16:23 | 3072375 youngman
youngman's picture

It is wierd that Bernanke denies monitization......just what does he think he is doing in his mind??????

Mon, 12/17/2012 - 16:26 | 3072387 Bay of Pigs
Bay of Pigs's picture

Providing liquidity?

Mon, 12/17/2012 - 16:30 | 3072403 aka Gil
aka Gil's picture

For the next derivative meltdown?

Mon, 12/17/2012 - 16:33 | 3072423 nope-1004
nope-1004's picture

No, for yesterdays debt binge.  The Fed acts in response, not in anticipation.  This is Crisis Management at its finest.


Mon, 12/17/2012 - 16:36 | 3072433 Redhotfill
Redhotfill's picture

Oh thats what that yellow stuff running down his leg is!

Mon, 12/17/2012 - 16:56 | 3072531 Catullus
Catullus's picture

He's covering Geithner's ass who said we were not monetizing the debt.

Mon, 12/17/2012 - 16:58 | 3072536 DaveyJones
DaveyJones's picture

 criminals can be hard to decipher

Mon, 12/17/2012 - 16:27 | 3072392 Dr. Engali
Dr. Engali's picture

Reason number 5 why I'm dropping the iPhone. ..... No flash player. I can't watch 1/2 the videos Tyler puts up.

Mon, 12/17/2012 - 17:42 | 3072716 TWSceptic
TWSceptic's picture

Jailbreak >  Cydia > install Frash

Mon, 12/17/2012 - 16:29 | 3072402 VonManstein
Mon, 12/17/2012 - 16:42 | 3072468 Winston Churchill
Winston Churchill's picture

Looking like the corzining of allocated gold amd silver could only keep the

basketball underwater for so long.Local gold dealers are reporting no

inventory.Delivery is soon going to be a real issue ,and the paper market is

going to be exposed as the sham it is.

Mon, 12/17/2012 - 16:32 | 3072413 john_connor
john_connor's picture

Roach motel is the analogy that John Hussman used in his recent newsletter

Mon, 12/17/2012 - 16:32 | 3072415 Silverhog
Silverhog's picture

This video is like opening a window for fresh air.

Mon, 12/17/2012 - 16:32 | 3072417 q99x2
q99x2's picture

Schiff repeated old ZH info and CNBC is agreeing. I'd say that was different when compared to the old days.

Mon, 12/17/2012 - 16:35 | 3072435 azzhatter
azzhatter's picture

Fuck You Bernanke

Mon, 12/17/2012 - 16:37 | 3072446 TonyCoitus
TonyCoitus's picture

Schantelli.....I like that.


Sounds like a perfume.  "Collapse" by Schantelli, only at fine retail stores.

Mon, 12/17/2012 - 16:44 | 3072481 Sutton
Sutton's picture

If Ben sells but ONE bond, the whole thing collapses.

Mon, 12/17/2012 - 16:50 | 3072509 VonManstein
VonManstein's picture

You wont have to wait that long

Mon, 12/17/2012 - 16:47 | 3072499 Nothing To See Here
Nothing To See Here's picture

Anyone noticed the spide in 10Y yield this pm? Like +3,8%?

Something brewing or just a bump?

Mon, 12/17/2012 - 16:51 | 3072512 VonManstein
VonManstein's picture

.... 30YR ?

Mon, 12/17/2012 - 17:20 | 3072625 inevitablecollapse
inevitablecollapse's picture

i've seen it mentioned here to keep an eye on bond yields - is the yield begins to go up, does this mean inflation is rising?  what bond yields should a person keep an eye on?  

Mon, 12/17/2012 - 17:40 | 3072705 busted by the b...
busted by the bailout's picture

Bonds are always central to reading the economic tea leaves.  Watch all the Ts. 

I think they are moving up now because,

1) "they" expect we will not cliff dive and so the economy will continue to improve slowly, leading to rising prices / inflation / interest rates.


2)  the recent decrease in foreign buying interest is driving down bond prices.

The trouble is, as soon as rates increase about 1/2 point on the long end, the housing market will dry up again, as will other borrowing, thus slowing the economy further.  I.e. rates can't go up for long in this economy.  Unless, of course, there is a Schiff style collapse and then all bets are off.  In the meantime the Fed is trapped by zirp and monetization to keep the boat afloat.  We, of course, are just pawns in their game and have no choice in the matter.


Mon, 12/17/2012 - 18:30 | 3072898 inevitablecollapse
inevitablecollapse's picture

must appreciated, thanks for the insight

Mon, 12/17/2012 - 18:44 | 3072933 Orly
Orly's picture

Not only that but bonds just got an $85B/month guarantee on their prices.  With the Fed gobbling up 90% available, don't expect bonds to waver very much.  With that comes a backstop under the equity markets, which they can let down gradually over the next two years.

No fear, no rush to safety, bond prices go down.


Mon, 12/17/2012 - 16:54 | 3072510 debtor of last ...
debtor of last resort's picture

9:30 pm The Netherlands, tv programme on a well watched channel, about the debt system, AND, a physical bullion dealer talking about physical gold and silver. 1971, debt, dollars, crisis, you know the drill. But many minutes about phizz..... And i have seen in rather busy shopping streets little shops purchasing silver and gold. Casino markets etc etc. Signs!

Mon, 12/17/2012 - 16:58 | 3072540 helping_friendl...
helping_friendly_book's picture

His Great-Grandfather, Jacob shipped all the Eastern European Jews emigrating to New York on to Galveston Texas.

I wonder why? Something different about Eastern European Jews w/ respect to Western European Jews?

Quite racist!

Were the Eastern European Jews even Jewish?

See for yourself. 

Mon, 12/17/2012 - 17:23 | 3072634 the grateful un...
the grateful unemployed's picture

at the end of the day UST buys the bonds back from the Fed. in the meantime the banks have the benefits of free collateral, or capital, but the roach motel idea works the other way, its collateral which can't be touched. consumers get some of it too, zero APR car loans, zero down mortgages, lots of good stuff.

Mon, 12/17/2012 - 17:48 | 3072742 hooligan2009
hooligan2009's picture

agreed...exactly what does happen if the Fed and the Treasury go one step further after monetizing the debt...that is..just cancel it?

let's see how this works..the treasury borrows the money at a few percent so it can fund half its spending...the fed buys back the debt issued by thte treasury by printing money at zero coupon (bank notes/fed funds rate)...result..the treausry injects the amount of money into the economy and the Fed doubles this down by printing cash...

what happens if you cancel the Fed's holdings of Treasuries?

the cash issued by the Fed stays in the economy and the Treasury doesn't have to pay back its borrowings, so what's the big deal? the Fed belongs to the Government (implicit guarantee and return of profits/losses to/by the Treasury).

this is the Ponzi scheme. it doesn't matter if one government department buys another government departments debt. remember there is 6 trillion of treasuries not in private hands (trust funds), leaving just ten trillion in debt "out there" of which the Fed owns around 16-20%. 

any ideas?

Mon, 12/17/2012 - 19:05 | 3072993 the grateful un...
the grateful unemployed's picture

i think it was machievelli who proposed "private debt for public good", that is individuals have to carry the debt which benefits the public (which is the opposite of how most people think about it, most people think that its public debt for private benefit) when you consider the word for as an indication of the direction of flow, money from personal debt flows into the economy, which represents the public good, and the only way to create more personal debt, is to create new (phantom) collateral.

a baby born this moment might earn 50K a year for 50 years, which is two and half million dollars. so the Fed has to hand this new child a trusseau, and create 2.5M dollars for him or her to use. according to the above axiom the nature of that money has to be defined as debt, which is why they run deficits. the struggle for success is a climb out of the pit of indentured servitude, which was the condition most of the first americans knew quite well.


Mon, 12/17/2012 - 17:47 | 3072734 Super Broccoli
Super Broccoli's picture

it's like a kid that comes home saying "look there is another guy that got an F-" ;-)

Mon, 12/17/2012 - 18:00 | 3072771 besnook
besnook's picture

anything the fed buys will become de facto infinity bonds. the fed will hold them forever.

Mon, 12/17/2012 - 18:28 | 3072893 GreatUncle
GreatUncle's picture

Take 3 currencies A, B and C. Debase A so B and C then follow. As A no longer has what it needs so it must debase again.

Just repeat it over and over please Mr Central Banker "what does this mean" as you fight in the here and now a battle you can never win? Can't they not see how obvious this as other currencies fight to survive. That really futile battle is pointless when you end up after repeating enough times with this ...

You lost the war as all currencies are now rendered totally useless and your position with it at the same time.

Somebody better start talking soon, especially with the words comig out of Japan and I can see India and China feeling they are not cheap enough contemplating the same action.

If they start to devalue, then the levels elsewhere reset upwards.

Mon, 12/17/2012 - 18:45 | 3072935 Remington IV
Remington IV's picture

Schiff and Santelli ... have either of these two CHIMPS ever been right ???

Tue, 12/18/2012 - 07:16 | 3074161 bunnyswanson
bunnyswanson's picture
Take it from a form IMF chief economist and MIT professor - US is under seige, a Quiet coup is unfolding.  1.4 million people are going to fall off Unemployment all on the same day, in a few weeks.  Then, it's 26 weeks and then you are on your own.  12/29/12 is the real end of the world for many.  14 February 2009
America vs. the Oligarchs Bill Moyers has an interview with former IMF Chief Economist and MIT professor Simon Johnson that is excerpted and linked below.

Simon Johnson's premise is that the big Wall Street banks represent an oligarchy that is exerting undue influence and control on our government and the economy. They are turning this crisis to their advantage, and circumventing the democratic process.

What we are seeing looks to Simon Johnson like a financial coup d'etat.

Now is the time to break up the big money center banks. Now is the time to reinstate Glass-Steagall. We must demand the reforms for which we elected the Obama Administration.

Watch this interview. Think about it. Let other people know. Write your congressmen.

And be prepared to act on a larger scale in a peaceful way to get the point across that we value our liberty and we will stand for justice. We are not optimistic that the government will do the right thing without more prodding and significant support from the public. "I think I'm signaling something a little bit shocking to Americans, and to myself, actually. Which is the situation we find ourselves in at this moment, this week, is very strongly reminiscent of the situations we've seen many times in other places.

But they're places we don't like to think of ourselves as being similar to. They're emerging markets. It's Russia or Indonesia or a Thailand type situation, or Korea. That's not comfortable. America is different. America is special. America is rich. And, yet, we've somehow find ourselves in the grip of the same sort of crisis and the same sort of oligarchs...

But, exactly what you said, it's a small group with a lot of power. A lot of wealth. They don't necessarily - they're not necessarily always the names, the household names that spring ...    

Mon, 12/17/2012 - 20:51 | 3073276 myptofvu
myptofvu's picture

Eureka I just figured out how they're gonna make it work. I had the same problem hearing Ben saying he's going to sell the Notes in the future. Who in their right mind would buy them knowing that he has trillions to sell that will just keep reducing the value of them? Answer no one will buy them. So how do they get around that problem? Easy they will make pensions, IRA, 401k HAVE TO buy them.

Tue, 12/18/2012 - 02:36 | 3073995 evernewecon
evernewecon's picture

I won't spam but I was first to recycle the Roach Motel recently for a 

double cross-check parking plan I proposed for reclaiming green space

from parking in San Diego's Balboa Park.


Anyway, there's nothing any market progressive said or did that's responsible

for massive free reserves at the expense of anyone seeing any return, apart

from real negative ones on all their "safe money" when they wake up in the 

morning, so the TBTF banks don't have to accept their own bubble.

Even the banks themselves seem afraid of the prospects for debt 

investments whether Americans are carrying the banks' collateral or are

leaving the Liquidity Trap and thus adding pressure for higher rates.


All who SOLD the bubble have helped pay for the mod's that mainly helped 

the bank-bubble-buyers, and they've totally faced the policy of hand-it-over

with respect to the income value of the proceeds of their bubble asset sales.


Of course, their parents' retirements have been ripped off.

But that's not market progressivism.   That's oligopoly.  TBTF is definitionally



Bernanke Acknowledged

The Trade-Off's Operative.

(but not really.)


There's no free lunch

in covering for TBTF banks' losses

and folly.  (Recall) the simple monetary equation.

This is simply reserve growth for banks,

with first the "Liquidity Trap" (near free

reserves for the banks) taking from

the savings of all who made good decisions,

and now, Bernanke finally saying those

people may have to pay the price in higher

general prices as well. 

So here, Keynesians can be very happy with

Alan Meltzer.


But an administration of Christina Romers not

serving oligopoly and allowing those who sold the

bubble to clear it would have extricated us from the

crisis long ago.


The mortgagors should have non-recourse.


Any program designed to conform to oligopoly

will mainly benefit the oligopolists.


And when labor's shafted, and the dollar's weakened, it's

the ultimate picture of extraction and false blame.  A nation's

goal should be high wages and a strong currency reflecting

a people's high worth.   And when China's blamed for the TBTF

banks' part in folly the U.S. starts becoming Japan and Iceland

at each one's worst moment: Iceland's kiting of our mortgage 

bubble by way of siphoning from Japan's recovery (the carry trade.)

But China's out of necessity inventing flexibility in the otherwise

(Mundell's) impossible trinity, 



Independent Monetary Policy

Free Capital Movement

Fixed Currency 

... by allowing the yuan to appreciate slowly simultaneously with RAISING Chinese workers' minimum wage.   So they're  getting an improved "terms of trade" framework while  Gov. Snyder in Michigan is apparently bent on allowing the TBTF banks' folly to cause less employment opportunity, and the emergence of a regime of oligopoly generally, when combined with shafted bargaining power, to render workers  supply side captives, and consumers spinning their wheels. Just like at the salt mine, but minus the Mahatma.


Just as in the case of ObamaCare, though a vast improvement over

not being able

to take advantage of a real estate

or job opportunity across state

lines because the cartel lives

by exclusions and cherry picking, nonetheless

is a clnically non-rationalized, profits statutorily

stipulated, exquisitely price and risk adjusted to

blanket-universal-oligopolistic ability to pay and

ability to own measures of freedom from business risk

at will, system.


Medicare being national health insurance for unwanted

customers, except when the carriers are paid to then

take some back (where by capitation (head count) credit

where it's due: then it's "accoutable" and they then DO/HAVE

made contributions,) the high risk exchanges, being those

customers the carriers would like to milk beyond the low risk

people who're played for all they're worth (60% medical loss ratio/40%

profit lever, by law, oligopolistically) for the low-risk, low-coverage, low

cost, easy patient (young and healthy) who will be glad to see the lower

premium but not be aware of the huge profit margin.


Oligopoly (not to be confused with market progressive(

is static (Taleb:   )


 Any program designed to conform to

oligopoly will benefit primarily the




About that plan for Balboa Park, S.D.'ans:



facilitate in-park parking

(One can add parking or 

one can delete cars.)



Wide-area satellite parking payable

variably, by voucher, upon exit.

Got Park?   Nominal rate.

So as to assure a percentage of

committed spaces, it would have

to be a cross-check voucher.

If you choose the wrong one coming

and have the wrong leaving, 

you can check in, but you 

can't check out, at least not cheaply.


That would spread the benefit all

around town.    Shuttles should

stop en route for those living along

the path.


People just pre-retirement or in retirement

tend to gravitate toward downtown, 

even with the area today revitalized and 

youthful, because it's pretty difficult 

mowing the lawn with arthritis.


Envision as to those 

in pre-assisted living:

terminals in lobbies;

local facilitators for this,

for all manner of life/health

status improver but also

a money saver.

I actually would be hard pressed imagining

a better health resource than their 

being able to check a shuttle schedule in

a high rise lobby, using an easy web portal tapping

into flex tech (anything conveniently inter-changeable)


hopping on and heading

to the park.     THIS is interesting though.


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