FOMC Minutes Released: Dissension To QE4EVA Growing

Tyler Durden's picture

While some were concerned at the Fed's new quantitative targets as suggesting early tightening, it appears (from the FOMC Minutes) that those fears were somewhat warranted (with most seeing QE ending in 2013):

  • *FED SAYS A FEW ON FOMC WANTED QE UNTIL ABOUT THE END OF 2013
  • *FED: SEVERAL ON FOMC BACKED QE HALT OR CUT WELL BEFORE 2013 END
  • *ALMOST ALL FOMC MEMBERS SAW POTENTIAL QE COSTS AS INCREASING

The punchline: "several" means more than just QE4 hater Jeff Lacker are turning hawkish. Though, even with the risks, they want moar. Pre-FOMC Minutes: ES 1460, 10Y 1.86%, EUR 1.3108, Gold $1674. Post: ES -6pts, 10Y +5bps, EUR -40 pips, Gold -$10.

 

Here is the punchline from the report:

In their discussion of monetary policy for the period ahead, all members but one judged that continued provision of monetary accommodation was warranted in order to support further progress toward the Committee’s goals of maximum employment and price stability. The Committee judged that such accommodation should be provided in part by continuing to purchase MBS at a pace of $40 billion per month and by purchasing longer-term Treasury securities, initially at a pace of $45 billion per month, following the completion of the maturity extension program at the end of the year. The Committee also maintained its existing policy of reinvesting principal payments from its holdings of agency debt and agency MBS into agency MBS and decided that, starting in January, it will resume rolling over maturing Treasury securities at  auction. While almost all members thought that the asset purchase program begun in September had been effective and supportive of  growth, they also generally saw that the benefits of ongoing purchases were uncertain and that the potential costs could rise as the size of  the balance sheet increased. Various members stressed the importance of a continuing assessment of labor market developments and reviews of the program’s efficacy and costs at upcoming FOMC meetings. In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases. Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial  stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted.

Full FOMC minutes (link)

FOMC Mins December

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DrDinkus's picture

10s flushinggggggggg

IvyMike's picture

Why do privation enterprise advocates have such a problem with a privation bank run for the profit of its privation owners?

*private, I mean private! Oh well, privation and private mean the same thing anyway, if you study your Latin etymology.

Private - privation - privilege - privity - privy
University of Hull
http://slb-ltsu.hull.ac.uk/awe/index.php?title=Deprivation_-_Private_-_p...

Isn't Privation enterprise grand?

ebworthen's picture

Privacy is the right to fail all on your own.

Forcing failure on individuals without their consent to benefit the enterprise is hegemony.

IvyMike's picture

If you are correct, then Capitalism (and Communism too, they're both just slightly different variants of City-Statism (Civilization)) is hegemony, founded on THE RIGHT TO TAKE.

Of course, once wealth is taken, it's always rather nice to keep it "private" while you laugh at others' "failings." Ben has to love your attitude.

"[The Native Americans] didn't have any rights to the land ... any white person who brought the element of civilization had THE RIGHT TO TAKE. over this continent."

~Ayn Rand
US Military Academy at West Point, March 6, 1974

GCT's picture

Captilism where is it Ivy certainly not in the USA anymore.  The USA is Facist.  But the right to take is why governments are formed to be honest.  They form so someone cannot come and take what we produce.  Basicallythey were formed to protect others from taking their agricultural lands and staples.

You see throughout human history you had settlements that produced and other that took from them so they form alliances to kill the takers that did not earn it.  They formed militia's to kill the takers.  Now it is legal to just take and produce nothing.

nope-1004's picture

I'm going to go out on a limb here, because these "free" and efficient markets are just way too obvious......

The Fed releases it's "Minutes" of the meeting a few weeks after the meeting.  Ever wonder why?  Looks to me like they can then gauge market reaction to the policy and adjust the wording of the minutes release accordingly to change / undo / alter market reaction to whatever policy is announced, in this case QE4EVA.  Doesn't matter what is said, doesn't matter what is 'reported' by (spoon fed to) Hilsenrath, the centrally planned economy via the Fed is working well:  Control the markets, control the masses, and control public opinion.

When Bernocchio came out saying that the Fed wanted to do public Q&A's in an effort to be more "transparent", that should have been your first clue that control has been levered up and the opposite is really occurring.  Bernocchio is only a propagandist, and that's it.  He's certainly no economist, more like a self admitted idiot, as this clip before the housing crisis proves.

Don't believe this chronically dishonest private enterprise (the Fed) and its cheif liar (Bernocchio).  Corruption and media control are all that is left as policy tools.

AldousHuxley's picture

Top elites never produce, just take % of what you produce.
Just like a mob, protection fee for profit sharing without real work or ownership

IvyMike's picture

You've got civilization (city-statism) nailed.

IvyMike's picture

Captilism...not in the USA anymore.

You're committing the No True Scotsman logical fallacy.

Besides, Fascism has eternal merit because it saved City-Statism (civilization), according to one capitalist economist:

"It cannot be denied that Fascism and similar movements aimed at the establishment of dictatorships are full of the best intentions and that their intervention has for the moment saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history."

~Ludwig von Mises, Liberalism

me·rit (n.) 1. Superior quality or worth; excellence 2. Demonstrated ability or achievement.

You see throughout human history...

No, you're just parroting Civilizationist (City-Statist) garbage that you haven't even begun to study yourself.

"The current literature consistently reports that until the final stages of the Paleolithic Age—until just prior to the present 10,000-year era of domestication—there is no conclusive evidence that any tools or hunting weapons were used against humans at all."

~John Zerzan
On the Origins of War
scribd.com/doc/62268835/The-Origins-of-War-John-Zerzan

OneTinSoldier66's picture

Is counterfeiting money up out of thin air, that people are required to use through legal tender laws, civilized behavior? Do you believe that the Federal Reserve System should be allowed to counterfeit money up out of thin air for it's member banks? Do/did you believe in bank bailouts? Is it your belief that a bank that is a member of The Fed and can go to it's "discount window" should never be allowed to fail?

 

Is privatizing the profits for those that are "well-connected" and socializing the losses onto the masses civilized behavior? Are poor people the only ones that should fail?

 

Where's my bailout? Or do I first have to hoodwink enough people into some kind of scam to the tune of tens of billions of dollars first, then have nothing to show for it because I already spent all the money, before I can receive a bailout? Is that what entitles' me to a bailout?

LawsofPhysics's picture

Indeed, push those yeilds on the 10 year past 2%, come on, I dare you.

ZerOhead's picture

Never. Fight. The. Fed.

I learned that the hard way from Buzzy years ago when the tens were over 3. When this starts to turn all of those trillions of 'liquidity' injected into the system over the years will be positioned short to crash it with 100X leverage. She'll come down like WTC1, WTC2 and WTC7. The next act will be Fed injections through the CB's and Primary Dealers of a hundred trillion or more... transferring all global strategic assets to those with access to credit in the process.

And the sheep will be screaming for it.

LawsofPhysics's picture

Bullshit.  The commodity complex will break this time around.  When fraud is the status quo, possession is the law.  Really don't give a shit about paper "assets" at this point, nor do I care for paper promises.  You can have all you want.

ZerOhead's picture

Agreed it will all break. Down first and then way way up. I am waiting for a buying opportunity to pick up as much copper and tin ingot as the concrete floor in my warehouse will support.

As quickly as possible.

Then watch the dollar (and other currencies) wash away in the Fed's tsunamic response to reinflate in a sea of hyperinflation...

trav777's picture

we have wars to arbitrate that.  And the police will wage it on you

WhiteNight123129's picture

Not where I sit Trav. How is fixed income doing today?

WhiteNight123129's picture

Not where I sit Trav. How is fixed income doing today?

WhiteNight123129's picture

Not where I sit Trav. How is fixed income doing today?

IvyMike's picture

If by sheep you mean docile and stupid domesticated mammals, then you must include all humans too.

Peter J. Wilson (1991) The Domestication of the Human Species. Yale University Press.

Jack Goody. (1977) The Domestication of the Savage Mind. Cambridge University Press.

Although some of us are less poodle-ized than others.

"...if we aspire to break the bonds domestication has laid on us, to STOP BEING DOGS, AND BECOME WOLVES AGAIN."

~Jason Godesky
Wolves & Dogs
http://rewild.info/anthropik/2006/11/wolves-dogs/

Hey, Ben Bernanke's dad is third picture down! LOL!

GCT's picture

Agree Ivy most are domesticated and need the government teat to survive.  The wolves are the politicians and the financial institutions in the world right now.  The only way to stop being a prey animal is to stop playing the debt game.  I could go on about being prepared for disaster but most already know this if they can think critically at all.

In the end it will be survival of the fittest as it always has been until the last century.

WhiteNight123129's picture

The thing is that rising long bond will mean corporation borrow in a hurry and spend. Long bond rising and rising inflation push people to dishoard financial assets....

So rising long yield can move nominal GDP upwards. (inflate away), that means less borrowing needed from Gov but quite a bit of sticky and chronic inflation.

 

 

LawsofPhysics's picture

yes, putting even more pressure on the commodity complex.  exponentially more in fact, good luck with that.

SimplePrinciple's picture

That would be Latin for doing it Argentina style.  Let Congress enact that government bonds be bought by everybody's retirement accounts, so the central bankers can take a break.

Cult_of_Reason's picture

Unlimited free money party for Wall Street is over. There are limits to this unlimited insanity.

ebworthen's picture

Sort of.

They'll cut QE and raise rates so they can crash everything, rob savers and pensioners and individual investors (again), and bail out the banks and bankers all over again.

I mean, they could spend another $5 Trillion on QEX - or on another round of TBTF Bank, Insurer, and Corporation bailouts.

It's twisted perverted counter-intuitive reasoning, but this is the FED.

Watch 'em do it.

Irelevant's picture

Gold does very well in a deflation scenario. Bills and Bonds not so well. It is impossible for the FED, with a 1.5$ trillion/annum exponentially growing debt to stop QE4, or any other money printing scheme for that matter. I think they are trying to bring down the price of oil, as they see a recession ahead for the US (Europe is in one). Also they will be able to point out, look, we stopped QE and the economy went down the drain. Those pesky tea party activists took your job, and your house, and your wife and they are terrorists. Gold is wealth, if you buy it today ask for physical and hold it for a minimum of 5 years. Gold, as in physical gold, held by you, is not part of the casino called the stock markets. The price they present on Bloomberg is irrelevant. Its funny how they smashed gold on the last days of last year, when it was impossible to buy any as all the shops were closed. And also don`t worry, the masters own more physical gold than we will ever do. We need a global French Revolution, that is the only solution, we need Thomas Jefferson, that is the only way to go! Actually in what we have ahead of us gold is pretty much irrelevant. Water, food, heating will be a much more urgent issues for many.

Stuart's picture

Follow what they do, not what they say.  Not a snowball's chance in hell QE is ending while $1.5T annual deficits continue.  Money to finance this deficit has to come from somewhere cause they sure ain't going to cut spending. 

centerline's picture

Exactly.  This is pure theater.  Nothing more.

Now, just to play devil's advocate, one potential spin on this is force the politicians' hand.  Needing the fingerprints of those clowns on the printing press lever for the last big pull before everyone officially goes all funny-like.

Either way, turn of the spigot and the system collapses overnight.  Heck, just leaving it as is would cause the same thing but delayed.

SpykerSpeed's picture

Yeeeeup.  The collapse is coming, one way or another.  The only way to avoid it is to slash the size of government massively, practically overnight.  Even in that best-case-scenario (for the US dollar), you'd still have a major depression while people try to find new jobs and wages fall.

ZerOhead's picture

No way to avoid it... like Ron Paul said... we probably passed that exit on the interstate in the early 2000's...

Quantitative Easing is getting old. Perhaps Quantitative Delaying is more appropriate under the present circumstances...

LawsofPhysics's picture

Unless of course the union is dissolved, following the soviet model.  In that case, as with the soviets, a phone number will be given to all of America's creditors and an answering machine will be placed at one end with the following message; "We're sorry, the party you are trying to reach no longer exists and neither does their debt."

Hedge accordingly.

cougar_w's picture

Dude. Serious listen to me here. They could slash the size of government to ZERO (0) (nada) (bagels) and still not be able to maintain a positive cash flow.

There is simply no way this situation can be improved. No wait, I know something that would make it at least look better: a direct hit by a meteor.

LawsofPhysics's picture

Correct.  I think the euro-soviet solution is the answer. The sooner the better.

cougar_w's picture

My scenario has the Fed and Congress end up holding a really big bag of steaming poo-caca, and then everyone agrees to dissolve the Union.

Debt repudiation by suicide.

Coastal states and cities get the nukes and form federations, Canada and Mexico go all M&A with border states, and the heartland becomes Iowastan.

FoeHammer's picture

Iowastan...hahahaha  
+1

Ghordius's picture

WTF is "the euro-soviet solution"?

LawsofPhysics's picture

see cougar's link.  It is impossible to repay the debt, period.  The soviets have been through this already.

Harbanger's picture

Apples and oranges, when the Soviet Union dissolved it lost control of the 14 seperate nations it conquered by force.  Russia is still intact and dangerous.

LawsofPhysics's picture

Right, so are you saying that American territory was aquired peacefully then?  LMFAO!  "Russia" and the "Soviet Union" are two very different entities.  I have done business in Russia for 20+ years.  The collapse of a centrally planned, over indebted, superpower is what it is.

Harbanger's picture

There's no comparison between the formation of the Soviet Union snd the United States.  Russia conquered established countries and failed to hold them together.

FoeHammer's picture

Maybe one day you'll get it.

LawsofPhysics's picture

Perhaps, connecting the dots is too complicated for you.  Allow me to simplify.  How the Soviet Union got to their endpoint compared to how the U.S. got to the same endpoint is irrelevant.  We are here, now, with far too many paper promises and no real consequences for bad behavior.  We Who gives a shit about the "formation", the past is dead and collapse is collapse and all economies are really local in the end.  Get your tribe in order (regardless of whether or not your members belong to a conquered country - FYI, the Navajo still consider themselves as such).

Harbanger's picture

The Soviet Union got to it's end point not because of a failed currency, but because of a failed communist system, Russia is still intact.  The US got to this point not because of a failure of capitalism, but a failed federal reserve banking system. It's fundamentals are still intact.  FYI- the Navajo were slightly more advanced than the russian peasants of the time.

Ghordius's picture

have to agree though I miss a "deficits do matter" in your comment

and a failed currency is a unique experience with special side effects

but dissolution from it is historically not a given

on a lighter note: putting "euro-" in front of it does make it friendlier, eh? ;-)

sounds way better than "The Fall of the Soviet Empire"

GCT's picture

Harbanger you forgot about that Civil War we had did yah?