Liesman: "The Fed Gets To Print Dollars"; Bullard: "Indeed We Do"

Tyler Durden's picture

Fed mouthpieces Bullard and Lacker are out in force this morning talking the market back from the edge of yesterday's FOMC Minutes and reassuring us that the economy is going to be weak enough for a lot longer to justify the Fed's actions. However, right at the end of Jim Bullard's interview with CNBC's Steve Liesman, we got a glimpse of the reality behind the curtain as the St. Louis Fed president threw Bernanke under the purge-ry perjury bus... Following a discussion of fiscal policy uncertainty and the need to carefully spend what money we have, Liesman jokingly commented to Bullard that it is "Easy for you to say, you have a lot of dollars to spend; you get to print them!" To which the now foot-in-mouth Bullard replied, "Aaahh; indeed we do." This seems a little different from what Bernanke previously told Congress.

 

Forward to around the 7:45 mark (though the early discussion is worthwhile as Bullard talks the economy down)...

 

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Slightly Insane's picture

USE Fiat Currency, printed at whim to purchase every single hard asset that is perceived to be "under water", so that when the Tide goes out, they own everything at depressed value Fiat dollars.  If only I could get a few trillion dollar credit line too .... I could just buy up everything on the horizon, eventually, I would own EVERYTHING.  Real-estate would be my main target.

ToNYC's picture

"Real-estate would be my main target."

 

Why would the King want to own real estate when it can extract real estate taxes on a working unit so located and blessed to pay a cut of the works?

madcows's picture

The government borrows from the FED.  That's credit, not money printing.  The government doesn't have money, it has debt.

The FED does print money.  Your wallet holds federal reserve notes.  Redeemable for absolutely nothing except what the next guy is willing to accept it for.

  The more inexplicable thing though is that the FED loans the government all sorts of imaginary digital money, credit.  Turbotaxcheat timmy goes to the FED, borrows some 0's and 1's and distributes it to everyone on the government dole.  It's not real money.  it's nothing.  it comes from nowhere.  The FED gives the government imaginary money backed by absolutely nothing.  That's not printing, it's magic.  They made money out of nothing.  They are God.  Benny breathes on the computer and boom the imaginary money has life.  He speaks and it becomes real like the stars and the earth and the animals in the sea.  Pretty soon he'll take a rib from me and create a suitable mate... like a government EBT card.

Glass Seagull's picture

 

 

[Bullard climbs off the back of his human serf-board and says]

"Ahhhh; indeed we do."

yogibear's picture

Bullard was proud the Fed can print.

It means it won't anytime soon!

It's still, print, print, print.

 

Fred Hayek's picture

Everything the Fed or its minions says publicly is spin.  Everything. 

Everything spouted is calculated to try to get some of the unavoidable effects of their insane money printing while avoiding others. 

Between the lines is a constant message, "Oh please rise equities market!  But not you, too, commodities!  Please!"

TerminalDebt's picture

It's balance sheet expansion, not printing

Benny takes the balance sheet to the photo copier and press enlarge, and boom, 2 more trillion dollars appear.

orangegeek's picture

I smell riots coming very soon.

TerminalDebt's picture

nobody has the balls to start a riot anymore

 

Who's gonna riot? the 50M people collecting from the government? or the 50M middle class living in thei McMansion?

yogibear's picture

The government knows as long as you have the media propaganda and keep them fed they will riot.

LawsofPhysics's picture

Tylers of the world - cue the "Reserve Currency Does Not Last Forever"  chart!!!!

cougar_w's picture

Ah yes, the "end of empires" chart. It's good to chill the marrow once in a while.

The Romans in 470AD didn't know they were entering something that would later be called The Dark Ages, and I wonder what they would have had to say about the matter if they had known? And since we've already had The MIddle Ages I guess our period of recovery will be called The Late Middle Ages? Or maybe we'll demand special treatment (as usual) and we'll rename the period of Western history from 800AD to now as the Late Dark Ages so that we can proclaim The Middle Ages to have started around 2020? Oh and see here what happens next, that means we get to have another lovely Renaissance in about 400 years down the road.

However I really want to suggest to any future historians reading ZH 400 years from now to just stop there. We don't need everything you think comes after, like the Enlightenment or Industrialization or Post-Modern or Internet Age. And when you get to that whole Facebook Age thing, really just run the other way.

Been there. Wasn't worth it.

Do enjoy the mead and wassail though. Can't have a real Middle Ages without those.

The worst trader's picture

None of this matters.............It's all under control. Just keep sleeping and more zanax please.

polo007's picture

The creation of money

It would seem natural, that money is created by the State, and in fact most Central Banks seem to be owned by the State and run by it. I say "seem" because, to all intents and purposes, it is an apparency. They are almost constituting a "fourth power" in addition to the three legally constituted and well known "traditional" powers, legislative, executive and judicial.

When the State needs money, it does not order the Central Bank to credit some money to the treasury’s account. The State has only two ways to obtain money. One is taxation of it's citizens, the other is borrowing from the banks.

When the Central Bank issues money, this is done in the form of a loan. The State has to borrow this money, and must promise to repay it, with interest.

The same is true of course for a private person who needs money borrowing from a commercial bank. The bank is happy to loan, as long as you can show you have security, and promise to repay with interest.

How can the banks "create" money? That is a good question. Is it not the State's printing office that prints all the banknotes?

Banknotes, when they are printed, are considered the property of the Central Bank. They are not given to the State to spend, but are brought into circulation against a corresponding debt. Anyone wanting some of those notes to spend, has to "buy" them by giving up some of their credit. And in any case, most of the money in circulation (more than 90%) is not banknotes but "credit".

When you go to your bank asking for money, the loan you get is created right there in your bank. The "money" consists of figures on your bank account, and it can be spent writing checks, giving an order to transfer or drawing the cash. Banks only have to have a small percentage of their loaned-out money actually available. The rest can be paid out just by moving some figures from one account to another. The important thing to know: Money is created just by inserting some numbers into a computer.

In practice, it works like this: For every 10.000 a bank gives out as loans, 1000 or 2000 have to be deposited at the central bank. That means, if a bank collects 100.000 in deposits, it could keep 10.000 for liquid cash, put 90.000 into deposit with the central bank, and it is then allowed to create 900.000 of fresh money just by writing the figures on someone’s accounts!

In the case of the government needing money to spend, the procedure is slightly different, but the result is the same. The government has to issue papers that promise interest and repayment. Those papers are "bought" by the banks, who "sell" them to their wealthy clients, or who may also keep them, and the government gets credited an equivalent sum of money.

The irony here is that the government, who should by rights be the issuing authority of the money that circulates in the country, has to borrow the money from privates (through the bank) and that is has to pay interest for this.

Now we start to see why the government never has money, and why much of our taxes go "off the top" of the budget, towards debt service.

http://www.hasslberger.com/economy/money.html

polo007's picture

Let’s review. In their shortsighted greed and hubris, in their pursuit of extraordinary personal wealth, a small group of exceptionally wealthy and politically well-connected bankers took enormous and obvious risks that nearly destroyed the global financial system. In response, two separate bailouts took place. One was the congressional sideshow that gathered all the media attention, and the other was the real deal, with over $12,000 per household in money created and another $150,000 per household committed to be created if necessary.

The $12,000 per household was paid in cash, freely spendable cash. Cash that could take a big chunk out of the value of the US dollar if it got out into general circulation, both directly and via the “multiplier effect”. So the Fed began paying off the bankers not to spend the massive amount of cash that had been created and given to them under highly favorable terms.

One could liken this situation to that of a loaded revolver (a six-shooter to continue the corral theme). In essence, the Federal Reserve dealt with those mischievous risk-takers at the banks who had nearly destroyed the financial world by handing to them a loaded revolver that was pressed against the heads of all the nation's savers, investors and retirees. A revolver that could destroy most of the value of your personal savings. Then the Fed said "Please don't pull the trigger! We will create however much money is needed and pay it into your personal bonus pools, just so you won't pull the trigger on that revolver we just handed to you."

This is essential to understand, because what does paying higher rates than the banks could otherwise get on excess balances and reverse repos really mean? It means higher profits and bonuses. Ultimately, the Fed’s official inflation containment strategy is to always be able to offer banks a better deal than any private investment alternative. A better deal means the bank taking in more income, which means the banking executives involved get bigger bonuses. The source of funding for this ability to always pay more than the private markets is the ability to directly create a limitless amount of money. At this point it is a very low interest rate, but the rate can go as high as needed, when inflationary pressures build.

This may sound outrageous, but all it really does is demonstrate the true nature of the Federal Reserve. It is owned by the banks. It is run by the banks. As we are seeing demonstrated right now, its job in times of crisis is to manage the money supply for the benefit of the banks, regardless of the harm inflicted on the rest of the nation.

http://danielamerman.com/articles/Containment.htm

Pareto's picture

nobody benefits from the FED except the banks.

 

nobody.

optimator's picture

PPT is eight minutes early today, means they are really going to bang the close.

Sutton's picture

On weekly and monthly charts and measures, 10s and 30s look awful(and conversely TNX looks great).

WizDumb's picture

"..Starting right about..Now.."

wisefool's picture

I dont have highspeed anymore, so I can not watch the video But Bullard is either an anti-Keynsian, reformed-Keynsian, or a tomato can. In any case, he has to conform if they are going let him become a voting member. Just because you tell the truth does not mean you think it is correct.

Death of a Theory. (Keynsianism) Bullard STL FED. 2012-01-12.

http://research.stlouisfed.org/econ/bullard/pdf/DeathOfaTheory2012Januar...

Titus Flavius Caesar Vespasianus Augustus's picture

the whole monetary system is a scheme to exchange paper for work.

 

which transfers "wealth" from labor {productive work} to capital.

 

Now, I'm all for people being able to make money off their money by getting reasonable return or interest... but when banks can lend it into existence without any work at all - it's axiomatic that it is a thefot of productive value.

 

The issuing power should be restored to The People, to whom it properly belongs.  The US government should "nationalize" the Fed, and lend money to banks at interest, thus inverting the scheme.

 

But look what they did to Ron Paul.  We're riding this thing to the bottom.

graspAU's picture

"We can create money by fiat (decree). Our checkbook doesn't have a ledger. So you write out the check, it's (money/currency) just transmogrified out of thin air, which is a nice checkbook to have."

- Jerry Nelson, Federal Reserve Bank of Chicago, Public Relations. May 14, 2008.

And here is the full discussion with Jerry. Quite the speaker:

Updated Video Links as of 2012: part 1 http://www.liveleak.com/view?i=65a_1212394303

Part 2 http://www.liveleak.com/view?i=e90_1212396161

Banksters's picture

 

ECB wins case to conceal Greek debt secrets Secret documents revealing the extent of the European Central Bank’s knowledge of Greece’s concealed debt issues prior to its €240bn (£195bn) tax-payer funded rescue have been withheld in a "disturbing" EU court ruling.

http://www.telegraph.co.uk/finance/financialcrisis/9713651/ECB-wins-case...

 

 

Gee, crooks are refusing to disclose their paper trail... 

Economic warfare, so easy a child could do it.

 

 

Yen Cross's picture

 I'm, surprised Liesman didn't get down on his knees and polish Bullards knob. Those two are made for each other.

  Bullard sucks Bernankes cock and "snowballs" the load into Liesmans mouth for {dissemination} all over CNBS cameras.

debtor of last resort's picture

Inflation exports overkill WILL come home. To roost or whatever. The croupier will know before you do. Faites vos jeux mes amis.

q99x2's picture

We have prisons for those conspiring to commit treason. Indeed we do.

Investor Wizard's picture

So much printing. I should have listened to my parents and opened an ink supply business.

unplugged's picture

Hey Bulltard, can I print my own money too?  You aren't above the law are you?  So its all like, legal, right?  Its cool then, yeah?

The Fonz...before shark jump's picture

Steve Liesman is a pimp for the fed..

Man is his name apt... Lies man

You can't spell Liesman without the LIES, man!

The fed couldn't have found a better mouthpiece... I guess mr. Bulschiter wasn't available

NaiLib's picture

Whatever you say now does not matter. Quite soon now we will se headlines like: "YOu _have_ to buy and own equities, that is the _only_ way you can make and preserve your capital"

When you see that, you are about 3 - 6 months from the mother of all declines.

q99x2's picture

Didn't have time to watch it. Everytime I see Leisman I have to take a dump and I'm never sure how long that will take.

falak pema's picture

the great american mystification unravelling is awesome to see. 

We get the impression that more and more segments of the US elite are now seeing openly, as opposed to feeling it secretively, that the immense divide between the proponents of the "status quo" oligarchy and the encroaching apprehension of reality is not tilting in favour of that hopium ball park of our scions of USA, USA. 

WHere do we go from here?

In fact it is the hard reality of the WS financial world which will show the way to the acceptance of this new reality, which ever it is : 

1° FED saying QE from now on is kaput.

2° Congress saying we are in the shits to meet the entitlements cum defense spending conundrum. Remember we have two months to get to this tipping point.

3° Margin squeeze of WS scions start screwing up the P/E of all these levitated assets big time.

4° Some external event brings crisis and financial stress further to breaking point.

5° Alternatively, USA, USA proving that shale oil/gas energy USA is now blowing the economy to self sustainance, as job creation and bringing back industry bigtime...will save America's future by 2017.

All this in a scenario of 2013 frought with electoral uncertainty in Germany as elsewhere...

Its a scenario where either S&P to 1650 is a very risky bet in status quo hopium mode...or its the contrary, as the supercycle now hots up bigtime. 

Place your bets ! 

 

Titus Flavius Caesar Vespasianus Augustus's picture

HAGEL!

 

The coin thing isn't going to happen - this weekend, it's all about Chuck Hagel's nomination and the batshit crazy smear campaign that the neocons are going to unleash....  silly bitches.

 

http://discussions.latimes.com/20/lanews/la-pn-obama-to-nominate-chuck-h...

http://www.huffingtonpost.com/mj-rosenberg/nominating-hagel-will-sen_b_2...

 

http://articles.baltimoresun.com/2013-01-02/news/bs-ed-hagel-20130102_1_...

 

 

 

I wonder if Obama is borrowing someone's balls...   we can support Israel, but the thing is, those who would American blood and treasure to defend Israel no matter what, and fight another needless, barbarous war on the rumor of what Iran might possibly try to one day do [but which we and Israel have done] is not only bad thinking - it's treasonous.

 

Bil Kristol and his 'Emergency Committee' are warmly invited to suck a bag of dicks and fuck off to Israel.

ToNYC's picture

Black Swan event of FED Fiasco is the offspring of the inconvienient Truth always shunned, the 800 lb ZIRP gorilla in the room.

How could they not know? they will all say.

cranky-old-geezer's picture

 

 

Bullard:  Indeed we do, we can loot you stupid sheep whenever we want, all we gotta do is turn on our printing press, hell we don't even have to do that, a few computer keystrokes will do it.

Manipuflation's picture

Has anyone tried to renew an expidited passport lately?

(there will be a point at the end of this post)

I did today as mine expired in December.  This is all about two fucked up "states":  The UNtied States and Russia.  I was hoping for a Simon Black "travel the world on daddy's money guest post" but I hope you will all tolerate my indignations.  I will be brief.  I am trying to establish double citizenship for my children; US and Russia.  Do not confuse double citizenship with dual citizenship as they are not the same.

The nearest Russian consulate to me is in Seattle, we are in MN and you can't do this shit by mail.  Apparently the Russkie consulate travels from city to city from time to time to do some consulate "work" but they only gve 14 days advance notice.  They will be in Minneapolis on Jan 18 and for some fucked up reason I need a valid U.S. passport in order to sign off on my kids becoming Russian citizens.(only when they are in Russia though, check the laws)

So how do you get a US passport in just a few days?  I called the Department of STATISTS and explained the situation in detail.  After I was finished, the guy asked "So what country are you traveling to then and when?"  I am not going anywhere right now I explained again.  Turns out there is a way to get the new passport but now I have to appear, in person, before the almighty state as to why I need a passport expidited even though I am not going to be travelling abroad in the next two weeks.  The concept of double citizenship is not encouraged by the STATIST DEPT and one reason is tax laws.  So now I have an appointment with the U.S. on Monday at High Noon that took me 45 minutes to get set up via their re-re-re-redundant automated telephone system.  This just ought to be the thrill of my life.

It gets even better though:  It turns out that I also have to meet with the Russians in person.  What the fuck is this?  Reykjavík?  I had to inquire as to where this meeting would take place.  Anyone want to take a guess?  US Bank in Minneapolis

I think many of you can understand why my blood is boiling and how I have suddenly developed a nervous twitch in my neck.

I think I will wear my threadworn Ron Paul 2008 shirt to that meeting.  I am measuring my words carefully now for those encounters with the two states.  All this for me not to go anywhere.  And the cost of it all besides my nerves?  Get out your checkbook.

Thank you for listening if you did and I apologize for how fucked up we have let this world become as a result of central banking.

http://en.wikipedia.org/wiki/Russian_nationality_law

Manipuflation's picture

I can not and will not tolerate corruption of blood.  This whole financial mess we have been trying to deal with for the last decade is not my children's fault.  I just want the option to get them out of the way if need be and the need seems to exist. 

http://legal-dictionary.thefreedictionary.com/Corruption+of+blood

alfbell's picture

They've taken over in toto. It will be a long slow process of wealth transfer.

If you can't beat em you might as well join em.

Everyone is on their own. Do what you need to do.

rufusbird's picture

Fee, fi, fo, ing, gee! I see the image of a Ferengi.