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Fed Intervention For Dummies - What A Record $3 Trillion In Fed Assets Gets You

Tyler Durden's picture


At the heart of it, visualizing the record $3 Trillion Dollar Federal Reserve balance-sheet is practically impossible. However, in two simple charts we can easily visualize what impact that gargantuan amount of printed cash has had on the 'real' economy and the 'real' market via Bernanke's magic wealth-effect. Presented with nothing to add...

The Market vs The Jobs...


and the real wealth effect...


(h/t @Not_Jim_Cramer)


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Fri, 01/25/2013 - 15:20 | 3186157 Xibalba
Xibalba's picture

"I won't let the facts stop me" ---USSA.GoV

Fri, 01/25/2013 - 15:29 | 3186179 max2205
max2205's picture

TD add the start of each jawboning frontrunning ramp for reference...cock suckers!

Fri, 01/25/2013 - 15:30 | 3186186 flacon
flacon's picture

So the stock market is a hedge against inflation? Better than gold? Better than Silver (which is still at the same price it was two years ago)...... oh how they manipulate things, eh? 

Fri, 01/25/2013 - 15:36 | 3186206 spastic_colon
spastic_colon's picture

the true "wealth effect" inflation adjusted only begins above a certain equity level and the fed knows this, so under current "real" inflation that ES level is still well above 1500.....we were all "wealthier" the last 2 times we were at these levels

Fri, 01/25/2013 - 15:51 | 3186244 ZerOhead
ZerOhead's picture

I might be guilty of skewing the numbers just a tad since five of those new recovery jobs are mine...

Fri, 01/25/2013 - 16:04 | 3186300 Medea
Medea's picture

Two for me! Whaddafuq.

Fri, 01/25/2013 - 16:05 | 3186302 Joe Davola
Joe Davola's picture

You go guy!

Really, you better go, you're probably late for a couple of those jobs.

Fri, 01/25/2013 - 16:45 | 3186398 TruthInSunshine
TruthInSunshine's picture

The stock market indexes ARE ALL BERNANKE HAS as his failed legacy (aka 'VIRTUOUS CIRCLE' ALCHEMY), and he and his apologists can now ONLY cling to the artificial and TRANSITORY (mark not my words, but the inevitability of the fate of such artificial bubbles blown by digitized fiat) "stock market rally" that he has inflated as the last, sole claim that his monetary policy bore (rotten) fruit.

The Bernank is now literally trapped. Look at the real economic conditions in the U.S. and the polls that reflect that the a fiat-juiced equity market rally (that will implode) is and never will be enough to stop the genuine and rapidly declining economic conditions, nor the genuinely terrible and declining national mood regarding the health of the real economy (as people witness the real time degradation of the economy).


Fri, 01/25/2013 - 22:27 | 3187173 trav777
trav777's picture

printing ain't fucking stoppin...either bitch about it like ZH or get on board and do what you gotta do

Fri, 01/25/2013 - 22:59 | 3187226 TruthInSunshine
TruthInSunshine's picture

Printing with reckless abandon always and will forever lead down the same road. It's not about bitching, but making sure people notice the pattern and inevitable outcomes:

The Harvest excerpted from the book The Creature from Jekyll Island

When men are entrusted with the power to control the money supply, they will eventually use that power to confiscate the wealth of their neighbors.

There is no better illustration of that law than the Crash of 1929 and the lingering depression that followed.


During the nine years before the crash of 1929, the Federal Reserve was responsible for a massive expansion of the money supply. A primary motive for that policy was to assist the government of Great Britain to pay for its socialist programs which, by then, had drained its treasury. By devaluing the dollar and depressing interest rates in America, investors would move their money to England where rates and values were higher. That strategy succeeded in helping Great Britain for a while, but it set in motion the forces that made the stock-market crash inevitable.

Fri, 01/25/2013 - 16:44 | 3186409 Clowns on Acid
Clowns on Acid's picture

Agreed Spaz  - but in hyperinflation equities may be better than anything except pm's

Sat, 01/26/2013 - 10:54 | 3187598 Papasmurf
Papasmurf's picture

That may be true except for the counterparty risk of your equities being held by DTC.

Fri, 01/25/2013 - 15:37 | 3186208 Clint Liquor
Clint Liquor's picture

Historically, the Stock Market did not do well during periods of high inflation. The myth that the Stock Market protects your wealth during inflation is propagated by the fleecers of investors more commonly known as Stocksuckers.

Fri, 01/25/2013 - 15:37 | 3186213 SafelyGraze
SafelyGraze's picture

as long as you keep employment low, you can keep prices low

at least, prices on things that employed people might purchase

Fri, 01/25/2013 - 15:53 | 3186260 spastic_colon
spastic_colon's picture

exactly or at least in theory, in this way consumption and potentially inflation can theoretically be "controlled".  which begs the argument, wouldnt the market and employers be able to do this on their own? why hire if demand is low thus keeping wages out of circulation.

Sat, 01/26/2013 - 08:49 | 3187509 css1971
css1971's picture

In the USA or in China?

Fri, 01/25/2013 - 15:51 | 3186254 daxtonbrown
daxtonbrown's picture

The concept of GDP loses meaning when the Fed Gov makes up 24% of GDP. All the Solyndras and welfare boondoggles are not additive to production no matter how Helicopter Been jiggers the books.

Fri, 01/25/2013 - 16:17 | 3186332 Caveman93
Caveman93's picture

We NEED to build that damned Death Star!!! Look at the no move on NFP Lulz!

Fri, 01/25/2013 - 15:22 | 3186159 philosophers bone
philosophers bone's picture

What was the explanation for the decline in Fed Reserve Assets in 2012 again?

Fri, 01/25/2013 - 15:22 | 3186160 LongSoupLine
LongSoupLine's picture

What it got us?

A ton of fucking pain and suffering for future generations.

Fuck you Bernanke, prick.

Fri, 01/25/2013 - 15:44 | 3186232 Clint Liquor
Clint Liquor's picture

All the Geezers hope the 'Future Generation' has to pay. But it will be the current generation whose wealth is blown away along with fiat currencies and derivatives.Good for the 'Future Generations', it's not their fault.

Fri, 01/25/2013 - 17:20 | 3186553 SheepDog-One
SheepDog-One's picture

I can't wait till the morning all these 401K and pensioners see that all their 'wealth' they sold out for is also gone!

Sat, 01/26/2013 - 16:45 | 3188050 DosZap
DosZap's picture

I can't wait till the morning all these 401K and pensioners see that all their 'wealth' they sold out for is also gone!

Sold out for?, as in most have no CHANCE to remove them?,they/most  cannot remove them.

All these SO called Sell Out's worked their asses off for 30-40+ years on a promise that they were protected,(they earned it for the vast majority) and as in every generation past did also.

At least they saved.

You should be more concerned about the DONE nothings still at the trough, and get all this free shit, FOR never being productive or spent an hour working or saving.

Fri, 01/25/2013 - 15:24 | 3186161 syntaxterror
syntaxterror's picture

My god, imagine if GDP year over year growth were 5% instead of under 2%! The Dow would be at 30,000!

Fri, 01/25/2013 - 15:43 | 3186230 francis_sawyer
francis_sawyer's picture

so would a can of grandma's catfood...

Fri, 01/25/2013 - 15:23 | 3186163 kralizec
kralizec's picture


Fri, 01/25/2013 - 15:23 | 3186164 Bam_Man
Bam_Man's picture

It gets you a stock bubble and a bond bubble at the same time.

When they have blown another housing bubble, they will be 3-for-3 and declare victory.

Fri, 01/25/2013 - 16:16 | 3186330 inevitablecollapse
inevitablecollapse's picture

shit...if you go 1-3 through an entire career, the HOF will be calling you.  3-3 is altogether on a different level.  fu bb, fu jd, fu bo, fu tg, and on and on

Fri, 01/25/2013 - 15:24 | 3186166 101 years and c...
101 years and counting's picture

from Jan 21, 2009-Dec 31, 2012, obama added 5.84 Trillion in debt.  a normalized 3 week period would add another 90B.  since obama was sworn in, the US has added 5.93 Trillion in debt.  all that to grow the economy 0%.....once you back out inflation, growth is, in fact, 0.0000%.

Fri, 01/25/2013 - 16:28 | 3186358 Overfed
Overfed's picture

Once you discount inflation, I suspect growth has actually been negative.

Fri, 01/25/2013 - 15:24 | 3186167 ceilidh_trail
ceilidh_trail's picture

I see banksters coming out on top. The common man? Not so much.

Fri, 01/25/2013 - 15:24 | 3186168 valkir
valkir's picture


Fri, 01/25/2013 - 15:26 | 3186173 youngman
youngman's picture

They are just waiting until the unemployment number hits be a few more trillion though

Fri, 01/25/2013 - 15:27 | 3186174 Wilcat Dafoe
Wilcat Dafoe's picture

Fret not - the Neocons who are still, along with the banks, controlling the American government and its intelligence agencies, is going to pay for all of this with North African oil and gas and gold - where our SOFs will be greeted as liberators.


Amazing...  The same sort of chickenhawk neocons who infiltrated the Office of Special Plans to lie us into Iraq are still around.

And let's pull off this bandaid quickly - they're just about all Zionist Jews.

Fri, 01/25/2013 - 15:31 | 3186187 PAWNMAN
PAWNMAN's picture

More government intervention = less growth


Fri, 01/25/2013 - 15:32 | 3186194 steve from virginia
steve from virginia's picture




(Sigh ...)


There is + $3-4 trillion in deleveraging taking place within the US economy ... The balance sheet addition is this deleveraging being shifted to the central bank which can sustain (paper) losses indefinitely without ill effect.


If the banks sustain these multi-trillion dollar losses they fail taking other banks and businesses with them. I'm not saying the banks should not fail but the consequences of doing so are profound ... and ill considered.


The $3 trillion is a 'phantom' there is no 'money' added anywhere, it's an accounting artifact. You can see for yourself that this is so ... despite the claims for 'money printed' why is everyone broke?



Fri, 01/25/2013 - 15:36 | 3186204 HD
HD's picture

LIESman? That you man?  Love your comedy bits on CNBC.

Fri, 01/25/2013 - 15:53 | 3186237 francis_sawyer
francis_sawyer's picture

 "despite the claims for 'money printed' why is everyone broke?"


Blankfein & his cronies ain't broke... They're buying $33 million dollar shitholes in East Egg, sending their kids to Haaahvud, & systematically stealing gold off the Comex shelves... [You must have missed that story on CNN]...

Fri, 01/25/2013 - 15:40 | 3186223 Dr. Engali
Dr. Engali's picture


Fri, 01/25/2013 - 15:49 | 3186248 Sauk Leader
Sauk Leader's picture

No he is too busy filling Herbalife orders.

Fri, 01/25/2013 - 15:50 | 3186253 spanish inquisition
spanish inquisition's picture

 despite the claims for 'money printed' why is everyone broke?

It has been a week since Jamie Dimon has checked his pockets.....

Fri, 01/25/2013 - 16:15 | 3186327 LawsofPhysics
LawsofPhysics's picture

"Banking is like a jet engine, too complicated for you debt slaves to understand" - Jamie Dimon.

Fri, 01/25/2013 - 15:55 | 3186268 Joe Davola
Joe Davola's picture

OK, but have the banks written off the trillion's of dollars in losses that the freshly minted dollars take the place of?

Sat, 01/26/2013 - 08:47 | 3187507 css1971
css1971's picture

Because Japan is a fabulous model to follow. Zombies 4 ever!

Fri, 01/25/2013 - 15:33 | 3186197 HD
HD's picture

Three trillion equals 800 S&P points. Sure we could have had a new electric smart grid, or a cure for cancer or hell, put a man on mars.

Nope. 800 S&P points...and what are we left with when a black swan flies away with our manipulated rally to the moon?

Fri, 01/25/2013 - 15:40 | 3186217 Dr. Engali
Dr. Engali's picture

It sure is a lot of "money" that's been pissed away. It's sickening to think of the things that could have been done with it....that is if it were real money to begin with.

Fri, 01/25/2013 - 16:24 | 3186351 perelmanfan
perelmanfan's picture

Yeah, how about solar on every sunny rooftop in the U.S., rendering the country energy independent for the next 30 years? Naw, fuck that, let's give it all to Blankfein...

Fri, 01/25/2013 - 17:30 | 3186587 hooligan2009
hooligan2009's picture

check out the empty spaces in the vast majority of offices between 7 pm and 7 am that could be used for converted to tother things with just alittle planning


how about the massive amount of wind power in the big cities from the wind tunnels created by the office blocks..that runs all night over 60 floors (if anyone can be bothered to stick a turbine on it).

Fri, 01/25/2013 - 23:06 | 3187231 GoingLoonie
GoingLoonie's picture

What is the market value of the entire S & P?  I want to watch when the Fed is the sole owner of the entire S & P.

Fri, 01/25/2013 - 15:33 | 3186199 Banksters
Banksters's picture

Donde esta the shovel ready jobs? 

Fri, 01/25/2013 - 15:43 | 3186234 syntaxterror
syntaxterror's picture

Lotsa bullshit to be shovelled outta DC. So there's the answer I guess.

Fri, 01/25/2013 - 15:46 | 3186238 Wakanda
Wakanda's picture

Los puestos de trabajo estan en el cemeterio.

Fri, 01/25/2013 - 15:37 | 3186212 alangreedspank
alangreedspank's picture

But but.....that's because the money isn't circulating! .... Good, because if it did, people would not be busy producing useful stuff but rather, pushing wheelbarrows of money...

Fri, 01/25/2013 - 15:39 | 3186214 W74
W74's picture

Why is the Russell 2K doing so well? 

Fri, 01/25/2013 - 15:43 | 3186231 Scalaris
Scalaris's picture

Because billionaires have to eat as well.

By the looks of it I'm guesing soylent poor it's what's for dinner.

Fri, 01/25/2013 - 16:16 | 3186325 LawsofPhysics
LawsofPhysics's picture

Personally, I'm thinking the billionaires will taste better.  Although one might want to avoid the likes of Paris Hilton.  As a microbiologist, I would say that she may be hazardous to your health.

Fri, 01/25/2013 - 17:24 | 3186569 hooligan2009
hooligan2009's picture

because they are cute little doggies that you can tie ribbons on..they don't have to be called tookay tho.

Fri, 01/25/2013 - 15:41 | 3186220 amadeusb4
amadeusb4's picture

OK, nice graph and all but you can't exactly increase GDP or NFP by 70% now can you?

Fri, 01/25/2013 - 15:41 | 3186221 ziggy59
ziggy59's picture

I wonder if 3Trillion split evenly and given to every one of the 312 Million people in this country ..whats that approx 10 grand? Would the effects and affects be better and cause more jobs than the trickle down BS we are told

Fri, 01/25/2013 - 15:46 | 3186239 1100-TACTICAL-12
1100-TACTICAL-12's picture

The best part of the Bernak trickled down his moma's leg.

Fri, 01/25/2013 - 15:43 | 3186233 Yen Cross
Yen Cross's picture

 Global Intervention "For Dummies". What $ 13 Trillion gets you. 

 1• Shitty Coffee

 2• 100% price increase in commodities ( Fuel, Protein, health care)

 3• Geopolitical turmoil (M/E and Asia) a budding Africa.

 4• Self euthanasia (immolation).

 5• I could go on forever, but I'm trying to squeeze a 'yen cross' short before N.Y. closes.

Fri, 01/25/2013 - 16:21 | 3186345 inevitablecollapse
inevitablecollapse's picture

self euthanasia!  i'm going to start using that - of course, i will cite ZH and Yen in all uses moving forward

Fri, 01/25/2013 - 16:44 | 3186381 Yen Cross
Yen Cross's picture

 Slow day for you? You are more than welcome to discuss your Trading ideas with me. Leave the politics under your left sleeve.

  Show me a chart? Show me a "snippet" of your trading ideas. I don't conform your "SNAP theory" divisiveness.

"Koi Pond" basement baby.

Fri, 01/25/2013 - 17:23 | 3186560 hooligan2009
hooligan2009's picture

yen per euro will/needs to get to 150, but i can't find any evidence of a "sell the shit out of it" technical indicator that works!

Fri, 01/25/2013 - 15:49 | 3186247 Chris88
Chris88's picture

Government - if something proves to be an abysmal failure, just do more of it instead of admitting you're wrong; that could mean your re-election dammit!

Fri, 01/25/2013 - 15:50 | 3186251 natronic
natronic's picture

I think the fallacy in Bernanke's speaking is he was talking about selling them (I don't think he will).  I mean how the hell are you going to sell something nobody is going to want to buy?  College Degree does not equal smart, I'm guessing he's doing what his liberal professors taught him.

Fri, 01/25/2013 - 17:05 | 3186490 philosophers bone
philosophers bone's picture

Premise 1.  The Fed can't allow interest rates to go down until the Fed it stops buying bonds and MBS and resells them, otherwise the value on their balance sheet goes to shit;

Premise 2:  The Fed needs someone to want to purchase the bonds and MBS;

Premise 3:  No person in his /her right mind would want to purchase them;

Conclusion:  Prepare to be fucked over through blatant financial represssion and/or watch your account to see when the Triple A-rated "Fed Money Market Fund" shows up in your account.


Fri, 01/25/2013 - 17:06 | 3186494 philosophers bone
philosophers bone's picture

Revised Premise !:  The Fed can't allow interest rates to go up!!.....

Fri, 01/25/2013 - 17:19 | 3186548 hooligan2009
hooligan2009's picture


yes but...all Fed profits and losses are disclosed by letter to the Treasury, who can file them appropriately (think waste paper basket).

Fri, 01/25/2013 - 22:58 | 3187223 GoingLoonie
GoingLoonie's picture

Selling to the Bernak means giving them to his friends at a huge discount.  He does not know what a free market is.

Fri, 01/25/2013 - 15:57 | 3186274 spanish inquisition
spanish inquisition's picture

After spending some time looking at the first chart, I think there is conclusive proof of trickle down wealth effect at work.

Fri, 01/25/2013 - 17:18 | 3186536 hooligan2009
hooligan2009's picture

also known as "the golden shower~" effect

Fri, 01/25/2013 - 16:06 | 3186305 falak pema
falak pema's picture

What is interesting to note in the CB evolution is the relative degradation of the CB balance sheets; even though they be very interlinked. 

As mentioned here on ZH the FED seems to be ahead in this race :

Banks Return €137 Billion In LTRO Funds To ECB: Goldman's Take | Zero Hedge

Fri, 01/25/2013 - 16:11 | 3186320 LawsofPhysics
LawsofPhysics's picture

WTF- It "gets" the bankers control of every single productive asset in the fucking world.  You and I "get" fucked.

Any questions?  Got physical?

Fri, 01/25/2013 - 16:19 | 3186341 Yen Cross
Yen Cross's picture

 The 23.6% Fibi(retrace) on usd/jpy comes in @ 90.454. A little fry-day humor.

Fri, 01/25/2013 - 16:23 | 3186347 JR
JR's picture

Talk about a rigged casino! The Fed is a moral hazard. Paul Farrell said it best in 2010 and nothing’s changed: "Stocks are a sucker bet in a rigged game." Most retail investors, anticipating another meltdown, don’t like the odds in a stock market that is rigged to the advantage of large investors. And they’ve left the game.

 How the Fed Began Rigging the Stock Market | The New York Post | October 23, 2012 by

John Crudele (excerpts)

Oct. 27, 1989, a guy named Robert Heller proposed rigging the stock market so that crashes like those in ’87 and ’89 would never happen again.

Kooks propose things like this all the time. But Heller was the real thing. He was a renowned banker who had just left the Federal Reserve board weeks before he gave a speech that was reprinted in the Wall Street Journal.

Heller worried that the Fed was dangerously pumping too much money into the financial system whenever crashes occurred. All it really had to do, he said, was buy enough stock to keep the market afloat until the markets calmed down. Simple enough!...

In short, Heller wanted the Fed to rig the stock market when things looked dire — and only when they were dire. And he said stocks could be bought easily and cheaply enough through index futures contracts. ...

[T]he Fed today is rigging the stock market. Indeed, ever since the day Heller proposed the unthinkable, Washington has been making sure stocks don’t go into an unstoppable slide. …

There’s a big difference between what Heller proposed and what’s going on today. Heller wanted the Fed to be a temporary emergency backstop because he didn’t want the central bank to flood the financial markets with cash. That was too dangerous.

Yet that’s exactly what current Fed chief Ben Bernanke is now doing — flooding the financial markets with cash, although he calls it quantitative easing and pretends that the electronic money he’s creating is somehow better than printing currency and dropping it from helicopters. …

I don’t know how you feel about rigged financial markets. Personally, I don’t like games of chance, but I’m especially leery when someone else knows when the dice are loaded. …

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died

                                          Leonard Cohen (The Burning Platform)

Fri, 01/25/2013 - 16:41 | 3186399 Yen Cross
Yen Cross's picture

 It's hard not to catch a falling knife J.R. ( My best to Sue ellen)

Fri, 01/25/2013 - 16:34 | 3186385 DosZap
DosZap's picture

Yep, and Tina Turner just turned in her US Passport, and gave up her citizenship.

Only the uber wealthy get away.

Fri, 01/25/2013 - 17:00 | 3186471 venturen
venturen's picture

couldn't you include average bonus per bankster?

Fri, 01/25/2013 - 17:15 | 3186526 hooligan2009
hooligan2009's picture

excellent point, but those tricky bastages know how to get round that. 

bonuses per capita are probably down, but by less than salary per capita have gone up..and of course, there's the circle jerk of ramping bank shares using Fed money to capture the most from deferred bonuses paid as share options.

nothing new in the world, really.

Sat, 01/26/2013 - 09:25 | 3187530 Grand Supercycle
Grand Supercycle's picture

As mentioned – central bank intervention prolongs and postpones but can not oppose natural market forces indefinitely...

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