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Friday Tragicomedy: Former Fed Advisor Urges Fed To Buy More, "A Lot More" ... $30 Trillion More
While we can only hope the following screed posted in an otherwise serious BusinessWeek, by David Kemper, CEO of Commerce Bankshare, and more importantly, a former president of the Federal Advisory Council of the Federal Reserve and thus indicative of the kind of "advice" the Fed receives, is a joke we have a very nagging feeling that the text below is actually serious. Which is why instead of Friday humor, we have decided to err on the side of caution and call this segment Friday tragicomedy. Because with a statement such as the following: "Why not expand the Fed balance sheet exponentially, from its current $3 trillion to $33 trillion... Would $30 trillion in extra buying power be inflationary when our entire current GDP is only about $15 trillion? Maybe, maybe not—but we need a game-changer here. First let’s celebrate the Fed’s record profits and its contribution to reducing our deficit. Then let’s seize the moment to do something truly grand: eliminate that stubborn deficit. We have the tools, and I, for one, say let’s give it a try."... it shows that the idiotic trillion dollar coin, Sheila Bair's farcical suggestion to let every American borrow $10 million from the Fed at zero rates, or even our suggestion from a year ago that the government build a Death Star, may appear as sheer genius in comparison to what else the Fed may be considering, and implement, before all this is said and done.
From BusinessWeek
QE Cubed: A Modest Proposal for More Fed Buying. A Lot More
by David Kemper, Chairman, President and Chief Executive Officer of Commerce Bancshares, Inc., and Past President of the Federal Advisory Council of the Federal Reserve
The ongoing depressing news about the American fiscal situation has obscured the startling and very impressive earnings performance recently announced by the Federal Reserve. The Fed, in its usual understated way, just revealed it will be turning over $90 billion in 2012 profits to the U.S. Treasury, a much-needed contribution that will put a sizable dent in our nation’s current $1 trillion federal deficit.
The Fed’s earnings performance over the last several years has been exceptional. It earned more than twice Apple’s after-tax earnings last year, the result of a simple but powerful strategy: borrow money at very low rates, then buy long-term bonds.
Now, some people might question the Fed’s exceptional results and point out that it has an unfair advantage in that it has a monopoly on manufacturing the U.S. dollar. Yes, the Fed does have extraordinary profit margins, since its cost of goods sold is close to zero (basically paper, some bond traders, and access to the Internet), and yes, so far the demand for new dollars seems unlimited. Meanwhile, we as a society seem to have no stomach for trying to reduce our soaring deficit and our accelerating entitlement programs. No one in our federal government seems to be willing to work out a long-term fiscal solution. Why not go with a business model that has proven to be such a winner?
That is why I propose the Federal Open Market Committee’s next move be to take our central bank to a whole new level—a 2013 campaign that I call QE Cubed. Why not expand the Fed balance sheet exponentially, from its current $3 trillion to $33 trillion? Earning an extra 3 percent on another $30 trillion in bonds would allow the Fed to return an additional $900 billion to the Treasury—thus wiping out most of our federal deficit while avoiding actually having to do anything about current government spending.
I’m sure some skeptics will scoff that this might be a little irresponsible. They make invoke memories of Weimar Germany. And, oh, by the way, where is the Fed going to find $30 trillion in acceptable bonds? I am the first to admit that the Fed will have to buy all $15 trillion or so of our current U.S. debt, as well as most of our agency and some corporate debt, in order to reach an additional $30 trillion. But we can make this happen! Here’s the plan:
The Fed will buy all outstanding Treasury debt held by our major creditors–including the Chinese, the Japanese, the Saudis, Bill Gross, and everybody else. This is not a bad thing; it is a major opportunity consistent with current monetary policy. Let’s cut through the economic mumbo-jumbo and put it in human terms: Would you, the American taxpayer, rather owe money to your benevolent rich uncle (the Fed) who is trying to get you a job, or to your no-good brother-in-law (you know who) who is out to steal your business and all your intellectual property? Not a difficult decision. Our current creditors, flush with cash from a $30 trillion infusion, would have to buy something else, further driving up asset prices and lowering interest rates.
Would $30 trillion in extra buying power be inflationary when our entire current GDP is only about $15 trillion? Maybe, maybe not—but we need a game-changer here. First let’s celebrate the Fed’s record profits and its contribution to reducing our deficit. Then let’s seize the moment to do something truly grand: eliminate that stubborn deficit. We have the tools, and I, for one, say let’s give it a try.
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Market pumper pops a gasket in response to Peter Schiff telling it like it is on CNBC.
That was funny, would make a good video clip here on ZH when it goes online.
"A Modest Proposal" ? It's swiftian satire.
Absolutely correct; but Swift didn't get paid just short of $4,000,000 a year to sneer at the 'unsophisticated' investors.
He also seems a bit too intentionally blind to the fact that the potato famine was largely caused by food exports rather than actual lack of potatoes, (this is well known, at least on the European side of the pond), implying he's fully aware (and supportive) of the current looting & Banking piracy going on.
Cecil Woodham-Smith, an authority on the Irish Famine, wrote in The Great Hunger: Ireland 1845-1849 that no issue has provoked so much anger and embittered relations between England and Ireland as "the indisputable fact that huge quantities of food were exported from Ireland to England throughout the period when the people of Ireland were dying of starvation." Ireland remained a net exporter of food throughout most of the five-year famine.[wiki]
That's not a smart position to hold in public if you're assuming that watchers aren't watching; one might say a very silly position indeed. Not someone I'd like to stand too close to in times of trouble.
Harvard - Oxford - Stanford... Always the problem with Americans, no Public School beatings to instil at least a modicum of humility.
"A Modest Proposal" ? It's swiftian satire.
This guy is surely taking a piss. He must be taking a jab at his former colleagues. That's what he is doing right?
If you look from the standpoint that the system will implode at some point in the future no matter what then this might not be a bad idea because it will give everyone time to prepare.
(Not thinking DHS here)
Deathstar!
Stormtrooper jobs!
$10 Trillion to Universities and Student Loans to figure out how to make those cool laser guns, light sabers, and that home robot that says "gom"!
Space probes to find the Ewoks, Yoda, and Chewbacca!
DOW to 500,000!
Let's go!
I want my daughter to study Eastern African Art painted by monkey shit at university! Should be about 250K a year by that time.
$250k per hour
This is essentially what the Fed is doing anyway, it just hasn't taken the nuclear option of shooting the entire bond market in the head at point blank range.
"Would you, the American taxpayer, rather owe money to your benevolent rich uncle (the Fed) who is trying to get you a job, or to your no-good brother-in-law (you know who) who is out to steal your business and all your intellectual property? Not a difficult decision."
This is a false dichotomy which, to any rational reader, immediately raises the more basic question: "why owe money - with interest - in the first place?". And it's a false dichotomy because - among other alternatives - as every fucking politician knows, sovereigns default all the fucking time.
Default on the debt and tell everyone to eat the fucking loss, or cube the amount of debt you owe FOR A NET-NEGATIVE MARGINAL BENEFIT. Not a difficult decision, YOU ARROGANT FUCKING SHILL.'
Edit: Forgot the image. http://i.imgur.com/Uqg3cxa.jpg (SFW)
Goal is $32 trillion for the deficit.
They can just cut and paste his note into the next FOMC Statement. Hey, it's worth a shot....
..The Fed will buy all outstanding Treasury debt held by our major creditors–including the Chinese, the Japanese,...
Sure, but they will request maximum twenty-dollar-bills, that amount of paper will exceed the face value easily then.
Run Ferris.... Run
As long as they reduce bank leverage in an identical amount, I am in full support of Fed printing enough to buy up all debt. Refinance it all at 3% and the government has $900 billion a year towards the federal budget. Eventually it gets paid off and the balance sheet goes back to zero.
Basically all it is is having a central bank create debt free money instead of banks creating debt based money.
This really is the answer.
Yes, the balance sheet will hit zero, when the value of a dollar reaches zero.
Until then it is a chain mail game and the number must be increasing exponentionally. But you can run it only to the point until the computers can't represent the large numbers anymore (paper isn't the limit like it was in Weimar). But never underestimate the exponential function, human race is unable to imagine it's consequences. So it will get to the monetary supernova very quickly.
That crackhead idea is just another way of filing for government bankruptcy.
Here's a fun bit of trivia. David Kemper, the author of this lunacy, is the father of Ellie Kemper. Ellie plays receptionist Erin on NBC's The Office.
"Daddy!?!?! I wanna be an actress.....gosh. Please? Please make me an actress! Buy me a sitcom!"
Ellie's sister is one of the show's writers.
Seriously, let's not pretend that Ellie is some dimwit with a silver spoon in her mouth. She was educated at Princeton and Oxford and is a surprisingly nice and humble person.
Still, if her father is serious, she needs to have him institutionalized.
Princeton ain't Penn State
Dollar is slipping fast. Bernank must be printing like a banshee without telling anyone.
This is what, like, reverse debt jubilee?
Build the Death Star!
Then target the Wall Street and Govt databases
Just mint the trillion dollar coins. No need for all this debt nonsense - just pure seigniorage.
Why don't we all stop working and ask Uncle Benny for a cool Tril each? When we get low, we just call him up and ask him to transfer another Tril.
Monopoly money, bitches!
Benny won't take your call. You aren't a large Wall Street institution. On second thought, he might take your call just to tell you to get bent.
Needless to say, this guy, should blow me...and the horse I rode in on.
In five years we'll all be working for Paul Krugman... or be dead by his hand.
Look at this point, having heard all the bullshit and seen the benefactors of fed policy masturbate about high finance and balance sheets one thing remains clear: people are making out like bandits and Sheila Bair's farcical idea is the only thing that seems to make sense out of everything that's been proposed. Any order or intelligent process has been thrown out the window (or in this case helicopter) a long time ago, so let's get out the checkbook and start writing those $10million loans at 0% Benny boy.
Who gives a fuck. The elites are doing everything they can to keep things up. Eventually it will be the Fed and GS trading back and forth while the rest of us watch.
Fuck you piece of shit white trash David Kemper.
And ps.I know your reading this article on ZeroHedge 'cause it's about you,you arrogant peasant fucker.........
Eliminate the deficet with debt......
This bankers buddy guy is as delusional as one can get.
Hey ....I wonder if the fed can make lots of interst with this hot idea,and can give mega free bucks to the treasury...?
Fuck you banker.
Kinda sad when you have to figure out if someone IS joking. I'll tell you a truth more often than not a jokes often are indicative of what people are thinking about.
What this joke suggests fits perfectly into the elite scheme. Purchase everything and everyone and live off the 'interest'. It IS the ultimate goal of the elite - they have 80-90% of everything and need the remaining 10-20%. First rule of ruling - give the masses only just enough to make them think they have a chance. Take away everything and you guarantee revolution.
What I think is funny about this is the idea that the govt would be paying itself interest to cover the deficit. By that line of logic interest rates could go where ever they wanted (up) and the federal deficit would be corrected immediately.
I still find it funny the the FED even pays the treasury it's 'profit'. I take it this is after paying the FED shareholders their take.
My last comment is the fact these people would even make such a joke indicates they are completely out of touch with reality. If I served food to these people I would have a special bag of my own shit, so I could dab my special sauce on their food for them to eat and then pee in their drinks. Bon appite mother fucker and don't forget the tip.
And he's correct in everything he say here. Until the end. They (the creditor) flush with cash in USD's would go buy an asset. And asset called GOLD. The price would be the result of a race to buy it first, and suddenly the old reserve of USD's becomes nothing as everyone rushes to dump them to get a REAL ASSET. Confidence is dollars is gone, and the US is fucked.
Not to worry, the bullion banks would just print up a bunch more gold, so everybody could have their 10 million's worth and the price wouldn't even move. Hell, they could probably print enough gold to make the price go down, if they really wanted to...
ZOMG
an entire ARTICLE written by MillionDollarBonus_
no?
Heck, why not? No one is watching.
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The Securities and Exchange Commission (SEC) has named an attorney for the now-defunct MF Global as its top legal officer.Geoffrey Aronow, who previously served on the board of the National Capital Area Chapter of the American Civil Liberties Union (ACLU), represented MF Global CFO Christine Serwinski when the brokerage firm raided customer accounts and vaporized $1.6 billion in client funds.
In a statement, the SEC praised Aronow’s “passion for investor protection” and said he will be a “faithful steward of the securities laws” and possesses “a comprehensive understanding of law enforcement.”
Aronow says he’s looking forward to taking over as the SEC’s general counsel. “I’m truly honored to re-enter public service as the general counsel at an agency with such a storied history and critical mission of investor protection and effective market oversight,” said Mr. Aronow in an SEC statement.
Despite the Obama Administration’s “get tough on Wall Street” rhetoric, the Obama Justice Department has not charged, prosecuted, or jailed a single Wall Street executive in the wake of the largest financial collapse in U.S. history.
Indeed, no charges were filed against former MF Global chief and top Obama bundler Jon Corzine. Today, Corzine is reportedly back trading with his family’s wealth and considering opening his own hedge fund.
http://www.breitbart.com/Big-Government/2013/02/01/MF-Global-Attorney-Na...
I can't believe they picked another Jew. Never in a million years.
For fuck's sake.
A new house for everybody and a new car of the year in every driveway!!!
'...hey baker, how much for that loaf of bread?'
'7600 bucks, but it's fresh.'
'can you break a million dollar bill??'
When did David Kemper become a contributor at The Onion?
Following Ben's logic; if 3 trillion is good then 30 trillion is better, right? And at 0 percent interest should the US Govt refinance and pay off all its outstanding debt?
At what point will he figure out that the only reason the dollar stumbles on as the world's reserve currency, is because all these pesky foreigners are stuck with trillions of them. The minute the Fed offers to take them back, the dollar is worth nothing -except @ $500 a barrel,
The following is a comment from the comments section on the Business Week site.
Thank god this is satire, after all.
You all need to lookup Jonathan Swift's - A Modest Proposal. This is pure satire. It's a reference to A Modest Proposal for Preventing the Children of Poor People From Being a Burden to Their Parents or Country, and for Making Them Beneficial to the Publick. In it, Swift suggests that since the Irish are poor and have so many children, they could solve their problems by selling their children as food to the rich and eliminate both the problem of supporting their children and having no money.
geez people...
"In English writing, the phrase "a modest proposal" is now conventionally an allusion to this style of straight-faced satire."
http://en.wikipedia.org/wiki/A_Modest_Proposal
Never underestimate the stupidity... etc.
The Fed and The Gov are like Siamese twins .... one doesn't own the other .... they're in it together !
Sure...what's a trillion here, a trillion there...
http://aphs.worldnomads.com/safetyhub/32420/starving_billionaire.jpg
Gee. With $30 trillion the Government could hire everybody. No more unemployment. Free medical care. Free housing. Wheeeee.
This guy is a magician. He has magical powers which you and I don't have. Let's give him a chance!
/sarc
this lunatic wrote this for satire, right?
Why not make it $30 quadrillion? Or $30 octillion? This had to be an attempt at humor....
why not give one million to every US citizen? Oh no, that will not create inflation at all... sarc/
This is a test flag for the next economic collapse. This is the plan for when the next financial disaster. So when it does occur, the Fed can point out that such a solution has already been proposed and this is not a radical/desperate solution to an impossible situation.
And Why not just the 15 Trillion that we owe? Because the entire developed world will need to be bailed out too. That's where the other 18 Trillion will go. New World Order indeed! And hell yeah it's inflationary.
Great idea... let the predators-DBA-federal-reserve own the country. Brilliant idea. I have a better idea, why not just take all the nukes the US miliary has, and nuke the USSA. At least that would be less painful.
As a PM owner I support his solution.
As a citizen of this planet, I recommend he should be committed.
Why not, it's only fiat, and the so called 'assets' are only imaginary toxic liabilities.
The principle of the conservation of nothings is being maintained throughout.