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How The Fed's Latest QE Is Just Another European Bailout

Tyler Durden's picture





 

Back in June 2011 Zero Hedge broke a very troubling story: virtually all the reserves that had been created as a result of the Fed's QE2, some $600 billion (which two years ago seemed like a lot of money) which was supposed to force banks to create loans and stimulate the US (not European) economy, ended up becoming cash at what the Fed classifies as "foreign-related institutions in the US" (or "foreign banks" as used in this article) on its weekly update of commercial banks operating in the US, or said simply, European banks.

And while many, primarily the British press, demonstrated how simple it is to confuse cause and effect, and suggested, incorrectly, that the surge in cash was due to arbing the Fed's IOER (it wasn't, as otherwise all excess reserves would have migrated to European banks due to the open-ended arbitrage instead of merely tracking the ebb and flow of the Fed's reserves), what we showed was that there a one to one correlation between the surge in foreign bank cash assets courtesy of the Fed, and the EURUSD exchange rate, a proxy for European stability, not to mention a key signal for virtually every ES correlation algo.

As the chart above shows, there was a clear and definite correlation, if not causation, between the $500 billion that the Fed added as cash to European foreign banks, and the nearly 2000 pip move in the EURUSD, at which point everyone was pronouncing the European crisis over. It also resulted in a wholesale surge in risk assets. Just like now (incidentally, a topic we covered last night).

So with the Fed's open-ended QE in place for over 3 months now, or long enough for the nearly $200 billion in MBS already purchased to begin settling on Bernanke's balance sheet, we decided to check if, just like during QE2, the Fed was merely funding European banks' US-based subsidiaries with massive cash, which would then proceed to use said fungible cash to indicate an "all clear" courtesy of Bernanke's easy money. Just like in 2011.

The answer, to our complete lack of surprise, is a resounding yes.

* * *

First, some basics.

While there is much theoretical confusion over what excess reserves are, which are merely the fungible cash-equivalent liabilities created on the Fed's balance sheet whenever Ben Bernanke has to monetize the US deficit by purchasing Treasurys or MBS, and thus needs to create offsetting money-equivalent liabilities, especially by academics whose only job day and night is to debate endlessly just what constitutes "money" as their value added in any other field is negative, from a practical standpoint the answer is and has always been one and the same. Cash.

And because there is always confusion on this matter, especially by the monetary intelligentsia-cum-philosopshers club, here is the evidence. Excess reserves = bank cash. Bank cash = excess reserves.

In the chart above, the black line is the surge in Fed excess reserves since September 2009 (source: St Louis Fed), while the shaded area chart shows the break down of bank cash between small domestic, large domestic commercial banks and foreign banks (source: H.8). The two are identical.

So that should remove any of the the confusion of where the the Fed's main de novo created liability ends up as an asset on commercial banks operating in the US - both domestically-chartered and foreign ones.

But the focus of this post is the foreign banks. And it is foreign banks that have seen their cash soar by some $207 billion in the past four weeks (and $216 billion using not seasonally adjusted numbers). This is the second highest monthly surge into "foreign-related" institutions since the bailout of AIG, and is even more on a running 4-week basis than the maximum $171 billion posted in the spring of 2011 when the Fed was injecting some $500 billion into foreign banks as well.

Another exhibit showing just how generous the Fed has been to foreign bank is a chart of cash compare to all non-cash assets. After nearly hitting 100% as a result of QE2, the ratio has once again soared from 60% to just over 80% in the span of four weeks, or since the settlement of MBS monetizations started hitting the Fed's balance sheet.

Perhaps all of this soaring cash is merely the result of a massive inflow of deposits (a liability) into foreign banks without a matching increase in loans (the much discussed previously excess deposits over loans topic), which only leaves cash? The answer is no, as excess deposits over loans at foreign banks has kept flat over the past year, at between $200 and $300 billion.

And in case the big picture is still not obvious, here is the chart that ties it all together: a comparison of the spike in Fed excess reserves and the cash held by foreign banks. Thank you open-ended QE, and Fed Chairman, for injecting over $200 billion in US Dollars into foreign banks operating on US soil.

What is interesting about the chart above is that while cash and small domestic banks has barely budged since 2009 and has been flat at just over $200 billion, and that cash at Large US Domestic banks, or those that hold the bulk of US financial assets, has also been relatively flat in the $500-600 billion area, it is the foreign banks that any new incremental reserves created by the Fed always inevitably end up at ever since QE2.

As shown above, cash held by foreign-related branches operating in the US has surpassed that of domestic banks only for the fourth time in history, the first being the end of QE2 when Europe was again "fixed" (just before it broke), the second was just before the coordinated central bank bailout of Europe in November 2011, the third was May 2012 just before Spanish spreads soared to record highs, and now.

With all of the above, anyone who was wondering where all those hundreds of billions in Fed cash created out of thin air were going now knows the answer: straight into the coffers of mostly European banks operating in the US.

* * *

The only answer that is still missing is precisely what these foreign banks are using said cash for. Because remember that as JPM's CIO showed, a bank can "indicate" it has cash on its books, when in reality it is using said fungible asset for anything: funding one's prop operations, including selling IG9 CDS in a borderline illegal attempt to corner the entire corporate bond market. Or it can perhaps buy the USDJPY, in the process sending the Nikkei soaring and "indicating" that Abe's reflation plan is working. Or it can simply buy the EURUSD as it did in the spring of 2011, crushing the USD and sending the S&P500 soaring, as can be seen on the chart below showing the correlation between the cash on foreign banks and the recent surge in EURUSD.

And while we are confident that the "British press", which is now reliant on Wall Street banks to help it find the highest bidder to which it can sell itself, will promptly come up with contrarian theories all of which will be wrong as they were in 2011, the reality is simple, and can easily be tracked in real time.

We urge readers to check the weekly status of the H.8 when it comes out every Friday night, and specifically line item 25 on page 18, as we have a sinking feeling that as the Fed creates $85 billion in reserves every month to offset its other key task - the ongoing monetization of the US deficit, it will do just one thing: hand the cash right over straight to still hopelessly insolvent European banks to push the EURUSD higher, until, as in the summer of 2011 it goes far too high, crushes German, and any other net European exports, and precipitates yet another wholesale bailout of Europe by the global central bankers. Just as the Fed did in 2011.

Because remember: it is never different this time.

 


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Sat, 02/02/2013 - 19:11 | Link to Comment cossack55
cossack55's picture

I am not concerned.  Please awaken me when the story breaks that we are bailing out the Crab Nebula.

Sat, 02/02/2013 - 19:18 | Link to Comment tsx500
tsx500's picture

QE 1 , 2, 3,   27,  85 ............... WHAT DIFFERENCE DOES IT MAKE  ?!

Sat, 02/02/2013 - 19:41 | Link to Comment CH1
CH1's picture

Euro-elite draining the US. What comes after is kinda ugly.

Sat, 02/02/2013 - 20:17 | Link to Comment selectricity
selectricity's picture

Mario Draghi Can't Stop The Bubble In Europe From Bursting http://read.bi/Y0y0Ik

Sat, 02/02/2013 - 21:09 | Link to Comment malikai
malikai's picture

TD: Spot on, as usual. But you fail to mention who these "Foreign Banks" are and their relationship to the FED.

Which I believe would make the motive quite clear.

Don't you?

Sun, 02/03/2013 - 01:11 | Link to Comment SeverinSlade
SeverinSlade's picture

Interesting how the Federal Reserve (the independent central bank of the United States) works directly for the insolvent European banking system. 

The tin foil hat thinker in me wonders how many of those European banks are owned by the Rothschilds.

Sun, 02/03/2013 - 01:34 | Link to Comment francis_sawyer
francis_sawyer's picture

@malikai

~~~

What I'm to understand is that it's 'improper' to ever ask the question 'WHO'?... For some odd reason, it's taboo to ever put a FACE on anything...

Sun, 02/03/2013 - 02:59 | Link to Comment Thomas
Thomas's picture

Is this not treason?

Sun, 02/03/2013 - 05:01 | Link to Comment Harlequin001
Harlequin001's picture

Apparently not.

This would appear to be the fiat equivalent of 'serving your country'...

Sun, 02/03/2013 - 07:57 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

'serving your country'

 

The spice must flow.

Sun, 02/03/2013 - 04:09 | Link to Comment Cosimo de Medici
Cosimo de Medici's picture

You can probably keep the hat off and just look at all the major European banks, and since they are all publicly traded, you can read the list of their major shareholders off the internet. Don't make it more complicated than it is.

Sun, 02/03/2013 - 09:21 | Link to Comment ArkansasAngie
ArkansasAngie's picture

It's just a bigger (global) version of Reagan's rolling recession.

I've been watching this for a few years now.  "they've" been cycling to EURDOR back and forth. If it cycles back up to 145 +/- then Europe gets killed.  I presume their theory is/was that Europe was supposed to recover in 2012 as the dollar got stronger.  The trouble is it didn't.  So what happens when they do it again and push the Euro up again in 2013? 

Ben beats Detroit in terms of channel stuffing any and every day.

Sun, 02/03/2013 - 12:14 | Link to Comment fockewulf190
fockewulf190's picture

This article, is yet another, in an ever increasing line of "disclosure" stories broken by ZH, which is allowing the world to see just how truly FUBAR and corrupt the "Big Club" (grateful thanks to the great George Carlin for that description) actually is. 

It seems to me, that the true financial situation the world is currently in, is in such a precarious state, that the detonation of the six to seven hundred trillion dollars in derivatives time bomb is not far off and every trick, deception, manipulation, con, or what not, is being used to try to prevent the inevitable from happening.  They may be buying some time, but the methods being used to buy that time are just adding more destructive yield.

Sun, 02/03/2013 - 11:18 | Link to Comment socalbeach
socalbeach's picture

According to John Hussman, it was the European bank bondholders who were bailed out, not the stock owners,

The Right Kind of Hope

"That said, it is important to remember that the attempt to rescue distressed European debt by imposing heavy austerity on European people is largely driven by the desire to rescue bank bondholders from losses."

or,

The Reality of the Situation

"Spain has now committed 23.5 billion euros of public funds to rescue its third-largest bank, Bankia, amid last week's revelation of fresh deterioration in real estate loans and other assets (which again makes us wonder what the losses would look like on the $100 billion-plus of European mortgage debt that JP Morgan has amassed, if JPM was actually required to mark these securities to market). Worse, Spain is providing these funds not as part of any restructuring, but by purchasing newly issued stock of the unrestructured, insolvent bank. While this will give Spain nearly 90% ownership of Bankia, the bailout effectively gives the people of Spain nearly worthless stock in an insolvent entity, putting them behind Bankia's bondholders. "

Same with US banks, although the following quote doesn't exclude the possibllity stockholders were bailed out also.

An Open Letter to the U.S. Congress Regarding the Current Financial Crisis

"As an economist and investment manager, I am concerned that the plan advocated by Treasury is essentially a plan to bail out the bondholders of financial institutions that made bad lending decisions,"

Sun, 02/03/2013 - 13:04 | Link to Comment steve from virginia
steve from virginia's picture

 

 

Bailing out the bondholders (the '1%ers') is the only strategy of the west ... and the BRICs, too.

 

There is nothing else to bail out! The world is saturated with 'consumer goods' that are really bads. None of these goods earn anything, they are simply costs/waste. Among the costs are the permanent erosion of capital/resources. What is the point of bailing out this sort of nonsense? Bailing makes things worse! Our problems are not our business failures but our business products' success.

 

By default, the richie-richs are bailed out because they can produce paper claims that the rest of us cannot. Our claims would have be be invented which would subvert the entire process that includes the bailouts. Whichever way we turn we are stranded ... to bail, to not bail, to bail one group and not another. The bailing is nothing 'real' only the substitution of one set of worthless claims for other (equally worthless) sets of claims.

 

What difference does it make if the US Federal Reserve is floating loans to the Europeans? One set of bad loans replaces another set. Nothing real is changed! Regardless of the loans Europe is still bankrupt. It is so because it cannot gain a return on the waste of its irreplaceable capital ... not because of central bank loans.

 

Meanwhile, the European citizenry has no money, it did not have any money before the central bank loans, it has no money now. Instead, it has less ... and so do the 1%ers ... every single day. Over the course of days the public is less able to afford its share of diminishing capital to destroy. This is our crisis.  We are 'out of gas'.

 

The central banks cannot produce capital on demand. The capital was here before central banks, before industrialization, before waste-based economies, before the rise and conquest of financialization ... the capital is gone now, it has been spewed out the tailpipe leaving nothing behind that is worth anything. The loans are intended to increase the numbers of tailpipes ... which is counterproductive on its face.

 

Because the central banks cannot produce capital they are as useless as teats on a bull. There is too much obsession with central banks, what they 'do'. Little is said about what they cannot do. The banks try and try but always and inevitably fail, they try until their efforts convince the public that the entire finance system is beyond saving and is indeed insolvent.

 

Like now.

 

The implications of capital destruction are profound. Here is a topic rarely seen on Zero Hedge because it is too frightening. Better to blame the central bankers and the governments instead of tycoons: the loss of capital means the enterprises that are dependent upon wasting it will fail or are willfully done away with. This means the end of an economy that monetizes waste. There are no more cars no more conveniences, no more 'modernity', no toys, no recreation, only war or starvation or hard physical labor for a lot fewer human survivors ... no more loans because there is nothing to repay them with.

 

People over here better get on the stick. This is no drill, there is no recovery in anyone's future or slick evasions, no preening Austrian can gesture his way out ... nobody can trade their way out of this future, only the possibility that your grandchildren murder you in your beds. Why? The counterparty is Mr Entropy and he doesn't give a fuck.

 

Get rid of the goddamned cars. All of them ... now. That way you have a fighting chance.

 

Otherwise (finger cutting gesture across throat).

 

 

Mon, 02/04/2013 - 10:54 | Link to Comment SeverinSlade
SeverinSlade's picture

Except for the fact that the largest shareholders are almost never individual investors, but rather, HFs, holding companies, banks, etc.  Best part of the banking oligarchy is that they know how to hide who truly owns what.

Sun, 02/03/2013 - 12:33 | Link to Comment Marco
Marco's picture

QE doesn't magically transfer money to European banks, it strengthens the Euro but it does fuck all about the dollar holdings of European banks. Other mechanisms can provide dollars to European banks, but not QE ... some of that might be deemed nefarious, but most of that is simply the US's massive trade deficit.

Foreign banks had massive amounts of US bonds, now they are chosing to hold a little more of those bonds in cash because the Fed is driving down the interest rates ... big whoop.

Sun, 02/03/2013 - 10:07 | Link to Comment Ghordius
Ghordius's picture

I'm a bit - actually a lot - confused by the article's view on this shift in the FED's and the bank's acconts, both domestic and foreign-based

does this all not start with monetization? the FED is buying US Treasury Bonds, mainly from the banks, roughly as much from foreign-based ones as from domestic ones, if I read it correctly. the banks give the bonds, the FED gives/creates a credit entry in it's "excess reserves" liabilities book

did I miss something in it? the question about what those banks do with that electronic cash is a different thing - they had bonds, now they have cash, both denominated in USD. leaving it in the FED's accounts is though not the same as playing it on the EURUSD trade

Sun, 02/03/2013 - 11:44 | Link to Comment Tyler Durden
Tyler Durden's picture

The cash is accounted for at being at the Fed, or specifically the cash collateral. What happens with it is a different story entirely, one that is mediated by the $30+ trillion repo pool and the security custodians, who provide ledger asset indentity for accounting purposes, allowing banks to fungibly transfer cash for whatever purposes they need on a day to day basis.

A simplistic and very much incomplete perspective of what happens (and there is much more, but for that you would actually need to read some more, in this case Matt King's "Are The Brokers Broken?") in the real world is shown below.

In plain English terms, excess reserves at member banks can be used to fund virtually any risk-taking activity that does not explicitly lead to an expansion in the money supply. That it does so implicitly, via Shadow Banking, is what is lost on 99.999% of the "experts"

Sun, 02/03/2013 - 12:01 | Link to Comment Ghordius
Ghordius's picture

Thanks, Tyler. I also forget often the shadow banks - hope does not make me one of the "experts"

Sun, 02/03/2013 - 12:41 | Link to Comment unununium
unununium's picture

+ 18,000,000,000,000 THANK YOU Tyler

Sun, 02/03/2013 - 13:03 | Link to Comment Marco
Marco's picture

How is cash collateral any more or less useful for shadow banking than treasury bond collateral?

Sun, 02/03/2013 - 15:11 | Link to Comment Ghordius
Ghordius's picture

fucking good question, Marco +1 - can't answer in a few sentences and I'd appreciate if someone answers to you better than I would

it hinges on this "In plain English terms, excess reserves at member banks can be used to fund virtually any risk-taking activity that does not explicitly lead to an expansion in the money supply. That it does so implicitly, via Shadow Banking, is ..."

which is exactly the other way I still understand it in this case, with the Shadow Banking system selling UST, winding down the hedges they used, and accepting only a small part of the cash, because in theory the cash is the bank's

except that banks have this nasty habit of loaning those FED excess reserves back and forth - including with the shadow banks, and so making any domestic/foreign discussion sensesless, since it could well be that a hyperleveraged US entities is actually behind cash deemed as "foreign because handled by a foreign bank"

"explicitly lead to an expansion in the money supply" would be lending it, instead of "playing with it"

Sun, 02/03/2013 - 10:19 | Link to Comment Ghordius
Ghordius's picture

as from the article "excess reserves are ... cash" "...created on the Fed's balance sheet whenever Ben Bernanke has to monetize the US deficit by purchasing Treasurys or MBS...

if you really want to make that great difference between the US and the "foreign", than be reminded that Ben Bernankes is "buying" back US Liabilities from foreign banks, in exchange with a different kind of US liability, the "zero-perpetual bond" called the USD

now those foreign-based banks don't even touch this cash whenever they leave it as "excess reserve" on the FED's books

and yet yes, perhaps they are using part of it in "repatriation", i.e. selling the dollars and buying other currencies, or lending in other currencies, or buying up assets in other currency zones

but of course we are talking about smelly foreigners, don't forget that

Sun, 02/03/2013 - 11:30 | Link to Comment Tyler Durden
Tyler Durden's picture

There is a reason why the article above linked to this piece: A Record $2 Trillion In Deposits Over Loans - The Fed's Indirect Market Propping Pathway Exposed, which in turn is the basis for "Dear Steve Liesman: Here Is How The US Financial System Really Works" - it is to explain how most people's (and certainly that of "smelly foreigners") understanding of what excess reserves are is completely wrong.

Of course, to actually understand what is said in the pieces above you would need to catch up on some 3 years of writings on shadow banking. Feel free to start, unless of course reading is against the primary tenets of chauvinism.

Sun, 02/03/2013 - 12:38 | Link to Comment Ghordius
Ghordius's picture

I think I have only one and half years worth's to catch up
reading and chauvinism can be good friends, btw

seriously, great work. Though since we are talking about chauvinism, you did read how it can be understood, and you knew it beforehand

To put it more simply, the FED can't gift monopoly chits for nothing to foreign banks, not even PDs. Someone had to have USTs, before

The biggest heist and theft of history yet was committed when shadow banking was re-allowed, through re-allowing of previously forbidden derivatives, imho

all based on US laws, as you know, so I still resent the "you know, thei'r foreign" part

my impression is that it's all about not looking too hard if this might not mean a permanent shift out of USD

Anyway, you are a magnificent SOB, if I may make a compliment. thanks

Sun, 02/03/2013 - 11:32 | Link to Comment socalbeach
socalbeach's picture

If John Hussman is correct (see above comment), perhaps the title of the article should be,

"How The Fed's Latest QE Is Just Another European Bank Bondholder Bailout"

I suspect the major bondholders of the European banks are the same cast of characters as the bondholders of the major US banks. If so, the title could be simplified to,

"How The Fed's Latest QE Is Just Another Bank Bondholder Bailout"

Sun, 02/03/2013 - 11:37 | Link to Comment Tyler Durden
Tyler Durden's picture

If equityholders are bailed out then by implication all security classes above them are also bailed out.

What Hussman may have failed to mention is that bank equity and bondholders are explicitly one and the same ultra-levered class, for whom any impairment, anywhere is terminal.

Sun, 02/03/2013 - 13:10 | Link to Comment unununium
unununium's picture

The Fed's Latest QE Is Just Another Bank Bond Derivative Seller Bailout

Sat, 02/02/2013 - 20:23 | Link to Comment sunaJ
sunaJ's picture

Congress and Placeholder will get right on that just as soon as they make it clear what guns are and are not for.  Shipping to Mexico to protect our drug and energy interests there?: Yes.  But in Amerika, guns are never used to stop an active gunman (but if you chance upon some scissors, you may go to your grave with the satisfying thought that your killer enjoys his one-eyed victory). 

In Soviet Russia,  gun shoot you!

Sat, 02/02/2013 - 22:58 | Link to Comment max2205
max2205's picture

This is to try to get you back in bonds which can crash any day now

Sat, 02/02/2013 - 20:25 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Euro-elite draining the US. What comes after is kinda ugly.

Yes, it will be ugly, before it gets worse.

I can't help but wonder, though, just based on the name of the report (Weekly Hate Status), if some at the Fed are just doing it for the lulz.

http://www.federalreserve.gov/releases/h8/current/#fn16

Sun, 02/03/2013 - 01:10 | Link to Comment Curiously_Crazy
Curiously_Crazy's picture

Exactly. Same ol shit.

When TARP was rammed down the yanks throats without them even wanting it I said at the time it was only the beginning. The sheeple at my workplace were all "oh no this is going to solve the problems the US is having, do you know how much money that is" et al.

Why even give the money printing and the manipulation through operation twist names? The system is fucked and has been fucked for a long time - re QE - as far as I'm concerned we are still on QE 1 because as soon as one finished it's onto the next, then the next. Like one golf shot after another you might be on the fourth stroke but your still playing the same game; Guess they finally realised it's just been one long stream of printing so figured fuck it we'll leave it open ended.

What will they call the next QE infinity when the monthly amount needs to be increased? QE infinitiy revision 2 or version 2?

cheers

Sun, 02/03/2013 - 12:13 | Link to Comment physsilverbankr...
physsilverbankruptsmorgan's picture

Look everyone  knows this path and what it leads to...... Pick your poison ,now or later, I prefer now as my offspring are very young 18 months of hell won't affect them as bad as if they were young adults and If I was old..... fact being I don't want the lazy Baby boomer kids running things now, I prefer the Gen x kids running things later.

Thu, 02/14/2013 - 21:26 | Link to Comment Race Car Driver
Race Car Driver's picture

What would Howe & Strauss say?

 

 

Sun, 02/03/2013 - 13:00 | Link to Comment ATM
ATM's picture

Thank you Hillary.

Sat, 02/02/2013 - 22:12 | Link to Comment LongSoupLine
LongSoupLine's picture

A full fucking audit of the Feds actions, followed by the procecution and high treason execution of the fucking shit eating fuckers involved.  This will wipe a large portion of the criminal fuckers in Treasury, Congress, Fed, COMEX all exchanges and all regulators.  Fucking dicks.

Sun, 02/03/2013 - 01:28 | Link to Comment RockyRacoon
RockyRacoon's picture

The dicks are the folks who keep voting the same retards into office.  My policy is to vote for non-incumbents -- no matter what the circumstances.  I'd hate to have to see forced term limits:  If you ain't above ground, you can't run again.  Oh, JFC, did I just invent the Congressional Zombie brigade?  I think that's what has already happened...

Sun, 02/03/2013 - 09:59 | Link to Comment CH1
CH1's picture

Party A and Party B all dance to the same tune, amigo.

Walk away from the game. You'll feel better.

Sat, 02/02/2013 - 19:16 | Link to Comment gadzooks
gadzooks's picture

These "Weimar" arrangements will result in major disasters, it can only bring bad results for the majority of people ,and considering the euro cultural status quo,there would never be enough changes to "change it". I think we are seriously fucked within 5 to 10 years,hope the emerging markets have 

good slaves....

Sat, 02/02/2013 - 19:22 | Link to Comment RebelDevil
RebelDevil's picture

5-10 years!? i'm looking towards the end of 2013 man!

Sat, 02/02/2013 - 19:25 | Link to Comment gadzooks
gadzooks's picture

Thats possible also,but it would probably be a sign of worse things to come....

Sun, 02/03/2013 - 01:30 | Link to Comment RockyRacoon
RockyRacoon's picture

It's like Ground Hog Day... and I'm getting tired of Sonny & Cher.

Sun, 02/03/2013 - 14:33 | Link to Comment ATM
ATM's picture

Never underestimate the power of money printing to hide problems. They can do it until they cannot. End of 2013? Perhaps but you are setting yourself up to be majorly disappointed and even to begin second guessing yourself. 

It's coming and it will probably be further off than most expect. It will create complacency then BANG. It's over.

Thu, 02/14/2013 - 22:29 | Link to Comment Race Car Driver
Race Car Driver's picture

.

Sat, 02/02/2013 - 21:25 | Link to Comment All Risk No Reward
All Risk No Reward's picture

How do you reconcile the mega banks doling out 3% 30 year loans ahead of a Weimar they have to initiate?

You do know that Little Ben is a puppet of the mostly foreign owned mega banks, right?

A debtor's society (almost all the debt is fraudulent Debt Money Tyranny ) will wish for a hyperinflation bailout.

The criminals that fraudulently indebted you will see a hyperinflation bailout to keep you calm as the debt noose is strapped the national, state, county, city, community "neck."

They want everyone betting "hyperinflation" right into the time they pull the plug and rip off Muppet face so violently that that Hannibal Lector would cringe in disgust.

The OWNERS ofd the mega banks hold TRILLIONS IN CASH.  They hold TRILLIONS in debt instruments.

Hyperinflation will wipe them out, not to mention cause a run on banks.

I will assure you... mega banks wiping out their wealth IS NOT in the plan.

This is Economics 101 cost / benefit analysis.

Now, busting the economy and turning trillion in debt into "hard goods" (yours and your community's) and spending trillions in looted cashola (debt money receipts) buying up the rest for pennies on the dollar just might be.

Oh, don't worry, you'll likely get your hyperinflation...  it is just that you likely won't own anything by then.  Hyperinflation will almost assuredly be a "book balancing" program for the MAJORITY FOREIGN OWNED TBTF Torjan Horse institutions (along with the Federal Reserve).

These people are both wicked smart and just plain wicked beyond belief.

Sat, 02/02/2013 - 22:23 | Link to Comment garypaul
garypaul's picture

I've learned to run from anyone who uses the term "Economics 101"

Sun, 02/03/2013 - 08:47 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

That....and the term "Critical Thinking"

Sun, 02/03/2013 - 10:28 | Link to Comment Ghordius
Ghordius's picture

+1 a friend always repeated: "critical thinking does not get you laid"

Sun, 02/03/2013 - 10:38 | Link to Comment new game
new game's picture

maybe with critical thinking and basic econ 101: usery as a violation of law is "not such a bad idea"...

called cash and carry - no credit here!

but of course then the usery would be burried in the price as visa has enforced via 90 percent compliance.

cash is da king till the king is no longer king

but this wise king ordered the loyal to roam the countryside, and plunder gold by death or otherwise...

and the story goes on.

when the govmnts begin to print and directly buy gold, the fiat end is near(max da mouth).

Sun, 02/03/2013 - 10:44 | Link to Comment Ghordius
Ghordius's picture

"the fiat" has always an end. history is full of fiats that were born, thrived and died. at the end "a fiat" is nothing else than a moral pact

Mon, 02/04/2013 - 00:29 | Link to Comment All Risk No Reward
All Risk No Reward's picture

Except the fact your "cash" is lent into existence and accrues interest to someone.

Unless by cash you mean "coins," which are debt free.

Mon, 02/04/2013 - 00:38 | Link to Comment All Risk No Reward
All Risk No Reward's picture

So, if someone says critical thinking is important, you shut down your thought processes because that's a magic word for anti-critical thinking?

Oh, I get it.  You are adverse to critical thinking because it makes you ill or something.

Well, that makes sense.

If you ever get over it, though, search "trivium binder" and go to the audio section to listen to some podcasts on the Trivium.

Also learn the various fallacies that are used to manipulate people.  Search 42 fallacies and learn a few a day.

Then you will know you actually have to listen to an argument in order to gauge the data, the context and the logic used in the argument, you can't simply take the simple minded way out and have a chance to understand reality.

Mon, 02/04/2013 - 00:33 | Link to Comment All Risk No Reward
All Risk No Reward's picture

You have been victimized by the poison the well fallacy.

Much of Econ 101 is about humans engaging in a cost/benefit analysis in order to make decisions.

That principle is sound.

Just because criminals and useful idiots misapply it or manipulate it or create nonsense macroeconomic theories does not mean the baby should be thrown out with the "bath water," as it were.

Econ 101 has some excellent course material if you understand it.  I actually apply its principles in my effort to expose Big Finance Capital shill "economists" as frauds.

Sun, 02/03/2013 - 10:27 | Link to Comment Ghordius
Ghordius's picture

"mostly foreign owned mega banks"? Interesting thought. but irrelevant, because the "foreign devils" have no power of legislation over the megabanks, not de facto

the laws that make this global phenomenon called megabanks possible are made by the US Congress and signed by it's president

mainly by deletion of existing laws that previously forbade them

nevertheless I'm not so sure if hyperinflation kills 'em - it never did, before

Sun, 02/03/2013 - 15:54 | Link to Comment All Risk No Reward
All Risk No Reward's picture

1. They control legislation via the financing and promoting of their political operatives.  Nobody else can compete because nobody else has the ability to lend to governments.  Stop thinking linearly.

2. You don't understand the context.  When countries are hyperinflated in their own currencies, the international banking cartels actually see deflation from the standpoint of the currency they control.

In Argentina, for example, the people expe3rienced hyperinflation, but people with dollars (the international banking cartel) were able to buy stuff up for PENNIES ON THE DOLLAR.

Stop thinking like a peasant looking up and start thinking like a financial oligarch looking down.

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”? Napoleon Bonaparte
Sun, 02/03/2013 - 12:24 | Link to Comment tarsubil
tarsubil's picture

Hyperinflation kills them? Who do you think is going to be handed all the new cash? You and me? Hahaha!

Mon, 02/04/2013 - 00:27 | Link to Comment All Risk No Reward
All Risk No Reward's picture

After serfs pay their debts with bread crumb money?

I don't think so. 

Rather, they will bust society first, asset strip society, then hyperinflate when when they are "all in" when it comes to hard assets.

Society's hard assets.

They aren't giving out 30 year loans at 3% ahead of creating a massive inflation.

Money is debt and society is debt saturated.  End "mark to myth" for the criminal syndicate and credit and monetary aggregates are deflating, not inflating.

Even with mark to myth they are barely above the previous 2007 high.

You are observing previous inflation slosh and not new monetary and credit aggregate inflation relative ot the 2007 high.

Price inflation is a symptom.  I look at root causes.

Sat, 02/02/2013 - 19:16 | Link to Comment Rainman
Rainman's picture

The Fed's teet is probably the reason European banks won't sell their US operations, despite a lot of buying interest from other foreign banks. Printed fiat makes for odd bedfellows.

 

 http://online.wsj.com/article/SB10001424052970204062704577221202467348784.html

Sat, 02/02/2013 - 19:17 | Link to Comment RebelDevil
RebelDevil's picture

Yet another jaw-droping article by the tyler(s).
*applause*

Sat, 02/02/2013 - 20:34 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Yet another jaw-droping article by the tyler(s).
*applause*

But, but, but the Fed says that "writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy" and that the general public "are simply being had by the bulk of the economic blogging crowd."

http://www.zerohedge.com/article/fed-has-lost-it-publishes-essay-bashing...

Sat, 02/02/2013 - 21:22 | Link to Comment RebelDevil
RebelDevil's picture

smh ... now I know why we're called "conspiracy theorists". - The bastards destroyed the surface credibility of "Truth seeking".

Sat, 02/02/2013 - 21:31 | Link to Comment All Risk No Reward
All Risk No Reward's picture

Only in the minds of the chumptocracy.

Those same people run and hide when I drop conspiracy fact in their lap...

Debt Money Tyranny

http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

One guy, who says that the banks didn't commit any crimes (and got livid when I told him about the Citibank executive that said, under oath, that 80% of the mortgages didn't meet represeantation - clear criminal fraud), told me, "I'm not going to look at that chart.  You don't make me feel good."

Yeah.

Spread the word - there is no debate...  so long as the observer understands 5th grade math concepts.

Sat, 02/02/2013 - 21:43 | Link to Comment RebelDevil
RebelDevil's picture

Agreed.
"I'm not going to look at that chart. You don't make me feel good."
and that's exactly why 2/3 of the population drink the cool aid. They would rather feel good than know the truth. So they're out of the game. It's the thinkers that we need to spread the word too, as they are the real truth seekers here.

And I'd say that this statement doesn't just apply to the economic crisis, but to everything (and most apparently in regards to religion).

Sun, 02/03/2013 - 01:42 | Link to Comment RockyRacoon
RockyRacoon's picture

Many of these folks just can't handle the truth.  Denial is a very useful tool.  It keeps one from having information that would drive them over the edge.  If you don't see the boogeyman, he ain't there.  This works for those at all levels, whether the regular voter trying to do what he conceives as the right thing, to the banker who believes he is doing god's work, to the elected official who believes that he/she is acting in the best interest of constituents and personal values.  One has to hit bottom before denial can be overcome.  Unfortunately, the bottom in this case is the crashing of financial markets, social structures, and basic morality.   Too sad.

Sun, 02/03/2013 - 03:52 | Link to Comment smart girl
smart girl's picture

Actually one does not HAVE to hit bottom, right? The truth is alienating at the moment, I agree.

Sat, 02/02/2013 - 22:28 | Link to Comment 1C3-N1N3
1C3-N1N3's picture

"Smart" people pride themselves on devoting at least a decade or so to formal, specialized study aimed at (mis)understanding human behavior, while everyone else has it down intuitively before middle school.

Sun, 02/03/2013 - 01:01 | Link to Comment gadzooks
gadzooks's picture

Lol ,and inovating from it by the age of 20......good one 1C3....the poor culted people.....

Sun, 02/03/2013 - 18:12 | Link to Comment Ricky Bobby
Ricky Bobby's picture

Hey Fourth, fuck the PHD, I hold the honary degree of ZHD.

Sat, 02/02/2013 - 19:20 | Link to Comment bobthehorse
bobthehorse's picture

Ben Bernanke fears deflation like a vampire fears a crucifix.

The collapse of Europe would be a huge deflationary event.

Oil would crash.

Stocks would crash.

Commodities would crash.

So he's gonna do all he can to keep the Titanic afloat.

http://www.angrysinner.blogspot.kr/2013/02/yesterday-morning-i-had-hankering-for.html

Sat, 02/02/2013 - 21:35 | Link to Comment All Risk No Reward
All Risk No Reward's picture

That's the establishment narrative.  You do know what a narrative is, right?

Bernanke isn't afraid of deflation, he's afraid of crossiing Biggest Finance Capital and getting rubbed out.

What does Big Finance Capital want?

1a. Their trillions in cash holdings and debt holdings wiped out in hyperinflation?

1b. Those 30 year loans at 3% being paid off with 2 loaves of bread?

2. The chance to buy up the world for pennies on the dollar?

Do tell us...

The reason they havn't busted us yet is because they are looting us ahead of the big bust.

They are offloading $45 trillion in their toxic debt to the Fed on its way to the tax payer every month...

Hey, if we are that stupid...  or, if they can psy-op us into thinking the debt will be inflated away...

They meet every few months and ask, "are the stupid enough to let us steal $10s of billions from them?"

If the answer is yes, they keep doing it.  When that answer becomes no, KATIE, BAR THE DOOR.

Ahhhhh, is the light bub now on?

Debt Money Tyranny

http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

Sat, 02/02/2013 - 19:21 | Link to Comment bobthehorse
bobthehorse's picture

Ben Bernanke fears deflation like a vampire fears a crucifix.

The collapse of Europe would be a huge deflationary event.

Oil would crash.

Stocks would crash.

Commodities would crash.

So he's gonna do all he can to keep the Titanic afloat.

http://www.angrysinner.blogspot.kr/2013/02/yesterday-morning-i-had-hankering-for.html

Sat, 02/02/2013 - 19:24 | Link to Comment RebelDevil
RebelDevil's picture

He fears it so much, that he in fact creates it.

Sat, 02/02/2013 - 21:32 | Link to Comment deKevelioc
deKevelioc's picture

We heard you the first time.

Sat, 02/02/2013 - 19:22 | Link to Comment ebworthen
ebworthen's picture

Another reason to avoid paying taxes to, or supporting the market casino of, the U.S.S.A. Kleptoligarchy (a.k.a. - International Banker Plantation).

Sat, 02/02/2013 - 21:39 | Link to Comment All Risk No Reward
All Risk No Reward's picture

A kleptocracy perched atop a chumptocracy.  Yep, got that.

Now I want a word for "people who think their enslavement is freedom and Stockholm Syndrome is a given."

Anyone?

Sat, 02/02/2013 - 21:44 | Link to Comment ebworthen
ebworthen's picture

Patriot Act Patriot?

P.A.P. for short.

Sat, 02/02/2013 - 23:44 | Link to Comment Totentänzerlied
Totentänzerlied's picture

"citizen"

Sun, 02/03/2013 - 04:04 | Link to Comment All Risk No Reward
All Risk No Reward's picture

Wait, I might have it.

"Consumer."

Sat, 02/02/2013 - 19:33 | Link to Comment chubbyjjfong
chubbyjjfong's picture

So by injecting the the funds directly to foreign banks, the Fed not only can indirectly instigate the bailout of European Sovereign Banks, it can screw their EU currency higher at the same time aiding the income of massive US export corporations.  The Fed looks like a god dam hero in Europe and a saint to US elite Corporate, who get all their shit made in China anyway.  It just gets better and better. Meanwhile the middle class is just ignored to stew in their own shit. YAY!  Do I need to add the SARC/ button?

 

edit.  Agreed, excellent article Tylers, great information.

Sun, 02/03/2013 - 10:05 | Link to Comment CH1
CH1's picture

Meanwhile the middle class is just ignored to stew in their own shit.

As long as the overlords, enjoy complete obedience, why should they change anything?

Sat, 02/02/2013 - 19:30 | Link to Comment Tsar Pointless
Tsar Pointless's picture

Incredible work, Tyler Whoever.

I had some person on HuffPo tell me that it is Harvard endowments and Pension funds pushing the stock markets toward new highs, NOT banks.

Some of us will get it, others won't, until they "get" it.

Sat, 02/02/2013 - 19:51 | Link to Comment Stuffs And Stuff
Stuffs And Stuff's picture

Oh, they'll get it alright. I can only imagine what their faces will look like when they finally realize.

Sat, 02/02/2013 - 19:34 | Link to Comment Yen Cross
Yen Cross's picture

 Do we really need to explore ( Reverse Repos) again? Tyler?

Sat, 02/02/2013 - 19:32 | Link to Comment Stuffs And Stuff
Stuffs And Stuff's picture

In USSA, bank robs you!

Sat, 02/02/2013 - 19:37 | Link to Comment Banksters
Banksters's picture

 

Fed extends aid to foreign banks The Federal Reserve, along with four other central banks, announced Thursday that it will extend a program that keeps borrowing costs cheap for foreign banks that want to deal in U.S. dollars.

Last year, the Fed slashed in half the rate that foreign central banks pay to borrow U.S. dollars, a staple in global financial transactions.

The so-called dollar liquidity swaps are basically credit lines to foreign central banks. It's a tool that has been extended and revived several times, to lower the cost of short-term borrowing, particularly for European banks, and keep the global economy free of a credit crunch as in 2008.

http://money.cnn.com/2012/12/13/news/economy/federal-reserve-us-dollar/i...

 

Ben has his lactating money tits ready for any bankster that needs it.

 

 

 

 

 

Sat, 02/02/2013 - 19:56 | Link to Comment DangerClams
DangerClams's picture

Now I understand what Berspankme means when he says he feels "let down" - it's the milk that spontaneously flows from the afore-mentioned teats, that instantly start leaking whenever an EU banker cries.

Not that I want to envision those hairy sway-paps, but someone else brought it up.  I can only gouge my eyes out so many times.

Sat, 02/02/2013 - 20:46 | Link to Comment Pure Evil
Pure Evil's picture

If eye gouging doesn't work, then a lobotomy certainly will.

Sat, 02/02/2013 - 20:45 | Link to Comment Pure Evil
Pure Evil's picture

That is god-awful nasty.

Sat, 02/02/2013 - 20:56 | Link to Comment Stuffs And Stuff
Stuffs And Stuff's picture

So is the reality, my friend.

Sat, 02/02/2013 - 19:44 | Link to Comment Handful of Dust
Handful of Dust's picture

<< The only answer that is still missing is precisely what these foreign banks are using said cash for.>>

 

I hear private Swiss bank accounts are Fatter then ever.

 

Bravo Zulu to the author of this article....it's excellent!

Sat, 02/02/2013 - 19:44 | Link to Comment reload
reload's picture

Repaying LTRO ?

 

Sat, 02/02/2013 - 19:41 | Link to Comment RebelDevil
RebelDevil's picture

Actually I literally just remembered Graham Summer's (Phoenix Capital Research) posts from the summer. He was right! - Europe would have collasped by the end of september IF the Fed DID NOT start QE3.

So apparently QE3 "saved" the Euro. (At least this time around.)

Sat, 02/02/2013 - 19:42 | Link to Comment Michelle
Michelle's picture

SOSDD

If the Fed "owns" the European banks and the European banks are holding the Eurozone and its citizens hostage, and with Germany the only European country that is helping to support the viability of the Euro, from a NWO perspective, WHAT THE HELL ARE WE WAITING FOR? Does this mean the Eurozone is a U.S. territory now?

Sat, 02/02/2013 - 20:55 | Link to Comment samsara
samsara's picture

No,

Both The US and Europe are owned/controlled by the CB's.

The CB's of course are the sole stock holders that OWN the Fed.

The CB's are OWNED by the Rothchilds, Walburgs, Rockefellers, et al.

The Fed will do what it's OWNERs tell it to do.

Period.
Exclamation Point.
End of Story

Sat, 02/02/2013 - 21:52 | Link to Comment All Risk No Reward
All Risk No Reward's picture

Of course, the same people own the major banks and corporations throughout the world...  all working as subdivisions for the criminals mentioned above.

Don't forget the Transylvanian/German "Queen of England" and "my wealth is national security" Queen Beatrix.

I think that is "Warburgs".

The Shadows of Power: The Council on Foreign Relations and the Decline of America

https://www.youtube.com/watch?v=j_gj1uZ6194

The American Republic is already a gutted corpse.  All that remains is an illusiono and rapidly wearing off pain medication.

The international banking cartel wants to be soverieng (diplomatic immunity) and rule the world above nation states filled with serfs.

The collaborators who are making this happen think they will be given special privileges that come from serving their masters.

For a time, sure.  But in the end...  they will be surprised that they get what they deserve from these criminals.

The monetary system is a debt based fraud engineered to systematically and covertly asset strip entire nation states.

Debt Money tyranny - The Art of War implementation of a Trojan Horse ("war is all about deception")

http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

Whenever the bankster financed and controlled media promotes a candidate - that needs to be the kiss of death to that candidate.

Sat, 02/02/2013 - 22:15 | Link to Comment samsara
samsara's picture

ARNR

You Got it.

Everything else is a Secondary, Tertiary, quaternary, quinary, senary, septenary, octonary, nonary, and denary

and so on down the line.

Down from Rothchilds, Queen Beatrix, and the other past aristocracies on their path to reclaim their rightful place as the rulers of mankind as they see it.

Sun, 02/03/2013 - 03:45 | Link to Comment smart girl
smart girl's picture

Nice. Quinary (base-5) is a numeral system with five as the base. 

Did you check out the lastest from our friends at ECI  http://www.elliottwave.com/freeupdates/archives/2013/01/28/Ending-Diagon...

Sun, 02/03/2013 - 10:35 | Link to Comment Ghordius
Ghordius's picture

samsara, the FED is "owned" by the so called "Primary Dealers", which are privately (through stocks) owned banks, not central banks

most "central banks" worldwide are in fact national banks, i.e. owned by the state - example: The Bank of England

the Rothschilds, Walburg, Rockefellers, etc. were the original owners of banks that served as "Primary Dealers"

Sat, 02/02/2013 - 19:49 | Link to Comment ebworthen
ebworthen's picture

Rapacious theft.

An act of treason.

Sat, 02/02/2013 - 20:46 | Link to Comment nmewn
nmewn's picture

Very much so.

Sat, 02/02/2013 - 19:49 | Link to Comment TimmyM
TimmyM's picture

I hereby nominate ZH for the Pulitzer Prize for Investigative Journalism.
http://www.pulitzer.org/bycat/Investigative-Reporting

Sat, 02/02/2013 - 19:59 | Link to Comment DangerClams
DangerClams's picture

Katie Couric's going to cover this breaking story Real Soon Now, right?

Sat, 02/02/2013 - 20:06 | Link to Comment Joebloinvestor
Joebloinvestor's picture

No shit, Ben was making direct secret "loans".

EU bankers don't go to jail either.

Sat, 02/02/2013 - 20:13 | Link to Comment rqb1
rqb1's picture

Anybody who thiinks that the Fed's main focus is US unemployment is mislead

Sat, 02/02/2013 - 20:12 | Link to Comment From Germany Wi...
From Germany With Love's picture

Guys, don't be so 20th century. Nationality doesn't mean much within the global banking system. All that matters is that the spice keeps flowing.

Sat, 02/02/2013 - 20:10 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

EURUSD and SPX are often in sync, not always magnitude, but direction.

Ah hah. I'm happy to see that its probably just old fashioned collusion / manipulation, rather that machines gone truly amok.

Sat, 02/02/2013 - 20:17 | Link to Comment Yen Cross
Yen Cross's picture

 e/u >spx    < asia> dax= spx>  ( ME= eur) "syg nok kow" Toilet bowl cleaners.

Sat, 02/02/2013 - 20:19 | Link to Comment Banksters
Banksters's picture

Time for 2+2 = Fuck representative democracy and the rights of the indivdual

 

 

The Obama administration has expressed concern at what US officials see as Britain's slide towards the European exit door.                                                                                                                       . +          

.

EU wants power to sack journalists A European Union report has urged tight press regulation and demanded that Brussels officials are given control of national media supervisors with new powers to enforce fines or the sacking of journalists.
 http://www.telegraph.co.uk/news/uknews/leveson-inquiry/9817625/Leveson-E...

 

+

Bernank bails out Europe

 

=  I don't think they have our best interests in mind.

 

Sat, 02/02/2013 - 22:28 | Link to Comment newengland
newengland's picture

Shoot the messenger. That's always the aim of fascists, and the bankrupt.

Sat, 02/02/2013 - 20:27 | Link to Comment ekm
ekm's picture

As I've said over and over and over:

Money in the sidelines is simply left over cash after the primary dealers and major world banks have bought up everything, S&P, Dow, Dax, Nikkei you name it.

 

There's nothing left to buy any longer.

Sat, 02/02/2013 - 20:34 | Link to Comment Atomizer
Atomizer's picture

The wagon trains are circling the SDR allocation thieves.

 

Special Drawing Rights (SDRs)|August 24, 2012

http://www.bankofengland.co.uk/markets/Pages/forex/reserves/imf_sdrs.aspx

 

SDR Valuation

The table below shows the new currency amounts that will be effective January 1, 2011. To assist users of the SDR in preparing for the changeover to the new SDR valuation, the IMF has provided illustrative projections of the currency amounts every week in December.

http://www.imf.org/external/np/tre/sdr/sdrbasket.htm

Sat, 02/02/2013 - 20:41 | Link to Comment Tyler Durden
Tyler Durden's picture

The world's central banks are scrambling to devalue their currencies on a relative basis yet there are those who are naive enough to suggest that the globalized world, in which to the shock of some trade still matters, will opt for a blanket uniform currency which would make individual currency debasement impossible? Especially if that means taking away China's endgame trump card of the new commodity-backed reserve currency?

Interesting.

Sat, 02/02/2013 - 20:51 | Link to Comment Atomizer
Atomizer's picture

Keep up the great work you do..

Sat, 02/02/2013 - 22:24 | Link to Comment Aurora Ex Machina
Aurora Ex Machina's picture

It's not naive, it merely relies upon a different understanding of both economics and geopolitics. The current plays are all about the "buy in" to the new poker game.

Wake me up when you look at the security council (+1 Germany, who has always been a silent enforced partner due to WWII) and then transpose that onto the 21st Century. It's not nukes, it's if your economy can crash the global system. This is why France is probably losing it's seat, but the UK will not, and there will be a few new players soon. (And yes, I junked you for suggesting China is the next reserve currency - that's already been discounted, most forcibly by India).

 

Put another way: India, Pakistan and Bangladesh and Cricket. A sport was used (and still is) to counter geo-political turmoil and make sure that >1 billion people don't riot in anger all the time. Might want to ask around about how fixed Sports in general are. Not everything is about the benjamins, sometimes it's about making sure the benjamins flow.

 

p.s. All currencies are currently pegged to the same thing: it's energy; Pretending otherwise is a bit silly. Currencies are merely a fluid wriggle of tadpoles struggling for a share of the energy potential of the planet. Sure, you can dress the potential up into h-cation or futures or d-rivatives, but it's all the same game.

Sun, 02/03/2013 - 10:49 | Link to Comment Ghordius
Ghordius's picture

pegged to energy? it's a metapher for which I doubt a correlation can be made

fiat currencies are based on faith (or, if you prefer, goodwill)

this includes expectations, including about energy

Sun, 02/03/2013 - 13:55 | Link to Comment tip e. canoe
tip e. canoe's picture

yes, this is where perception management works wonders, until it doesn't

Sun, 02/03/2013 - 13:19 | Link to Comment tip e. canoe
tip e. canoe's picture

very interesting chart:

http://www.xe.com/currencycharts/?from=XAU&to=XDR&view=2Y

check out the number of the level where the shiny ball has been bouncing.

couldn't find a way to map a barrel of Brent priced in XDRs, though curious to see.

p.s. agree with your hypothesis AxM...sometimes you gotta dig just a little bit deeper.

 

Sun, 02/03/2013 - 07:27 | Link to Comment tradewithdave
tradewithdave's picture

Divorced currency. Keep the flavor... Lose the fat. Centralize the wealth ... Distribute the convenience.

Sun, 02/03/2013 - 12:37 | Link to Comment reload
reload's picture

So the GBP is 11% of an SDR.

The UK GDP is 3% of world GDP.

Will the GBP still be 11% of an SDR next time the composition of the SDR is re `negotiated` (in 2015IIRC) ?

It seems the make up of the SDR needs dramatic change to reflect the realities of world trade. Presumably currencies relegated inside the SDR loose some reason to be held - loose some `intrinsic bid` they may enjoy.

Anioher reason for the GBP to go down the drain?

As if it needs more reasons.......

Sat, 02/02/2013 - 20:41 | Link to Comment HoaX
HoaX's picture

LOL. Owned?

Greetings, Europe.

Sat, 02/02/2013 - 20:48 | Link to Comment fonzannoon
fonzannoon's picture

(Jim Rickards scratching bald head in confusion)

Sat, 02/02/2013 - 21:08 | Link to Comment Tinky
Tinky's picture

All you whiners need to gain a little perspective...

http://mtanga.com/Shareholder2.png

Sat, 02/02/2013 - 20:53 | Link to Comment Sudden Debt
Sudden Debt's picture

Oh it's just money!
And it's not like you'll need to repay it! NO!!! that one will be reserved for your kids.

Sat, 02/02/2013 - 20:53 | Link to Comment BaggerDon
BaggerDon's picture

The next bull market might be TAR AND FEATHERS......

Sat, 02/02/2013 - 21:02 | Link to Comment yogibear
yogibear's picture

And the Vampire Squid makes billions skimming the exchange of funds.

Sat, 02/02/2013 - 21:26 | Link to Comment Yen Cross
Yen Cross's picture

 Oh. what a web we "weave," when we practice to " deceive".

Sat, 02/02/2013 - 21:56 | Link to Comment newengland
newengland's picture

This is the 'globalist' agenda. Central banks will bail out other central banks as they pursue globalism, whereby there are no borders, no nations, no ethnic people, no differences. All will become hamburger, ground down into one thing:  globalism which has wrought more war, more debt, more woe in its short time of about a decade than any other  'ism' made by its founders: Nazis masquerading as 'capitalists', 'socialists', 'communists'.

The so called 'new world order' is the old world order: fascist families hiring salesmen to put a pretty mask on their ugly ways.

The salesmen are bought politicians, and their little helpers in law, academia, accountancy: the bureaucrats.

These fascist families always exist in all times and all places. In 1776, they were overthrown. In 1913, they reconquered the USA with the founding of the un-Federal no-Reserve Board of money changers, the gold and silver thieves; the ruin of nations.

PS All central banks and central governments lauded the Nazis...until Hitler failed. No honor among thieves, then and now. Our modern problem is that this Nazi idea, now called globalis, is on the march again.

Sat, 02/02/2013 - 22:04 | Link to Comment Yen Cross
Yen Cross's picture

 N/E You have "not" the slightest inclination  of global banking policy.

 The fucktards in England are 8 hours ahead of me. That explains the junks!  2:00 am London on my GMT clock

  I like YOU! Always have.

Sun, 02/03/2013 - 00:30 | Link to Comment newengland
newengland's picture

True, Yen. I dislike this 'globalist' experiment, the ruin of the world, as per usual.

And I never 'junk' you, friend.

I see there's a new cartoon character on ZH, someone called the 'Red Arrow' :-) A mysterious cowardly agent for ...?

Sun, 02/03/2013 - 08:36 | Link to Comment Ricky Bobby
Ricky Bobby's picture

I junk you (yen) quite often because your comments are obscure and never to the point. Your condescending attitude is annoying.

Sun, 02/03/2013 - 13:34 | Link to Comment Orly
Orly's picture

Does he talk in riddles so he never has to really say anything?

Sun, 02/03/2013 - 00:09 | Link to Comment Totentänzerlied
Totentänzerlied's picture

"In 1776, they were overthrown."

Don't be so sure...

Sun, 02/03/2013 - 00:22 | Link to Comment newengland
newengland's picture

T...,

'They' are always with us: the fascists. Resist, we must. In every place and every time. 1776: a very good year ;-)

Sat, 02/02/2013 - 22:03 | Link to Comment q99x2
q99x2's picture

Nailed them for treason.

Sat, 02/02/2013 - 22:06 | Link to Comment samsara
samsara's picture

Treason ? exactly on what charges?

They are a PRIVATE CORPORATION

NOT a Federal Agency. 

They are carrying out the orders of their STOCK HOLDERS.

Their STOCK HOLDERS happen (up the chain) to be Rothchilds, Walburgs, Rockefellers, et al...

Sat, 02/02/2013 - 22:33 | Link to Comment newengland
newengland's picture

'Crush the bourgeoisie between the millstones of inflation and taxation,' said Lenin, funded by the same people who funded the Nazis. Those who now fund the Trilateral Commission, Bilderberg Group and endless bureaucracy: the Rothschilds, Walburgs, Oppenheimers, Rockefellers, the House of Saxe-Coburg (now named House of Windsor) et al.

The un-Federal no-Reserve Board will bail out its kin in Britain and Europe with the tax and labor of the USA, and anyone else it can domineer.

Sun, 02/03/2013 - 08:25 | Link to Comment tradewithdave
tradewithdave's picture

Corporations are people too.  Lock 'em up. 

Mon, 02/04/2013 - 11:04 | Link to Comment Optimusprime
Optimusprime's picture

Do you mean "Warburgs"?  Don't forget the Schiffs!

Sat, 02/02/2013 - 22:36 | Link to Comment devo
devo's picture

Hate to pat my back, but I called this.

Sat, 02/02/2013 - 22:53 | Link to Comment Its Only Rock N Roll
Sat, 02/02/2013 - 22:54 | Link to Comment smart girl
smart girl's picture

Looking Serious... Springtime cometh, when Trillions will be needed for Bailouts. In my humble opinion, the markets will crash, the dollar will rise (other debt denominated in U.S. dollars is larger than what the Fed has going on) and the U.S. Govt. will attempt to herd the masses into Gov Bonds.

Please do not comment on my current pathetic social life. Zerohedge on a Saturday Night.. Thanks Guys...Better than sniffing glue.

Sun, 02/03/2013 - 01:52 | Link to Comment RockyRacoon
RockyRacoon's picture

The Saturday Night crowd is small but vociferous!

Sun, 02/03/2013 - 03:16 | Link to Comment smart girl
smart girl's picture

Love that word vociferous! Thanks. Reminds me of obstreperous. Now there is a Wordament word for you.

Sun, 02/03/2013 - 03:13 | Link to Comment Skateboarder
Skateboarder's picture

Skateboarder has been around the mainstream club and bar scene - it sucks ass. Better to sit at home, read ZH, educate self, and perhaps share comments with rational folk from around the continent and beyond. That or a dive bar with nice microbrews on tap.

The illusion of fun is a fucking nasty one.

Sun, 02/03/2013 - 03:20 | Link to Comment smart girl
smart girl's picture

Oh my yes, I forgot about that; trying to have fun really is not fun... I like skateboarding though. My real challenge with zerohedge is all the poopy language. At least Tyler does not use it. Thank you Tyler.????

 

Sun, 02/03/2013 - 03:48 | Link to Comment Skateboarder
Skateboarder's picture

Well, I won't apologize for my potty mouth because it chooses words accurately for the context. The vulgarity, stress, and often times digsust that comes along with my favorite profanity hits the spot for conveying the right emotion, mefeels. And that's what honest communication without boundaries is more or less about. If I feel at home with what I have to say, and you feel at home with receiving it, we've constructed a good communications channel. Words are just that... words... it's the intention behind them that makes all the difference. All my sentences might contain 'fuck,' but I'll stand up for you. The oodles of laws your country makes has not a single profane word but their consequences put profanity to shame.

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