QE Is "Unsustainable And Unfair To Those Who Work For A Living"

Tyler Durden's picture

Via 'Lucas Jackson',

Fed Creates A New $4.25bn Asset Manager Every Business Day in March
There is ample debate going on in the market right now about the long-term effects of the Fed’s seemingly never-ending QE.  The well-respected Stanley Druckenmiller was on CNBC this morning defending his recent commentary that the mal investment currently being instigated by the Fed can only end poorly.  The counter-point was provided by former Fed governor Kevin Warsh who in his best status quo pleasing way essentially said Bernanke is in charge and all is well.
Perhaps it is, perhaps it isn’t.  Personally, in the debate between a Fed governor academic and a man who successfully managed billions of dollars for decades, I’ll put my money behind Mr. Druckenmiller any day of the week and twice on Sundays!
But I’m not smart enough to know what will be the result of the Fed’s latest monetary experiments.  Perhaps all will be well.  Perhaps the magical money multiplier really works and is higher than anyone thinks?  Perhaps the wealth effect is just about to kick in.  Perhaps inflation really is low and muted, as Bernanke keeps repeating.  Perhaps housing is recovering despite a continuing decline in real wages.  Who knows?  I don’t.
But one thing I do know is that the Fed’s hands are all over markets today.  Consider for a moment the current QE program.
QE aka Money for Nothing
In March, there are exactly 20 business days.  Also in March, the Fed will commit to purchase via their Permanent Open Market Operations (POMO) approximately $85bn in securities from the TBTF primary dealers.  The $85bn in cash (not real cash but actually 1s and 0s in an electronic account) didn’t exist on the world’s ledger in February.  However, yesterday at the Fed some functionary sat down at a computer, went into one of the Fed’s POMO accounts and entered the numbers 85, followed by nine 0s.  Suddenly, the world had an additional $85bn.  It doesn’t exist and then POOF!  11 key strokes later and it exists.
Over the course of the next 20 business days in March, the Fed will take this newly “minted” money and buy things with it.  This new cash now enters the system and starts chasing other assets almost immediately – otherwise it sits in cash earning a negative return, something Bernanke is very actively discouraging.
The net effect of all this is that on average, every business day in March will see the Fed effectively seed a new $4.25bn AUM investment firm whose sole goal is to buy, not sell, securities.  Think about that, out of thin air, a new $4.25bn competitor is starting up each and every business day in March, courtesy of the good folks in the Marriner Eccles building in DC.
Some of you have worked in asset management your entire careers.  You know how hard it is raise assets.  You know how long it takes and how important it is that your investors know that you can both buy AND sell assets effectively in order to earn their business.  You know how hard you must work to study your markets, sectors and companies to be able to understand the fundamental drivers.
It must be hard to sit by and watch while the Fed creates a new $4.25bn competitor every business day where the sole goal of that money is to buy simply because a Princeton academic thinks it should.  The Princeton academic thinks stocks should be high, so they are.  The Princeton academic thinks bond yields should be low, so they are.  Period.  Of course this makes a mockery of those of you who actually try to understand fundamental value, but hey, the Princeton academic gets what the Princeton academic wants.  The devil take the hindmost.
Again, I gave up long ago trying to predict how the massive manipulation currently being conducted by the world’s central banks will end.  However, I do know that what the Fed is doing now – essentially creating a $4.25bn asset manager every business day in March 2013 – is unsustainable and certainly unfair to those of us who actually work for a living.
And what is unsustainable and unfair in the long-run does not last.

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takeaction's picture

FUCK YOU BERNANKE.....we had our chance...look at this guy. 24 years ago. This video makes me smile.  Sir, you are a legend!


redpill's picture


That's the understatement of the last century.  It's fucking theft, plain and simple.  It's "unfair" like getting shot in the face is "unfair."

Law97's picture

It's more like an ass-raping.  At least a shot in the face is over quick.


I just can't understand why, in this great country that supposedly stands for the Rule of Law and individual freedom and dignity, we are allowing this government-orchestrated theft of trillions from its people.   Sad times....

Richard Chesler's picture

Just because it can't be repeated enough:

Fuck you Bernanke you miserable thieve.


AmCockerSpaniel's picture

A thieve just take your money for his own self. Bernanke is playing Robbin Hood. By burning some of everyone's money (inflation), while pushing up the price of stocks. He does this by buying them (stocks), and never selling. So if your part of one of the TBTF's, then this is a great thing, but at the expense of the workers, who's money buy's less and less.

flacon's picture

And what is unsustainable and unfair in the long-run does not last.

"The long run is a misleading guide to current affairs. In the long run we are all dead." ~ Satan

Supernova Born's picture

Company script in a company town.

When virtue is a vice the naughty rule the nice.

Supernova Born's picture

So I wonder how much gold we pay the Norks, ChiComs and others to keep their "US currency" printing presses idle.

THEY certainly don't accept "cash".

Popo's picture

"What thd Fed is doing is unsustainable and certainly unfair to those of us who actually work for a living. And what is unsustainable and unfair in the long-run does not last."

I was with this article until that very last sentence, which has zero historical empiricism.

What is "unfair" frequently persists for centuries, unfortunately.

All Risk No Reward's picture

All animals are equal, except some are more equal than others.

Expose their energy source...

Debt Money Tyranny


The Trojan Horse of the modern day.

The mechanics of the biggest hoax in world history and there have been maybe 10 comments in ~15,000 downloads.

Society isn't too sharp these days.

eatthebanksters's picture

The explanation is very simple....Bernanke thinks he is choosing the lesser of two evils and trying to right a capsizing ship.  He thinks if he had not intervened with his programs our economy would have been wiped out and millions would be suffering - he may be right.  But if his programs don't work, then the damage that they will create will make the original proposition for failure appear tame.  They have a fundamental problem; by manipulating the system and picking winners and losers and neglecting justice and principle , they have told society that the only rules that matter are the ones that they dictate.  The fabric of society is breaking down and it will continue to break down with the further manipulation of the markets and the forgiveness of criminals on Wall Street.  When I look at the world I am full of dread....I can't say when it will all blow up, but I can say with great certainty it will happen.


in4mayshun's picture

No, totally wrong. Bernanke is a puppet who is playing his part. He graduated from Princeton, he is no dummy. Bernanke is a traitor. He knows that his (er Rothchilds) policies will bring down the US...and that was the plan all along.

Midas's picture

Let's see, 85 billion a month by 12 months is 1,020 billion.  If annual silver production is 760 million ounces and they go for 29 dollars that would be 22,040 million.   And that friends,  works out to 2.16% of the POMO.  Judging by the "price" of silver, I am going to say none of the POMO is finding its way down to the COMEX.

Shizzmoney's picture

Princeton grads and alumnus always throw the country under the bus: see Woodrow Wilson, Donald Rumsfeld.

All Risk No Reward's picture

Exactly correct.

People fall for the false narrative waaaaay too easily.


Is that a stupid plan or is Machiavelli smirking in envy?

Bernanke fronts for Debt Money Tyranny, the biggest con in human history.


Humanity either confronts Debt Money Tyranny or your daughters and granddaughters may end up selling themselves in order to live.

This is no joke - far too many people don't see where this wickedness leads - and I didn't mention the worst parts of it in this post.

But, hopefully, the thought of selling their children and grand children into prostitution is enough to get all but the most narcissistic personalities to invest enough energy to understand Debt Money Tyranny and SPREAD THE WORD!

Translational Lift's picture

in this great country that supposedly stands for the Rule of Law and individual freedom and dignity

The Rule of Law and individual freedom and dignity was sealed in a coffin and buried four years ago..........

Ned Zeppelin's picture

Actually it was during Bush's turn that this shit started in earnest. Hank Paulson, anyone?

blindfaith's picture



Want to know how deep the rabbit hole is ?



It is a new book out and the pieces fall together so nicely

GiantVampireSquid vs OWS UFC 2012's picture

I thought he meant people who actually do work.  Not sharks who's only purpose is to bite chunks out of the tuna.  Christ a hedge fund scalper complaining about fair.  Gimme a break fucking cry baby.  Go out and do a real days work then tell me about fucking fair.

Go Tribe's picture

You got that right. And it's going to continue for years and years.

reTARD's picture

Don't just blame me. These are the true conspiracy theorists behind the curtain:


HowardBeale's picture

When this charade (parade of thieves) comes apart--and it WILL COME APART LIKE A FUCKING NUCLEAR BOMB, "Fuck you Bernanke" is going to turn into "They shot him how many times! Fuckin' a! And have they found Dimon's head yet? Or his limbs? How do they know the torso is his?" 

DoChenRollingBearing's picture

And that is why you save some money and buy gold with it.  That goes for everyone, 1/10th oz Gold Eagles are under $200.

newengland's picture

Yer a jolly nice chap, 'dochenrollingbearing' who graciously spares time for others.

No need for you to do so, yet you do. 

My beloved father was an engineer, so I have a special affection for company making, risk taking, die hard bearings.

No surrender. 

Genuine community, land, gold silver and job making work. No surrender.

SemperFord's picture

I have started to feel this way myself. It might just be a slow decline with most Americans not being able to understand and us ZH's without the numbers to fight back. I think the majority of Americans fit in the Peopleofwalmart.com category so we are doomed. Idiocracy here we come!

newengland's picture

Only 3% of colonialists gave their all - money, and blood - to the new Republic, and other neighbors provided the important supply lines or kept out of the way.

Long live the Republic.

CONgress is bankrupt.

Goyim Sheep's picture

They're not keeping out of the way now because they keep voting for the two party system. They vote for the same system that sucks the blood out of the real producers and injects it in NYC and DC.

newengland's picture

No worries.

3% rule abides.

max2205's picture

I am trying not to think about this anymore

AldoHux_IV's picture

t must be hard to sit by and watch while the Fed creates a new $4.25bn competitor every business day where the sole goal of that money is to buy simply because a Princeton academic thinks it should. 

It's beyond this. When you consider all the initiatives our country has taken since 9/11 to eliminate our rights and liberties and continue to wage unjust and illegal wars abroad (even creating false flags and dictators along the way) and not to mention the greater centralization of power which ultimately means we lose even more democracy-- it's even more frustrating to see that the government has found a self-funding mechanism to allow itself to be psychopathic and totalitarian in nature. This goes beyond asset envy and free markets, we're talking about a blank check that has essentially LBO'd democracy from the hands of the people into the hands of the very few with an agenda that will turn out well for the rest of us.

Edit: keywords are "enablers" and "frontrunners".

DollarMenu's picture

+1 Aldo - the italics preclude my praise at your post.

Pareto's picture

+100.  Excellent.  The two tails of massive deleverage (price deflation), or, monetization of debt forever (price inflation), are getting fatter and fatter, where instead of each tail representing 2.5% probability of occurring, each now represents, in my view, a measure closer to 20% on each side.  The window for exiting is narrowing.  Even if equities were cotinue to rise, their real value diminishes.  Anybody waiting this out, isn't missing anything and for sure, is avoiding having their hat handed to them.

Instead,buy some PMs.  Take the family out.  Invest in oneself or others who are endeavoring to help make people or businesses better off.  This will be the new normal.

fonzannoon's picture

someone named Steven Grasso was on cnbc today and told me to just stay in the market until Bernanke says he is exiting. So that's cool. That is what I should do. Because in a free market I will get that info in real time with everyone else and we can all sell together. I don't have a clue who we will all be selling to but that really is not my concern. My concern is that I get that information at the same time as everyone else. I have heard conspiracy's that the banks etc. get tipped off ahead of everyone else so they make their moves ahead of time and are well positioned while people like me get stuck with a bag of shit. But I don't believe that. That wiould be unfair. So I will keep buying stocks until Bernak tells us all to sell at the same time. Wish me luck.

I think I need to buy a gun's picture


TruthInSunshine's picture

I actually think Druckenmiller is sharp, but no man is infallible, and the BIG point he expressed today that I think is redonkulous is in saying that "you have to be in some form of equity assets to even some degree [aka take Bernanke's bait] given the alternatives out there."

No you don't.  Unless you're a fund manager, whose compensation depends on churn, and you get paid to take risk with other peoples' money (and are absolved of the destruction of such OPM), there's no law that states you have to take the bait, assuming one even agrees with S.D. that there aren't more compelling alternative to asinine stocks in an asinine "market."

Temporalist's picture

I think that was a point of mockery.  He is suggesting that equities is the only alternative to negative interest rates and being forced into only one asset class, that asset class being highly speculative while being subsidised by the Fed and as seen in recent history is unstable, is the ridonkulous part.

I don't recall exactly because I watched all the interviews but it sounded more to me like he was bashing the QE strategy because, as the subject of the interview was unsustainable entitlements and such, fixed income and savings are getting crushed and housing lost great wealth for many and is shaky at best.

Anyway you are still right if that was his take.  I didn't get that from the interview at all.

fonzannoon's picture

I'm with you TIS but standing there in cash is painful too. Something is going to give though and I think we all see it coming.

slightlyskeptical's picture

It won't be long until everyone decides that cash is king. But good luck getting the little guy to sell. Thats why they stay little guys.

Colonel Walter E Kurtz's picture

And we have special CNBS coverage of the new record at 7pm.

I think I just threw up a little in my mouth!

otto skorzeny's picture

Maria and Jimmy C hosting-you should have full-on puked

I think I need to buy a gun's picture


Cult_of_Reason's picture

CNBC was paid to hype up the stock market (very similar when Morgan Stanley hired CNBC and Bloomberg to run nonstop commercials-free 3-hour hype about FB IPO).

PDs need to unload the inventory.


1. Mark up the Dow to new highs.
2. Hire MSM shills to hype it up (exploiting human greed).
3. Unload the inventory from PD books to naive retail investors.

A Lunatic's picture

Stop working for these fuckers. It's THAT SIMPLE. What the Hell is wrong with people??

CH1's picture

What the Hell is wrong with people?

They've been trained for X thousand years that it is good and right for other people to order them around.

newengland's picture

Never underestimate Chairsatan's resolve. Prepare to defend yourself, rather than be bought off with paper money.

When this battle is over: both brave sides will profit. Fiat vs gold and silver. Both will win. The political pets and their fans will lose...as they should. Cowards, wanting something for nothing.

If you believe in anything, you defend nothing. Your fate.

Buzz Bernanke...to QE infinity, and beyond.

km4's picture

QE Is "Unsustainable And Unfair To Those Who Work For A Living"

if 98% of Americans watched this video about Wealth Distribution in the U.S. there would be riots in streets http://www.fastcoexist.com/node/1681517