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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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Tue, 03/05/2013 - 19:59 | 3302844 takeaction
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!
http://www.youtube.com/watch?v=ORt_k7LjGDg

 

Tue, 03/05/2013 - 20:07 | 3302864 redpill
redpill's picture

"Unfair" 

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."

Tue, 03/05/2013 - 20:19 | 3302885 Law97
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....

Tue, 03/05/2013 - 20:33 | 3302973 Richard Chesler
Richard Chesler's picture

Just because it can't be repeated enough:

Fuck you Bernanke you miserable thieve.

 

Tue, 03/05/2013 - 21:30 | 3303183 AmCockerSpaniel
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.

Tue, 03/05/2013 - 22:01 | 3303294 flacon
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

Wed, 03/06/2013 - 00:09 | 3303714 Supernova Born
Supernova Born's picture

Company script in a company town.

When virtue is a vice the naughty rule the nice.

Wed, 03/06/2013 - 00:22 | 3303737 Supernova Born
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".

Wed, 03/06/2013 - 07:37 | 3304155 Popo
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.

Wed, 03/06/2013 - 03:32 | 3303984 All Risk No Reward
All Risk No Reward's picture

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

Expose their energy source...

Debt Money Tyranny

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

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.

Tue, 03/05/2013 - 21:36 | 3303208 eatthebanksters
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.

 

Tue, 03/05/2013 - 21:51 | 3303249 in4mayshun
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.

Wed, 03/06/2013 - 00:06 | 3303705 Midas
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.

Wed, 03/06/2013 - 00:18 | 3303741 Shizzmoney
Shizzmoney's picture

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

Wed, 03/06/2013 - 03:37 | 3303987 All Risk No Reward
All Risk No Reward's picture

Exactly correct.

People fall for the false narrative waaaaay too easily.

Bernanke is hired to implement THE WICKEDEST EVIL UPON THE POPULATION POSSIBLE WITHOUT MAKING IT OBVIOUS TO TOO MANY PEOPLE WHILE DOING IT!

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

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

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

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!

Tue, 03/05/2013 - 21:37 | 3303210 Translational Lift
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..........

Tue, 03/05/2013 - 22:29 | 3303400 Ned Zeppelin
Ned Zeppelin's picture

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

Tue, 03/05/2013 - 22:36 | 3303419 Bendromeda Strain
Bendromeda Strain's picture

It started in earnest with Wilson...

Wed, 03/06/2013 - 10:40 | 3304555 Mrmojorisin515
Mrmojorisin515's picture

lincoln......

Tue, 03/05/2013 - 20:11 | 3302892 negative rates
negative rates's picture

it's lasted almost 100 years, don't kid yourself either.

Wed, 03/06/2013 - 08:04 | 3304179 blindfaith
blindfaith's picture

 

 

Want to know how deep the rabbit hole is ?

READ:

LAST CALL

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

Tue, 03/05/2013 - 20:17 | 3302926 GiantVampireSqu...
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.

Tue, 03/05/2013 - 20:27 | 3302956 diogeneslaertius
diogeneslaertius's picture

>fucking theft<

Tue, 03/05/2013 - 23:13 | 3303547 Go Tribe
Go Tribe's picture

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

Tue, 03/05/2013 - 20:31 | 3302969 reTARD
reTARD's picture

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

https://wikispooks.com/ISGP/organisations/Pilgrims_Society02.htm

Tue, 03/05/2013 - 21:35 | 3303205 HowardBeale
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?" 

Tue, 03/05/2013 - 19:59 | 3302845 DoChenRollingBearing
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.

Tue, 03/05/2013 - 20:25 | 3302945 newengland
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.

Tue, 03/05/2013 - 20:01 | 3302859 SemperFord
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!

Tue, 03/05/2013 - 20:29 | 3302963 newengland
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.

Tue, 03/05/2013 - 20:42 | 3302995 Goyim Sheep
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.

Tue, 03/05/2013 - 21:07 | 3303092 newengland
newengland's picture

No worries.

3% rule abides.

Tue, 03/05/2013 - 20:43 | 3302997 max2205
max2205's picture

I am trying not to think about this anymore

Tue, 03/05/2013 - 20:03 | 3302862 AldoHux_IV
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".

Tue, 03/05/2013 - 20:15 | 3302917 DollarMenu
DollarMenu's picture

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

Tue, 03/05/2013 - 20:39 | 3302991 Pareto
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.

Tue, 03/05/2013 - 20:02 | 3302863 fonzannoon
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.

Tue, 03/05/2013 - 20:11 | 3302895 I think I need ...
I think I need to buy a gun's picture

DRUCKENMILLER WAS ALSO ON CNBC TODAY SAYING IT WAS THE 8TH INNING AND ALL THE LOBSTERS ARE ALMOST IN THE POT AND AbOUT TO BE BOILED ;)

Tue, 03/05/2013 - 20:34 | 3302977 TruthInSunshine
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."

Tue, 03/05/2013 - 20:52 | 3303023 Temporalist
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.

Tue, 03/05/2013 - 20:53 | 3303030 fonzannoon
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.

Tue, 03/05/2013 - 21:20 | 3303135 slightlyskeptical
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.

Tue, 03/05/2013 - 21:12 | 3303107 Fredo Corleone
Fredo Corleone's picture

Good one, Fonz.

+1

Tue, 03/05/2013 - 20:02 | 3302866 Colonel Walter ...
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!

Tue, 03/05/2013 - 20:05 | 3302874 otto skorzeny
otto skorzeny's picture

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

Tue, 03/05/2013 - 20:16 | 3302921 I think I need ...
I think I need to buy a gun's picture

YOU KNOW THE FUNNY THING ABOUT THAT IS THAT IT WAS PLANNED AT LIKE NOON TODAY, HOW THE FUCK DID THEY KNOW WE WOULD CLOSE HIGHER? WHAT IF THE MARKET TANKED IN THE LAST HOUR, ITS SO RIGGED THEY CAN PLAN AHEAD OF TIME WHERE THINGS ARE GOING

Tue, 03/05/2013 - 20:35 | 3302981 Cult_of_Reason
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.

Solution:

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.

Tue, 03/05/2013 - 20:03 | 3302871 A Lunatic
A Lunatic's picture

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

Tue, 03/05/2013 - 20:23 | 3302949 CH1
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.

Tue, 03/05/2013 - 20:07 | 3302872 newengland
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.

Tue, 03/05/2013 - 20:05 | 3302875 km4
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 

Tue, 03/05/2013 - 20:10 | 3302890 newengland
newengland's picture

If people understood the money system and the Crown, there would be revolution by morning.

Not going to happen. Most people are happy with wage slavery, and the others are bought off with paper money, trinkets.

Tue, 03/05/2013 - 20:17 | 3302925 Moe Hamhead
Moe Hamhead's picture

"Those who work for a living".

What about those who don't work for a living?  Like the non-employed and those on a fixed income.

Tue, 03/05/2013 - 20:22 | 3302947 Law97
Law97's picture

At least they're stealing a lot less from real working people than are Wall Street and Washington.

Tue, 03/05/2013 - 20:06 | 3302879 davidsmith
davidsmith's picture

Another whining, useless ZH post.  Overthrow the U.S. Government now.

Tue, 03/05/2013 - 20:14 | 3302905 newengland
newengland's picture

Overthrow the Crown and the Vatican:  Nazis, bloodline fascists who dominate Britain, Europe, and the U.S. Federal Reserve Board.

They hate you. Endure penury or resist. Your choice, pet.

Tue, 03/05/2013 - 20:28 | 3302958 CH1
CH1's picture

Just Walk Away

Tue, 03/05/2013 - 20:36 | 3302966 newengland
newengland's picture

No. No surrender.

My people. My land. Our money and self determination.

If sneaky types want to kill us, then look us straight in the face, and live with that. Long live the Republic.

Pick up a gun, and shoot me dead between the eyes; red mist. Beware: we will most certainly do that to any freak politician who imposes NDAA on our land and people, and steals from us, seeking to make us poor...like them: serving the Crown and Vatican.

 

Tue, 03/05/2013 - 23:37 | 3303626 CH1
CH1's picture

Your life, your choice.

Violence is a losing strategy, even ignoring the moral issues. All we have to do is stop obeying and the beast dies.

And I don't want another republic. I want liberty. They are NOT the same.

Wed, 03/06/2013 - 07:24 | 3304141 GCT
GCT's picture

Agree CH1.  Stop playing the debt game if you can.  I did years ago.

Tue, 03/05/2013 - 20:37 | 3302985 davidsmith
davidsmith's picture

But just you wait.  Although middle class Americans can't conceive of a revolution in the U.S., in the end, it will come down to just that.  The attitude of the U.S. Government is exactly the attitude of the Czar and Louis XVI.  Neither could tolerate ANY alteration in their governing doctrine.  If ANY alternation was made, their feeling was, "I may as well abdicate."  This is the U.S. government position--without the abdication.  They cannot CONCEIVE of any alteration in policy--it has too many unacceptable repercussions, in their minds.  So there will be NO change--NONE.

 

This leaves only one recourse: overthrow.  Once the middle class realize that the U.S. Government has them on a course to starvation, resistance will begin.

Tue, 03/05/2013 - 21:02 | 3303049 newengland
newengland's picture

Zzz.

The Crown and Vatican are the most hateful entities. Pet.

Long live the Republic.

You dare to defy my land, my people, our Republic.  Shill.

PS,

endless wars and child abuse in state run orphanges are the work of the Crown and the Vatican.

Tue, 03/05/2013 - 21:00 | 3303060 NoWayJose
NoWayJose's picture

Many other kingdoms and empires have come and gone. And the going always began when they started doing the same thing Bernanke is doing now.

Tue, 03/05/2013 - 20:11 | 3302893 Racer
Racer's picture

And if you have any savings for a rainy day or even for just things like food and every day living they are being eaten by inflation and not earning any interest

Tue, 03/05/2013 - 20:11 | 3302894 lolmao500
lolmao500's picture

And anyone who saves money..

Tue, 03/05/2013 - 20:23 | 3302897 Henry Hub
Henry Hub's picture

"Money for nothing and the chicks are free" Party on!!

http://www.youtube.com/watch?v=dlPjxz4LGak

Tue, 03/05/2013 - 20:12 | 3302899 IamtheREALmario
IamtheREALmario's picture

To state the obvious.

Prices go higher. The people who get the free money get richer in dollar terms. Things get too expensive for most people to purchase. Because things are too expensive people buy less. Corporate profits go down, but execs up THEIR salaries so they can keep THEIR standard of living up. Profits go down further. The Fed must buy more! ... not only stocks and bonds, but now commodities and finished goods as well.

Tue, 03/05/2013 - 20:23 | 3302951 rum_runner
rum_runner's picture

I'm starting to believe that what you portray is the "old world" where the consumer mattered.  Sure it does if you're Red Lobster or Walmart but a lot of the B2B business could give a f-k about unemployment.  They sell eachother services and non-consumer goods made by robots.

Tue, 03/05/2013 - 21:35 | 3303170 tickhound
tickhound's picture

Labor is now just a cost.  The consumption end is subsidized.  Higher taxes are meaningless to a 'chosen' corporation or a multi-national in the face of higher profits.  These taxes only strengthen their position against smaller competitors or small business.

The truly SAD part is that all this breakthrough technology is being developed and guided toward simply REPLACING our labor and SUPPORTING ancient profit models. 

These models were created as OUR LABOR WAS NECESSARY.  We fetched pails of water FCS.  Value was placed on labor as we domesticated plants and animals and became more dependent on one another. 

The models were built to get the MOST out of our labor.  Profit was the incentive. 

A robot doesn't require incentive.  It is not a consumer.  It doesn't require laws governing "FAIRNESS."  It doesn't require the services, the protection...

IT DOESN'T DRIVE AN SUV 60 miles to work.

The Models are broken. 

Ben is CHIEF MEDICINE MAN for an ANCIENT RELIGION that is IRRELEVANT outside of faith.

Tue, 03/05/2013 - 22:08 | 3303328 infinity8
infinity8's picture

I would sit here and plus you, over and over, for 30 minutes if I could - just pondering all of the ramifications of the (I believe) facts you stated. Nuts and bolts. People don't get it.

Tue, 03/05/2013 - 20:12 | 3302901 ebworthen
ebworthen's picture

End the FED!

Turn the Marriner-Eccles building into a history museum of the failures of central planning, Ponzi schemes, Black Tulips, South Seas Company, and empires that debase their currency and the value of citizenship.

Tue, 03/05/2013 - 21:37 | 3303212 yogibear
yogibear's picture

Only way to end the Fed is for the citizens to demand it be dismantled and people like Bernanke hauled off to prison. 

Ain't going to happen. The Fed is the great enabler for massive government spending  and fiscal irresponsibility.

Tue, 03/05/2013 - 20:13 | 3302904 101 years and c...
101 years and counting's picture

what a great job! completely fuck up the global economy and when your buddies need free money, you print it for them!!!  where do i apply?  oooops, im not a princeton grad....aka stupid fucking ape.

Tue, 03/05/2013 - 20:14 | 3302911 Racer
Racer's picture

And they now have 'bedroom taxes' for the poor in the UK

Not strictly a tax as such but it means the poor have less to live on whilst energy and food soars

Tue, 03/05/2013 - 20:17 | 3302927 newengland
newengland's picture

Very sad for Britain's working young who are innocent.

Tue, 03/05/2013 - 20:15 | 3302918 Tanz der Lemminge
Tanz der Lemminge's picture

And Greenspan is grinning from ear to ear. He knows when this one bursts he won't even be a close second to the worst fed chairman in history.

Tue, 03/05/2013 - 20:30 | 3302941 khakuda
khakuda's picture

Now that made me laugh. In fact, he will write yet another book claiming that Bernanke was actually pulling all the strings during the late 1990s bubble as well and, thus, Greenspan himself had nothing to do with it, as he was already senile at that point. Plus, all the Viagra he used in wooing Andrea Mitchell at the time drew all the blood out of his brain which clouded his thinking.

Tue, 03/05/2013 - 22:20 | 3303372 WillyGroper
WillyGroper's picture

Gravity's a bitch.

Tue, 03/05/2013 - 23:38 | 3303631 Its Only Rock N Roll
Its Only Rock N Roll's picture

Greenspan has made Burns look astute.  Bernanke is going to make Greenspan look like a poet laureate and scholar.  Good God the 3 worst Fed leaders of all time all in the last 40 years...and since Dick took us off of what was left of the gold standard. 

In a few years hence (or sooner) we will all be saying..."If the Fed would have just left it all alone".

Tue, 03/05/2013 - 20:18 | 3302930 LawsofPhysics
LawsofPhysics's picture

You work for that fiat, they can create it out of thin air with a keystroke. Got physical? Stupid fucking sheep.

Tue, 03/05/2013 - 21:10 | 3303098 Crash Overide
Crash Overide's picture

        ^that

Tue, 03/05/2013 - 20:20 | 3302940 janus
janus's picture

VERY well written...most-outstanding thinking.  calls for some good songs.  janus, git right on it! 

yessah.

really, lucas jackson (luv the name, btw...i considered both as first names for my sons at various times), that was some splendidly sweet awesomeness.

so, here's some songs to back up your elocution (as a firm and contentious resolution; which is to say, long live competition! selah):

http://www.youtube.com/watch?v=EMs1QVW_yjk

http://www.youtube.com/watch?v=hORw0NoZC64

http://www.youtube.com/watch?v=kW1u2Vn1y9w  (yup! gird thyself, bitches)

http://www.youtube.com/watch?v=WnU6pcrKeYo (tain't me sayin it; tis been said)

http://www.youtube.com/watch?v=eJlN9jdQFSc

death to all communists! forevah! 

told ya, chavez!  now what?  janus lives; you be dead.

now to castro.

well, my Goodness-Gracious, lemme tell you the news,

Janus

Tue, 03/05/2013 - 20:23 | 3302950 newworldorder
newworldorder's picture

You know - it may well be very very unnfair, but thats the way the banksters and the politicos want it. All nice and neat watching each others back. Is it not grand to know that you are untouchable? The Academic Economists have learned how profitable it is to do the banksters bidding. Easiest money ever made.

The politicos provide cover without having to face voters who are not paying attention. Look at the 2008, 2010, and 2012 elections and tell me that change is coming - NOT.

Tue, 03/05/2013 - 20:54 | 3303034 newengland
newengland's picture

Buy gold, silver, land.

Tue, 03/05/2013 - 20:28 | 3302960 q99x2
q99x2's picture

There's nothing wrong with quitting work if you don't like it. I'm all for that. Take advantage of the incentive. China and the US are at the pentagon this week discussing how they're going to pull off the controlled nuke exchange anyhow. It is the perfect opportunity to do the things you've always wanted to do but could never find the time for.

Tue, 03/05/2013 - 20:31 | 3302962 razorthin
razorthin's picture

Hang the fukker.

Tue, 03/05/2013 - 20:34 | 3302975 El Hosel
El Hosel's picture

Free Market Capitalsim... "A system of economics that minimizes government intervention and maximizes the role of the market."

Lets Shit all over it and see what happens.

Tue, 03/05/2013 - 20:53 | 3303029 newengland
newengland's picture

'Crush the bourgeoisie between the millstones of inflation and taxation.' (Lenin)

Tue, 03/05/2013 - 20:34 | 3302976 Wakanda
Wakanda's picture

"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."

Nicely put - yeah it is hard to watch - therefore:

The Second American Revolution - unfolding now in a neighborhood near you.

Tue, 03/05/2013 - 20:45 | 3303001 Godisanhftbot
Godisanhftbot's picture

 I only know one thing for sure.

 

 20 million ZH Readers missed the rally.

Tue, 03/05/2013 - 20:50 | 3303021 newengland
newengland's picture

Yah yah. Cheer leaders. 

Moron.

2008 buried your sort, but you are too dim to do inflation adjusted numbers.

Tue, 03/05/2013 - 21:00 | 3303061 razorthin
razorthin's picture

And you'll soon be like Wile E. Coyote, stretching and yawning high above the canyon.

Tue, 03/05/2013 - 21:54 | 3303271 khakuda
khakuda's picture

Not true. ZH readers know that money printing creates asset bubbles over time. Many are positioned accordingly.

Poor policy choices and a struggling, debt balooning economy is actually GREAT for asset prices for a significant time period.

Wed, 03/06/2013 - 01:03 | 3303805 Godisanhftbot
Godisanhftbot's picture

 20 million and only  neg 10?

Tue, 03/05/2013 - 20:52 | 3303024 NoWayJose
NoWayJose's picture

Lest we forget, our own friends in Congress are creating a similar $85 billion every month - out of thin air - and exchanging it for an IOU that will never be repaid with today's dollars

Tue, 03/05/2013 - 21:00 | 3303057 Confundido
Confundido's picture

The Fed is not targeting stocks. If you believe that they have a target level for the S&P500, then you have to be consistent and believe that once that level is reached, they will stop QE. Of course they wont! Because, again, they are not targeting a value in stocks. They are simply monetizing fiscal deficits. That's all. You don't need a Phd for that.

Tue, 03/05/2013 - 21:09 | 3303095 Mr. Hudson
Mr. Hudson's picture

: "Suddenly, the world had an additional $85bn.  It doesn’t exist and then POOF!  11 key strokes later and it exists."

Bernanke must froth at the mouth every time he does that.

Tue, 03/05/2013 - 21:19 | 3303131 newengland
newengland's picture

Chairsatan is a believer, not a deceiver. He truly believes that he is doing he right thing.

If you agree, fine. If you don't, fine.

Choose.

Tue, 03/05/2013 - 21:21 | 3303137 Umh
Umh's picture

What most hard working people need is a stable system that is predictable over the long term; a gold standard would provide this. Planning real things is easier when the scale doesn't change. Essentially Bernake and the government are yanking the people who don't deal with finance everyday around. Because of this they can't plan.

Tue, 03/05/2013 - 21:26 | 3303155 newengland
newengland's picture

And the political pets who gift themselves inflation busting or tax free gifts from taxpayers and laborers Party on.

With the votes of the electorate, and the hurrah of main scream media cheer leaders.

Corporatism, the Crown, the Vatican rules.

Tue, 03/05/2013 - 23:24 | 3303583 slightlyskeptical
slightlyskeptical's picture

They will just manipulate gold based money with international gold prices. Unless the whole world is on board it simply will not work. If the whole world is on board there simply isn't enough gold and silver. We need soveriegn money supplies based on and backed by each nations productivity.

Tue, 03/05/2013 - 21:21 | 3303141 Tuffmug
Tuffmug's picture

4.25 billion/ a day is chump change relative to the total stock market cap of 15+ trillion and Bernanke knows it. Assume every penny of this QE goes into stocks (a very bad assumption) then stocks would only increase by 6%/year. He is attempting to con everyone into the market and just hopes no one does the math and realizes he's just an impotent dwarf trying to fuck and impregnate a blue whale.

Tue, 03/05/2013 - 21:48 | 3303236 adr
adr's picture

It's not chump change though. Other money that is invested is taken from other sources, ie real people. Some are betting short, some are going long. Most are searching for sustainable yield from well performing corporations, if one actually exists.

Ben is creating $4.25 billion a day out of thin air, with the only purpose being to inflate stocks, any stock regardless of fundamentals.

Everything inflates, nothing deflates. That's called blowing a bubble and he knows it. He just doesn't fucking care. Rich people lost money in 2008 and he needed to give it back plus an extra four years of returns that should have been made in their eyes.

Tue, 03/05/2013 - 22:33 | 3303409 Tuffmug
Tuffmug's picture

Ben's got you conned but good! He is the Wizard of Oz, an old fart behind the curtain pushing levers and buttons to scare and awe you to get you to do his bidding. That bubble only grows if you believe the con and start buying stocks cause the Wizard's going to buy them to the moon. Max of 6% ain't "to the moon".

Tue, 03/05/2013 - 21:23 | 3303149 newengland
newengland's picture

Want money? Pay for it.

Tue, 03/05/2013 - 22:02 | 3303298 adr
adr's picture

If you want to know what is going on right now in business, I'll tell you. Anything that can be done to support stock prices, nothing else.

Employment, don't need it. Service, hell no, costs money. Quality product? Are you out of your mind.

The ten steps to CEO billions

Step #1: produce own product for inventory stuffing as cheaply as possible. Defective, poisonous, don't worry we'll cover that

Step #2: cut out as much of the supply chain as possible, reduce vendors and make vendors give you as much margin as possible

Step #3: open as many stores as possible to channel stuff, stores work like car dealer lots, what ships there can be booked as sold

Step #4: staff stores with the fewest employees as possible, paying as little as possible and work them the fewest hours as possible

Step #5: make sure to set up a foreign shell company to sell 90% of the product that doesn't actually sell. Book as sold again.

Step #6: have foreign shell corporation book all "sold" product as a loss, use "loss" to mitigate tax bill

Step #7: have a good lawyer

Step #8: set aside enough cash to pay legal settlements when your shitty product injures or kills someone

Step #9: previous steps should have created the appearance of a sound business, stock soars.

Step #10: Sell your shares for a massive premium, thank Bernanke and your Congressman. Send a thank you card to Cramer.

That is business today. Anybody that tells you different is a fool or running the scam and doesn't want to be outed.

Tue, 03/05/2013 - 22:04 | 3303309 Bansters-in-my-...
Bansters-in-my- feces's picture

Then "Poof"....your a pile of shit. Get back to work consumers.....

Tue, 03/05/2013 - 22:17 | 3303365 tawdzilla
tawdzilla's picture

Awesome little rant from Lucas Jackson...whoever that is...cheers brother.

Tue, 03/05/2013 - 22:26 | 3303391 Ned Zeppelin
Ned Zeppelin's picture

The people the Princeton academic works for think stocks should be high.

There - fixed it.

Tue, 03/05/2013 - 22:50 | 3303469 flyonmywall
flyonmywall's picture

The funny part about this is that the status quo is being maintained by TPTB because they think they are #winning ! and doing well for themselves.

The problem with absolute power is that it corrupts absolutely, and eventually, makes you blind to the truth. In the end, the truth has to be shown to the absolute power hungry madman (or woman), usually in a violent way, otherwise they are incapable of seeing it.

History has shown this to be true, time and time again. The end will be violent. There is no other alternative, because there simply can't be, otherwise it cannot be the end.

You can argue and debate this endlessly, but in the end, articles and figures will not do it. We're still at the articles and figures phase. The question is, for how long?

The answer lies in the Periodic Table. Oddly enough, it was invented by a Russian. The Russians have some experience with this sort of thing.

Strangely enough, both atomic numbers 79 and 82 are in Period 6 of the Periodic table.

Tue, 03/05/2013 - 23:26 | 3303591 insidious
insidious's picture

How exactly does the Fed "money for nothing" get into the stock market? I think for the most part the Fed is buying US Treasuries and Mortgage Backed Securities. I don't know about the mortgage backed securities but the primary dealers make a profit on the treasury transactions but I think that money goes primarily to the US Government right? The government then spends the new 1's and 0's to fund the roughly $1 trillion dollar deficit or to cover the payment on bonds which are maturing? So how does that money get into the stock market?  Maybe holders of US Treasury debt, which is maturing now, invest those funds in the stock market instead of rolling it over into new treasuries? I don't know - how does it work? What percentage of the newly minted / created money do you think goes directly from the Fed into the stock market?

Tue, 03/05/2013 - 23:39 | 3303637 barwar
barwar's picture

don't get overly wrapped up in the details, this is the mistake of the academic class, but the bankers know better.  

 

money is fungible.  the net result to the system is an additional $85bn in cash.  someone who was going to roll that position did not have to, they sold to the fed instead, now they have cash instead of bonds.  

 

maybe they bot stocks, maybe bonds, maybe commodities, maybe they bot a portfolio of foreclosed real estate from BofA.  who knows.  

 

but the system is bigger by $85bn each month and that cash is not being stuck under someone's mattress.  it is buying things.  beware of things...

Wed, 03/06/2013 - 00:42 | 3303778 slightlyskeptical
slightlyskeptical's picture

But it is debt that will be paid off eventually, so any money the Fed spends eventually comes back to them plus interest. I would imagine they are buying new offerings rather than old stale MBS's since the intent is to keep interest rates low. So the banks get all the money in return for handing over their fresh mortgages, which they originated from thin air. Fed is just replacing the thin air since other capital does not seem willing to do so. Not sure how anyone has any more money in the long run except for transactional charges.

Wed, 03/06/2013 - 01:35 | 3303838 Law97
Law97's picture

Yes, you are right in the 1776-2009 paradigm.  However, since 2009, what the Fed prints will NEVER be paid back. Their balance sheet will simply grow and grow until somebody has the balls to say the emperor has no clothes. 

It's alreay past the point of no return.

Tue, 03/05/2013 - 23:53 | 3303663 Hohum
Hohum's picture

Fed obtains crappy paper for cash; primary dealers sell at a quick profit after auction.  Banks spend cash in stock market or maybe loan to those who gobble up margin debt to invest in the stock market.

Wed, 03/06/2013 - 00:29 | 3303758 proLiberty
proLiberty's picture

Create $85 Billion Now?  Yes/No.

Are you sure?  Yes/No.

OK!

 

Wed, 03/06/2013 - 01:17 | 3303818 Grand Supercycle
Grand Supercycle's picture

DXY daily chart retracement still expected & DOW megaphone wedge continues so more equity upside and SPX short squeeze expected.

Bullish warning for DXY monthly long term chart continues and this will not change.

trader618

Wed, 03/06/2013 - 02:38 | 3303931 steve from virginia
steve from virginia's picture

 

 

 

Because Bernanke cannot print crude oil he is nothing more than a witch doctor.

 

The Fed accepts private sector debt as collateral for its own credit. The Fed does not create anything new, it is an asset exchange. What changes is the interest rate/maturity and the yield curve. 

 

The danger is maturity mismatches with hedges in over-the-counter derivatives markets.

 

There is no new money, and no inflation. Prices of goods increase because of high real crude oil prices. Diesel fuel has been above $4/gallon for the past year, everything in America moves by diesel truck or railroad.

 

High crude prices have nothing to do with monetary worth, in fact the price of crude is pressured downward by the inability of crude customers to afford credit: in the world dollars/money is exchanged for crude oil products every single day in a massive trade.

 

If the Fed is 'printing money' where is the money?

Wed, 03/06/2013 - 03:28 | 3303978 Kirk2NCC1701
Kirk2NCC1701's picture

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

J.D. :  "So?  That's why I'm richer than you are."

Wed, 03/06/2013 - 03:36 | 3303986 CanaryInTheCoalMine
CanaryInTheCoalMine's picture

for the plebeians of zerohedge (me) this is one of the few articles I was able to understand technically.

Wed, 03/06/2013 - 04:00 | 3303999 Lord Of Finance
Lord Of Finance's picture

Ok. I am going to break the flow of all these good postings. I read the article and then I went back to the home page and stared at that photo of the Bernank just sitting there, probably at some congressional funtion, looking very contemplative.

 

I do not read minds but as I was staring at the guy, I swear i heard his thoughts and they said,

 

       "Here I am again. I relish these moments when I can sit in front of these stupid, clueless politicians and just be given a free license to bullshit my way through their pointless questions. Now let me see . . . Hmmmnn. What kind of bullshit can I get away with telling them this time. How can I top that last session? Oh wait. How can I top that session from 2006 when I told them there would be no rise in energy prices, or decline in home prices, just weeks before there was a catestrophic rise in energy, and decline in home values. I also keep telling them that inflation is "tame" over and over and over again. But I am not satisfied with my lies and outright deception. I need to come up with something good. Let me see. I need a magnum opus for a lie this time. I need to draw from some age old central banker inspiration.(pause-thinking real deep) Hmmmn---What would lucifer say?"

Wed, 03/06/2013 - 05:22 | 3304053 Black Markets
Black Markets's picture

It does make a mockery of the whole system, the people who work at the Federal Reserve are not gods.

They are normal people just like your brother or sister or the guys and girls you went to school with.

 

The fact that this particular organisation is tilting the table by $1,020 billion per year can only be destabilizing, as everybody else has to give up what they used to do and just frontrun them.

The whole meritocratic mechanism where good capital allocation generates positive returns is completely destroyed by this singularity within our monetary system. Do not waste time looking for good capital allocation, just frontrun the Federal Reserve. Buy what they buy, sell what they sell.

 

All the hunter-gathers, have stopped hunting and gathering, they all saw this singularity and they turned and ran. And that is the state of the system today.

 

 

 

Wed, 03/06/2013 - 10:23 | 3304507 SoundMoney45
SoundMoney45's picture

There are only two viable investment strategies.

1.  Front run the Federal Reserve Corporation using inside information (think Goldman Sachs)

2.  Don't play.  Acquire hard assets and hunker down for the duration.

An example non-viable investment strategy

3.  Invest using methods which were successful in the 60's, 70's, 80's and 90's.

 

Wed, 03/06/2013 - 16:47 | 3306024 rjs
rjs's picture

unfair to those of us who actually work for a living?

that might be the funniest closing i've heard all year...

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