One Hundred And Eighteen Million Dollars An Hour

Tyler Durden's picture

Submitted by Mark J. Grant, author of Out of the Box

$118 Million Dollars An Hour

That is how much money the Federal Reserve Bank of the United States is creating as you wake, work or sleep. That is $85 billion a month and the stuff must go somewhere. It pours out like sugar upon the markets, each market, every market and it is no wonder that the American stock markets are hitting new highs. The spice must flow.

In the bond markets it is low interest rates and compression, a vice closing in progress, as each sector of the Fixed Income markets grinds closer and closer to Treasuries. It is real, it is not an avarice, but it is also the most manipulated market in the history of our country and something that could not be accomplished in other responses to Recessions because the world’s central banks had never worked in this kind of collective action before. It is not earnings and it is not technicals; it is just money and vast quantities of it that come pouring out of Washington each day. The United States found manna from Heaven.

The initial call had been for Inflation, even Hyper-Inflation from some well-known thinkers. It has not happened and the reason, I postulate, is because the underlying economy is in far worse shape than the numbers indicate or most think. The earnings at corporations also rely upon this injection of capital and so the whole boats floats but the underpinnings are shaky, risky and fraught with danger. Any hint of curtailment by the Fed throws out tremors as everyone wonders for how long this will go on and will the rising tide turn to a flood and upset the American boat. It is a very good question. The other possibility is an “Event;” some shattering moment that punctures the hull and sends the whole enterprise into a waterspout where the boat is sucked up into a vortex that will certainly not be Oz.  

I play the game. The Rule is to win and not to be eventually right and lose your capital during the process. The compression in bonds has been an absolutely winning hand and in many cases a better bet than equities have been. One of the interesting reasons for this has been the structure of bonds as compared with equities or preferred stocks. Bonds accrue interest every day while dividends are paid quarterly with no accrual. Consequently if you are trading bonds and taking advantage of what you can the accrual part of the equation can add to your winnings in a substantial fashion when interest rates are this low.

There are two maxims in operation now. The first is that euphoria continues on right up until the day when it does not. In the last go-round the “Event” was Lehman and the music stopped. The second maxim is that there is not strategy that wins forever. Frequently the winning bet of last year is the losing bet of the next and I always bear this in mind. In this light one also looks at the Fed; will this outpouring of money go on forever? Fairy godmothers are children’s tales and when someone offers you the glass slippers; let me know.

I have been asked numerous times why the Fed’s balance sheet can’t be thirty trillion dollars and so the game continues. The answer is that it can be but, and a very big but, is that the debt of the United States would also be ten times the size it is now and it would have to be serviced by an economy that only has so many resources as the debt to GDP ratio of the country would be out of sight. Perhaps if Europe and Asia expanded their balance sheets by ten times as well so that on a relative basis everything remained in tandem it could happen but the amount of debt issued by our Treasury would be at levels that would portend some kind of nightmare scenario.

The catch here is the amount of debt that would be created along with the creation of money and that is where the game halts or reverses the course. I suppose it is theoretically possible that the Fed bought all of every new issue, bought 100% of each new Treasury or Agency offering but there are consequences for that kind of behavior that, while unknown, would disrupt private capital in some very significant ways. It would no longer be, and we are close to it now in my opinion, that the Fed is “the lender of last resort” but the only important lender in town. What would it be; JP Morgan at Treasuries +1, Bank of America at Treasuries +2 and Morgan Stanley at Treasuries +3? The boys are driving the train in that direction as risk becomes quite secondary to the money in the system that must be utilized.

Cowardly Lion: I *do* believe in spooks, I *do* believe in spooks. I do, I do, I do, I *do* believe in spooks, I *do* believe in spooks, I do, I do, I do, I *do*!

Wicked Witch of the West: Ah! You'll believe in more than that before I'm finished with you.

                  -My cousin in Oz

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TruthInSunshine's picture

"I play this game..." is code for "I gamble because I have a system that can beat the house."

Famous fukkin' last words.  I'm sure those "tight stop losses" will save you on true liquidation days, too.

People who are the biggest jackasses at the poker table never realize it.

fonzannoon's picture

It's so true...How freakin stupid are huiman beings that crash after crash we can tell ourselves we will know when to get out of the way.

The big difference here though is when the next katanker comes most likely bonds and the dollar go down the toilet with stawks, So....not too many places to hide.

I love the inference though that Bernak can print the exact amount of money to counteract deleveraging but also put a cherry on top for the markets. I am sure he can thread that needle forever.

MillionDollarBonus_'s picture

I've just been looking at some of the technicals on the four year chart of the S&P 500. I have to say, this chart just looks great. Firstly, there's a clear uptrend, which is a good sign. The second thing to look at is that we've had weekly closes above all the moving averages. Then you look at the MACD, which also is up. I have to say this is one of the best charts I have seen in all my life. If you're not in this market, you need to buy now. I'm as certain that stocks are going up as have been about anything in the markets.

fonzannoon's picture

I remember the technicals and your thoughts on the facefart IPO.

TruthInSunshine's picture

lmao. "Technicals". MACD. RSI.  Ichimoku Clouds. Chaikin Oscillator. TRIX. KST. Coppock Curve. Aroon.

How could ANYONE downvote that? It is good shit.

francis_sawyer's picture

IDiott waves... 123 - x - abc - 123 - x - abc - oh shit P3 - QE 'n+18'

kaiserhoff's picture

Great article, and quite right about unintended consequences.  What has been hidden so far is the effect of ZIRP on small and midsized banks.  They are all broke and it's getting worse every day.  They are still in business because the FDIC is broke, and DOESN'T HAVE THE MONEY TO SHUT THEM DOWN.

The compression of all things interest related is true, and a great insight.  Some of the better minds here should work on that. 

Bernanke has been "successful" because of the dollar's status, the best looking horse in the glue factory, but that too will end.

SafelyGraze's picture

"I have been asked numerous times why the Fed’s balance sheet can’t be thirty trillion dollars and so the game continues. The answer is that it can be but, and a very big but, is that the debt of the United States would also be ten times the size it is now"

not so .. unless and until some authority (congress? the courts?) determines that the fed may not make outright purchases or swap currency, it is free to expand as much as it pleases. 

real estate
agency debt
natural gas

kaiserhoff's picture

There are solid markets for white babies, kidneys, and livers (preferably not from the ZH crowd).

Maybe that's why Ben gets so twitchy when someone screams AUDIT THE FED!

GMadScientist's picture

Now look at it priced in oil or gold!

FubarNation's picture

MDB how about volume mate?  And broad participation?

Agstacker's picture

I've gotten to to the point where I downvote you out of simple habit.  

NotApplicable's picture

LOL, so you're only encouraging him. This aids you how?

I'm amazed that people can't simply scroll past these posts, but no, they can't help but to take the bait, it seems.

Oh well, cheap entertainment, I guess.

TheCanadianAustrian's picture

Funny, I do the opposite. Seems some people can't recognize a joke if it's not clearly labelled with a disclaimer along with instructions on how to get the joke.

prains's picture



I've been looking at the MIllionDonutsForUS charts and find the transvaginal mesh is leaking, the hair plugs are infected and the gunt fold over has a deep red rash



good luck with 'your' technicals

redpill's picture

'The initial call had been for Inflation, even Hyper-Inflation from some well-known thinkers. It has not happened and the reason, I postulate, is because the underlying economy is in far worse shape than the numbers indicate or most think.'

There certainly has been inflation, but it has been specifically directed inflation.  The money the Fed is pouring out is largely contained within a tight vortex around the financial elite in TBTF banks and Wall Street firms.  The last thing they want is wage inflation in the middle or lower end, because then the ongoing theft taking place would become more visible and undeniable to the common person.

But I would also concur things are worse in the underlying economy than what is admitted.  Wall Street is making money hand over fist flipping bonds from the Treasury to the Fed, meanwhile people on fixed incomes are getting next to nothing on their savings in terms of interest.  The disparity between average income of new jobs versus those that have been lost is severe.  The gap between the very wealthy and everyone else is yawning wide.  Those with substantial financial assets are able to take advantage of the ongoing inflation by paying the Wall Street boys to get them in the game.  But when it comes to the average person with a 401k that has become risk adverse, they essentially have no practical way to make yield on their savings.

Killtruck's picture

Let's not forget all of those angry ragheads overthrowing their governments because they can no longer afford to feed their inflation? Maybe not a lot stateside...yet.

LawsofPhysics's picture

That liquidity trap you are referring to will be contained about as well as herpes in a whore house that doesn't believe in condoms.  Absolute power corrupts absolutely.  Enjoy this opportunity to exchange those paper promises for physical assets of real value, it is the only real hedge that anyone has anyway.

Almost Solvent's picture

Bernanke couldn't score in a monkey whorehouse with a bag of bananas

eclectic syncretist's picture

Bernanke is beginning to realize that he is just a stooge swept up in a game that is beyond him, as delineated in his face during his last testimony.  Amost none of the money being printed is making it into the real economy in any positive, meaningful way, and instead it's feeding a gambling casino mentality in the banks.

Don't need to tell anyone here that that's not good and won't end well.

web bot's picture

Very insightful comments.

The one thing that is not mentioned in the jobs numbers is the salaries associated with these jobs...

TruthInSunshine's picture

Nor the hours available nor the lack of benefits.

MainLameStream Media, where every outlet whether network "news," print, cable, radio, etc. is owned by 5 KronyKapitalistKorporations- think many friends of whoever is in office), FTW!

Hohum's picture

web bot,

True.  But ZHers should realize that, if their wishes come true and economic righteousness enters the land, most new jobs are still going to pay shitty salaries.  Who is going to create the jobs with great salaries?  Mitt Romney?

TruthInSunshine's picture

It's not about the nominal levels of wages, salaries or savings, it's about productivity and purchasing power.

kaiserhoff's picture

I see your point, but trends matter. 

Right now, all the trends stink real loud.

NotApplicable's picture

If righteousness enters, there won't be any new jobs, let alone ones that don't pay well, as the economy will be rebooted from the ground up, and economic activity will revert to the local entrepreneur level. By the time jobs come about within this framework, they will once again be based on true value provided, allowing one to earn an honest living.

Not that I expect the fraud facade to end anytime soon...

Dapper Dan's picture

Yesterday, one case (12 quarts) of Car Quest brand oil, 30 weight @ $48.00  WTF?

Eye exam with dilataion, 1 pair glasses, 30 daily wear contacts, $785.00

2 Michelin 225 x 75 x R16 load zone E tires mounted = $595.00

I spent $1428.00 in one day, on "every day" items.

Obviously my Myopia prevents me from seeing any inflation.


dark pools of soros's picture

You got rooked on tires

On oil, you watch the price of mobil 1 synthetic over the years?

post turtle saver's picture

"Inflation in what you need, deflation in what you want"

post turtle saver's picture

If you look around the table and you're wondering who the sucker is, the sucker is you.

max2205's picture

if the dollar was a unit of light movement, the speed of light or $185,000 per second or $11,100,000 per minute, 0r $666,000,000 per hour (theres that # again)

at $118,000,000 per hour , Ben is printing at over .12 X the speed of light

WARP speed Ben....we're breaking up!

rotagen's picture

Repeat after me: Fake money Fake debt.  Now that's out of the way, why the incessant debt whining?  Because it's time for banksters to start the other side of the cycle, making those dollars worthless and stealing your real assets...why?  Well the boomers are out of the picture, the new generations had crap education, dumber than a stump... and we can't pay them chinese wages cuz the real estate slumlords have to keep your slavery going.



fuu's picture

$32,777,77/second, been saying it for months.

GetZeeGold's picture



We couldn't possibly squeeze a $15 savings out of that. 

King_of_simpletons's picture

Main street will turn a deaf ear and a blind eye to this just like everything else, if it has not already.  Numbness to all of this madness will set in and their collective attention will focus on the next season of American Idol.

Once the fantasy land mindset sets in, puppets are easy to manipulate. In Crimelandia, the person seeking the truth is jailed.

assumptionblindness's picture

"When you see that trading is done, not by consent, but by compulsion - when you see that in order to produce, you need to obtain permission from men who produce nothing - when you see that money is flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed." - Ayn Rand

otto skorzeny's picture

cue that moron Let Them Eat Rand. that is really a brilliant and fitting statement about our current state of affairs.

GetZeeGold's picture



Not sure that's an option.


Please send your GPS coords.....and we'll let you know.

Dr. Richard Head's picture

Pay no attention to the drone behind the cloud.  I am the great and powerful Bernanke.

francis_sawyer's picture



It looks like you should have rounded that one "up" to ',78' [but close enough for government work]...

fuu's picture

Thank's my thong was creeping again.

bunnyswanson's picture

It's not a realization, it is a scheme.  This is not the first time in history a nation has fallen due to corruption in high govt.

kridkrid's picture

Rand perpetuates the myth that it is industry vs. gov't, when, in fact, it the collusion of industry and government against us. The industry that she wrote of doesn't exist today. The corporate bureaucracy is equally prone to evil as is government bureaucracy... the merger of the two is horror. I'll get all sorts of down votes for this... oh well. The world she created in her writing is NOT objective... which make Objectivism... well... not very objective. She falls short in her A=A litmus test, I believe.

walküre's picture

She couldn't have foreseen the conspiracy between government and corporations then.

Her statement is more generic about a failing society based on a ruling class of parasites.

A Nanny Moose's picture

It's been a while, so I forget...does Rand actually mention the word corporation in reference to the producers?

The Corporation is merely a legal fiction, which exists by Government decree. So the merger of the former with the latter is only inevitable.