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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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Wed, 03/06/2013 - 10:13 | 3304463 GMadScientist
GMadScientist's picture

"...on the Big Rock Candy Mountain."

Wed, 03/06/2013 - 10:16 | 3304473 TruthInSunshine
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.

Wed, 03/06/2013 - 10:24 | 3304508 fonzannoon
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.

Wed, 03/06/2013 - 10:28 | 3304525 MillionDollarBonus_
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.

Wed, 03/06/2013 - 10:32 | 3304534 fonzannoon
fonzannoon's picture

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

Wed, 03/06/2013 - 10:42 | 3304552 TruthInSunshine
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.

Wed, 03/06/2013 - 10:47 | 3304566 francis_sawyer
francis_sawyer's picture

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

Wed, 03/06/2013 - 11:15 | 3304692 kaiserhoff
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.

Wed, 03/06/2013 - 11:50 | 3304853 SafelyGraze
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

Wed, 03/06/2013 - 12:40 | 3305078 kaiserhoff
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!

Wed, 03/06/2013 - 13:46 | 3305282 dark pools of soros
dark pools of soros's picture

How much is a pound of flesh?

Wed, 03/06/2013 - 15:39 | 3305743 SafelyGraze
SafelyGraze's picture

kidneys in backwardation!

Wed, 03/06/2013 - 10:34 | 3304540 GMadScientist
GMadScientist's picture

Now look at it priced in oil or gold!

Wed, 03/06/2013 - 10:50 | 3304584 FubarNation
FubarNation's picture

MDB how about volume mate?  And broad participation?

Wed, 03/06/2013 - 11:23 | 3304734 Agstacker
Agstacker's picture

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

Wed, 03/06/2013 - 12:33 | 3305052 NotApplicable
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.

Wed, 03/06/2013 - 13:52 | 3305296 TheCanadianAustrian
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.

Wed, 03/06/2013 - 11:29 | 3304756 prains
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

Wed, 03/06/2013 - 10:29 | 3304526 redpill
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.

Wed, 03/06/2013 - 10:33 | 3304537 Killtruck
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.

Wed, 03/06/2013 - 10:35 | 3304542 LawsofPhysics
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.

Wed, 03/06/2013 - 11:26 | 3304746 Almost Solvent
Almost Solvent's picture

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

Wed, 03/06/2013 - 13:03 | 3305170 eclectic syncretist
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.

Wed, 03/06/2013 - 13:52 | 3305295 dark pools of soros
dark pools of soros's picture

Working as pretended

Wed, 03/06/2013 - 10:50 | 3304587 web bot
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...

Wed, 03/06/2013 - 10:55 | 3304591 TruthInSunshine
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!

Wed, 03/06/2013 - 11:11 | 3304670 Hohum
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?

Wed, 03/06/2013 - 11:14 | 3304687 TruthInSunshine
TruthInSunshine's picture

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

Wed, 03/06/2013 - 11:25 | 3304740 kaiserhoff
kaiserhoff's picture

I see your point, but trends matter. 

Right now, all the trends stink real loud.

Wed, 03/06/2013 - 12:38 | 3305072 NotApplicable
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...

Wed, 03/06/2013 - 11:02 | 3304638 Dapper Dan
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.


Wed, 03/06/2013 - 13:56 | 3305306 dark pools of soros
dark pools of soros's picture

You got rooked on tires

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

Wed, 03/06/2013 - 12:00 | 3304908 post turtle saver
post turtle saver's picture

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

Wed, 03/06/2013 - 11:59 | 3304903 post turtle saver
post turtle saver's picture

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

Wed, 03/06/2013 - 12:14 | 3304959 max2205
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!

Wed, 03/06/2013 - 13:46 | 3305281 rotagen
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.



Wed, 03/06/2013 - 10:13 | 3304474 fuu
fuu's picture

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

Wed, 03/06/2013 - 10:16 | 3304484 GetZeeGold
GetZeeGold's picture



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

Wed, 03/06/2013 - 10:26 | 3304512 King_of_simpletons
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.

Wed, 03/06/2013 - 10:28 | 3304522 assumptionblindness
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

Wed, 03/06/2013 - 10:37 | 3304545 otto skorzeny
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.

Wed, 03/06/2013 - 10:39 | 3304554 CaptainSpaulding
CaptainSpaulding's picture

I'll pass

Wed, 03/06/2013 - 10:44 | 3304565 GetZeeGold
GetZeeGold's picture



Not sure that's an option.


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

Wed, 03/06/2013 - 10:50 | 3304585 Dr. Richard Head
Dr. Richard Head's picture

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

Wed, 03/06/2013 - 11:01 | 3304627 francis_sawyer
francis_sawyer's picture



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

Wed, 03/06/2013 - 11:23 | 3304732 fuu
fuu's picture

Thank's my thong was creeping again.

Wed, 03/06/2013 - 10:52 | 3304595 bunnyswanson
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.

Wed, 03/06/2013 - 11:53 | 3304876 kridkrid
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.

Wed, 03/06/2013 - 12:37 | 3305066 walküre
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.

Wed, 03/06/2013 - 12:41 | 3305081 A Nanny Moose
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.

Wed, 03/06/2013 - 12:58 | 3305153 kridkrid
kridkrid's picture

It's been a while for me as well. 20+ years, I guess. I don't know the answer to your question but agree with your post, 100%. For the person just above, she could have known or written on the topic. Ford had cozied up to Hitler... tire companies were killing public transportation... the "rise of the MIC" was an available topic for her to consider. She chose, instead, an overly simplistic narrative. I don't think she is worthy of condemnation and vilification the way that many do, but she wasn't "Objective".

Wed, 03/06/2013 - 13:51 | 3305294 Creepy Lurker
Creepy Lurker's picture

Very much agree. Like any philosphy, I take from it what is useful and makes sense to me. All philosiphers are human and therefore imperfect. Those who vilify her have their own agenda.

Wed, 03/06/2013 - 13:14 | 3305207 LostAtSea
LostAtSea's picture

In Atlas Shrugged, she does in fact talk about the collusion of industry and government.....Those businesses that were 'in favor' with the government, got the work.  The honest ones were shut out.


Wed, 03/06/2013 - 14:34 | 3305462 Rogue Trooper
Rogue Trooper's picture

Agreed, that was one of the main themes.  The road to surfdom can take many paths.  It would appear that the Western World is taking the 'ism called Corporatism. Same outcome.... we have been there before.

Wed, 03/06/2013 - 10:16 | 3304482 insanelysane
insanelysane's picture

But they couldn't do without 2% of my pay.

Wed, 03/06/2013 - 10:16 | 3304483 Sach Mahoney
Sach Mahoney's picture

Soon, after hyperinflation sets in, that rate will be our minimum wage

Wed, 03/06/2013 - 10:18 | 3304486 JustObserving
JustObserving's picture

US debts and unfunded liabilities rise at $936 million per hour.  In a couple of years, it will exceed $1000 million per hour.  Yes, we can.

Wed, 03/06/2013 - 10:35 | 3304544 King_of_simpletons
King_of_simpletons's picture

At this rate we might as well think about getting rid of the $100 bill. But deluded as we are, we keep pondering about the Penny and if it is of any use.

Wed, 03/06/2013 - 11:01 | 3304624 JustObserving
JustObserving's picture

That is enough debt to give out $100,000 for every family of four in USA every year.  What is the chance that we ever pay down US debt? Less than zero would be a conservative guess.

Wed, 03/06/2013 - 11:35 | 3304787 Almost Solvent
Almost Solvent's picture

Now that would be a winning platform for 2016 presidental politics:

I will pass legislation to pay every man woman and child $25k each every year for life - have more kids, get more money.

Also, no need to work. Everyone can quit their jobs and live off the free money train. A family of 8 would be making $200k per year.


Wed, 03/06/2013 - 14:38 | 3305481 Rogue Trooper
Rogue Trooper's picture

Set up a facebook & twitter account and the 'Free Shit Army' will follow.

'Almost Solvent' 2016!

Wed, 03/06/2013 - 11:29 | 3304758 BeerBrewer09
BeerBrewer09's picture

Soon all pennies will be worth more than a $100 bill.

Wed, 03/06/2013 - 12:26 | 3305019 i_fly_me
i_fly_me's picture

And pre-82 pennies especially. 

Copper, soon to be the new silver.

Wed, 03/06/2013 - 15:37 | 3305729 viahj
viahj's picture

hell, even the 97.5% zinc penny has broken 50% metal value.

Wed, 03/06/2013 - 10:19 | 3304493 fonzannoon
fonzannoon's picture

As long as the fed does not print and send us all a check so we can possibly benefit from all this...

Wed, 03/06/2013 - 10:25 | 3304514 yogibear
yogibear's picture

It still creates bubbles. Who benefits except a select few. It's not productive. It's destructive when the buibble bust. As the one the Fed is creating will.

This bubble will make the housing bubble look like a joke.


Wed, 03/06/2013 - 10:19 | 3304495 kill switch
kill switch's picture

Makes for a good minimum wage. Just a little kick start..

Wed, 03/06/2013 - 10:19 | 3304497 DosZap
DosZap's picture


Wed, 03/06/2013 - 10:23 | 3304505 yogibear
yogibear's picture

Reason enough the markets can go much higher and the rest of the economy sink lower.

The 1% make out like bandits and the rest suffer as asset prices increase.

Bernanke, Evans, Dudley and Yellen are creating the largest bubble in  history.

The Federal Reserve cannot stop, because if it does it will pop the bubble.



Wed, 03/06/2013 - 10:25 | 3304509 slightlyskeptical
slightlyskeptical's picture

" 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."

Private capital needs to be disrupted according to everyone at Zero Hedge. If the Fed held all Treasuries then it wouldn't even be debt any longer in any sense of the word. It would simply be an accounting of the money supply. Private capital would have no choice but to invest in productive endeavors instead of paper shuffling. Such printing offset by reduction or elimination of fractional reserve banking would limit the inflationary effects. Income tax would be eliminated. WTF not? To preserve the current banking system?

Wed, 03/06/2013 - 10:38 | 3304551 Joe Davola
Joe Davola's picture

Income tax would be eliminated.

You had me going until that comment.

Wed, 03/06/2013 - 12:47 | 3305105 NotApplicable
NotApplicable's picture

There are NO productive endeavors in the world of which you speak (input costs will always be too high with the accompanying price inflation, unless you're a TBTF GM type, perhaps). As for the end of the paper-shuffling game? NFW Your life insurance company, for example, will buy all the paper that MS AAPL or any other "cash-flush" business puts on the market.

Until this current monetary regime dies on its own, there is no escape for private capital. It will ALL be consumed by the banks, govs, and good ole entropy.

Wed, 03/06/2013 - 10:27 | 3304520 jomama
jomama's picture

and yet, Ag and Au's price don't reflect this easing one iota. 

that's ok, i bought yet another 100 oz. Ag yesterday from my local coin dude. too bad he was out of stock and i gotta wait till friday to pick them up...

Wed, 03/06/2013 - 10:33 | 3304529 otto skorzeny
otto skorzeny's picture

no one -and I mean NO ONE-here gets out alive. your ballroom days are over, Bernank. night is drawing near.

Wed, 03/06/2013 - 10:33 | 3304536 WhiteNight123129
WhiteNight123129's picture

Short Treasuries Bitchez.


Wed, 03/06/2013 - 10:35 | 3304541 otto skorzeny
otto skorzeny's picture

people have been getting burned on that trade for 2 years

Wed, 03/06/2013 - 10:37 | 3304548 fonzannoon
fonzannoon's picture

we will see 1.25% on the 10yr before 2.5%. Unless we go so straight to game over in which case we will pass 2.5% and go straight to hell.

Wed, 03/06/2013 - 11:05 | 3304643 francis_sawyer
francis_sawyer's picture

there are no paper bets in any direction that you will ever be able to cash in for any material value when a paper ponzi blows up...

Wed, 03/06/2013 - 12:51 | 3305126 NotApplicable
NotApplicable's picture

True dat. I'm still waiting for the inevitable shift out on the yield curve, once it is accepted by conventional wisdom that the Fed's avg. maturity no longer matters. Then they take their entire short-term mess and solve the problem with a gigantic can kick all the way out to the 30 year.

I only wonder if the Treasury will introduce a 50 yr. bond before or after this event?

Wed, 03/06/2013 - 11:26 | 3304743 WhiteNight123129
WhiteNight123129's picture

You are confusing money and credit.

We have a bubble of money, not of credit right now.

The money gets spent as Dalio mentions.

Goods and services expenditures make both the nominal GDP and tax revnues and cost on debt rise together.

The Gov debt on Fed balance sheet should be excluded from the computation of total debt.


Wed, 03/06/2013 - 11:12 | 3304678 Hohum
Hohum's picture


More like 30 years.

Wed, 03/06/2013 - 11:24 | 3304737 WhiteNight123129
WhiteNight123129's picture

Guys listen to Dalio.


Wed, 03/06/2013 - 10:44 | 3304564 El Hosel
El Hosel's picture

A Short reality ETF would be nice to see, talk about free money.

Wed, 03/06/2013 - 10:36 | 3304547 Sudden Debt
Sudden Debt's picture

And when you print a million replica dollars in your basement the FBI trashes your front door.... go figure...

Wed, 03/06/2013 - 10:37 | 3304549 DaveyJones
DaveyJones's picture

...and all for me

and all the other little guys

Wed, 03/06/2013 - 10:42 | 3304561 fuu
fuu's picture

They hurt us because they love us.

Wed, 03/06/2013 - 10:50 | 3304583 Sudden Debt
Sudden Debt's picture

you'll figure that one out when you're old enough.... very very very old enough... like in dust old...

Wed, 03/06/2013 - 10:45 | 3304556 Black Markets
Black Markets's picture











They can pump an extra $85bn a month in and it has little or no effect because the velocity of money is rapidly decelerating. They are injecting the money into the wrong place if they want to stimulate growth. They need to give it to the wider public (whose monetary velocity is ~3) instead of the primary dealers (whose monotary velocity is 0.25).


But guess what, the Federal Reserve already know this. They are simply injecting dead mass into the system to replace the deleveraging credit from the previous boom. It's an attempt to maintain price stability in the credit markets, except it it's not dead mass they are injecting it's nitroglycerene and at some point they have to sneak it out again without anyone noticing.



It's not that difficult to figure out. In fact it's fucking obvious.



GDP + Inflation = money supply x monetary velocity



Learn that formula if it's the last thing you ever do.


Wed, 03/06/2013 - 10:46 | 3304574 GetZeeGold
GetZeeGold's picture



Ask Sonny Bono about velocity.

Wed, 03/06/2013 - 10:48 | 3304579 SheepDog-One
SheepDog-One's picture

No Black Markets you miss it completely...all they're doing is monetizing the debt, always the final act before all empires collapse.

Wed, 03/06/2013 - 10:52 | 3304594 web bot
web bot's picture

tomar = beber

You're both right... just different ways of understanding how to solve the rubics cube.


Wed, 03/06/2013 - 10:54 | 3304598 Black Markets
Black Markets's picture

I recognize that they are monetizing the debt, but they are also transferring ownership of assets and purchasing power.


My point is that they can continue to do this for a longer than people here expect, because the velocity of money is still decelerating.


I also recognize that the stock market does not represent the economy. And the DJIA certainly does not represent the US economy so attempting to draw parallels there is entirely misguided.


Wed, 03/06/2013 - 11:05 | 3304644 Shell Game
Shell Game's picture

However, one can draw parallels between the market and a casino.  So, WTF is your point in pounding the drum of using the casino by god!  My choice of not using the shit casino is so that I don't get the shit on me. It is a choice of morality, and I choose to not participate.  You choose to use it, good on you..

Nuf said, cheerleader? 

Wed, 03/06/2013 - 11:19 | 3304711 Black Markets
Black Markets's picture

The whole system is the casino, just because you do not participate in the financial markets does not take you out of the system. It merely means you engage the system with one hand tied behind your back.


If you simply have dollars in your pocket, in your bank, under your bed, then you are in the system and you are being slowly eroded. You cannot hide from the economy, it is everything, it is everywhere, it is not limited by participation in the financial markets. Morality does not have an event horizon in Lower Manhatten.


Wed, 03/06/2013 - 12:31 | 3305037 Shell Game
Shell Game's picture

Morality doesn't have an event horizon from a cubicle in Langley either, fucking .gov troll...

Wed, 03/06/2013 - 12:42 | 3305082 Black Markets
Black Markets's picture

Hey if you think I'm entitled to some of your public money where do I send my invoice?

Wed, 03/06/2013 - 10:54 | 3304597 Sudden Debt
Sudden Debt's picture



 They need to give it to the wider public



but do they listen? no...

do they send you emails and letters that tell you to stop harassing them? yes....

Wed, 03/06/2013 - 10:56 | 3304608 Black Markets
Black Markets's picture

Once they own everything, then they will give QE to everyone. Not before.


Once they own everything they will need somebody to sell it to. So they will lend you money via QE so that you can buy back all the assets in the world.

Wed, 03/06/2013 - 11:12 | 3304674 Shell Game
Shell Game's picture

"Once they own everything, then they will give QE to everyone."

Horseshit. Only those closest to the printers will ever have access to newly conjured fiat.  IF we all ever have access to QE as you seem to think, do not believe for one second it will have any purchasing power at that point. 


Wed, 03/06/2013 - 10:55 | 3304603 Gadocat99
Gadocat99's picture

We need some new NINJA loans.  Let's use life insurance as collateral.

Wed, 03/06/2013 - 13:27 | 3305235 Lordflin
Lordflin's picture

Yes... We all need a lecture on the velocity of money... Thank you so very much...

Wed, 03/06/2013 - 10:43 | 3304558 SWCroaker
SWCroaker's picture

Well and good, but...     Are there not at least two types of debt?  Debt that comes from actually borrowing money from Frank the Skank loan shark is debt that I pretty well intend to pay back.  Debt that I owe to Uncle Ben 'cause he printed money to give to me in exhange for Treasuries that I printed for him is, well,   debt between friends.   I somehow suspect that, possessing as he does a machine that manufactures money out of thin air, Uncle Ben really isn't in the game to earn interest on lent money.  He plays the game and dispenses his favors for power.

Having gone back and forth on the "all money comes from creation of debt" thesis, I think I've finally come to the conclusin that it isn't what is truly important.   Dumb, messed up system, but not the thing that brings it down in time.   What matters is not the interest we owe ourselves by cheating, but whether enough of the other players in the world become offended by the degree of our cheating, and then find it to their advantage to act in response.   If the numbers on our interest or debt get to be visibly frightening, I'm sure the numbers will be ... changed to something more convienent.   Matter of national security and all.

What can't be papered over is when other nations stop accepting Ben Bux for physical goods, or if the distribution of Ben Bux gets so out of balance that citizens stop honoring them en masse; the decision of others to act isn't driven by BigBen's balance sheet, but by belief, degree of pain, and availability of viable alternative options.

Wed, 03/06/2013 - 11:40 | 3304814 lotsoffun
lotsoffun's picture

but the thing is, they don't think they can stop taking treasurys, because they also have borrowed against them as 'cash'.  it's a big game of chicken, just like lehman days, who takes the chips off the table first.   goldman would have gone under except they were channelled 80 billlion of the 180 billion via aig because they had the people in place.  this time isn't different.  the size of the cds globally is beyond a nuclear bomb.


Wed, 03/06/2013 - 10:45 | 3304567 SheepDog-One
SheepDog-One's picture

Looks like they're charging for DOW 15K by Friday!

Wed, 03/06/2013 - 10:45 | 3304568 rsnoble
rsnoble's picture

So by this line of thinking:

"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..............."

"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"

We can conclude that this nonsense will go on until the balance sheet hits 30trillion.  So my as well pour all your money into stocks and stop complaining because it's going to take awhile. 

Wed, 03/06/2013 - 11:14 | 3304682 Hohum
Hohum's picture

The only thing that will stop the nonsense is a real resource constraint.  Not before.

Wed, 03/06/2013 - 11:18 | 3304704 rsnoble
rsnoble's picture

That's why we converted to digital zeros from paper.  LOL.

Wed, 03/06/2013 - 10:45 | 3304569 ziggy59
ziggy59's picture

Thats about 272$ a month per person... Personally i could put it (*4-family)to better use than the banksters are supposedly doing.

Wed, 03/06/2013 - 10:55 | 3304604 Sudden Debt
Sudden Debt's picture



Wed, 03/06/2013 - 10:46 | 3304573 ekm
ekm's picture

The fact is that the whole world securities market hangs on the legal right of one person only:

The president of the united states of america.


He ordered DOW at 15k, he will get it.

When the military complex gets pissed because they can't sell weapons from Lockheed Martin and Boeing, he will simply order DOW at 7k.

Military Complex Lobby rules, not the banks.

Wed, 03/06/2013 - 10:57 | 3304609 Vince Clortho
Vince Clortho's picture


Wed, 03/06/2013 - 11:06 | 3304647 ekm
ekm's picture

You have to read more, a lot more.

Bank lobby is a minion compared to military complex lobby.

Wed, 03/06/2013 - 10:57 | 3304610 fonzannoon
fonzannoon's picture

ekm they have already changed the CPI so as to not, in any accurate way, measure inflation. They have rendered the already pathetic ratings agencies useless. They have suspended the debt ceiling (and that will be permenant). Maybe we just inflate from here on out. I know you say the fed can buy the whole market but they can just tell companies to issue more and more shares and they keep buying?

Wed, 03/06/2013 - 11:06 | 3304646 ekm
ekm's picture

They have already bought up the whole stock market.

Wed, 03/06/2013 - 11:15 | 3304690 ekm
ekm's picture

I think the FLOW has no meaning any longer. New money has nothing to buy.

We are very close to the crash and I think IRAN has a lot to do with it.

Wed, 03/06/2013 - 11:16 | 3304697 fonzannoon
fonzannoon's picture

I guess we will see.

Wed, 03/06/2013 - 10:49 | 3304581 moneybots
moneybots's picture

" 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."


That means nothing to me.  This market is based on financial fraud.


Phil Grandy said said when the market was up 40% from the low, that people needed to get out of the market, that they had been given a gift.  Now he says the same thing as you- you need to be in this market, you have been given a gift.

I don't buy it.  They are all saying get in the market.  Buffett said buy stocks. I read yesterday that Bernanke says he sees no sign of a bubble.  Well, neither could Greenspan.  Both Greenspan and Bernanke are known liars.


They are trying to sucker the dumb money in.

Wed, 03/06/2013 - 10:51 | 3304589 ebworthen
ebworthen's picture

But the markets are at all time highs because all is fixed in this amazing recovery.

Oh wait...

($118 million per hour, did you say?)

Wed, 03/06/2013 - 10:56 | 3304607 Zola
Zola's picture

Such a shame America, a torch of freedom that once shone so bright...

Wed, 03/06/2013 - 11:17 | 3304698 otto skorzeny
otto skorzeny's picture

right up until the Civil War.

Wed, 03/06/2013 - 10:58 | 3304613 fromthedeepersouth
fromthedeepersouth's picture


I'd like to know exactly where the Fed money is going.  I'd especially like to know if the 0.1% of uberwealther are being enriched by this money and how.  I can't help but believe that they are but I don't know how it is beind done.

any help would be much appreciated

Wed, 03/06/2013 - 11:08 | 3304655 ekm
ekm's picture

Good question.

I don't see there's anything left to buy any longer.


There's no more need for QE, expect for to keep interest rate zero so the swaps do not blow out.

But that cash that goes into the market has nothing left to buy.


Wed, 03/06/2013 - 11:10 | 3304666 ekm
ekm's picture

The whole system depends on COLLATERAL.

What's left for collateral?



Wed, 03/06/2013 - 11:20 | 3304721 fuu
fuu's picture


Wed, 03/06/2013 - 11:22 | 3304728 ekm
ekm's picture

LOL. I am too expensive.

Wed, 03/06/2013 - 10:58 | 3304616 yogibear
yogibear's picture

If there was a recovery you wouldn't need 85 billion or more per month being created out of thin air.

It's a game both Washington and the Federal Reserve are playing to keep the economy going.

To keep a less than +3% economy going with $85 billion/month is quite desperate.

If the Fed dropped the $85 billion/month it would collaspe. How healthy is that?


Wed, 03/06/2013 - 11:10 | 3304667 TruthInSunshine
TruthInSunshine's picture

Everything you've just said:


1)  Highlights why Von mises is far closer to correct than neo-Keynesians in the debate over whether it's HEALTHY to try and stop purely market based recessions or booms (I.E. NOT REACT AFTER CENTRAL BANK MONETARY POLICY HAS ALREADY SET THE STAGE FOR & IS FUELING THE FIRE FOR THESE),

2)  Essentially indicts MMT as it MUST BY DEFINITION create larger and more frequent batches of fiat/credit/debt than prior batches in order to perpetuate a fundamentally flawed system.

Wed, 03/06/2013 - 11:12 | 3304677 ekm
ekm's picture

85b/month is for the primary dealers to do CDS payouts, swap losses, quarterly payment.


The problem is that all that cash going to winning couterparties has bought up everything. So, new cash would have nothing to buy, that's why commodities are in hyperinflation.


I don't think that FLOW MATTERS ANY LONGER.

Wed, 03/06/2013 - 11:20 | 3304716 ebworthen
ebworthen's picture

"Listen, just give me my $85K per month of coke, booze, and hookers and I'll keep touring and making studio music, deal?"

Wed, 03/06/2013 - 11:01 | 3304626 Lewshine
Lewshine's picture

Exactly Yogi -

What most ZHer's fail to mention or understand is what the whole QE theory represents. The Fed MUST continue to pour liquidity, BECAUSE THEY KNOW THE ALTERNATIVE. The moment it stops - The curtain will be torn away and we, as in all Americans and the world, will see everything that has been hidden from public evaluation. Basically, how the whole thing has been a well orchestrated LIE. There is a lot on the line - The amount of money Ben throws at this market reveals what's at stake - Everything!

Wed, 03/06/2013 - 11:04 | 3304641 web bot
web bot's picture

I'm speechless at the amount... does anyone think this is going to end well?

I don't blame the Bernanke/Geithner for this... without sounding apologetic, they've responded to the credit crisis to stabilize the system. If it wasn't these guys, others would have done so. The REAL people that I blame are the politicians that have allowed too big to fail and their lack of spine to realize that capitalism gone awry is the real culprit.

I'll die with a gun in my hand defending democracy and capitalism... but not crony capitalism. THIS is the real root of the problem - a system that has been perverted and no political courage and leadership to take the tough stance and make the tough choices.

I firmly believe that the politicians and elites know that we're all in a spiral that will require a major reset, which history shows is usually a war and social disruption. They're hoping that things can pick up and with a lift in economic momentum, things will reverse and we can start to get out of the hole we are in. The only problem is that you can't dig yourself out of a hole.

We are definitely looking at a collapse this decade... just no one knows when. Prepare accordingly. You still have time.

Wed, 03/06/2013 - 11:43 | 3304833 GMadScientist
GMadScientist's picture

The politicians are just well-kept pets of big money...showing a spine is a career-limiting move at best.

Wed, 03/06/2013 - 13:36 | 3305258 LostAtSea
LostAtSea's picture

better to die defending a republic

Wed, 03/06/2013 - 21:42 | 3307161 Law97
Law97's picture

"They're hoping that things can pick up and with a lift in economic momentum, things will reverse and we can start to get out of the hole we are in. The only problem is that you can't dig yourself out of a hole."


Actually, they know it's hopeless and so they are helping themsleves and their well-connected buddies to loot what's left before the collapse.  Collapse is better when you are living far away on your own private island with cases of the finest scotch, and stacks of pm's.  Spend 10-15 years there and come back to North America, maybe, once radioactivity levels drop back down to safe levels. 

Thu, 03/07/2013 - 10:46 | 3308503 Lordflin
Lordflin's picture

One would think that the would understand the downward spiral they have created... And it is natural to look for an endgame... a question I have often asked myself. But history is replete with examples of foolish men blindly killing the goose out of sheer wanton greed without any consideration for what is to follow. Or if they do consider, their thinking is entirely delusional.

Or to put it another way... Sometimes I think we give these assholes too much credit.

Wed, 03/06/2013 - 11:07 | 3304654 IridiumRebel
IridiumRebel's picture

Maybe they can kick her some Benjamins.....FUCKIN GREEN SHOOTZZZZZZZ

Wed, 03/06/2013 - 11:18 | 3304703 Ban KKiller
Ban KKiller's picture

Again, my chickens don't lie. They lay eggs. They could care less about stocks, bonds but they do follow the corn/grain futures. 

Wed, 03/06/2013 - 11:41 | 3304819 GMadScientist
GMadScientist's picture

Hope you like omelettes.

Wed, 03/06/2013 - 11:26 | 3304744 sundown333
sundown333's picture

A letter from the Gubmint to the Amerikan People,


Dear slaves,

  How have you enjoyed the past 12-15 years? You have been good slaves. We told you it was your duty to keep the economy going and you did just that. You used your home as a piggy bank and now you have houses big enough for 4 apartment units. You have home theaters, Cadillac Escalades, a TV, stereo and game console in every room. You have bathrooms big enough for a party. You have vacation homes, RV’s, motorcycles and gold watches. You live like Kings and Queens. At least you did. Now what do you have? DEBT! No jobs because we sent them all overseas. No money because we screwed the economy and we will rob and tax you for the rest. We control you because we know how to appeal to your hidden desires and your oversized ego. You believe whatever we tell you. Well you can believe me when I say you are screwed. You upset about the economy and politics? We took more than your jobs and money. We took your security, peace of mind, future and your country. We will let you continue to bitch about it on your favorite blogs. At lease for now but when we get tired of that we will take that away too! You have asked us many questions but we only have one question for you, WHAT ARE YOU GOING TO DO ABOUT IT? That’s right, NOTHING!


Good Luck,

Your Gubmint

Wed, 03/06/2013 - 11:40 | 3304817 GMadScientist
GMadScientist's picture

They didn't "take it" dumb motherfuckers gave it away.

Wed, 03/06/2013 - 11:27 | 3304750 Hohum
Hohum's picture

Yep, stock market is going up and up because QE is not working.  If it were working for the economy, banks wouldn't have excess reserves because they would be loaning out the Fed cash.

Think we'll see a NYT article about QE's failure leading to higher stock market prices?

Wed, 03/06/2013 - 11:53 | 3304879 drivenZ
drivenZ's picture

this is not correct, excess reserves are a function of the Fed's balance sheet and do not mean banks are not lending. 

Wed, 03/06/2013 - 17:08 | 3306083 Hohum
Hohum's picture


I know reserve requirements aren't so important these days.  But wasn't QE meant (for public consumption) to get the banks lending?  Are they?

How are excess reserves of private banks a function of the Fed's balance sheet?  I assume you mean that the transaction increases the bank's reserves (i.e. cash)?  Can't that liquidity be used to lend more?

Please explain.

Wed, 03/06/2013 - 12:14 | 3304969 Sandmann
Sandmann's picture

In the future someone will explain how it all went wrong....but will it be archeologists or historians ?

Wed, 03/06/2013 - 12:12 | 3304961 Sandmann
Sandmann's picture

Well Bernanke knows how the Children of Israel were bonded slaves in Egypt and Exodus 5 tells us about brick-making quotas. This is no doubt the fate of the Americans in the New World Order

Wed, 03/06/2013 - 12:29 | 3305027 Gamma735
Gamma735's picture

Why doesn't MDB ever troll the Fed printing threads? Things that make you go hmmm.

Wed, 03/06/2013 - 12:44 | 3305098 Lordflin
Lordflin's picture

That the recent activities of the FED has not revealed the farce that is our monetary system once and for all to all and sundry is testament to man's willingness to remain blind so long as he is comfortable.

Wed, 03/06/2013 - 14:34 | 3305461 Bansters-in-my-...
Bansters-in-my- feces's picture

Hey Buddy...!!!!

Crawl back in your fucking box......Loser.

"the initial call had been for inflation", even "Hyper-Inflation" (why hyper-inflation needs capitals is beyound me,the drama effect I guess) from some well known thinkers. "It has not  happend"


Tell my power company that asshole

Tell my gas supplier that ASSHOLE.

And tell my Grocery that,you delusional fucktard.

Do NOT follow this link or you will be banned from the site!