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Chart Of The Day: The Fed's Taper In Perspective

Tyler Durden's picture


Back in September 2012 we forecast that absent major changes, the Fed's security holdings, which then were under $3 trillion, would hit $5 trillion by the end of 2014. One possible "change", and the topic that has consumed the market and pundits over the past month, and led to a spike in equity vol, has been whether or not the Fed will taper its purchases of securities from the current $85 billion per month, to a lesser number, in the process reducing the liquidity "flow" injected into risk assets via Primary Dealers. The prevailing consensus appears to be that Bernanke may trim the monthly number by about 25%, and lower the monthly purchase quota from $85 billion to $65 billion, with an announcement due at the September 18 FOMC meeting. So assuming this is correct, and Ben does as expected, what does this mean? The chart below shows the unprecedented calamity that such as "drastic" move by the Fed would lead to...

The black line is how the Fed's security holdings are projected to grow assuming the status quo; the red dotted line is what would happen in the case of the dreaded Taper: instead of ending up with $5 trillion in AUM at December 31, 2014, Ben Bernanke would have just $4.7 trillion.

Apocalypse now? Because the tiny delta between the black and red lines is what is nowadays seems to be the biggest threat, giving the market daily indigestion and desperately trying to decode with the Fed's presidents are saying at their every public utterance.

So what will happen to stocks when (just kidding) the Fed actually stops, or even begins to reduce its gargantuan balance sheet which is just under 25% of US GDP?


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Tue, 06/04/2013 - 10:56 | 3623487 Capitalist
Capitalist's picture

Where's the chart with the increase in QE4eva?

Tue, 06/04/2013 - 11:00 | 3623508 TheFourthStooge-ing
TheFourthStooge-ing's picture

Mmmmmmm, that's some good free market capitalism you've got going there, Ben.

Tue, 06/04/2013 - 11:04 | 3623526 MillionDollarBonus_
MillionDollarBonus_'s picture

Does the Free Market Produce Prosperity?

         A Comprehensive Research Paper

There are a number of articles investigating the relationship between deregulation and economic prosperity, but very few studies reference the unintended consequences of laissez faire capitalism. This research paper by Alan Krueger, Obama’s chief economic advisor, suggests that a decrease in the minimum wage could result in a reduction in income[1].

Despite the claims of many libertarians that the free market favors the poor, the academic literature continues to question this proposition. Either this is a strongly contested or under-researched economic issue, or the science has not been widely disseminated amongst economic educators and publicists. This study aims add some clarity to the question of whether the academic literature does in fact support common libertarian beliefs about the virtues of the free market.



Tue, 06/04/2013 - 11:10 | 3623546 bnbdnb
bnbdnb's picture

Power determines means, not money.


Stupid paper.

Tue, 06/04/2013 - 11:22 | 3623578 nope-1004
nope-1004's picture

If that "tapering" is considered responsible monetary action, and if it actually comes to fruition (which I don't believe it will in reality but may in more press release lies), then Bernocchio truly is a dumb dumb.

MDB need only look at how effective the current economic experiment is.  More intellectual references are useless at this point.  The economy is headed into a black hole.  Bernocchio is leaving because he is a failure and he damn-well knows it.


Tue, 06/04/2013 - 11:38 | 3623603 Badabing
Badabing's picture

Can you say exponential?

Our Ponzi system is based on growth. As the GDP increases they add to the money supply or we would experience deflation.

But my fellow ZHers as we know, this is all fake, we have no GDP. If they stop or even slow down the bailouts the system would implode and as they print they devalue the currency and have to print more.

They are caught by the balls and cant get loose. Hold your gold/silver and wait it out is all we can do.

Fucking Banks!

down Vote? did i spell something wrong?

Tue, 06/04/2013 - 11:52 | 3623663 imaginalis
imaginalis's picture

Academic Literature - Oxymoron?

Tue, 06/04/2013 - 11:53 | 3623666 kridkrid
kridkrid's picture

I didn't down vote you... but I think you have some things ordered incorrectly. The GDP is measured in dollars, correct? So wouldn't rising money lead to rising GDP, not the other way around? And they don't merely add to the money supply... they loan debt into existence. That's money... it's not some arbitrary unit created to match economic growth.

GDP is a horrifically misleading statistic... by design. Most statistics that act as some sort of "leading indictor" or are supposed to represent the general health of the economy are misleading, again, by design. Our Ponzi scheme is our monetary system (money = the creation of debt+ interest with fractional reserve banking + shadow banking). Inside of that exists a real economy where goods are bought and sold, but all of that can and will come to a screeching halt when the monetary system collapses.

Tue, 06/04/2013 - 12:16 | 3623717 Badabing
Badabing's picture

+1 So you’re saying that as the dollar looses value, it makes it look like we are producing more? Interesting, but I guess that’s part of the paper problem.

GDP is what we produce like a bushel of apples. I know we produce dollars also regardless of debt or not, but that is our medium of exchange and not product. If we double our product without increasing the money supply we have deflation. This is the flexibility that fiat has and has been abused by TPTB.

Tue, 06/04/2013 - 12:45 | 3623813 kridkrid
kridkrid's picture

I think you are confusing what you believe money should be and what it actually is. While you and I do use money as a medium of exchange, that isn't what it is fundamentally. You say we produce money regardless of debt or not. That actually isn't true. We produce money in the form of debt. We do it when we sell treasuries and banks do it when they issue loans. Virtually all "money" is a loan. The interest that is paid on that debt is how the oligarchs extract our labor from us.

The system is created in such a way that aggregate debt can never decrease, therefore the cost to maintain the debt must continue to expand until it kills the productive economy inside of it. When people want to complain about income inequality, this is where it is. Banks literally create nothing, but look at the names written on the big buildings and sports complexes in all of our major cities. Look at the percentage of income from the financial services sector of our economy and how it has grown over the past 40 years. All propaganda is meant to keep these truths away from our understanding.

Tue, 06/04/2013 - 14:14 | 3624103 Badabing
Badabing's picture

I totally agree with a dollar created into debt but that dollar also becomes part of the money supply.

Look at the percentage of income from the financial services”

I do look at the income, but I see no product.

“All propaganda is meant to keep these truths away from our understanding

So true.

With all the commotion it’s hard to see how the big money is made, sure fractional reserve banking is lucrative, but exporting inflation is where the big scam is. As a reserve currency of the world we have to match or slightly inflate in respect to upcoming nations GDP. What happened this time is the world just stopped and that coming to a standstill removed the curtain from the wizard and reviled how they now change the rules on the fly, like it’s normal, and the sheep blindly follow.

Tue, 06/04/2013 - 11:58 | 3623677 spine001
spine001's picture

To be fair to the argument (not to Bernocchio, love that name), Bernocchio said that QE WAS NOT going to work repeated times during his reports to both chambers of Congress. He always indicated that monetary policy alone couldn't do the trick and that a looser fiscal policy was needed in the short term with a longer term (10 years) rebalance to at least project the illusion of fiscal deficit growth reductions.

Congress, as expected paid no attention to it. His fault lies in the fact that HE WAS indeed told by Congress that they were not going to do anything unless he stopped QE and created a crisis. While the crack keeps on flowing the party goes on and on and on... Well, he hasn't stopped it, so NO surprise, even to Bernocchio that the party is still on and that his policies have not worked, HE KNEW they wouldn't. With regards to Congress, he was told in very clear words that nothing would happen.

The short answer to this mess is that the current democratic system is failing all of us... Not necessarily the people but the structure under which they work.

Until next time,


Tue, 06/04/2013 - 11:18 | 3623570 prains
prains's picture

MDtransvaginal mesh

what do you call a liquidity trap where interest rates are low AND savings are low ? I call it a liquidity bomb, tick tock

Tue, 06/04/2013 - 11:19 | 3623579 Stuck on Zero
Stuck on Zero's picture

Academics doing valid economic studies?  Never happened.  Never will.


Tue, 06/04/2013 - 11:44 | 3623649 Go Tribe
Go Tribe's picture

Of course the government literature continues to question this proposition. That's "comprehensive resesarch?"

Tue, 06/04/2013 - 12:16 | 3623719 Pairadimes
Pairadimes's picture

This is like waking up on a rainy day and questioning whether sunlight ever really made the plants grow. it requires a special brand of stupid to construct a worldview such as this within plain sight of the obvious truth.

Tue, 06/04/2013 - 14:35 | 3624166 moneybots
moneybots's picture

"Despite the claims of many libertarians that the free market favors the poor, the academic literature continues to question this proposition"


There is the problem: academic literature.

Tue, 06/04/2013 - 18:25 | 3624743 SpiceMustFlow
SpiceMustFlow's picture

go fuck yourself ZH doppleganger

Tue, 06/04/2013 - 11:40 | 3623639 Stoploss
Stoploss's picture


Tue, 06/04/2013 - 10:58 | 3623491 AssFire
AssFire's picture

The landing ramp will need to be moved 2" closer since we are going off the cliff at 270mph instead of 271mph.

Unfortunately, the landing ramp is inside the volcano's crater melting in FSA magma.

Tue, 06/04/2013 - 11:02 | 3623520 dontgoforit
dontgoforit's picture

Good description, A-fire.  Like would you like a .357 or a .44 magnum for that shot to the head?

Tue, 06/04/2013 - 10:57 | 3623495 OpTwoMistic
OpTwoMistic's picture


Tue, 06/04/2013 - 11:03 | 3623521 LawsofPhysics
LawsofPhysics's picture

The price of gold and yields must go down.  "Market" and yields moving together;

expected, welcome to the "new normal". 

Tue, 06/04/2013 - 13:25 | 3623956 Thisson
Thisson's picture

The price of gold is usually inversely correlated to yields.  If yields go down, we should expect the price of gold to increase (the opportunity cost of holding gold becomes smaller)/

Tue, 06/04/2013 - 13:46 | 3624040 Herd Redirectio...
Herd Redirection Committee's picture

Big Brother is selling gold and buying treasuries.  He wants you and me to mimic him.  Get in on the action.   Be a part of the 'winning team'.

I hope they let me know how it turns out for them.

Tue, 06/04/2013 - 10:57 | 3623499 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

The taper going on right now is down to levels that he actually says they are buying aka stealth tapering since when you add up all their purchases it has been above the 85 billion a month they say they are buying. Do the math........

Tue, 06/04/2013 - 10:59 | 3623506 LawsofPhysics
LawsofPhysics's picture

How does one "do the math" if the numbers are bogus to begin with?

Tue, 06/04/2013 - 11:05 | 3623530 dontgoforit
dontgoforit's picture

Well, you take a couple of them thar fuzzy caterpillars and yeh dip 'em in paint, and then ya' turn 'em loose on a blank sheet of paper.  If the one in red makes it to the bottom first, you goin' ta' hell.  If the one dipped in blue makes it first, ya' goin' to hell.  There ya' go - we're goin' to hell.  Simple math, you know, first grade stuff an' all.

Tue, 06/04/2013 - 11:21 | 3623564 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Yes and distorted logic that allows you prove that 7 x 13 = 28 ala Abbott and Costello.

One of the funniest bits they ever did.

Same logic applies to 25 divided 5 equals 14

Tue, 06/04/2013 - 11:12 | 3623548 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Just add up the purchases for each auction on the bond market alone, let alone the MBS. Bogus or not if bogus you'd at least think they would massage the numbers to reflect the narrative they are passing off as reality.

Tue, 06/04/2013 - 11:19 | 3623582 LMAO
LMAO's picture



The Feds' business is not to Taper but  to Tamper

Tue, 06/04/2013 - 11:00 | 3623503 Dr. Engali
Dr. Engali's picture

By the time September rolls around the fed will be talking about  the need to protect their holdings from interest rate risk and diversifying their portfolio  into soveriegn debt.

Tue, 06/04/2013 - 11:02 | 3623519 ArkansasAngie
ArkansasAngie's picture

They are already there.  The money printing isn't going here.  I(t's landing in Europe's banks who are buying soveriegn debt. 

Tue, 06/04/2013 - 11:23 | 3623533 Dr. Engali
Dr. Engali's picture

Yes the foriegn banks are buying soverign debt thereby making the fed an indirect holder, but the next move will be for the fed to take it directly onto it's balance sheet.


Central banks balance sheets.

Tue, 06/04/2013 - 11:28 | 3623605 kaiserhoff
kaiserhoff's picture

Wouldn't it be nice if we had an audit?

Remember those?


Tue, 06/04/2013 - 11:46 | 3623650 Winston Churchill
Winston Churchill's picture

What on earth so you think an audit would achieve when you can mark assets to phantasy

'modelled' values.

5 years and how many trillions later  TBTF are still bankrupt,and now are the sovereigns as


Just awaiting the coup de grace,which seems close.just one black signet away.

Tue, 06/04/2013 - 13:51 | 3624053 Herd Redirectio...
Herd Redirection Committee's picture

Well, that is assuming the accountant is allowed to question the valuation model and ask for other, you know, standards, to be used.

Like Mark to Market, Cost Basis, Replacement Cost...  What is the market value of MBS?  US Treasuries?  What did the banks pay for them? 

Tue, 06/04/2013 - 11:07 | 3623537 dontgoforit
dontgoforit's picture

Ok, good point.  So, if the dollar is still solid and they're all winding up in foreign banks, does that mean we plan to 'buy' the world with them?  Why not, then?  We can be the United Countries of America.  UCA all the way; UCA all the way.  Kind of like, 'Hell no, we won't go' from the '70's.

Tue, 06/04/2013 - 11:13 | 3623556 LawsofPhysics
LawsofPhysics's picture

Unfortunately, the debt-servicing is a real problem.  Unless of course, the entity that owed that debt no longer existed.  See what happend to the Soviet Union in the 80's and 90's for reference.  Post collapse, the Soviet Union died, and so did all the debt.  Why won't the collapse of the Corporation of the Unitied States be any different?  Everyone ran away from the ruble then and everyone is running away from the dollar now.

Tue, 06/04/2013 - 13:53 | 3624060 Herd Redirectio...
Herd Redirection Committee's picture

I love reading about the collapse of the Ottoman Empire, the end of Rome, the fall of the Soviet Union...  You feel like you are reading the newspapers from the future  :)

Tue, 06/04/2013 - 11:09 | 3623541 LawsofPhysics
LawsofPhysics's picture

So, just like what was occuring before the great depression and WWII.  Awesome.

Tue, 06/04/2013 - 11:14 | 3623559 the grateful un...
the grateful unemployed's picture

my bet is Japanese bonds, the carry trade is on

Tue, 06/04/2013 - 10:59 | 3623505 101 years and c...
101 years and counting's picture

dont worry, once stocks plunge because of the taper, the Fed will not only go back to $85, they'll make up for the lost reach arounds so they do hit the $5 trillion, 30% of GDP by end of 2014.  Cheers, mates.

Tue, 06/04/2013 - 11:11 | 3623550 dontgoforit
dontgoforit's picture

Who really knows how much they're pumping?  They probably have six sets of books, "The Book of Ben" - that's the really bogus one, the one shown to the public.  "The Book of Alan" - older version, still looks good in fine condition, no broken spine or torn pages.  And of course, "The Book of Paul" - the one that opened the door to the current editions.  Wonderful stuff if you're into money-fiction.  They could be buying $85bn/month or $585bn/month.  Who knows?

Tue, 06/04/2013 - 13:54 | 3624064 Herd Redirectio...
Herd Redirection Committee's picture

Volker or Warburg?

Tue, 06/04/2013 - 11:01 | 3623510 Truther
Truther's picture

It's WAR BITCHEZ......Fuck you Bernancke.


Tue, 06/04/2013 - 11:04 | 3623512 Headbanger
Headbanger's picture

I think we will get a massive fusion reaction from the implosion caused by the Fed unwinding its balance sheet.

And is that... r r r r r RED I see now!!??     

Tue, 06/04/2013 - 11:58 | 3623675 RSloane
RSloane's picture

Yes it was, for a few seconds.

Tue, 06/04/2013 - 11:03 | 3623522 JJ McApe
JJ McApe's picture

People, I would trust a FED banker about as far as a 10 foot pole. They have done nothing but promote risk, instability and speculation. They should be promoting savings and stability rather than debt but they are the great illusionists of the world. They make everyone think they are promoting growth while promoting the seeds of destruction.

Tue, 06/04/2013 - 11:23 | 3623592 rqb1
rqb1's picture

They are just saving their shareholders.

Tue, 06/04/2013 - 11:04 | 3623527 kridkrid
kridkrid's picture

"Taper" and "Austerity" are similar lies... misnomers at best... but really they are lies.

Tue, 06/04/2013 - 11:05 | 3623529 chistletoe
chistletoe's picture





its not about the holdings.

its about the flow


you know this already.  but if you have trouble conceptualizing, test out the reaction of one of your heroin addict buddies to the proposition that he cut back his fixes by 25% .....

Tue, 06/04/2013 - 11:25 | 3623596 Professorlocknload
Professorlocknload's picture

Yes, Tyler.

   And now that the authorities have nationalized the US Economy under the auspices of saving it, they own it. It remains to be seen if they can hold it as long as the Soviets did.

  Guess we'll now see how the grand National Socialism experiment will work out. For those less fortunate than the ruling elite, that is.

Tue, 06/04/2013 - 11:42 | 3623601 Ham-bone
Ham-bone's picture

Given the inflation of financial assets...$85 billion/mo has a lessening impact.  To maintain market impact in a rapidly rising landscape, the "flow" must increase or the leverage must increase to maintain the effect.  Given leverage at all time highs, seems neccessary for the Fed to turn the tap a little further to maintain the "efficacy of it's wealth effect mandate".

Given the one way market, the $85b/mo QE is naturally tapering in effectiveness anyway...actually tapering to $65b/mo would be a double whammy to the Fed's Russell 2000 mandate.  Not to mention the move of the 30yr mortgage rates from 3.5% to 4.1% in the last month will really start to push home prices down correspondingly...a Fed taper and rates would move to astronomical 30yr fix of 4.5% or god forbid 5%...but the corresponding price reductions would be really significant even though rates are still historically really low and housing bubble 2.0 would go pop.  Anybody believe Mr. Ben gonna let that happen while he still has ink catredges???

Tue, 06/04/2013 - 12:02 | 3623690 the grateful un...
the grateful unemployed's picture

their purpose is not to make a profit, but to cause economic growth. the unintended purpose of saddling government with debt is to sell it, privatize most of it. this is how wall street works? want to sell a company you put up a sustainable business model, [using a lot of debt] and let the takeover guy parse off the working business from the debt. (repackage that debt, probably with government guarantees) in a few years there will be very little government and very little government debt, but it will all work pretty much the same way. housing is the sacred cow, someday there will be two garages for every car, and you won't have obamacare, you'll have general motors health care. its inevitable, they bankrupted the government to save corporate america, how did you think it was supposed to turn out?

Tue, 06/04/2013 - 12:22 | 3623743 Ham-bone
Ham-bone's picture

point is the housing market only has one lever left to manipulate prices higher...that is ever lower mortgage rates (incomes stagnate, leverage maxed, household formation slow).  Housing is the holy grail of money creation via mortgage equity withdrawal and/or re-fi's.  But if rates stall here or rise further the re-fi market is done and housing prices will be dropping...naturally it would seem a 30yr mortgage can't get much below 3% (1% 10yr + 2% for lenders) maybe hiting 3.5% was the end and we are well and truly on our way to a collapse as housing will only get worse from here.  When the prime component in an exponential system can go no further...that is it.  The end.

Tue, 06/04/2013 - 12:40 | 3623802 the grateful un...
the grateful unemployed's picture

a house is no more a place to live than a car is a thing to get you from one place to another. (cars grow obsolete, so do homes) today  car leases are all the thing, in a few years home leases will be the thing. wall street calls it value added. you're not drinking carbonated sugar water you're drinking coke or pepsi. and although i agree that popular culture and economics are moving away from branding the wall street, federal reserve banking system will be there a lot longer, only because it supports the political encumbency, and our concept of the union lincoln fought that war over.

Tue, 06/04/2013 - 11:44 | 3623648 the grateful un...
the grateful unemployed's picture

all this flow talk is kinda geeky. but when economists search for real world analogies about money flow they often divide themselves between those who think money flows like water, and those who think it flows like electricity. those who think water, are always worried about the feds ability to mop up excess liquidity, those who think electricity know there is nothing to mop up, you are tuning the circuit. but if we believe in fungible assets, trading bonds for stocks, ( by backstopping the stock market and the risk premium between stocks and bonds [they used to talk about this a lot] investors who used to buy the long bond at 5% are now buying stocks for the same reason. bonds in turn become exactly what they know they are currency, and the method by which government funds its deficits by printing money. the beauty?? of this system is that printing money is inflationary, but stocks will always build that into their valuations, like bonds with a floating rate. bob prechter calls it the all in one market, all paper assets are the same. for the question of flow, would you rather have a lot of stodgy 50 year olds bonds which don't trade, or stock XYZ, where the bid can be manipulated 1000 times a second to produce any value you desire, [the Plunge Protection Team is dead, long live the PPT]  most of this bond manipulation is just footnotes in the text. its what printing money used to mean.


Tue, 06/04/2013 - 12:46 | 3623817 gatorengineer
gatorengineer's picture

The interesting thing is with the bonds getting spanked the interest rates on mortgages havent seen a similar half point rise... Thoughts?

Tue, 06/04/2013 - 11:07 | 3623536 OpTwoMistic
OpTwoMistic's picture

Seems the EU markets have ignored todays pump and BS.

Tue, 06/04/2013 - 11:10 | 3623547 Hal n back
Hal n back's picture

need alternatives  if taper causes problems and they have to print even more or taper does not cause problems and they add to taper


with 10 rate up 1bps today this should be fun to watch if one were sitting idle on sidelines , but we all have too much skin in this game to see this as a spectator sport.


Well, us maybe--the 99% of population does not give a hoot.




Tue, 06/04/2013 - 11:14 | 3623561 dontgoforit
dontgoforit's picture

Yeah - that old 99% who don't give a hoot.  The 'gimme dat free cell phone' group.  Gonna be fun when their stuff runs out - they'll be trying to burn the place down.  Hollow pts anyone?

Tue, 06/04/2013 - 11:16 | 3623567 Toolshed
Toolshed's picture

Are you claiming to be a member of the much hated 1%? I am rather certain that the majority of ZH'ers (myself included) are members in good standing of the 99% you poke fun at. I can't wait to see what you 1%'ers taste like. Tender and oh so sweet I'll bet! Mmmmmmmmmm.........1%'er, it's what's for dinner. Yummy.

Tue, 06/04/2013 - 11:13 | 3623557 alangreedspank
alangreedspank's picture

The punchbowl is ZIRP, not QE. The "taper" is like the "sequester".

Tue, 06/04/2013 - 11:36 | 3623627 Proofreder
Proofreder's picture

Ah ha!

Figured out your avatar

Big floppy ears, swinging dick



Tue, 06/04/2013 - 11:17 | 3623569 astoriajoe
astoriajoe's picture

Road to roota?

Fade stocks.

buy Gold/Silver.

Start over.

Tue, 06/04/2013 - 11:19 | 3623581 Hal n back
Hal n back's picture

one problem is the rates-mortgages-if anybody was really thinking of buying--or the hedgies who are using cheap money to buy property leveraged, or of course the banks who loaded up on a no brainer low zirp to buy 10 year treasuries paying 1.7% and now are underwater on that trade.


Of course, the taxpayer will bail out the banks.


Next up wil be the pension plans which will take losses on their fixed income higher risk portfolios

but keep assumptions high.

one day soon they wil run out of liquidity and have to sell somehting at surprise losses.



Tue, 06/04/2013 - 11:20 | 3623583 monopoly
monopoly's picture

They will not taper or slow down. No way. All bullshit. How can humans be so stupid as to believe the vile that emanates from Fed mouths. There is no economy without printing. Done.

Tue, 06/04/2013 - 11:35 | 3623624 kridkrid
kridkrid's picture

They aren't stupid in the traditional sense of the word. They could understand if they were to choose to understand.

Normalcy bias, conditioning, cognitive dissonance and some stupidity.

Tue, 06/04/2013 - 12:56 | 3623738 OneTinSoldier66
OneTinSoldier66's picture



Should I ever attribute to stupidity that which can be atrributed to malice?


When does greed reach the point that it is blantantly obvious that it is no longer stupidity?


Just food for thought, hopefully.

Tue, 06/04/2013 - 11:21 | 3623585 Stuck on Zero
Stuck on Zero's picture

Ever seen a junkie taper off his habit?


Tue, 06/04/2013 - 11:57 | 3623674 marathonman
marathonman's picture

You know what's really funny?  I'm reading The Big Short by Micheal Lewis about how the big houses were stuffing sub-prime mortgages into Fannie and Freddie and creating the most ridiculous 'securities' out of the crappiest BBB rated sub-prime bombs that they glommed together and got the ratings agency to pass off as AAA.  Then AIG blew up when stuck with the bill for insuring those loans through their credit default swap 'insurance'.  So the Fed now owns all those crappy bonds and has to keep buying off all the other crap from these banksters.  And none of them ever went to jail or lost much of the fortune they made in outright fraud.  I mean from the 10,000 foot view its just amazingly funny.  What a bunch of suckers we are.

Tue, 06/04/2013 - 14:17 | 3624115 Herd Redirectio...
Herd Redirection Committee's picture

Behind every great fortune lies a great _____.  - ***********

Same as it ever was.  The slave trade, the opium wars, financing both sides in wars, prohibition, the war on drugs, the war on terror... Who was making extraordinary profit margins? And they say "Crime doesn't pay". Anyone still believe that?

Tue, 06/04/2013 - 12:33 | 3623782 Sigep0612
Sigep0612's picture

Another useless article.  The country has $17T in debt.  Com'on.   This article is written as if we are teetering on the brink of solvency or total collapse?   Reality is we're in a shitload of trouble!!!  

So how about a few ideas on how to resolve the problems that Bernake and Washington are incapable of fixing.  How can we as a nation rally around a few of those ideas?   If we are just waiting for the lights to go out...why wait...just flip the switch!!!  

Please...don't suggest we need a different political party in DC.   Geez....

And my wife wonders why I drink.....

Tue, 06/04/2013 - 14:18 | 3624121 Herd Redirectio...
Herd Redirection Committee's picture

The country is fine, the currency is fucked.

Deal with that on an individual basis best you can.  Storable food, gold, silver, lead, are good starts.

Tue, 06/04/2013 - 15:41 | 3624366 Albertarocks
Albertarocks's picture

In all due respect, the country 'is not' fine if the currency is fucked.  All hell will break loose when the world suddenly realizes and accepts that the currency is fucked.  Otherwise we wouldn't have to be considering the necessities you listed.  A list which I agree with by the way.

Tue, 06/04/2013 - 13:07 | 3623893 Guy F.
Guy F.'s picture

novice investor/fed-watcher here. does the 'total holdings' graph include or neglect the securities that naturally expire each month?

Tue, 06/04/2013 - 15:58 | 3624429 WallowaMountainMan
WallowaMountainMan's picture

the taper will have no effect on the real economy. only the economy of the 1%. they'll get richer.

how do you know?

what effect was there when the gushing qe's went spaying around? the rich got richer...

un-spraying will be nothing more than "-" sign to the algos.

and the 1% will make as much on the way down as they did on the way up.

Tue, 06/04/2013 - 18:28 | 3624749 Milestones
Milestones's picture

No on the way down you'll be looking at 6 feet down          Milestones

Mon, 06/17/2013 - 14:57 | 3665581 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

The WSJ giveth and the FT taketh away ...

As Hilsenrath said a couple of weeks ago ... the FED wants to introduce some UNCERTAINTY back into Mkts!

"The Fed effectively wants the markets to experience the same uncertainty it experiences about policy and the economy when officials walk into a meeting, and it wants to condition the market to avoid jumping to conclusions about what it will do next. As officials keep saying, it will depend on the economy."

How's that workin out for you Benjy?

Mon, 06/17/2013 - 16:16 | 3665815 q99x2
q99x2's picture

FEDs going to shit in its hat and pull it over its ears too.

They'll be going vertical black line like the end of 2008 before you can say, End the FED."

They are in the process of taking the wealth out of their member banks and concentrating it in the cartel familie's hands. Also they push lots of what is being confiscated into the military industrial complex.

Gots to get the Qatar pipeline to Europe in before the Fall 2014.

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