This page has been archived and commenting is disabled.

Charles Gave Warns: "Should The Fed Lose Control, The Downside Move In Markets May Be Terrifying"

Tyler Durden's picture


Charles Gave of GaveKal has a fascinating summary of where the nearly five-year long experiment in central-planning has taken the US, and by implication, global economy. To wit:

What kind of failure?


By propping up asset markets, the Fed has created an illusion that wealth is being created. The next step, according to Bernanke’s plan,  should be for growth to follow. In fact, there is no reason why the rise in prices of financial assets should lead to actual investments or a rise in the median income. So far, it has not. There has been no real increase in the private sector propensity to borrow, and the danger may be that any further public sector borrowing will hasten the decline because of our “permanent asset hypothesis”.


This means that, should the Fed lose control of asset prices (is this what is now happening in Japan?), then the game will be up and the downside move in markets may well be terrifying. Most at risk would be low and medium quality credits, banks, commodity producers, and any companies with negative cash-flow.


It is obvious, then, that if Bernanke’s experiment fails, it will be a profoundly deflationary failure. The best hedges in a deflation and in financial panic are US long bonds and the US dollar. Renminbi bonds seem also to be developing safe-harbor status. In fact, we found it interesting how, in May, every bond market around the world sold-off, except for the RMB bond market.

We agree completely with Gave on his proposed "permanent asset hypothesis" (as explained further below) which is a simple derivation of what happens in a world in which the Keynesian multipler is now negative. It is what we have been saying for over a year, namely that in an environment of permanent low interest rates there is no impetus on behalf of the private sector to spend for growth, either in the form of capital spending or the hiring of incremental workers. The only net money exchange is the issuance of debt to fund dividends and stock buybacks: or simple EPS-boosting balance sheet arbitrage as shown most recently here

We also obviously agree that if and when Bernanke finally loses control, there are simply no words to describe what would ensue as a situation like that - one where not just the Fed, but every single central bank has gone all in on reflating the world's biggest asset bubble - has never been encountered before.

However, we disagree that the final outcome will be a "profoundly deflationary failure." This will be an interim step. Recall that the Fed and its private bank conspirators simply can not accept deflation as a resolution. Which means that faced with the specter of full on deflationary collapse, Ben Bernanke will simply resolve to doing what he has hinted, if jokingly, in the past: he will literally paradrop money out of helicopters. Maybe not in that fashion, but he will find a way to bypass the banking sector as a monetary transmission mechanism, and bring crisp, fresh, just off the press banknotes into the hands of consumers in order to finally get the much needed inflationary spark as too much cash chases after too few products and services.

And remember: hyperinflation is and always has been a phenomenon concurrent with the full loss of faith in a given currency, be it reserve or not. It may emerge for economic, monetary or purely political reasons. It is also why the most valuable commodity a central bank has is credibility, and faith in fiat, or fiath as we like to call it. Furthermore for those who say that the Fed has a reserve currency premium, we like to show one of our favorite charts: reserve currencies through time...

... as well as our two favorite axioms: Nothing is forever, and this time is never different.

* * *

But those are all thought experiments for the future: a future, in which if we may remind readers, not one nation in history has collapsed due to hyperdeflation...

As for the present, and going back to Gave's wonderful analysis of the can of worms Bernanke's tinkering has unleashed, here is the balance of Charles Gave's "More On the Deflationary Bust Risk" just released paper highlights:

More On the Deflationary Bust Risk

This is what I will, for the purposes of this paper, call my “Keynesian multiplier” - it is simply the arithmetical difference between growth in  wealth and growth in public debt—on which I compute the seven-year rate of change.

If the multiplier is expanding, this tells us that an increased level of debt should lead to a greater increase in the household net worth over seven years. And vice-versa. This allows us to roughly evaluate how many dollars of private wealth are created by one more dollar of public debt.

Let us look now at the relationships between our Keynesian multiplier and certain economic variables. The chart below shows that the marginal efficiency of public debt, at least in the US (public spending in emerging markets from a low base usually improves productivity) has been declining structurally since 1981. And it seems that this marginal efficiency has now reached a negative level.

One initial indication that the Keynesian multiplier was now shrinking was the US boom that followed the Clinton/Gingrich balanced budgets and era of government deleveraging between 1997 and 2000. A reality which brings us back to one of the greatest debates between Keynesians and Austrians as to whether Milton Friedman’s “permanent income hypothesis” makes sense, or not; i.e., are economic agents rational enough that when they see an increase in government debt, they will increase their savings, safe in the knowledge that they will have to pay for the debt increase down the road? Or whether economic agents are just too shortterm focused to project themselves that far?

Modifying the above idea somewhat, we have, in the past, come up with a “Permanent Asset Hypothesis” which probably best applies in asset-rich, ageing countries. Basically, as interest rates move ever lower, retirees, pension funds and insurance companies needing to a certain fixed amount of return are forced to buy ever more fixed income. So low rates and rising public debt issuance, instead of encouraging more risk and renewing animal spirits, instead pushes investors feeling ever poorer into increasingly defensive, and yield generating, assets.

In essence, the perception that assets will not generate enough income going forward encourages the average saver to increase his savings, which is the precise opposite of the stated goal. This law of unintended consequences may help explain why the private business sector’s demand for credit remains limp, even though money is being lent for free.

Of course, credit demand may also be weak because there is no immediate reason to expect the rise we have seen in US (and global) financial assets should help boost median incomes. So far it has not:

And in a world where it does not pay to borrow, one should expect a structural decline in the velocity of money to take place. Which is what the next chart is indicating:

A decline in the velocity of money is equivalent to less money circulating in the system, and should lead to a structural decline in the inflation rate:

With the Keynesian multiplier now negative, one would expect very low growth in volumes and nominal GDP. And this, of course, is what we are seeing. Despite the massive stimulus, and the improvement in the US trade balance (thanks to the energy revolution and the US manufacturing renaissance), the US economic expansion remains rather unimpressive. The recent moves in bond yields would seem to suggest that markets are expecting that the economic lift-off is finally about to arrive; either that or that Ben Bernanke will soon throw in the towel and start normalizing monetary policies. Given that the odds of the latter are lower than a snowball in hell (from afar, it usually feels as if the Fed chief has made his motto that of George Bidault’s: “I don’t know where we are going, but we will get there without detours”), it is more likely to be the former than the latter. The problem, for me, is that I struggle to believe that we are on the verge of a new global economic expansion.

Instead, if structural growth is to now be dragged lower by the fact that the Keynesian multiplier has gone negative, and with governments continuing to spend like sailors on shore leave in Hong Kong despite the drag on productivity and structural growth, then we cannot really expect long rates to move decisively higher.

* * *

Summarizing the above: if Bernanke is honestly curious why the economy remains broken, and none of his "central" tinkering has done much to boost the Keynesian multiplier and with it any prospects for real economic growth, he suggest he take a long, hard look in the mirror.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 06/10/2013 - 14:29 | 3642992 fourchan
fourchan's picture

all paper currencies seek their intrensic value, which is zero.

Mon, 06/10/2013 - 14:34 | 3643025 maskone909
maskone909's picture

came here to stack some gold and drink some beer.  welp, im all outta beer.

Mon, 06/10/2013 - 14:53 | 3643110 fonestar
fonestar's picture

But.. but... the deflation all around us!  Just ask anyone who eats food or drives vehicles!

Mon, 06/10/2013 - 14:57 | 3643122 Oracle of Kypseli
Oracle of Kypseli's picture

The most eficient markets are the gray and the black, because they are based on need and the exchange medium is based on their choice.

Everything else is manipulated.


Mon, 06/10/2013 - 15:00 | 3643143 LawsofPhysics
LawsofPhysics's picture


I remain long those markets, sharecriopping, and security service companies...

Mon, 06/10/2013 - 15:21 | 3643188 TruthInSunshine
TruthInSunshine's picture

Japan has stated, just now (as crossing the wires), that it's about to go full-er retard on the monetary "experimentation" front.


Godspeed, Abenomics!

May the wind always be at your back, and the sun always upon your face, and may the wings of destiny carry you aloft to dance with the stars.

There's never been a more unsinkable ship than S.S. Krugman.

That MOAR DIGGING thing you've been doing for 20+ years might ultimately work to effectuate real, positive economic growth if you just do MOAR of it harder.

Mon, 06/10/2013 - 15:24 | 3643255 negative rates
negative rates's picture

Traders beware!

Mon, 06/10/2013 - 15:38 | 3643311 Pinto Currency
Pinto Currency's picture


Losing control of the bond market and financial assets will not lead to secular strengthening of the USD.

Mon, 06/10/2013 - 15:54 | 3643368 Temporalist
Temporalist's picture

Market moves are "terrifying" only to participants in a rigged casino with barred exits.

Mon, 06/10/2013 - 16:13 | 3643448 Herd Redirectio...
Herd Redirection Committee's picture

The USD is a bigger bubble than even Treasuries or the stock market.

If deflation hits, even briefly, it means that the USD bubble is being inflated one last time.  That will be your last chance to spend USD, before things go Ka-Poom (although theoretically things will have already gone Ka, so only Poom would be left).

Mon, 06/10/2013 - 16:50 | 3643584 I am more equal...
I am more equal than others's picture

I like a good horror movie.

Terrify me.  I mean, really terrify me.

Bring it on like donkey kong.

It that all this bitch gots?

Look, I'm poking a bear with a stick...

I'm running in the dark with scissors....

I'll even vote demoncrap...

Mon, 06/10/2013 - 18:14 | 3643842 TruthInSunshine
TruthInSunshine's picture

MOAR Debt and higher inflation will surely be the spark to prompt higher levels of domestic consumption in Japan.


It will be epic to see the increasingly volatile trials and tribulations of the unwind of the yen carry trade, and then the end of it.

Mon, 06/10/2013 - 16:16 | 3643460 He_Who Carried ...
He_Who Carried The Sun's picture

and you suggest the fed will be sleeping
on that very day, doing nothing, right...?


Mon, 06/10/2013 - 16:39 | 3643545 negative rates
negative rates's picture

No, he could be waiting for a call with the painters brush for all I know.

Mon, 06/10/2013 - 17:57 | 3643773 JimBowie1958
JimBowie1958's picture

As I understand the risk, in a rough draft way, the Fed is buying assets at face value despite their inability to be sold on the market (due to no equation to make said assessment). But the Fed persists, and the banks just buy more and more new securities with the cash the Feds give away and also buy other financial assets instead of investing it into growing the real economy. Over time they amass quite a fortune.

Then some triggering event, like a stock market crumbling down over a period of weeks, drives the banks to sell, sell, sell all the financials they have and buy physical assets of various kinds; art, PMs, real estate, industrial plants, etc. This sudden rush to convert their vast sums into tangible assets will quite likely spur a perception that the USD is not a solid storage of wealth, very understandably if this scenario takes place. This sell Tsunami is not a thing anyone will be able to predict to the exact day any more than a stock market correction can be predicted to the exact day.

So how can the Fed suddenly dry up all that cash that will get poured into the asset markets like a Biblical flood?

I dont see how they can. So after a long period of stagflation, the Fed will be sideswiped by the 'Sell Tsunami' and in all likelihood, caught fatally flat footed. Due to the publics widespread loss of confidence in the USD, we will then get hyperinflation.

Hope that helps.

Mon, 06/10/2013 - 15:29 | 3643276 MillionDollarBogus_
MillionDollarBogus_'s picture

"...The Federal Reserve just released its quarterly Z.1 report – known as the “flow of funds” – which documents changes in U.S. household net worth.

In the first quarter of 2013, household net worth rose $3.003 trillion to a record $70.3 trillion. In the fourth quarter of 2013, household net worth only increased (an upward-revised) $1.397 trillion.

Around $2.3 trillion of the increase in household net worth in Q1 owes to rising asset and real estate prices..."

Bernanke's goal now is to keep the markets propped up.  Sure its an illusion, and he's the guy behind the curtain pulling the levers, but that's his job.

The next step is for consumers to do their part and spend on what they want.


Mon, 06/10/2013 - 15:37 | 3643294 TruthInSunshine
TruthInSunshine's picture

Ben Blows MOAR Bubbles:  A Modern Monetary Lesson Demonstrating The High Recidivism Rate of Fiat Junkies (Newton Press)

By:  Hu Flung Poo, Ph.D.

Mon, 06/10/2013 - 16:06 | 3643417 MillionDollarBogus_
MillionDollarBogus_'s picture

The downside move (stampede for the exits) may look like this;

The bulls are the high frequency traders and the big hedge funds.


Mon, 06/10/2013 - 16:22 | 3643486 Thulsa Doom
Thulsa Doom's picture

Don't be the guy crossing the street who never saw it coming. Ouch!

Mon, 06/10/2013 - 16:35 | 3643535 SILVERGEDDON

Yay consumers - a million years of consumer spending could not dig us out of the pile of shit debt that bankers and politicians have buried American people underneath.

Fucking A, the American Bush way - it is your patriotic duty to mimic the powers that be, go shopping, and max out your credit cards.

Million Dollar Bogus. Apt name for modern day nursery tale consumption. 

Mon, 06/10/2013 - 17:26 | 3643687 disabledvet
disabledvet's picture

while i do agree "the money has already been spent" imagine an economy where we had oil...and oil only. "look at the economy that we would have been missed." i'm not calling trillion dollar deficits that have been sustained (without penalty...but in fact rewarded with lower interest rates) success. i'm just saying...imagine what is suppose to happen in a "normal world" the USA...where the risk in those deficits is IN FACT realized (Venezuela comes to mind...largest oil reserves in the world...which is currently hyperinflating i might add.) In other words THE USA HAS A HIGHLY DIVERSIFIED ECONOMY...which...IN THEORY...means that recovery is still an option. "payment is always a problem" of course in these matters. our current payment method of "stick it to the Fed's and the taxpayers" is pretty ugly to say the least. we're going to need a lot of oil, natural gas, solar cells, Fords, Chevy's, Chrysler's, spaceships, weapon systems, it output? throughput? name it. the term MAXXED OUT does indeed come to mind. yet nay...the answer is NOT in being a mimic...but doing your level best to provide...for yourself of course..and those closest to you as well. No greater truth need be said that "North Dakota's growth trajectory" (current north of 8 percent and sustained for some time now) "will not be sufficient to bail out....Bailout USA." and no, cheating via the media/NSA complex doesn't work either for all you Renminbi lovers out there. interestingly...there is a war going on...but you're gonna need to hire those vets if you want in on that moullah. that's TRILLIONS in largesse. "and those folks are hiring." good people one and all i might add.

Mon, 06/10/2013 - 16:31 | 3643516 SILVERGEDDON

Paper burns.

Paper gets shit upon.

Inflation destroys paper buying power.

Oh, look !

Shiney gold and silver ! 

Worth more now than ever before - in a relative to paper kinda way. 

Mon, 06/10/2013 - 17:34 | 3643708 disabledvet
disabledvet's picture

to ALL paper (even law now it would seem?) i agree. but before we blame "only the banks" for getting us into this mess...let us ask ourSELVES...what were our priorities or goals to begin with? "to get re-elected"? "to have power"? "to rule the world"? those don't sound like Banker objectives to me. there are providers of such things of course...and i hear bankers stand in the way of that more often than not. but are we to BLAME them for this? "what is your gold or silver worth if it is simply taken from you" as the Nazi's did...Mr. Silvergeddon? "not much" you say? Bankers take contract law very seriously i would argue. I would argue STRONGLY that that is a good thing. especially one based on a "Bill of Rights." one of those rights is to PETITION for greivances based on injuries suffered...or endured. "the Government came and stole my silver" comes to mind.

Mon, 06/10/2013 - 15:19 | 3643222 SRSrocco
SRSrocco's picture

It looks like some of the more well known BILLIONAIRES are dumping stocks.  I would imagine we are going to see a huge crash in the broader stock markets here shortly.   Even Warren Buffet is dumping stocks.

Billionaires Dumping Stocks, Economist Knows Why

Mon, 06/10/2013 - 15:50 | 3643357 Herd Redirectio...
Herd Redirection Committee's picture

Distribution, BITCHEZ.

Mon, 06/10/2013 - 15:57 | 3643382 kchrisc
kchrisc's picture

Didn't all the big connected players and insiders get warnings and dump their shares before the '29 crash?

Mon, 06/10/2013 - 17:08 | 3643637 caconhma
caconhma's picture

Thanks to FED, government bureaucrats became the highest paid employees. After all, they create nothing of values. However, they behave as some kind of an occupation administration similar to one we have in Afghanistan.

As soon as FED's QE programs are scaled down, US financial markets will lose at least $2.5T in markets values. As for insurance companies and municipal bonds, they will become totally insolvent in a matter of weeks.


Mon, 06/10/2013 - 15:21 | 3643234 Go Tribe
Go Tribe's picture

Charles Gave? GavKal?

Mon, 06/10/2013 - 15:54 | 3643372 gjp
gjp's picture

Total chump.  He may be saying the right thing now, but he was singing from the NWO hymnbook for far too long to take seriously.

Mon, 06/10/2013 - 15:42 | 3643327 Midasking
Midasking's picture

which means the upside move in the markets is just as terrifying! Got Gold?

Mon, 06/10/2013 - 16:05 | 3643387 YC2
YC2's picture

More first person singular Tylers? It's just not as cool with the "I"s. all it would take is a quick find/replace.

Mon, 06/10/2013 - 16:48 | 3643579 SILVERGEDDON

Reggie Middleton in disguise - great chart porn !

Where is the loincloth spear beefcake photo finish, though ?

Mon, 06/10/2013 - 19:18 | 3644095 Chuck Walla
Chuck Walla's picture


"Paper money eventually returns to its intrinsic value: zero."

-- Voltaire

Mon, 06/10/2013 - 14:30 | 3643000 LawsofPhysics
LawsofPhysics's picture

The only way the Fed (a private banking cartel - backed by U.S. and NATO forces) would lose control is if the dollar is no longer accepted.  It really is that simple.  Oh wait...

Mon, 06/10/2013 - 14:38 | 3643046 PiltdownMan
PiltdownMan's picture

IF they lose control?????????

Look at TIPs, the yield curve, t rates. MBS prices. It IS getting out of control.

Mon, 06/10/2013 - 14:48 | 3643079 LawsofPhysics
LawsofPhysics's picture

That was sarcasm by the way.  You are an optimist, but I tend to agree.  They are losing control.  For the record, I do not view the decentralization of power and control or economic activity as a bad thing.

Mon, 06/10/2013 - 15:29 | 3643273 Citxmech
Citxmech's picture

The impact on the "just-in-time" delivery network (food, fuel, medicines, etc.) could be extremely unsettling, however.

Mon, 06/10/2013 - 14:31 | 3643006 RafterManFMJ
RafterManFMJ's picture

But but but...this time, it's different!

Mon, 06/10/2013 - 14:39 | 3643052 SimMaker
SimMaker's picture

Yeah, it is different this time. Nobody had Nukes in the 1920s-30s....

Mon, 06/10/2013 - 14:46 | 3643081 francis_sawyer
francis_sawyer's picture

Was it over when the Iranians nuked Hiroshima?

Mon, 06/10/2013 - 14:56 | 3643119 Bay of Pigs
Bay of Pigs's picture

Or when the Germans bombed Pearl Harbor?

(Sadly, most Americans don't know that Hawaii or Alaska were even states then).

Mon, 06/10/2013 - 15:09 | 3643180 Hippocratic Oaf
Hippocratic Oaf's picture

Or worse, not knowing you're reference to Animal House.

All is well, all is well!!!!!!!!!!


Mon, 06/10/2013 - 15:11 | 3643182 francis_sawyer
francis_sawyer's picture

Hawaii shouldn't even be a state... The bullshit that surrounded Hawaii becoming a state belongs in the same category as Israel...

Mon, 06/10/2013 - 15:14 | 3643190 SpiceMustFlow
SpiceMustFlow's picture

We took it with what...200 marines?

Mon, 06/10/2013 - 15:22 | 3643242 longwind
longwind's picture

Nope, 100 missionaries.

Mon, 06/10/2013 - 15:13 | 3643187 SpiceMustFlow
SpiceMustFlow's picture

Sadly most Americans still believe that Alaska lies of the coast of SoCal, a tad farther West than Hawaii

Mon, 06/10/2013 - 15:15 | 3643201 g'kar
g'kar's picture

Bluto: What? Over? Did you say "over"? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!

Mon, 06/10/2013 - 20:48 | 3644376 RafterManFMJ
RafterManFMJ's picture

4/3rds of Amerikans know that.

Mon, 06/10/2013 - 14:59 | 3643135 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Shia's can not do shit. Just ask a Sunni.

Mon, 06/10/2013 - 15:09 | 3643181 bank guy in Brussels
bank guy in Brussels's picture

Sunni Muslims often quite admire the largely Shia Hezbollah of Lebanon led by Hassan Nasrallah

Those Shia fighters defeated Israel in the recent war, to the great joy of most of the Muslim world, which is predominantly Sunni, but appreciates a fellow Muslim who can defeat the Zionists

The predominantly Shia Hezbollah are one of the most impressive fighting groups in the world, given the resources they have ... on the level of the Vietnamese under General Giap who defeated the Americans

And now, Hezbollah are helping Syria defeat the US-Nato-Saudi-Qatar backed extremist groups from 30 nations that pose as the 'rebels' in Syria

Hezbollah is so admired that Sunni parents even name their children after Hassan Nasrallah


Mon, 06/10/2013 - 18:05 | 3643812 SeattleBruce
SeattleBruce's picture

"but appreciates a fellow Muslim who can defeat the Zionists...Hezbollah is so admired..." - 'fellow' Muslim.  Some of the only fellowship that Shi'ites and Sunnis have is at the end of a gun or knife.  The Iran-Iraq war (1980 - 1988) featured this for sure - to the tune of a half million dead.  The flaming up of the Shi'ite/Sunni conflict has caused no end of grief for current Iraqis, even well after the US pullout.  That's true yet again in Syria, although it's like a blood bathed puppet show there with the US, Russia, et al, all weighing in. 

Admired, appreciated - for brutal fighting ability?  Now there's the basis of a great society!  Just also ask Americans, Germans, French, Chinese, Russians and the British how raw militarism of the past 400 years has affected the building up of society...perhaps since the Shi'ites are the minority Islamic branch, they feel they have to fight brutally just to survive, and be "admired" by the majority.  Perhaps the militarists the world over follow the same drummer in an attempt to best each other in who can be most cunning and brutal in their killing.  It's no way to build a lasting society.

Mon, 06/10/2013 - 17:45 | 3643736 MeelionDollerBogus
MeelionDollerBogus's picture

LOL. It's good to get comfortable with our newly re-written history well in advance of the rush :D

Mon, 06/10/2013 - 14:33 | 3643012 Ancona
Ancona's picture

I'm pretty sure that there's no "if" about it anymore. The "when" is what we need to prepare for. As for the markets, they will cease to exist when this fucker burns. The swaps alone are able to take apart any notion of a market and wipe out every single bank.

Mon, 06/10/2013 - 14:34 | 3643023 The Shootist
The Shootist's picture

Without tyranny, these market shams would have ceased to exist long ago.

Mon, 06/10/2013 - 15:20 | 3643233 Hippocratic Oaf
Hippocratic Oaf's picture

'The swaps alone are able to take apart any notion of a market and wipe out every single bank.'


Let's not forget mark-to-market..........which no longer exists, obviously.

Mon, 06/10/2013 - 14:33 | 3643015 robnume
robnume's picture

Then we could have a real free market? Fat fuckin' chance!

Mon, 06/10/2013 - 14:33 | 3643017 venturen
venturen's picture

how come all the chart titled Keynesian....go down? 

Mon, 06/10/2013 - 14:34 | 3643020 orangegeek
orangegeek's picture

The Fed will keep spending to move the markets higher until there's two traders left - GS and JPM.


Above all else, the government must be in control, no matter how fucking stupid things get.

Mon, 06/10/2013 - 14:37 | 3643040 Being Free
Being Free's picture

edit - delete

Mon, 06/10/2013 - 14:37 | 3643041 lolmao500
lolmao500's picture

Should lose control? Lulz.

Mon, 06/10/2013 - 14:37 | 3643042 Cursive
Cursive's picture

Terrifying?  Has this guy seen pictures of Greece?  Looked at youth employment in the EU and US?  Been to a homeless shelter lately?  Has he visited Detroit?  Been to a local Salvation Army?  What's terrifying that we are letting a cabal of politician/bankers/rent seekers suck the life blood from our economy.  It helps that they have the full weight and force of the US military at their command.

Mon, 06/10/2013 - 14:38 | 3643043 machineh
machineh's picture

Something is wrong with the chart labeled 'Keynesian multiplier and the US long term growth rate.'

7-year nominal GDP growth has been running at around 3.5% annually, not one percent.

Mon, 06/10/2013 - 15:27 | 3643268 Winston Churchill
Winston Churchill's picture

Really ?

You may want to visit and get the real figures.We haven't even got back to

the GDP in 2007,a fact confirmed by the ceridian index, and gas consumption.

Lay off the hopium.Everything from TPB is now a default lie.Everything.

Mon, 06/10/2013 - 14:38 | 3643045 PaperBear
PaperBear's picture

It is only a matter of time before the non-federal non-reserve loses control.

Mon, 06/10/2013 - 14:38 | 3643051 Debt Slave
Mon, 06/10/2013 - 14:40 | 3643056 Arbysauce
Arbysauce's picture

The Gods of the Copybook Headings with terror and slaughter return!

Mon, 06/10/2013 - 14:40 | 3643061 TrumpXVI
TrumpXVI's picture

Yup, for my part, the Fed's policies make me poorer.  My reaction is and has been, CUT spending, do what (little) is possible to increase savings, divest as much as possible from risk assets.  I don't know if it will turn out to be the correct move, but I am 100% in cash, gold, silver, my home (real estate) and a bit in an annuity (in Treasuries), zero in equities.  And absofuckinglutely NO borrowing.

Mon, 06/10/2013 - 15:17 | 3643210 duo
duo's picture

Remember when you could live pretty well on a million in the bank?  If you had it in tax free munis, you could generate 60 grand in walking around money.

Now you need 10 million to get $50K a year without taking risk, which means putting off that new car, or boat, or college for the kid.

Mon, 06/10/2013 - 14:41 | 3643065 Pareto
Pareto's picture

2.25 - 2.3 max on the 10Y, then a retrace to 1.6.  Rates cannot continue to rise if: (1) there is no growth, and (2) Bernanke continues to protect the Treasury from imploding.  So stay long bonds and gold.....IMO.

Mon, 06/10/2013 - 14:47 | 3643085 Everybodys All ...
Everybodys All American's picture

The only way we see 1.6 is if the stock market implodes. That's possible. Bernanke is losing control over our bond market ironically because of the print fest occuring in Japan.

Mon, 06/10/2013 - 14:58 | 3643131 Pareto
Pareto's picture

I agree.  so, if you wee a betting man..............does he let the bond market go?

Mon, 06/10/2013 - 15:09 | 3643178 Everybodys All ...
Everybodys All American's picture

No. He lets the stock market go.

Mon, 06/10/2013 - 15:37 | 3643308 Citxmech
Citxmech's picture

My guess is that Bernanke's calculus looks like this:

"The stock market can be re-inflated.  An un-restrained rise in interest rates could nullify the effect of printing on deflation.

Mon, 06/10/2013 - 15:40 | 3643323 fonzannoon
fonzannoon's picture

The hysterical irony is everyone was worried that treasuries would be dumped when the U.S got downgraded. Now it get's a horseshit upgrade and that is what is causing people to dump treasuries.

If they want people to buy treasuries they need to cause a crisis. Fucking bizarro.

Mon, 06/10/2013 - 16:59 | 3643619 LawsofPhysics
LawsofPhysics's picture

Death of the dollar, loss of faith (as in full faith and credit) and trust.  The world recognizing that America is run by theiving paper-pushers who add nothing of real value, but want all the real wealth.  This is the end result of the financialization of our economy...

hedge accordingly.

Mon, 06/10/2013 - 14:45 | 3643076 Dr. Engali
Dr. Engali's picture

It's like I've been saying. We will go through a massive wave of deflation, where gold and silver will have a paper value but will not be available. Then the whole system will burn out like a super nova as the world rejects the Bernank's medicine and the dollar collapses.

Mon, 06/10/2013 - 15:28 | 3643272 negative rates
negative rates's picture

Coins bitches!

Mon, 06/10/2013 - 14:45 | 3643078 Groundhog Day
Groundhog Day's picture

He doesn't need to look in the mirror, he knows exactly what he is doing and knows exactlt what the end game is.  I'm sure he has already secured a secret island to live out his days lavishly 

Mon, 06/10/2013 - 14:48 | 3643093 No More Bubbles
No More Bubbles's picture

Terrifying to whom?  It would be a fucking relief to see this fake ass shitpile fraud laced pig of a "market" get smashed back down to where it frankly should have been hovering the last 4 years, namely, with the S&P back at the 666 level.  If anything, it should actually be closer to ZERO!

Mon, 06/10/2013 - 14:50 | 3643098 Jack Burton
Jack Burton's picture

I've been following this financial and economic story since about 2005 with growing interest. It was the great Housing Bubble that really grabbed my attention and prompted me to dig deeper in the markets and financial services industry that was engaged in the mass bubble. The Fed, by then, had become well known for it's bubble blowing and panic responses to bubbles popping. Like the infamous NASDAQ melt down that devestated so many 401K millionaires.

Since the great 2008 bust, the Fed has gone from a manipulator to a full on manager and director of markets, making no secret that they were printing money to have it funneled into the stock exchanges as a way to generate a "wealth effect" that was supposed to boost the real economy.

Over the years I have read many conservatives and their media outlets argue over and over for the free market approach, to get government out of the economy. All the while, these conservatives profited massively from money printing, as all gains went to the top 1% and 1%'ers are in most cases the conservatives calling for free markets. I have never been able to understand how the Fed as direct manager of stock prices and mass money printers, who bail out the financial service's many failed business models, could be allowed to control what is supposed to be a free market. The many elites who profit from the fed's policies are also those most strident in their calls for free market solutions and for austerity for the 99%.

What is it? Are they for a free market approach or not? Is it, as I suspect, a case of free market dog eat dog competitive capitalism for the 99% and for labor markets, while stock markets are given a 100% communistic guarantee from the Fed and government of tax payer backing and Fed intervention with printed dollars.

There is something wrong with this dual system of capitalistic creative destruction unleashed on workers while NO such mechanism is at work for financial services, bankers and the military industrial complex. To those people, the free market is unkown, all they know is guarantees, Fed backing, manipultation, too big to fail, capture of government, capture of regulators and a Fed that will print to infinity for their benefit. Meanwhile the average American is told to compete with the Chinese worker or get out of the way. It seems the 1% has found a way to have it BOTH WAYS, to get the best of both worlds all in one package. This is why they are so well off, they have found the secret to success in the crony capitalist USA.

Mon, 06/10/2013 - 15:00 | 3643130 prains
prains's picture

nice rant Jack, concise and clearly the MAIN issue at hand. The corpro-oligarchy is also happy to have the red/blue duopoly take all the heavy punches as well and quietly hide behind their main line of defence, issue edicts both geopolitically and domestically to both difuse, contrive, manipulate and corrupt anyone who stands between them and a decades long struggle to gain full control. They have won, the question is, for how long? The Eric Snowden case will be one to watch as they will roll out all forces to bear on him and his troothiness.

Mon, 06/10/2013 - 15:01 | 3643147 Bay of Pigs
Bay of Pigs's picture

They are most certainly not for a free market.

Anyone supporting and defending the FED is against anything resembling a free market.

Mon, 06/10/2013 - 15:16 | 3643170 falak pema
falak pema's picture

not communistic but elitist, statist, oligarchic, like Mussolini's definition of fascism : state + corporate power together.

And, the free market model is : our corporate dogs with our state might behind it eat your dogs in our export markets; don't resist it 'cos Uncle Sam runs your government as well,  whereas our oligarchs serve state in MIC fascist model at home as abroad. 

On the downside, its the Don Corleone model and Italy after the war was a good example as was Cuba under Batista. 

Where America shone was in the legacy of the great generation and those areas where state was lasted upto Nov 1963....

Mon, 06/10/2013 - 15:08 | 3643175 Oldwood
Oldwood's picture

The power of the elite pretty much washes out any true ideology in the end. I would challenge your premis however regarding conservatives as being the predominate winners here. For one, just because some call themselves or vote Republican, does not in anyway define what their beliefs are. Further it doesn't take much looking around to see a great number of Very Rich Democrats. These people largely see an ideology as simply another tool to their ends. True conservatives want small government with limited powers which by itself could go a long way towards minimizing the level of corruption we see today. Much of the large corporatocrisy we see today is th edirect result of government influence in distribution of the public cash flow. When a single entity, our government is directly responsible for spending 23% of our GDP, if not more if yo looked under the covers. As our gov continues, what many of us would assume an unsustainable monetary policy, it will forse us to participate in the stupidity or die on th evine, waiting for rationality to return. AS with everything else they do, it leads to a destruction that only increases our dependency on them. Free markets no longer exist. It is what they say it is and to defy them may be the right thing to do, it will likely put us even farther behind the curve than we already are. How can someone who lives the moral, financially conservative life succeed when we see those who cheat and steal pull farther into the lead everyday. We will be forced to capitulate or be left with what remains. It may be the right thing to do but how many will be able to resist, willing watching others grow rich or just simply live rent free while they continue a seemingly thankless toil. Corruption has always been winning.

Mon, 06/10/2013 - 15:25 | 3643225 ebworthen
ebworthen's picture

You can see this confusion/deception in conservative commentators such as my friend Larry Kudlow:

"Free market capitalism is the best path to prosperity" he will say, then argue that 11 million illegals should be granted citizenship (amnesty) to "stimulate growth".


Wages and the labor participation rate are too low but somehow encouraging illegals to flood across the border is going to help?

And, he has done a "mea-culpa" about Bernanke's bubble blowing debt spending ways and said that "it is working" and improving the economy - that he was wrong to criticize him.


Free markets and capitalism have nothing to do with FED QE and abrogating the rule-of-law Larry!

Mon, 06/10/2013 - 17:19 | 3643671 MeelionDollerBogus
MeelionDollerBogus's picture

"Free market capitalism is the best path to prosperity" he will say, then argue that 11 million illegals should be granted citizenship (amnesty) to "stimulate growth".


You don't get it? Immigration restrictions are statist controls on the free market for labor. I don't trust Kudlow's judgment or intentions for a second but facts are facts.

Mon, 06/10/2013 - 17:43 | 3643729 ebworthen
ebworthen's picture

So millions more U.S. legal citizens on food stamps, Welfare, and S.S. disability while illegals flow across the border to lower the wage scale and get taken advantage of by the U.S. corporatocracy/elites/big Ag. while filling the the local school rooms and emergency rooms is a good thing?

Mon, 06/10/2013 - 17:56 | 3643769 logicalman
logicalman's picture

Countries are just fictions - lines on a map.

People are real.

Are you claiming to be more human than some desperate brown person whose country has been stolen by the banksters?

You are just fortunate that you live in a country where the banksters are still finalizing the theft.

Your turn (and mine) is yet to come - shouldn't be long now.

Mon, 06/10/2013 - 18:04 | 3643811 ebworthen
ebworthen's picture

Can we agree that none of us should be paying taxes then?

BTW - do you let anyone come and live in your house?

Mon, 06/10/2013 - 20:00 | 3644228 MeelionDollerBogus
MeelionDollerBogus's picture

invalid comparison: the entire COUNTRY is not YOUR HOUSE. Just the part with your HOUSE is your house. The rest is NOT yours hence the MARKET can decide who lives there or not. Set a price & let there be bids. Those who can produce & afford should be welcome; their land of origin is not part of the price. Nationality is a fiction. Productivity, skills & assets are not.

as for taxes, the IRS already admitted twice under oath all taxes are voluntary:

Mon, 06/10/2013 - 20:02 | 3644239 MeelionDollerBogus
MeelionDollerBogus's picture

indeed, ebworthen seems to be forgetting he may want to re-locate and not be considered criminal bottom-feeding scum wanting to live in someone else's house free just because he came FROM the USSA but didn't actually run its criminal operations (or so I'd presume).

Mon, 06/10/2013 - 19:57 | 3644224 MeelionDollerBogus
MeelionDollerBogus's picture

in a free market not under statist controls you'd see doctors immigrating who can man those emergency rooms, you would see teachers immigrating who can run those schools. Somehow you've bought some nonsense statist story that all immigrants are useless bottomfeeders except if approved by the state - instead of by the MARKET.

And on top of that you tie in statist anti-market things like welfare, social security and food-stamps to "bolster" your argument.

You may as well be arguing why rabbits pop out of hats by referring to how beavers don't.

It's absurd.

Mon, 06/10/2013 - 15:36 | 3643306 beekeeper
beekeeper's picture

Best summary of the "free market capitalism" we have in the US that I've read in a long time.

Mon, 06/10/2013 - 16:30 | 3643515 No More Bubbles
No More Bubbles's picture

Nicely said Jack!  What I can't figure out is why they aren't all hanging from lampposts by now!

Mon, 06/10/2013 - 17:18 | 3643667 wisehiney
wisehiney's picture

Calling yourself a conservative and being one are two different things.

Mon, 06/10/2013 - 21:43 | 3644042 fuckitall
fuckitall's picture

You're preaching to the choir and it's the same sermon we've heard a hundred times on ZH, America's new fascist (govt-bank-corp) regime.  Or criminal racket if you prefer.  Govt mafia also works.  Banana republic fits too.

The foolish thing is trying to analyze it, how it got this way, why it got this way, the inconsistencies, double standards, legalized fraud, etc.  It's a waste of time and brain power. 

All nations end up this way eventually.  Sooner in some cases, later in other cases.  Why be alarmed it's happening in America now?

I'm not alarmed, I fully expect it.  Because I can read history.  And no, America isn't different. 

That might be what people here have a difficult time accepting.  America isn't different after all.

Mon, 06/10/2013 - 14:54 | 3643115 SheepDog-One
SheepDog-One's picture

WHOA! So you're tellin me if $100 billion free money used to prop stocks and bonds doesn't work out then the free money bubble might burst to smithereens?


Mon, 06/10/2013 - 14:56 | 3643120 screw face
screw face's picture

'......every bond market around the world sold-off, except for the RMB bond market.'



China.....Bullish.....BRIIICS 7..... leading a new para-dime, ever wonder about the fact of a monetary first, digital fiat, little cash in circulation, who knows the resulting effect and it's outcome.



Mon, 06/10/2013 - 15:02 | 3643151 JJ McApe
JJ McApe's picture

lets see if pomo tuesday can save the day tomorrow


Mon, 06/10/2013 - 15:04 | 3643152 Number 156
Number 156's picture

I don't think the markets will crash, because in the end, they will vote for window dressing, and crash the dollar instead.

The markets will then float on inflated dollars, just so some politicians and bureaucrats can sit there and say 'See, the markets are going up on our watch'. 

I dont really think this is the way it might actually happen, but to measure the economy based on the so called stock market is like looking at the world through a soda straw.



Mon, 06/10/2013 - 16:39 | 3643548 SheepDog-One
SheepDog-One's picture

Well with approval of clowngress at about 9% already, if they think more in-your-face stock pumping will help their reputation any then they're just delusional idiots.

Mon, 06/10/2013 - 17:12 | 3643644 MeelionDollerBogus
MeelionDollerBogus's picture

and the straw goes in the back-end of this:


Mon, 06/10/2013 - 15:06 | 3643164 Jason T
Jason T's picture

concur with this fellow.. dollars and RMB related assets.

Mon, 06/10/2013 - 15:06 | 3643165 Whatta
Whatta's picture
"Should The Fed Lose Control, The Downside Move In Markets May Be Terrifying"


That is a, "well, duh". We've known that for several years now.

Mon, 06/10/2013 - 15:06 | 3643167 ebworthen
ebworthen's picture

Great charts.

Does this mean I'm getting closer to receiving my $3,000,000 tax free check in the mail from the FED?

Mon, 06/10/2013 - 15:11 | 3643183 kito
kito's picture

my dollars (literally) are on deflationary tyler suggested...this scenario....where its never been encountered before......comes to light..i suggest so will an irreversible deflationary collapse of all assets with the federal reserve choosing to keep the dollar alive rather than print it into oblivion....... ben KNOWS both scenarios lead to the end...................................he wont choose the death of the dollar via fonz says....look for lots of skanking...........

Mon, 06/10/2013 - 15:21 | 3643237 Mr. Hudson
Mr. Hudson's picture

Goldbugs hate the word "deflation", but it always happens before hyper-inflation kicks in.

Mon, 06/10/2013 - 16:20 | 3643477 resurger
resurger's picture

Hudson, you must be kidding right!

Deflation is the friend of the poor, and it's where the money goes down the inverted pyramid at the very bottom.

Mon, 06/10/2013 - 16:50 | 3643585 Mr. Hudson
Mr. Hudson's picture

With deflation, the price of gold will drop. 

Mon, 06/10/2013 - 16:54 | 3643604 LawsofPhysics
LawsofPhysics's picture

No society or currency has ever died/collapsed because of deflation.  Please, go fuck yourself.

Mon, 06/10/2013 - 18:58 | 3644030 Mr. Hudson
Mr. Hudson's picture

You didn't read what I said, Macher. I said that before hyper-inflation kicks in, there has always been a severe deflationary period. Read Griffin's book about the creature. He confirms what I just said.

Mon, 06/10/2013 - 18:02 | 3643798 logicalman
logicalman's picture

The price??

What's gold worth now, if the value of the dollar is unknown.

In 1933 a dollar was 1/20.67 ounces of gold

Today 1/1387.

Did the value of the dollar go up or down?

Mon, 06/10/2013 - 18:55 | 3644019 Mr. Hudson
Mr. Hudson's picture

Gold will drop to $1,000 an ounce; even less. That is where I will start buying.

Tue, 06/11/2013 - 02:42 | 3645086 Non Passaran
Non Passaran's picture

Many will start buying at 1,001 so you may never get a chance to buy a single ounce

Mon, 06/10/2013 - 15:23 | 3643247 Dr. Engali
Dr. Engali's picture

kito the Bernank and his ilk do not care about the dollar. This is not the first time that the U.S has defaulted and changed it's monetary system and it probably won't be the last. There are other plans being put in place when it comes to a world currency, and it's the Bernanks job to hold things together as long as possible. The dollar in the form of a FRN will simply go away.

Mon, 06/10/2013 - 15:50 | 3643351 yogibear
yogibear's picture

"Ben KNOWS both scenarios lead to the end...................................he wont choose the death of the dollar via fonz says....look for lots of skanking..........."

Ben has alredy decided. He will attenpt to counter with infinite printing.


Mon, 06/10/2013 - 16:13 | 3643451 resurger
resurger's picture

Sure, if i was the head Kito i would buy all the garbage for some cents on the dollar and print all over again...

When are they replacing benny ne way..

damn that jew. lol

Mon, 06/10/2013 - 15:13 | 3643185 Encroaching Darkness
Encroaching Darkness's picture

The real collapse may yet be one of TRUST - naive people (around the world, not just Americans) believe their governments MIGHT be a little crooked, a little greedy, a little corrupt, a little evil - but the main body, executive / legislative / judicial or whatever form exists locally, is there at least TRYING to help, defend, organize, improve .....

These latest scandals are helping everyone, worldwide, recognize that governments are CREATED to empower power-mad control freaks to do their thing, preserve their own power and privilege, and be DAMNED to the rest of us...

Maybe watching Obama / Reid / Roberts / everyone else in D.C. lie, cheat and steal endlessly is also waking up some Chinese, some Japanese, some Russians, some Ghanians .... they are ALL, every government, out to screw you for their own benefit.

LOSING TRUST in your government is the single most rational, logical thing you can do: and avoiding participation in their illegal, immoral, murderous schemes is a MORAL imperative.

Just quit doing business with them; dump Gmail, Yahoomail, etc. until they starve.

Enough already.

Mon, 06/10/2013 - 16:40 | 3643553 Son of Loki
Son of Loki's picture
3,783 being laid off from Philadelphia School District


The Philadelphia School District announced Friday is it laying off 3,783 people across entire range of district employees, from senior administrators to support staff.

Superintendent of Schools William Hite made the dramatic announcement Friday afternoon at school district headquarters.


I love Phili...sorry to see it happen to 'm.

Mon, 06/10/2013 - 15:15 | 3643196 ncdirtdigger
ncdirtdigger's picture

What? Me worry? Nothing but blue skies and rainbows ahead!

Mon, 06/10/2013 - 15:19 | 3643220 Legolas
Legolas's picture

What? Me worry? Nothing but unicorns and skittles all around!


There, corrected it for ya !

Mon, 06/10/2013 - 17:44 | 3643735 ncdirtdigger
ncdirtdigger's picture

Hey Trayvon! It's my fairytale, and I'll tell it any damn way I want to. Make up you own fairytale if you want ice tea and skittles.

Mon, 06/10/2013 - 15:15 | 3643199 Legolas
Legolas's picture

<- 3:30 Ramp today works

<- 3:30 Ramp unsuccessful



Mon, 06/10/2013 - 15:39 | 3643249 ebworthen
ebworthen's picture

Depends if Tuesday is still POMO day or is it Thursday now?

If it's tomorrow, we'll have a nice collapse after 3:00 today so the HFT algos can buy at 3:59:59:45.

Mon, 06/10/2013 - 15:22 | 3643241 Payne
Payne's picture

of course the FED will lose control, The NSA could not stop themselves from screwing up and the FED will be stuck in the same hubris.

Mon, 06/10/2013 - 15:26 | 3643265 Avocado
Avocado's picture

Which means that faced with the specter of full on deflationary collapse, Ben Bernanke will simply resolve to doing what he has hinted, if jokingly, in the past: he will literally paradrop money out of helicopters. Maybe not in that fashion, but he will find a way to bypass the banking sector as a monetary transmission mechanism, and bring crisp, fresh, just off the press banknotes into the hands of consumers in order to finally get the much needed inflationary spark as too much cash chases after too few products and services.

Only one problem with this statement. Bernanke controls the FED. The FED doesn't print our currency. The Treasury does that, and so far they have shown no inclination at all to start running the printing presses in overtime. I suspect it would take an act of Congress to get them to do that. I don't think Bernanke's idea of printing money would go over too well with Congress.

This is the time when I'm glad there is no connection between the FED and the Treasury.


Mon, 06/10/2013 - 17:07 | 3643631 MeelionDollerBogus
MeelionDollerBogus's picture

in this electronic era merely putting numbers into accounts will do it while online spending and cash-withdrawal for the rest will permit all the inflation needed. So many can  buy what they need using debit cards that paper cash need NOT be engraved & printed to be used.

Mon, 06/10/2013 - 15:45 | 3643344 yogibear
yogibear's picture

Kill the US dollar and watch all those Fed Keysian PhDs show fear like never before.

Hyperinflation is a bitch.

Mon, 06/10/2013 - 15:47 | 3643347 e_goldstein
e_goldstein's picture

When he looks in the mirror, the reflection of Keynes stares back at him.

Mon, 06/10/2013 - 15:57 | 3643380 q99x2
q99x2's picture

" if Bernanke is honestly curious why the economy remains broken"

Even Q99x2 would have a hard time writing a worse sentence than that.

Mon, 06/10/2013 - 15:59 | 3643389 youngman
youngman's picture

"It is also why the most valuable commodity a central bank has is credibility, and faith in fiat, or fiath as we like to call it. "

It will be an event that sparks the loss of import duty...or a tax....that just changes things all over the world...

Mon, 06/10/2013 - 16:02 | 3643398 Nue
Nue's picture

I’ve only talked about this with a few people but I’ll share it here. Three years ago I was trying to figure out where the economy was headed. One night I had a dream. I was standing on Wall Street when the entire Island of Manhattan shot up into the air like a rocket. It was going so fast that people were being pressed into the ground by the force of the acceleration. Everyone was screaming in terror finally after getting so high that you could see the stars the island fell out from under everyone. It was strange because it was like the island fell first but everyone else stayed in place for a few seconds longer. Sort of like Wiley Coyote when he walks off a cliff. When the island crashed back to earth I looked down I could see the entire country it was a desert an absolute wasteland.
Three years ago I started telling people when you see the stock market going up with nothing underneath it to explain it watch out. I don’t know how high this market will go but I do know this. Artificially high price valuations always return back to normal at some point.

Mon, 06/10/2013 - 16:30 | 3643499 bunnyswanson
bunnyswanson's picture

The training with "zombies" which the DHS (Department of Horror & Screams) has not been for no reason.  The zombies are depicted jokingly but they are injured desperate people who have been wandering in a lawless land.

Blackmail, collusion due to fear of retaliation through ass ass in ations and treason are taking place before us on a global scale.

If there is a way to stop this, even if it means losing one's life while attempting to, would be a gift to the future of civilization.

My dream was working in a warehouse at a sewing machine with several hundred other women, wearing a tattered shapeless cotton dress which was faded from white to dirty yellow.  I was at the sewing machine when a guard walked up to me and told me to come with him.  I met an official by the door outside who said he was trying to help me.

  The end of my dream was one of relief for myself to finally get out of there.  My state of mind in this dream prior to being found by a Canadian embassy worker was hopeless despair, and I wanted to end my existence anyway I could to escape from this prison labor.  In my dream, I was, hungry, exhausted, filthy and overwhelmed with a sense of being smothered by oppression (unable to talk or move freely at all due to armed guards standing around us). 

My thoughts in the dreams shifted to a vision of cyclone fences going for hundreds of miles on each side of a several lane massive highway, where trucks filled with produce/food products were moving up and down the lanes from warehouses where labor prisons and highrise buildings/apartments were connected to ports, and people were up against the fence, trying to figure out a way to get to a truck so they could get something to eat.  Also, the cyclone fence prove to be a wall as the highway had no on/off ramps.  The people were trapped and hiding in my dream.

Mon, 06/10/2013 - 16:48 | 3643578 negative rates
negative rates's picture

The explanation is that higher prices lead to a higher mkt. When those prices can no longer be sustained because people have to stretch their money, it's monetary deflation as prices drop reflecting the fewer dollars in circulation for that product.

Mon, 06/10/2013 - 17:03 | 3643622 MeelionDollerBogus
MeelionDollerBogus's picture

Zimbabwe & Weimar (Germany) stock markets did it. The end result & mechanism is clear.

Mon, 06/10/2013 - 16:11 | 3643434 resurger
resurger's picture

Captain Obvious, we meet once again

Mon, 06/10/2013 - 16:12 | 3643443 Uncle Remus
Uncle Remus's picture

Wow. Do ya think?

Mon, 06/10/2013 - 16:33 | 3643529 moneybots
moneybots's picture

"However, we disagree that the final outcome will be a "profoundly deflationary failure." This will be an interim step."

A 90% deflation of the DOW was an interim step.  The DOW began rising after that.



Mon, 06/10/2013 - 16:44 | 3643567 FireBrander
FireBrander's picture

"There has been no real increase in the private sector propensity to borrow"


Why would a rising stock market make people want to borrow and spend? The only way increased stock prices are going to translate into more spending is if people sell the stocks...


Since most people don't own stock (outside of a 401k, etc), they have nothing to sell and thier income is just covering day to day life...and those most likely to borrow and spend still have a horrible credit rating from 2009..although GM seems to have found a way around it.

Mon, 06/10/2013 - 16:44 | 3643569 uncle_vito
uncle_vito's picture

Yeah, but when?

Mon, 06/10/2013 - 16:50 | 3643586 moneybots
moneybots's picture

"... he will find a way to bypass the banking sector as a monetary transmission mechanism, and bring crisp, fresh, just off the press banknotes into the hands of consumers in order to finally get the much needed inflationary spark as too much cash chases after too few products and services"

How long will that last when oil jumps to 200 dollars a barrel and sucks up the too much cash before it chases too few products and services?

Mon, 06/10/2013 - 16:55 | 3643608 razorthin
razorthin's picture

Death by 20 trillion paper cuts.

Mon, 06/10/2013 - 17:08 | 3643638 rsnoble
rsnoble's picture

Now happening in Japan? Does that mean we have to wait another 30 years? I'll be dead by then.

Mon, 06/10/2013 - 17:09 | 3643639 wisehiney
wisehiney's picture

Need to be careful where to park, with that new money market fund rule and all.

Mon, 06/10/2013 - 17:18 | 3643666 Lmo Mutton
Lmo Mutton's picture

OT but, FU NSA cuntless whores!!

midget tranny dating geeks with no life and $350K

Mon, 06/10/2013 - 17:26 | 3643688 bobbydelgreco
bobbydelgreco's picture

you guys are so so dumb the issue is a plutocracy that gives itself lot of money if things go bad (my bet it will happen on ms piggy's time not ben's) they are not giving you losers any money and not ruining their piles of wealth on what planet are you zhers living?

Mon, 06/10/2013 - 17:48 | 3643725 kurzdump
kurzdump's picture

Should the FED lose control ... ? There is no "control" or whatsoever! The FED is financing the deficit of the USA by printing USD. Countries outside the US are delivering manpower and ressources in exchange for these USD. As long as these countries are ok with being exploited the FED cant lose control. The FED cant do anything to avoid that. The only thing the FED can and should (and tries to) do is to convince other people to get into (even more) debt instead.

The US army as well as the intelligence and the media are the only ones that might lose control.

Federal reserve banking is not rocket science.

Mon, 06/10/2013 - 18:33 | 3643940 kurzdump
kurzdump's picture


Mon, 06/10/2013 - 20:17 | 3644288 JohnFrodo
JohnFrodo's picture

anyone thinking about anything without a profit motive is suspect

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