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1994 vs 2013: Spot The Carbon-Copy Similarities

Tyler Durden's picture


The only thing that is necessary for something to happen, is for everyone to say it can't possibly happen. Such as a carbon copy replica of the 1994 bond crush. Presenting: 1994 vs 2013, or as it is better known "It can't happen... It can't happen...It can't happen...  It just happened"

And some rather spot on commentary on just this from Guggenheim's Scott Minerd, who just like us, sees the inevitable outcome of the upcoming taper (which is coming), as the untaper, i.e., even moar printing by the Chairman (or woman as the case may be in 2014).

From Guggenheim's Scott Minerd

The Fed's Bind: Tapering, Timetables and Turmoil

There are striking parallels between the dramatic recent sell-off in U.S. Treasuries and the Great Bond Crash of 1994. But the summer of volatility now facing financial markets is no doomsday scenario. Instead, it puts the U.S. Federal Reserve in a bind. Higher interest rates will reduce housing affordability, which is especially troublesome since housing is the primary locomotive of U.S. economic growth. That means the Fed, despite Ben Bernanke’s recently announced timetable, may be forced to expand or extend quantitative easing if the housing market’s response to recent events becomes more acute and starts to negatively affect the job market recovery.

At the start of June, I waxed nostalgic about the canary in the coal mine. In the aftermath of a string of downside moves in financial markets, I wrote about how early mines lacked ventilation and so miners brought caged canaries into new seams to detect deadly gasses. The story went that if the canary stopped singing, or even worse, died, the mine would be evacuated until the gas buildup could be cleared to make work safe again. My point was that markets were foreshadowing worse trouble ahead. Now, I regret to tell you, my prognosis was all too accurate. The canary is certainly dead. And, in the sudden market rout that has marked the beginning of the summer season, the chirpy yellow bird was far from the only casualty.

I see striking parallels between the dramatic recent sell-off in U.S. Treasuries and the Great Bond Crash of 1994. To make matters worse, today’s bond market is even more sensitive to fears about tightening thanks to the U.S. Federal Reserve’s unprecedented expansionary program since the 2008 crisis.

At the start of 1994, Bill Clinton signed the North American Free Trade Agreement into law, Alan Greenspan was at the helm of the U.S. Federal Reserve, and markets were optimistic. I was working in London, running European credit trading for Morgan Stanley. Our desk turned over about $500 million in credit daily. Bond yields were historically low, inflation was muted. Then, after a calm start to the year and almost without warning, bond markets suffered their largest crash since the Great Depression.

The trouble began in February when Fed Chairman Greenspan, after four years of monetary expansion, announced a seemingly innocuous 25 basis point increase in the federal funds rate. Bond markets reacted swiftly and violently, re-pricing securities based on where investors anticipated interest rates would be at the end of what markets correctly assumed was a tightening cycle. Liquidity significantly dried up, and over the next nine months, the 10-year yield rose 240 basis points. We were on the front lines of the crisis -- during those dark days, our daily volume on the trading desk shriveled from $500 million to just $15 million.

In 1994, investors were caught off guard because the duration of their positions – a great deal of which were mortgage-backed securities – was lengthened beyond their targets due to rising interest rates. Those investors used Treasuries as a means to sell duration because they were their most liquid assets. Credit spreads soon exploded as dealers lacked the ability to take on larger positions from would-be sellers. Both sides of the Street were sprinting in one direction, leading to a violent stampede for the only exit.

It appears we are witnessing a similar cascade today. The sell-off began at the start of May, as U.S. economic data suggested housing could spark a stronger economy. It continued after May 22, when Fed Chairman Ben Bernanke told lawmakers that the central bank would, in the coming months, discuss how it might approach tapering its asset purchases. Then on June 19, the other shoe dropped when Dr. Bernanke held his post-Federal Open Market Committee meeting press conference. Despite his insistence that tightening is not imminent, his guidance amounted to an outline and a timetable of how quantitative easing (QE) will be tapered, and eventually ended. Markets were caught off guard by how quickly the Fed could take away the proverbial punch bowl.

Both Greenspan and Bernanke pushed the boundaries of Fed transparency, but the way they telegraphed their messages seems to have contributed to market volatility. Greenspan’s rate increase in February of 1994 marked the first time the FOMC released a statement announcing a move in the federal funds rate, its main policy tool. And Bernanke is the first Fed chairman to hold post-FOMC press conferences, a practice he began in April, 2011. The message contained in Bernanke’s June 19 post-FOMC press conference certainly triggered the market rout that would follow.

Part of the recent correction in the bond market is the result of the readjustment of the term structure of interest rates, but most of it is due to concerned investors seeking to reduce their portfolio exposure by shedding duration, often by shorting Treasuries. Many of these investors have recently been engaged in a leveraged carry trade, meaning higher interest rates magnified the downside losses and, in the case of mortgage securities, the effect on prices was even more amplified as durations extended as a result of reduced expectations of repayment. This leveraged effect on mortgage portfolio losses explains the dramatic decline in mortgage REITs over the past weeks. While in the very near term things could improve, the situation could worsen because the rising interest rate trend looks set to continue, with a medium-term target of 3.25-3.5 percent for the 10-year note. The eventual follow-on to this will likely be a widening of credit spreads.

Rising rates will continue to reduce housing affordability, which is especially troublesome because housing is the primary locomotive of U.S. economic growth. Housing activity has been driven by artificially low mortgage rates. Housing-related activity, including private residential investment, personal expenditures on household durable goods and utilities, as well as the wealth effect on consumption from home price appreciation, has positively contributed to GDP growth for the last five quarters.

Housing activity was the sole positive contributor to economic growth in the second quarter of 2012, and it comprised over two thirds of real GDP growth in the first quarter of 2013. First quarter real GDP growth was only 1.8 percent, 69 percent of which was directly attributable to housing. Rising interest rates caused mortgage applications to fall sharply in May, and profits from new construction also faltered. The housing refinancing index has also come under pressure.

The Fed’s assumptions now include a forecast that unemployment will drop to 7.2-7.3 percent by year end. That suggests that the Fed believes economic activity will accelerate as we head into the summer. I do not subscribe to this view, since we are already seeing pressure on housing and the broader economy from higher interest rates, and the negative impact of the recent spike in yields is likely to continue to show up in the economic data over the summer. That means the Fed, despite Dr. Bernanke’s recently announced timetable, may be forced to expand or extend QE if the housing market’s response to recent events becomes more acute and starts to negatively affect the job market recovery. Consequently, it is fairly certain that QE will continue at its current rate through the end of 2013, and the Fed will likely still be carrying out asset purchases well into the second half of 2014. This view is supported by the low near-term risk of inflation.

Meanwhile Fed officials are struggling to put the toothpaste back in the tube. In the wake of Bernanke’s press conference, numerous Federal Reserve presidents have attempted to clarify or even refine the message. San Francisco Fed President John Williams, who in May said the central bank could begin tapering its asset purchases by the summer and finish them by year-end, backtracked in recent days. The centrist policymaker now says it’s too early to say when the Fed will taper and that the central bank must be certain the recovery can withstand ongoing fiscal contraction.

Another important consideration in the recent market dislocation is the value of primary dealer positions relative to the bond market’s total size. Ultra-low interest rates since 2008 spurred increased debt issuance while dealer positions in commercial paper, investment grade, and high-yield corporate bonds have declined from their peak of about $260 billion in 2007 to $69 billion today due to banking regulations. This means bond market dealer balance sheet coverage has shriveled from 4 percent of total inventory in 2007 to less than 0.7 percent of today’s $9 trillion market.

There will likely be further selling pressure when mutual funds post quarterly statements featuring losses, and as the carnage from the bond market shows up on 401k statements. These investors will not care that the risk of a recession is highly remote but will focus instead on signals from the Fed that interest rates will rise.

The New York Stock Exchange Advance Decline line is also forecasting tough times ahead. Over the long-term, equities prices will likely reflect the recovery in the underlying economy, but a stock market fall of 10-20 percent is still likely given how volatile markets have become. Uncertainty will remain elevated through the summer because we will not be able to gauge the impact higher interest rates are having on the economy until we get data in August that reflects housing activity from months earlier.

Fixed-income investors should be particularly cognizant of liquidity levels, keeping maturities short and spread duration low. High-yield spreads may widen by another 100 basis points because of the recent Treasury crash and Gold may ultimately regain its safe-haven status.

Markets are certainly under pressure, but this is not a doomsday scenario. This liquidity flush will continue to unfold, and things will likely get worse before they get better. Investors face a rough summer, but it is important to remember that even the extreme bear bond market that began in February 1994 ended before the end of that year.

This year, Treasuries began selling off in April, so if this swoon behaves like the 1994 bear market for bonds, we can expect to be out the other end by the end of the year. Certainly, I don’t think we will see any relief for lower bond prices until economic data begins to reflect a slowdown in both housing activity and price appreciation.


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Tue, 07/09/2013 - 08:52 | 3733628 howenlink
howenlink's picture

History rhyming.

Tue, 07/09/2013 - 09:23 | 3733709 taketheredpill
taketheredpill's picture

Exactly how does the 2013 Economy resemble the 1994 Economy?  In 1994 you could do things like raise fed Funds rates and slow down a Strong economy.  Today interest rates are no longer useful for implementing monetary policy.

Look at when QE1 and QE2 were started and when they were ended.  Today looks a lot more like when QE1 and QE2 were started, and nothing like when they were ended.

Bernanke realizes QE is not working, and where it is working is the wrong place (i.e. Bubbles).

Also, again, the "2013 is just 1994" is a sell-side myth designed to push more people into equities.

Tue, 07/09/2013 - 09:39 | 3733752 WarriorClass
WarriorClass's picture

Well, it rhymes in other ways.  

Lincoln rhymes with Obama.

Tue, 07/09/2013 - 10:25 | 3733860 WarriorClass
WarriorClass's picture

And now we learn that Michael "Mayors Against Guns" Bloomberg has purchased 2000 GUNS through a straw buyer.

Scroll down:


Tue, 07/09/2013 - 11:32 | 3734074 bigrooster
bigrooster's picture

I brought up this exact point a few weeks ago at a Patriot meeting here in Phoneix.  Why is Bloomberg allowed to finance the purchase of firearms across state lines but if anyone else does it is a Federal crime.  I think that the US Attorney General sould investigate this...oh wait that is Eric Holder so that is not going to happen.

Some animals are more equal than others...

Fuck you Bloomberg and fuck you Holder.  Your time will come.

Tue, 07/09/2013 - 10:08 | 3733820 CPL
CPL's picture

In 1994 the western world could still export inflation to back stop their ponzi efforts.


There is nowhere left to run now.  Everyone is painted into the same corner and the only countries left aren't biting the IMF cheedar.  Mainly because they themselves are in debt up to their eyeballs.

Tue, 07/09/2013 - 13:31 | 3734512 Panafrican Funk...
Panafrican Funktron Robot's picture

Just wanted to point out that the radio ads from the mortgage companies are now heavily pimping HAMP loan mods in the past week.  Stick a fork in it, the housing market is already done, and all it took was the mere suggestion that there may potentially be a reduction in QE.

Tue, 07/09/2013 - 09:30 | 3733733 Headbanger
Headbanger's picture

And we don't have much of any "disruptive technologies" today as we did back then with the internet, digital cell phones, etc. And there still were some good paying jobs!

Tue, 07/09/2013 - 11:04 | 3733974 Roger Knights
Roger Knights's picture

Except Rossi's E Cat cold fusion gadget, maybe. We'll know in a year.

Tue, 07/09/2013 - 11:24 | 3734022 CPL
CPL's picture

Nobody is buying Rossi's stuff until it passes mustard other than a carefully staged demo with a press conference.  Investors and engineers won't listen until they've got it in a cooler sized power plant (because in theory it can be scaled to any size.)  If they are looking for a pay day, they could throw it all under an open source engineering license and do the honor system.  HOWEVER, they've been flogging the same tech for 25 years and for 25 years they refuse to let anyone tinker with it.

Meanwhile magnetic motors are sort of interesting.

In action making a lot of power with little more than magnets pushing a fly wheel.

Tue, 07/09/2013 - 13:33 | 3734521 Panafrican Funk...
Panafrican Funktron Robot's picture

That would be pretty funny, large power plants running on magnets.  That won't cause any unintended consequences.

Tue, 07/09/2013 - 14:23 | 3734707 neidermeyer
neidermeyer's picture

Hate to be the vocabulary police here but "passes mustard" sounds like runny yellow stool. The correct phrase is "Passes Muster" ...

Tue, 07/09/2013 - 10:08 | 3733816 Yancey Ward
Yancey Ward's picture

History is a bus that runs you down, turns around and runs over you again.

Tue, 07/09/2013 - 08:53 | 3733632 Spitzer
Spitzer's picture

Please implode....

Tue, 07/09/2013 - 08:55 | 3733640 LawsofPhysics
LawsofPhysics's picture

yes, and legalize prostitution while you are at it...


Tue, 07/09/2013 - 09:00 | 3733654 Joe Davola
Joe Davola's picture

Heck, I'd be happy if they brought back sugary breakfast cereals - Honey Smacks, wtf I want my Sugar Smacks!

Tue, 07/09/2013 - 09:06 | 3733666 Urban Roman
Urban Roman's picture

You can't have sugar smacks any more. You're old and diabetic, remember? 

Now drink you Ensure, it's good for you. 

Tue, 07/09/2013 - 09:28 | 3733725 El Viejo
El Viejo's picture

I like the Black Walnut flavored Ensure. Mmm Mmm good.

Tue, 07/09/2013 - 09:44 | 3733759 Joe Davola
Joe Davola's picture

Bet it's really good with some Grey Goose over ice.

Tue, 07/09/2013 - 09:58 | 3733790 Temporalist
Temporalist's picture

At least with that tradeoff you will not mind that your shit is as liquid as piss because you'll be too drunk to give a fuck.

Tue, 07/09/2013 - 09:06 | 3733669 BLOTTO
BLOTTO's picture

1984!...errr, '1994'...

Tue, 07/09/2013 - 09:09 | 3733677 knukles
knukles's picture

You didn't order that Greek yogurt

Tue, 07/09/2013 - 11:14 | 3734010 Save_America1st
Save_America1st's picture

Oh they'll bring 'em back...chock full 'o tasty GMO corn!  You and the kids are gonna love the slow cancerous goodness of 'em.  Eat up! ;)

Tue, 07/09/2013 - 09:33 | 3733739 Headbanger
Headbanger's picture

And legalize pot so we stop wasting money enforcing stupid laws.

Tue, 07/09/2013 - 10:10 | 3733826 Herd Redirectio...
Herd Redirection Committee's picture

Oh they'll legalize it.  Just you wait.  But you won't be able to grow it....

Tue, 07/09/2013 - 10:50 | 3733915 roadhazard
roadhazard's picture

I'm sure you will be able to grow it just like you could grow tobacco if you wanted. The price will come down enough so that you would rather just purchase it.

Tue, 07/09/2013 - 09:57 | 3733786 Temporalist
Temporalist's picture


I'm fairly certain that there are still prostitutes even though it's "illegal."  You could always give Elliot Spitzer a call...

Tue, 07/09/2013 - 11:05 | 3733980 Renewable Life
Renewable Life's picture

Some idiot said on one of the irrelevant financial networks yesterday, DOW 60,000 by 2020!!!! But in that euphoric fantasy, no ne asked the dipshit what commodities and PM would go to????

If that's not a hyperinflation scenario, what is???? Ya DOW 60,000 on solid fundamental growth and healthy P/E ratios, ya OK crack smokers!!! The wolves of Wall Street only hope the sheeple think so??

Did that idiot also price in unlimited federal deficits and an exploding federal debt of 30 trillion by 2020, all to keep rates low and 1.5% GDP growth over those 7 years???? Ohhh and I assume this clown predicts the USD will still be the reserve currency on the planet, which it won't!!!

That's what everyone is missing in this debate on this article, it's not 1994 because already 12% of global trade is being settled in Yuan or Gold right now, by 2014 it will be 25%, once that snowball gets rolling, it won't take long until its 75-80%!!! Then we will see what the US bond market thinks rates should be on US debt?? Can you say, 7-8% on the 10Y!!!!! And if you somehow think that Americas worn out consumer market buried in debt and inefficiencies, will be any match for a 1:25 billion person consumer market in China desperate for upward mobility, with very little individual debt, you haven't been to Bejing, Hong Kong or Shanghai in the last 5 years!!!! USD meet the British Pound, you'll be room mates now!

Tue, 07/09/2013 - 08:54 | 3733635 LawsofPhysics
LawsofPhysics's picture

What garbage.  1994 was a blip in a 40+ year bull market for bonds.  Keep it simple stupid, the government must fund it's liabilities, period.  It needs cheap money to do that.  It rates continue to rise, we get a soviet-style collapse, period.  Good luck to those states that can't make ends meet (and good riddance).

Tue, 07/09/2013 - 08:58 | 3733649 TheSilverJournal
TheSilverJournal's picture

And the only way to keep rates down is more QE, leading to hyperinflation. As in all ponzies, it's expand or die.

Tue, 07/09/2013 - 09:06 | 3733668 ATM
ATM's picture

Which is exactly what Minerd beleives will be the ultimate end game.

Tue, 07/09/2013 - 09:15 | 3733689 Herd Redirectio...
Herd Redirection Committee's picture

The rising rates trigger the hyperinflation just as much as the moneyprinting (esp. that yet to come) will play its part.

Rising rates mean banks have to start lending out their reserves at some point (otherwise they will have to eat the financing and interest costs of doing business). 

Tue, 07/09/2013 - 09:36 | 3733741 El Viejo
El Viejo's picture

I see a schizoid Japanese fortune cookie in the long term. Now take your Bipolar meds and chill.

Tue, 07/09/2013 - 09:50 | 3733771 espirit
espirit's picture

Au bottomed mid-1993, so what's the co-relation?

Tue, 07/09/2013 - 10:21 | 3733852 eclectic syncretist
eclectic syncretist's picture

Don't you mean "in all ponzi's, it's expand UNTIL you die."?

might as well piss up a rope.

Tue, 07/09/2013 - 09:15 | 3733688 yogibear
yogibear's picture

A number of states are saddled with ever-increasing public pension and benefit promises. The states and school districts will tax their citizens out of the area.

Tue, 07/09/2013 - 09:55 | 3733780 Angry White Dude
Angry White Dude's picture

FedGov will start bailing out the states via takeover of public and private pension programs through mechanisms like PBGC. Expect to see creation of "Bad Bank" style pension management programs.

Tue, 07/09/2013 - 09:28 | 3733724 gjp
gjp's picture

Total garbage, all you need to confirm that was this snippet: " Over the long-term, equities prices will likely reflect the recovery in the underlying economy".  Another recovery shill I guess.  Idiot, equities are the recovery in the economy and over the long-term the ponzi is going to collapse and destroy the whole shitshow, economy and markets together.

Tue, 07/09/2013 - 08:57 | 3733638 SheepDog-One
SheepDog-One's picture

Oh, well can't they just get by with more 'Good Fed/Bad Fed' act to manage world markets? 

It's so easy, just hint at taper 1 day and get the rush for the door, then other Fed heads come out and say 'NO NO you got us all wrong don't worry!'...and market participants become placated sheep once again and buy moar.

Very easy! Homo Sapiens species is very stupid! 

Tue, 07/09/2013 - 09:06 | 3733667 LawsofPhysics
LawsofPhysics's picture

Come on SD-1, you are smarter than that.  Individually, many humans are brilliant, collectively, humans are idiots and have been devolving for quite some time.

Tue, 07/09/2013 - 09:08 | 3733675 BLOTTO
BLOTTO's picture

Speaking of ones...happy bday (tomorrow) to one of the brighest ever!


Nikola Tesla!

Tue, 07/09/2013 - 09:12 | 3733681 knukles
knukles's picture

Right next to Roswell Day!
I get static tingles all down my leg.

Love that stuff....

Look up in the sky.. It's a bird... It's a plane... It's a cloud orb spraying chemtrails!
I love the sound of HAARPs in the morning

Tue, 07/09/2013 - 11:56 | 3734143 mick_richfield
mick_richfield's picture

I always got a charge out of that guy.

Tue, 07/09/2013 - 09:17 | 3733692 SheepDog-One
SheepDog-One's picture

That's right some individual Homo Sapiens are brilliant....of course we can't have that! Unless they're easily controlled, what kind of treatment do they get? 'Kook', 'weirdo', 'terrorist'.

Tue, 07/09/2013 - 09:25 | 3733719 j0nx
j0nx's picture

Liberalism and political correctness are the root of the problem. People know what they need to do to solve problems and inherently they know WHAT the problems are but they are hampered from taking action because they know they will be labeled some kind of ist for it. Racist, sexist, terrorist, etc. We know who commits the vast majority of violent crimes in the country yet we do nothing. We know who the troublemakers are in our communities, our local, state and federal government offices yet we do nothing for fear of being labeled some kind of ist. I can put on one sheet of paper what the problems are in this country and how to solve them in less than a decade yet if such a paper were ever seen by society's eyes I would immediately be branded a racist and a terrorist and some kind of radical. EVERYONE and I mean EVERYONE knows what the problems are, knows deep down that we are fucked as a species and why yet nobody does anything. I've been saying for years that political correctness would be the doom of this nation and western society in general.

Tue, 07/09/2013 - 10:00 | 3733793 Winston Churchill
Winston Churchill's picture

Can't remember if it was Juncjer or Wederman who said;

We know what needs to be done,but don't know how to be re elected

if we do it.

Time to change the canary to a signet in an oil well.

Tue, 07/09/2013 - 10:48 | 3733910 prains
prains's picture

what you describe is neither liberal nor conservative in name so why do you insist on confusing the issue

Tue, 07/09/2013 - 12:02 | 3734167 j0nx
j0nx's picture

Get outa here. Liberalism is the disease. Political correctness is just a very bad symptom that leads to death. PC is entirely an advent of the liberal mind. Just like every little kid getting a blue ribbon and trophy at the awards ceremony. In my day you were either first place or you lost. People were called out on their bullshit and shame was still something that people felt when they knew others knew their dirty laundry. Honor and pride was also something that people knew and felt. 30 years of liberal indoctrination has taken all of that away. Liberalism also has nothing to do with politics. Liberalism is a mindset, a way of life and is destructive to everything that America ever stood for.

Tue, 07/09/2013 - 12:53 | 3734348 IdiocracyIsAlre...
IdiocracyIsAlreadyHere's picture

Wow you are a fully propagandized moron.  You really think that "liberals" have that much power.  And the "your either in first place or you lost" mentality is just as bad as everyone getting a ribbon for just showing up.  This creates the kind of willing serfs who believe everyone who has achieved money and power has somehow "earned" it through hard work.  Get a clue, idiot, the game is rigged and it is rigged against you no matter what Limbaugh tells you.  I laugh at you as you are just as indoctrined as any ultra PC faux progressive.  I see in you a classic high authoritarian follower so though I wish there was hope you could see beyond your preconceived notions, I know that is not realistic.  Authoritarianism  is a mindset that knows neither left nor right and you clearly a possessor of it.  Pathetic.

Tue, 07/09/2013 - 21:00 | 3735883 j0nx
j0nx's picture

You aren't even worth a rebuttal. All you know how to do is call names when you don't get your way. Typical liberal. Troll elsewhere. Obvious troll is obvious.

Tue, 07/09/2013 - 12:45 | 3734312 IdiocracyIsAlre...
IdiocracyIsAlreadyHere's picture

Because he has absorded enough of the propoganda that he continues to think of the world in (false) binary terms.  It is really frustrating the number of posters on this site that "get it" only half the way.  They understand that things are in many ways fucked, but cannot see the man behind the curtain.  So they channel their resentments to easy targets while being eagerly encouraged to do so by Limbaugh, Beck, Hannity and their (bought and paid for) ilk.  How many times do you see in the comments whining about EBT receipiants without any awareness that is it JPMorganChase (one of Obomba's owners) who is profiting from them.  It works for them on two levels:  they gets to skim money from .gov from every receipting (causing the need to create more) and keeping the resentments of the "Red Team" focused on peons rather than how they are getting screwed by TPTB.  Diabolically brilliant on their part.

Tue, 07/09/2013 - 17:01 | 3735269 hit_the_bid
hit_the_bid's picture

"So they channel their resentments to easy targets"

its an easy target for them cos otherwise they might have to think to discover who is at fault, & god forbid that may mean opening up a book or two. i cannot believe that msg has 17 up arrows, ZH down in quality severely,

Tue, 07/09/2013 - 21:01 | 3735889 j0nx
j0nx's picture

So hit the bricks then. Aint nobody twisting your arm begging you to stay.

Tue, 07/09/2013 - 17:01 | 3735270 hit_the_bid
hit_the_bid's picture

"So they channel their resentments to easy targets"

its an easy target for them cos otherwise they might have to think to discover who is at fault, & god forbid that may mean opening up a book or two. i cannot believe that msg has 17 up arrows, ZH down in quality severely,

Tue, 07/09/2013 - 16:49 | 3735232 hit_the_bid
hit_the_bid's picture

-1 for being a f mentalist

Tue, 07/09/2013 - 09:10 | 3733682 DOT
DOT's picture

Sheep Dog knows sheep.

Tue, 07/09/2013 - 08:55 | 3733639 Smegley Wanxalot
Smegley Wanxalot's picture

Christine Lagarbage will be our next Fed Chairsatan.

Makes sense: she studied in Chitcago and is part of that mafia.

Tue, 07/09/2013 - 10:51 | 3733918 zjxn06
zjxn06's picture

Chair-is-tan and wrinkled.

There. Fixed it.

Tue, 07/09/2013 - 08:58 | 3733646 doggis
doggis's picture

Markets are certainly under pressure, but this is not a doomsday scenario.



Hmmmm.. i was always taught - the moment you hear what is "NOT"  - is the moment you know what "IS".

of course this is NOT a doomsday scenario.



Tue, 07/09/2013 - 09:07 | 3733674 ATM
ATM's picture

NOT yet.

Tue, 07/09/2013 - 09:15 | 3733687 SheepDog-One
SheepDog-One's picture

Not yet, until it suddenly is, then of course no one coulda ever seen it coming!

Tue, 07/09/2013 - 09:01 | 3733648 fonzannoon
fonzannoon's picture

I thought in 1994 Clinton famously aid "I can't believe I am taking orders from the fucking bond market" and was forced to cut spending and balance the budget.

In this case, with the debt ceiling above 17 trillion, and no budget, bond yields will eventually be calmed down when the economy goes to shit and the fed has to blow out the balance sheet on an even larger scale.

I don't think the two years sound so similar after all. Luckily It's not doomsday. Definietely not doomsday. Buy some bonds, buy some stocks, call Guggenheimers toll free number and speak to a braindead zombie dipshit today!

Tue, 07/09/2013 - 09:09 | 3733678 dick cheneys ghost
dick cheneys ghost's picture

''From October 1993 to November 1994 US 10-year yields climbed from 5.2% to just over 8.0% fueled by concerns about federal spending. With some guidance from Robert Rubin, the Clinton Administration and Congress made an effort to reduce the deficit. 10-year yields dropped to approximately 4% by November 1998.

Clinton political adviser James Carville said at the time that “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody."''



Tue, 07/09/2013 - 09:18 | 3733697 fonzannoon
Tue, 07/09/2013 - 10:02 | 3733798 Angry White Dude
Angry White Dude's picture

Bingo! And so it begins.

Tue, 07/09/2013 - 09:21 | 3733703 francis_sawyer
francis_sawyer's picture

Correct me if I'm wrong... But wasn't that about the time that Clinton started dipping into the Soc Sec accounts?...

Tue, 07/09/2013 - 10:06 | 3733810 derek_vineyard
derek_vineyard's picture

lots of laws can be enacted to force private funds into financing the debt and/or control US rates. taper = crisis = new govt policy.

on a side note: my sister is involved in a short sale.  its been about 4 months.  in those 4 months rates have risen dramatically. i am now hoping the short sale falls through (even though on paper this home is worth a lot more) as her payment will now put her right on the brink of living month to month.   hope she stays in her small current home with the 3.5% mortage and keeps some breathing room.   wonder how many people are at this precipice. and cap rats at 4% trying to compete with long bond yields, with home no longer appreciatiing ---this is getting interesting.

Tue, 07/09/2013 - 12:05 | 3734181 Bay of Pigs
Bay of Pigs's picture

It is a looming disaster.

"Among The Worst Days in Mortgage Rate History"

Tue, 07/09/2013 - 09:17 | 3733693 taketheredpill
taketheredpill's picture

Clinton's best line was when he said they were going to pay off all the debt.  I think the Bond Market actually rallied when he said that.

To his credit he did actually PAY DOWN $360 Billion OF THE DEBT by 2000.  FWIW he projected the existing SURPLUS (remember that word?) would rise from $200 Billion to $1 Trillion by 2010.

Then Bush came in.






Tue, 07/09/2013 - 09:35 | 3733742 Debugas
Debugas's picture

he did it by stealing money from pension funds

Tue, 07/09/2013 - 09:53 | 3733775 LawsofPhysics
LawsofPhysics's picture

...and social security.  and allowing banks to do illeagal shit again (repeal of Glass-Steagal).  and allowing mark to fantasy accounting.

Tue, 07/09/2013 - 09:55 | 3733782 fonzannoon
fonzannoon's picture

As you can see from my link, they have a fix for the pensions, and eventually the 401(k) money.

Tue, 07/09/2013 - 10:04 | 3733805 kito
kito's picture

how does that fix the underfunding? a dollar owed to the pensioners is still a dollar owed.........................sounds skanky to me.................

Tue, 07/09/2013 - 10:10 | 3733822 derek_vineyard
derek_vineyard's picture

red pill--- how come presidents get praised or blamed for events which would have happened anyway?   hero worship?  these politicians are all the same---on the same team.  it really doesn't matter who the F is president if there is an R or D by their name.

Tue, 07/09/2013 - 10:17 | 3733847 fonzannoon
fonzannoon's picture

fix = skank

Tue, 07/09/2013 - 10:24 | 3733857 kito
kito's picture

what do you see from this plan fonz? what is their "logic" behind the fix?????

Tue, 07/09/2013 - 10:24 | 3733858 kito
kito's picture

what do you see from this plan fonz? what is their "logic" behind the fix?????

Tue, 07/09/2013 - 10:34 | 3733880 hootowl
hootowl's picture

Theft and deception and denial.

Tue, 07/09/2013 - 10:42 | 3733891 fonzannoon
fonzannoon's picture

I don't know about the logic of it, but the direction is clear. This seems like one of the stages towards the government takeover of the pension/401k assets. First set up this type of plan through the insurance companies. Then, when the market eventually tanks, blame the market performance for the pension shortfall. Get everyone used to the idea of a fixed/annuity type mechanism. Then, offer the same type of mechanism to be available to the 401(k) money. Either through "state sponsored" insurance companies, with god knows how much money gets kicked back to the gubbamint for the privilage of being one of those companies, or just eventually directly with the government,

This is not about a fix. This is about buying time. This seems similar to long term care insurance. People get told that ithey will end uyp burning through all their assets at the worst time in their life if they don't buy the insurance. So they buy it. Then, many years later when too many people go on claim, the insurance company says "hey sorry, we can't pay all these claims, but thanks for all those premiums!".


Tue, 07/09/2013 - 10:52 | 3733922 TheEdelman
TheEdelman's picture

Thanks for the link deerhunter fonz...yet more food to keep the machine fed.  It appears the tricks (solns) will never run out.  Day after day leaning more to the slow and painful theory.  Sorrys cogs...


I think Nofx said it all the best with The Decline....18 minutes of reality as early as 1999:



Tue, 07/09/2013 - 11:15 | 3734014 chdwlch1
chdwlch1's picture

Seems about right to me.  The first question that came to my mind was if insurance companies (as part of the shadow banking industry) can partake in fractional reserve banking practices.  If so, they could reduce the shortfall with conjured debt money.  Even if they can't engage in fractional reserve lending, there sure are less reporting requirements for the shadow banking industry, so they could at least hide the problem more effectively than it's being hidden currently.

Tue, 07/09/2013 - 11:28 | 3734054 falak pema
falak pema's picture

lady lagarde says she will print with IMF 3D printer to help out US banks if FED gets its nuts squeezed into austerity constipation; Imagine that; the ROW comes to FED's rescue. 

Tue, 07/09/2013 - 10:25 | 3733861 Surging Chaos
Surging Chaos's picture

There never was an actual budget surplus. Accounting tricks =/= surplus

Tue, 07/09/2013 - 10:32 | 3733875 hootowl
hootowl's picture

"Then Bush came in".....along with a rabidly Demoncrapic congress.

Tue, 07/09/2013 - 09:18 | 3733652 Shizzmoney
Shizzmoney's picture

Bonds are the next crisis.  A financial crisis in the Bretton Woods era has always coincided with Presidental Terms ending:

Nixon: Inflation

Ford and Carter: Oil Inflation, and Silver Crash

Reagan: Flash Crash (beginning of NeoLiberalism)

Clinton: Dotcom (and beginning of ex-Glass-Steagall) Bubble; Gold Bull market (a sign of civil decline, IMO)

Bush: Housing Bubble (beginning of TBTF Bailout era)

Obama: Bonds (also Portugal, Slovenia, UK, Japan, Brazil, Agentina....a China credit collapse could also happen)

His crash will be worse than them all b/c of the fact that bonds have a great deal of contagion........this is what happens when you have central banks monetizing each other's debt. 

They essentially become hedge funds for governments.  This is worrysome, because usually the only "revenue" that will satsify TPTB who own the rest of these bonds, will want their money. Then comes from war from the resulting austerity, unrest, and exportation of inflation to countries like Iran.


Tue, 07/09/2013 - 10:45 | 3733898 Herd Redirectio...
Herd Redirection Committee's picture

Currency destruction, loss of reserve currency status, thats whats coming along with the bondapocalypse.

Tue, 07/09/2013 - 11:24 | 3734048 falak pema
falak pema's picture

coming to your local theatre in 2014/2015.

Tue, 07/09/2013 - 09:02 | 3733657 ekm
ekm's picture

Collateral and margin calls still ongoing strongly.


In order to prepare for the imminent preplanned collapse, primary dealers and other guys and doing rather then fire-sale.

Same logic for gold's GOFO negative


Imminent, And you know what, there's nothing wrong with it, nothing bad, it's just mandatory house cleaning.


Never forget: It is a collateral based system.

Tue, 07/09/2013 - 09:04 | 3733661 LawsofPhysics
LawsofPhysics's picture

"It is a collateral based system." - yes, unfortunately for us all that "collateral" has been marked to fantasy. - hedge accordingly.

Tue, 07/09/2013 - 09:06 | 3733670 ekm
ekm's picture


But now the problem is, there's no collateral available for pledging, because if it is offered, it will be marked to market.

People want to hang on to it

Tue, 07/09/2013 - 09:19 | 3733699 LawsofPhysics
LawsofPhysics's picture

Right now all I care about is a good blueberry harvest.  Fuck all the motherfucking paper-pushers.

Tue, 07/09/2013 - 09:22 | 3733707 ekm
ekm's picture


Tue, 07/09/2013 - 09:02 | 3733659 They trynna cat...
They trynna catch me ridin dirty's picture

Doesn't matter; POMO Tuesday.

Tue, 07/09/2013 - 09:05 | 3733663 ATM
ATM's picture

The Guggi guy has been more right than anyone else.

Tue, 07/09/2013 - 09:05 | 3733665 knukles
knukles's picture

Lets see.
And housing has entered a long term bull market with even the 101 million on government assistance taking their overwhelming 301k cashing it out to buy McMansions, getting jobs in Greenwich at hedge funds as partners, making millions employed in the housing industry so everybody buys a new Cadillac Escalade meaning yes, it's taper time....

Not yet little Knukies, don't hold your breath

More like the whole worlds weakening, global CB ease is here for a while, gold will return to he fore, interest rates fall back and Stawks be suspect.

It is NOT different his time, just like several times n the past 5 years
We keep going thru this over and over and over....

Tue, 07/09/2013 - 09:29 | 3733729 Hulk
Hulk's picture

"Groundhog Day" was actually a training film...

Tue, 07/09/2013 - 09:07 | 3733671 taketheredpill
taketheredpill's picture

The Bond Market was THE Bubble in Feb 1994.  Everybody was caught offside.  Orange County blew up on it's exposure.  Proctor&Gamble had a massive long futures position for whatever reason.  Might have been a greeting card company blowing up because the treasurer took a view.  If you looked at the Dec 1993 minutes there was no clue the Fed was going to move, so it was just the STRONG DATA in January that pushed them to the first rate hike in 5 years.

STRONG DATA.  There was strong economic data in 1994.  That was why the Fed raised rates.

If there is STRONG DATA today, please feel free to incorporate it in the article.

The "Today is just like 1994" is just another Sell-Side BS argument to scare people out of Bonds and into Stocks.  "Strong data is pushing Fed to raise rates because the economy is doing so well, after 1994 the S&P Tripled blah blah blah".

Bonds are selling off because a very large buyer has said they will leave the market.  Until and unless equities sell off bonds will continue to under-perform.  But if equities ever return to reality, people will buy bonds at 2.7%, even at 1.7%.



Tue, 07/09/2013 - 09:20 | 3733700 SheepDog-One
SheepDog-One's picture

You haven't seen the 'strong data' of Alcoa's Special Olympian feat of strength .07 cents 'beat' which has lit the world ablaze in newfound uber-optimism?

Tue, 07/09/2013 - 09:27 | 3733672 JustObserving
JustObserving's picture

In 1994, the budget defict was $203 billion and unfunded liabilities were not a problem.  Now the US budget deficit is over $1 trillion and unfunded liabilities are $125 trillion. US debt to GDP was 65% in 1994.  Now it is 105% even with the artificial boost to the GDP on July 1 by the inclusion of $500 billion in intangibles.

And US unfunded liabilities grow at $7 trillion a year ($28 trillion over the next 4 years per  So compare $203 billion in 1994 with over $8 trillion in 2013.  That is a massive difference (it is 25 times larger now adjusted for inflation).  The sitaution is exponentially more dangerous now.  

Tue, 07/09/2013 - 12:33 | 3734272 Quaderratic Probing
Quaderratic Probing's picture

Japan is in the same boat and ahead of us, watch what they do to their seniors. Unfunded liabilities really are not liabilities if you don't honor them.

Tue, 07/09/2013 - 09:14 | 3733684 CheapBastard
CheapBastard's picture

<if the housing market’s response to recent events becomes more acute>


I'm already seeing lots of "price cuts" on Zillow  and offers on used...ooops, I meant "pre-owned" houses are plummeting to 20-30% lower then list. My former realtor said wait until december... RE's gonna get Fugly when the party ends.

Tue, 07/09/2013 - 09:20 | 3733695 yogibear
yogibear's picture

Housing bubble #2 about to get pricked. More people under water again and walk-aways.

Just so many FHA homes with only 3.5% down created the last 4 years. These are walk-aways if they drop enough.


Tue, 07/09/2013 - 09:18 | 3733696 kito
kito's picture

there is no bond crash right now.............confidence in the fed and this fairytale economy is still very high...........animal spirits are quite bullish...........the bernank accomplished what he wanted.........he bumped rates up all the while keeping stocks far the bernank is still killin it.............................when we see economic numbers plunge, and the bernank, or summers, or yellen cant fix it.....that is the end.......................until then, enjoy the bull ride....................................

Tue, 07/09/2013 - 09:20 | 3733701 LawsofPhysics
LawsofPhysics's picture

yes, yes...  ...wake me when rates ate back to their historical averages...

Tue, 07/09/2013 - 09:54 | 3733778 kito
kito's picture

thats not what im saying saying this isnt a crash.........this isnt a drop based on lack of confidence..............when that happens, when the markets short circuit.................nothing will be safe.....a loss of confidence in the fed means bonds and stocks and commodities all crash and burn..............the moneymen are still feeling safe that the bernank is in control.......

Tue, 07/09/2013 - 10:08 | 3733818 LawsofPhysics
LawsofPhysics's picture

I really don't give a shit if the paper "price" of commodities "crashes" and burns.  Oil and other commodities are still very fungible.  If you physically have possession of such things, you can still get shit done, period.  Fuck all the paper bullshit.

Tue, 07/09/2013 - 10:26 | 3733863 kito
kito's picture


Tue, 07/09/2013 - 09:29 | 3733727 orangegeek
orangegeek's picture

Here's the road the Fed is taking:


We used to by 20% of the US government bonds.  Now we buy about 35%.  We will shortly buy 100% of bonds.  Anything to keep markets going up.



What an unmitigated disaster in the making.

Tue, 07/09/2013 - 09:30 | 3733732 Whoa Dammit
Whoa Dammit's picture

The only things propping up the US GDP are individual welfare, corporate welfare, and the MIC. Housing is just a sideshow. We are actually as dependent upon government largess as the Soviet bloc was.

Tue, 07/09/2013 - 09:31 | 3733736 e-recep
e-recep's picture

this just in, rumor mill : larry summers to succeed ben shalom.

Tue, 07/09/2013 - 09:54 | 3733779 Tinky
Tinky's picture

That would, in a sense, be the perfect climax to this grotesque drama. Elevate the man who arrogantly helped to crush Brooksley Born, chairperson of the CTFC, and her efforts to regulate derivatives in 1999, to the head of the Fed.

Truly poetic.

Tue, 07/09/2013 - 09:40 | 3733755 The Abstraction...
The Abstraction of Justice's picture

If you really want to change the world, and get rid of these banksters then log on to steam and give this the thumbs up:


It is my latest game,

It is the only video game zerohedgers should endorse ;oD.

Tue, 07/09/2013 - 09:50 | 3733768 spankfish
Tue, 07/09/2013 - 09:50 | 3733769 goldenbuddha454
goldenbuddha454's picture

So from 93-95 Gold ranged between 330 and 395.  So if bond holders run for the exits will they trade in their bonds for liquidity or their gold/silver?  What is most widely held and easily liquidated?  Gold Paper, Gold Physical or Bonds?  Those trying to escape the gold paper will drive the gold physical high and those trying to escape bonds will also drive gold up.  People will seek safety somewhere.  Doubt they'll hold onto dollars.  IMO

Tue, 07/09/2013 - 12:25 | 3734230 Quaderratic Probing
Quaderratic Probing's picture

I think the next bubble is the USD. Having cashed out of bonds and stocks into cash with bubbles in tech, housing, oil, bonds and commodities ( cotton, silver, gold ). A deer in the headlights what to do with cash will hold just long enough to cause a flood into the Dollar. Past bubbles are not repeated as too many get burned and don't want back in. Forex traders will jump on the rising USD leaving it the only game for a time.

Tue, 07/09/2013 - 10:13 | 3733831 Catullus
Catullus's picture

Interesting reading a bond trader on 1994. Where's the part where they conspire against Bill Clinton and democrats in a reckless act of bond "vigilantism" and kill the liberal agenda that was going to lead us to the promised land? Shorting treasuries not because of "market fundamentalism" but because they're playing a duration spread?!

Paul Krugman is gnashing his teeth that this doesn't fit into to the tightly knit narrative.

Tue, 07/09/2013 - 10:23 | 3733854 Hubbs
Hubbs's picture

TPTB must be laughing hysterically at the poor ignorant masses. Their behavior is beyond criminal. They are sociopaths. Tyler, you need to write a review article on the definition of Machiavellian , and the  histrionic, narcissisitic, and hedonistic personality traits of the Wall Street and political classes.  (wait a minute, those traits were used to describe my ex-wife, the "good" doctor!) Then we can understand why they do what they do.

Tue, 07/09/2013 - 10:57 | 3733952 Herd Redirectio...
Herd Redirection Committee's picture

People think they are wealthy because they are greedy.  Thats generally incorrect (or only a partial truth at best).

In general, billionaires are powermongers.  Thats what makes the difference between $1 billion and $2 billion in their eyes.  More power.  More status.  More control.

Tue, 07/09/2013 - 10:27 | 3733866 Youri Carma
Youri Carma's picture

The two most likely scenario’s in my opinion:
1) The FED doesn’t Taper and will in fact even increase QE.
2) The FED does Taper but after an economical collapse the FED will dramatically increase QE.


Either way QE is on in a big way baby!!!

Tue, 07/09/2013 - 10:45 | 3733899 Seeking Aphids
Seeking Aphids's picture

I agree Youri.....can't understand why this is not understood by all........QE must continue and/or increase to keep interest rates low on the US debt....end of story. No real recovery in the wings just stagflation.....My guess is that the ROTW is aware of this and is moving away from dependence on the $US...look for an announcement by the BRICS re: new basket of currencies (including RMB and gold) to be used for trade globally...or maybe China will just keep pushing the Yuan as a new trading currency and bypass the $US...either way bad  news for the $US and good-bye get out of jail free card for the US. If the $US goes down what goes up?? Commodities, inflation..........all part of the plan to reduce the US debt to manageable levels? Net result, poorer Americans and a richer 1% who will have piled into commodities long before everyone else (happening now?)......

Tue, 07/09/2013 - 11:02 | 3733966 tvdog
tvdog's picture

I don't get how you can have high inflation and low interest rates. Who would want to buy a bond yielding 2% when inflation is at 10%?

Tue, 07/09/2013 - 11:09 | 3733991 Seeking Aphids
Seeking Aphids's picture

The Fed

Tue, 07/09/2013 - 11:08 | 3733988 Herd Redirectio...
Herd Redirection Committee's picture

I have found Ka-Poom theory helpful in describing this 'stage' in the action.

Right now we are headed for either government fiscal accountability (!) or currency destruction.  Thats it.  They can kick the can, they can delay, they can try to restore confidence, etc.  But until the US gov't has a balanced budget (LOL) the currency is the victim.

This recent USD strength is just an example of temporarily restored confidence in the fiat.   Bonds, housing, precious metals, have shown deflation.  But that is just a precursor.  The higher rates brought about by the selloff in bonds eventually results in higher financing costs, the impact on investment banks being... They have to start lending reserves again.

Tue, 07/09/2013 - 10:42 | 3733892 The Count
The Count's picture

Hmmmm.... housing is our main industrial motor. Well, that means two things.

1) Immigration, both illegal and legal, will have to keep increasing until we have a China-sized population because we aint making enough babies. At least the anglo's aren't.

2) Contruction will continue full force, environment and resources be dammned, until no more trees are left. Anybody protesting this will be called an environmental extremist, rassist and the all time favorite, a job killer. 

3) The population mix will continue to slant towards Latino/Asian until in maybe 100 years you whites will be the absolute minority. But of course, this minority will not get any preferential treatment whatsoever.

Tue, 07/09/2013 - 10:57 | 3733949 tvdog
tvdog's picture


Tue, 07/09/2013 - 11:46 | 3734122 Shizzmoney
Shizzmoney's picture

At June's rate of redemption ($9.9 billion), Pimco's Total Return Fund - the world's largest - would be empty in 28 months.


Tue, 07/09/2013 - 12:02 | 3734172 Volaille de Bresse
Volaille de Bresse's picture

"Now drink you Ensure, it's good for you"


"Ensure" is sugar-saturated crap!

Tue, 07/09/2013 - 12:18 | 3734210 macroeconomist
macroeconomist's picture

U.S cannot go bankrupt. Not only U.S, any country that issues its sovereign currency, and has its debt denominated in its own currency can technically not go bankrupt, how can a government who is the sole issuer of its currency go bankrupt, apart from self-imposed rules and debt ceilings, etc? So Japan cannot go bankrupt. U.S cannot go bankrupt. U.K cannot go bankrupt. But Greece, Spain and Portugal can.

Governments do not NEED to tax before spending. Government spending precedes taxation. Taxation is only used to extinguish some of the funds injected into the economy by government spending initially.

Austrians do not really understand the dynamics of money creation and sovereignity. Some education on this is needed for the deficit hawks here clearly.

Good luck with breaking your prejudices

Tue, 07/09/2013 - 13:14 | 3734430 hooligan2009
hooligan2009's picture

i dont think you should flatter yourself with the term "macro"..."ostrich" might be closer to it.

there is merit in your case on the timing of tax receipts against government spending. that is akin to saying i spent the money now but i can pay for it later, unfortunately that is a typical answer for PhD students of the a "bleeding obvious" degree.

as far as countries with their own currencies never going bankrupt, there are dozens of examples of countries going bankrupt that own their own currency. the latest example is zimbabwe, with argentina on the cusp amongst other east european countries. many countries would go bankrupt as a result of excess government spending (i.e. corruption) were it not for loan extensions with fiat currencies to continue more limited government spending (corruption). 

here is a list for you of country bankruptcies

i suggest you limit your comments to areas such as increasing your credit card limits to purchase more "stuff" in the "sales".


Tue, 07/09/2013 - 19:42 | 3735657 macroeconomist
macroeconomist's picture

It is funny to see the economically the most ignorant "Austrians" who do not even understand what they read to call me an ostrich, thinking that I am a PhD student or I am flattering myself with my nickname...This website is full of gems really. Have you ever heard somethig called "ad hominem"? 

If you are comparing a country like Zimbabwe with U.S, or your examples include defaults from gold standard era, countries with excessive foreign debt, you have not understood what I said anyway. Read again what I wrote.

With taxes, I know I am right, spending precedes taxation, and the government does not need to tax afterwards. Once again, it does not have to, it CHOOSES to do so. If you do not know how the U.S government operates together with the FED, that is your own problem. Debt-ceiling and bond-financing of debt are VOLUNTARY actions by the U.S government, not necessary actions. They are imposed as restrictions on itself by the government. 

You can create some inflation with monetizing excessive levels of debt may be as the U.S, but since U.S runs huge trade deficits and pays for those deficits with dollars created out of thin air, much of the associated inflation is exported abroad, that's why that inflation all those on this website have been waiting for like waiting for Godot will never come..That is why I am having so much fun on this website, just watching all of you being proven wrong time after time, country after country (Japan, U.K, U.S). 

And what I am saying does not imply let corrupt governments monetize excessive deficits, and we will be fine. But all governments are corrupt according to ignorant Austrians, aren't they? 

Anyway, think again, and come up with better arguments than those above. And if you do not understand these topics, better comment under the "Inflation is coming", "first signs of hyperinflation in the U.S" posts that occasionally appear on zerohedge, you and your fellow Austrians funnily co-masturbate under those posts, scaring each other of the catastrophic inflation of 3% per year!!!You have proven to be wrong endless times in Japan, now for 5 years in the U.S. I guess that should feel great.

Watch your fellow friends getting thrashed here, may be you will learn some economics meanwhile.


Wed, 07/10/2013 - 17:32 | 3739119 hooligan2009
hooligan2009's picture

if it was your money we were talking about I could agree with you. it is not. taxpayers pay for your theories, you don't.

Tue, 07/09/2013 - 13:26 | 3734488 MeelionDollerBogus
MeelionDollerBogus's picture

The very instant such a debauched currency is needed to import anything you'll see the error of your ways.
That currency will have B K O stamped all over it & you will suddenly find yourself FUCKED.

Tue, 07/09/2013 - 13:25 | 3734478 MeelionDollerBogus
MeelionDollerBogus's picture it's not real, it's not real! :D

Tue, 07/09/2013 - 14:22 | 3734691 Nostradumbass
Nostradumbass's picture


"Nobody is buying Rossi's stuff until it passes mustard..."



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