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Fed Magically Creates $180 Billion In Student And Car Loans Out Of Thin Air

Tyler Durden's picture


Normally, we would report the change in total consumer debt (revolving and non-revolving) in this space, but today we will pass, for the simple reason that the number is the merely the latest entrant in a long series of absolutely made up garbage. It appears that in the "quiet period" of data releases, when the BLS realized its "non-critical", pre-update 8MHz 8086-based machines are unable to boot up the random number generator spreadsheets known as "economic data", Ben Bernanke decided to quietly slip a modest revision to the monthly consumer credit data. A modest revision, which amounts to a whopping $180 billion cumulative increase in non-revolving credit beginning in January 2006.

So add that to the GDP, to Personal Income, to Household Net Worth, to the BLS' JOLTS "data", and of course, to last year's repeat revision of consumer credit data, as a data set, which while present, is absolutely meaningless following recent arbitrary revisions which meant all prior data contained therein was just as irrelevant.

To summarize: for whatever reason, the Fed decided to recast its entire non-revolving credit data series starting in January 2006, and has magically created $188 billion in student loan and car debt that previously "did not exist."

Old vs Revised series shown below.

For those who still opt to live in the Matrix and be treated like mushrooms, demanding to know just what the "new" fabricated, made up series implies, here it is: total consumer credit rose by$13.6 billion driven entirely by non-revolving credit, or $14.5 billion of the total, while revolving credit has now dripped for three months in a row as households continue to pay down their credit cards, better known as deleverage. In other words: using Uncle Sam as a charge card for cars and university courses, for everything else there is paying down debt.

Finally, perhaps the most amusing implication of today's revision, is the longer term chart of non-revolving credit. As the St Louis Fed chart below shows, we are about to go beyond exponential and purely asymptotic.


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Mon, 10/07/2013 - 16:42 | 4031768 Number 156
Number 156's picture

Fed dollars are just like frosted lucky charms, they're magically delicious.

Mon, 10/07/2013 - 16:45 | 4031782 max2205
max2205's picture

Chart looks moar better that way


I see the data series finally arrived from Madrid

Mon, 10/07/2013 - 16:50 | 4031808 FL_Conservative
FL_Conservative's picture

That's how they financed the goodwill and intangibles that were added to the GDP calc.

Mon, 10/07/2013 - 17:07 | 4031860 CheapBastard
CheapBastard's picture


I think that's the word my Procto-opthomologist used when he had that thick scope up my Butt.

He shook his head in dismal fashion  ... "you need more fiber," he mumbled, "lots more."

Mon, 10/07/2013 - 17:36 | 4031941 monad
monad's picture

I didn't want to be a proctologist, you know. I wanted to be an accountant. Accountancy is a respectable practice. Or it use to be, before all the positions were all filled by this lot of insiders and now look where we are. But the State quota for accountants was already filled, so I had to take this job they assigned me. Do you really think I enjoy examining people's anuses all day? Its not all its cracked up to be, you know. If you'd seen some of the things I have, you'd have a different perspective about things.

Mon, 10/07/2013 - 17:41 | 4031963 FL_Conservative
FL_Conservative's picture

Momma says that life is like a butt of chocolate.....

Mon, 10/07/2013 - 17:48 | 4032003 EscapeKey
EscapeKey's picture

>> 8MHz 8086-based machines


The original IBM PC XT was running an 8088, clocked @ 4.77MHz. It was the Model AT, which was running at 8MHz. And that was with an 80286 CPU.

Obviously, there were clones back then. But none anywhere nearly as successful as the XT.

Mon, 10/07/2013 - 18:09 | 4032069 TwoShortPlanks
TwoShortPlanks's picture

Whatever it takes to present the illusion that organic expansion is back, all is ok, or at least business as usual....until the last Hurrah!

This will be the fate of the United States of Delusion.

Mon, 10/07/2013 - 21:02 | 4032652 jonjon831983
jonjon831983's picture

Mine had a turbo button... so it beat everything.

Tue, 10/08/2013 - 02:45 | 4033155 cynicalskeptic
cynicalskeptic's picture

And they say Americans lack math skills..... 

We're better at fudging statistics than Stalinist Russians trying to porve they made their 5 year plan goals.  And don't think it's easy finding ways to manipulate all those numbers (at least in a remotely plausible way).   The Fed is really, really good at it - I know; I spent a good part of my career there making numbers fit predetermined results (and this was for operations - I can't imagine what the policy guys are doing).   I'm convinced that nobody at Maiden Lane (Liberty St - employees enter on Maiden Lane) has any idea of what they're doing.  The ambitious planned on leaving for higher paying stints on the private side while the medopcre careerists stayed secure in knowing they had job security despite their lack of accomplishments.

Mon, 10/07/2013 - 16:47 | 4031784 JLee2027
JLee2027's picture

Until you stuff your mouth full and start to gag.

Mon, 10/07/2013 - 17:29 | 4031910 Long-John-Silver
Long-John-Silver's picture

All I've ever seen kids do with them is pluck them out one at a time while spilling ~ ten on the floor at the same time.

Mon, 10/07/2013 - 16:49 | 4031805 McMolotov
McMolotov's picture

"Hey Rocky! Watch me pull $180 billion out of my ass!" —Benwinkle

Mon, 10/07/2013 - 17:29 | 4031915 Long-John-Silver
Long-John-Silver's picture

I just want to know what he's been eating so he could do that.

Mon, 10/07/2013 - 17:34 | 4031935 McMolotov
McMolotov's picture

Our kids' future.

Mon, 10/07/2013 - 22:05 | 4032800 oddjob
oddjob's picture

and past, being a revision and all.

Mon, 10/07/2013 - 19:19 | 4032346 jo6pac
jo6pac's picture

And are better then the cool acid they have been drinking 

Mon, 10/07/2013 - 16:41 | 4031769 malikai
malikai's picture

These guys are pros.

Mon, 10/07/2013 - 16:46 | 4031786 Translational Lift
Translational Lift's picture

These guys are pros.

Pros as in pros-titutes............

Mon, 10/07/2013 - 17:01 | 4031847 Arius
Arius's picture

yes, someone made a comment about the Modern Advanced macro tools ...


for a moment i was confused what he meant, but now i understand now what he was talking about ...

Mon, 10/07/2013 - 17:17 | 4031883 Rainman
Rainman's picture

Fabian socialists are a patient bunch, huh ?

Mon, 10/07/2013 - 16:43 | 4031773 ebworthen
ebworthen's picture

$180 Billion here, $180 Billion there...

It's less than three months of QE, so $180 Billion since 2006 is nothing to Ben.

Figured out why Maria Bartiromo has nugget nipples sticking out of her green blouse today; she had Hank Greenburg, former CEO of AIG on, saying that the Government should "lay off" of Jamie Dimon.  Schping!

Mon, 10/07/2013 - 16:49 | 4031788 JLee2027
JLee2027's picture

Since the FED can conjure money, why should anyone be required to pay taxes or repay debt? Let the FED do it all.

Mon, 10/07/2013 - 16:57 | 4031816 ebworthen
ebworthen's picture

Exactly.  Agree with you 100%.  Which is why FED QE, money printing, and the bailouts are so obscene and perverse.

The malfeasant elites would ask:  "But who will scrub the toilets, insert the catheters, and make our Lobster Bisque?"

The Pharaohs built the pyramids with slaves, not equals.

Mon, 10/07/2013 - 17:01 | 4031844 onewayticket2
onewayticket2's picture


dont forget, this administration is filled with disciples of 60s radicals (and domestic terrorists)....these guys BELIEVE Nirvana is only a matter of the right people being able to lead the way....


Tue, 10/08/2013 - 02:53 | 4033159 cynicalskeptic
cynicalskeptic's picture

Jamie, Hank - all of them are America's 'Nomenklature' - members of 'The Party' whose ONLY real qualifications are their slavish loyalty to 'The Party'.   Communism is alive and well in the US where the elite few exploit the workers and accumulate wealth and riches (while the rest starve).   No real talent or ability is needed to be a member of the ruling class - just an immoral ability to lie cheat and steal - and support the others in the Nomenklatura who are doing the same.

In REAL Capitalism you have competition and survival of the fittest - those that provide better products at s better price.  Under our current form of 'Communism' it's all about using government to give yourself an unfair advantage.  You suppress any real competition and loot all you can from the market and from government (the latter is far more profitable).

Mon, 10/07/2013 - 16:44 | 4031776 the not so migh...
the not so mighty maximiza's picture

so much effort that will amount for nothing

Mon, 10/07/2013 - 16:46 | 4031779 LawsofPhysics
LawsofPhysics's picture

Well, that's a "shocker".  Gee, when I played monopoly I always wanted to be the banker too...

Mon, 10/07/2013 - 16:49 | 4031789 bnbdnb
bnbdnb's picture

Now thats a boehner.

Mon, 10/07/2013 - 16:49 | 4031790 Cdad
Cdad's picture

...all of this revealing, once again, just what/who is at the heart of the US economic problem...namely the criminal syndicate known as Wall Street, and most directly, its leadership via the Federal Reserve Bank.

All are welcome to this wasteland, as Ben Bernanke and his merry henchmen, and all the little Wall Street toadies scuttling about, appearing on The BlowHorn [CNBC] an audience of virtually no one, it must be said...scrape every last possible dollar from the collapsing mess they have made...government closure, opening entirely aside.

Thank you, Ben Bernanke, for the wasteland, the joblessness, the inflation, the unsustainable debt, the 1%, and for destroying our capital markets.  We really appreciate it.

Mon, 10/07/2013 - 16:47 | 4031793 Scribbles
Scribbles's picture

How dis affect AAPL?

Mon, 10/07/2013 - 16:53 | 4031817 NOTaREALmerican
NOTaREALmerican's picture

Re: How dis affect AAPL?

I'd think student loans would be great for AAPL.  

You can't expect to make contacts with the future rulers of the planet if you have some old lame-phone.

Mon, 10/07/2013 - 18:35 | 4032161 FeralSerf
FeralSerf's picture

What makes you think those are REAL student and car loans? Somebody "needs" (or wants) $180 billion. Benny creates the $180B for them, but he needs $180B in debt to put on his magical balance sheet. Pull out the magic wand and poof: $180B in new debt on the balance sheet. He doesn't plan on collecting anything on his bogus new "asset", so what's the problem?

It's so easy to steal when you're the banker and the regulator as well. There's a reason the Fed doesn't like audits.

Tue, 10/08/2013 - 02:57 | 4033162 cynicalskeptic
cynicalskeptic's picture

BTW - what ever happened to the $2.7 TRILLION missing from the Pentagon that Rumy was talking about just before 9/11?

 Oh yeah... ONI and all the offices looking into that got vaporized.  Not to mention the companies responsible for clearing a few hundred billion in T-Bills that weren't supposed to exist.   9/11 was VERY convenient for some people.  



Follow the money.  Oops... can't have an audit when there aren't any records.

Mon, 10/07/2013 - 16:49 | 4031795 Number 156
Number 156's picture

I really hope they weren't thinking that they could actually sneak that by. The MSM would ignore it for them anyway regardless.

Mon, 10/07/2013 - 16:48 | 4031798 NOTaREALmerican
NOTaREALmerican's picture

You've got to live in an upscale (top 10%) College Town to truely appreciate the "wealth" generated by Student loans and auto loans.

The restaurants are packed, the bling mobiles are cruisin' `round,  nice cloths,  nice teeth,  it's amazing.  

Life is grand if you're close to one of the "Keynesian" debt spigots of happiness.

Gonna be hell to pay if the Big-Gov crony-socialist debt scams end.   

Mon, 10/07/2013 - 16:55 | 4031826 vxpatel
vxpatel's picture

it'll be interesting to see how much fun everyone's having when the bills come due.

Mon, 10/07/2013 - 17:09 | 4031868 22winmag
22winmag's picture

You just described greater Northern Virginia and Boston to a T.


Add in the poison pill companies and bomb making companies and you have more contrived wealth that you can shake a stick at.

Mon, 10/07/2013 - 17:36 | 4031945 DCFusor
DCFusor's picture

And in SW VA, VA Tech.  Amazing to behold kids driving (and crashing) new, expensive cars while tossing expensive booze bottles out the window.

Drive 5-10 miles from tech and everything is dead - yet prices are far less just a bit away from the school.

Mon, 10/07/2013 - 17:11 | 4031875 NihilistZero
NihilistZero's picture

These Keynesian Paradises will turn into pits of depression and despair during the next downturn.  See beautiful Orange County CA in the mid 90's...

Mon, 10/07/2013 - 17:14 | 4031810 Rainman
Rainman's picture

I remember a centurion lady saying the best invention of the last 100 years was the microwave....the worst, the credit card.

Mon, 10/07/2013 - 16:52 | 4031811 Inthemix96
Inthemix96's picture

Whats the fucking odds on that then?

Can it be rehypothicated into amounts that make us here wince??

Can it fuck.   These fuckers should be hanging from lamp-posts.


Mon, 10/07/2013 - 16:56 | 4031832 vxpatel
vxpatel's picture

Careful...NSA is taking notes and names...making a list...checking it twice....and when the inevitable happens....gues who they'll target first?

Mon, 10/07/2013 - 17:09 | 4031867 Inthemix96
Inthemix96's picture

I couldnt give two fucks mate.

Let the NSA and GCHQ corellate and postipulate, go fuck themselves with a broken blunt wood saw.  And if they want to come knocking, as you must be aware, they know exactly who I am, come and get some you fucks.

250 ft pd per second, 1", in silence.  I may only get one, perhaps two??  Who knows.


Mon, 10/07/2013 - 18:56 | 4032272 vxpatel
vxpatel's picture

It will be funny when they come knocking and people refuse to cooperate, well armed, well trained, fearless, normally domecile people...activated silence is a rage unto its own.

Mon, 10/07/2013 - 16:53 | 4031815 OpTwoMistic
OpTwoMistic's picture

Hitler moving invisible armies.

Mon, 10/07/2013 - 16:52 | 4031818 Kirk2NCC1701
Kirk2NCC1701's picture

Cool!  But don't tell China or the rest of the world that they are subsidizing this with every Dollar they buy.


Mon, 10/07/2013 - 16:57 | 4031827 ultimate warrior
ultimate warrior's picture

Those charts just confirm that we are truly exceptional.

Mon, 10/07/2013 - 16:55 | 4031828 LouisHill
LouisHill's picture

That looks like the kind of chart that Deder Sornette might do power log analysis on. :)

Mon, 10/07/2013 - 16:55 | 4031829 yogibear
yogibear's picture

China and the middle east is full of fools for holding US debt.  The US will default through monetizing by the Fed.

The US fed is making the Chinese and the mideast will look like dummies soon.


Mon, 10/07/2013 - 17:11 | 4031874 LukeWorm
LukeWorm's picture

Never make a Chinese lose his face. Never.

Mon, 10/07/2013 - 17:16 | 4031881 akak
akak's picture

Too bad they don't 'lose face' when they loose their bowels upon the roadside.

Tue, 10/08/2013 - 03:05 | 4033165 cynicalskeptic
cynicalskeptic's picture

China's been conveting all those paper FRN's into TANGIBLE assets - Australian mining companies, farmland in Africa and lots and lost of nice shiny gold.  I suspect that the US cut a deal under the table to allow China to stock up on Gold at bargain oprices os they DON'T immediuately dump US paper (not to China's advantage to see the $US tank precipitously anyway).    BTW - WOrld Bank lists US gold holdings at 0 - they were making noise about not counting stocks that had nbeen 'lent out'.

I suspect it's been gone for a while - the US cut a deal with the Saudis to support the Petrodollar in exchange for under the table payment in Gold.  Maybe the US really does thing the barbarous relic isn't really worht anything but the rest of the world begs to differ - and there's only so many FRN's and so much US debt you can force the world to take on at gunpoint.

China and the sheiks may be stuck holding some paper FRN's but the value of the gold and hard assets they own will appreciate at an exponential rate (while the value of US 'savings' and such will go to zero) when the dollar collapses.


still... you never know what will happen when WWIII breaks out - I think that's the last ditch effort to defent the dollar and US 'superpower' (superdebtor) status.

Mon, 10/07/2013 - 17:00 | 4031841 TrustWho
TrustWho's picture

Daddy Bernanke says "Rounding error guys. Go fuch yourself."

Mon, 10/07/2013 - 17:04 | 4031854 ptoemmes
ptoemmes's picture

And it didn't change reality one damn bit.  Might as well make it a trillion (the new default unit of measure) Ben.

Mon, 10/07/2013 - 17:04 | 4031855 Haager
Haager's picture

We need moar!

Mon, 10/07/2013 - 17:06 | 4031864 CheapBastard
CheapBastard's picture

Is there an App for this?

Mon, 10/07/2013 - 17:12 | 4031877 bentaxle
bentaxle's picture

So, the U.S economy is going to fall from an even greater height? At least they warned everybody it was going to be worse than thought.

Mon, 10/07/2013 - 17:15 | 4031882 booboo
booboo's picture

Bens just retardactivly making his tenure at the Fed look moar better.

"and now Janet, you just move the cursor over the "Moar" tab, right click, this opens up the "How much Moar" box and you just type in like 180B and it ask "are you sure you don't want Moar" Yes/No, click no this time and whammy i'm a MMT heavy hitter, look, it has my picture with a crown on it, so yea, thats how we do it."

Mon, 10/07/2013 - 17:21 | 4031890 LawyerScum
LawyerScum's picture

Come on, it's dangerous fucking work conjuring up that much money. One could easily acquire carpel-tunnel syndrome from the constant 0's one must type.

Mon, 10/07/2013 - 17:36 | 4031905 Yen Cross
Yen Cross's picture

  Why don't they just revise it back to 1916?  PIKERS...  I'm surprised they even have an x-y axis to build a graph with Benocchio running the carnival.

Mon, 10/07/2013 - 17:33 | 4031920 KashNCarry
KashNCarry's picture

That $180 billion seems to be the Magical Number of our times today:

"...And according to our and the BPC's preliminary calculations, just focusing on simply paying down this debt in the all too likely case that the rollover machinery grinds to a halt, means that the Treasury would be about $180 billion short of paying down just the amounts due in the table above!..."

Mon, 10/07/2013 - 18:02 | 4032008 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

The only thing I am not following is how does the scam work? The FED uses an accounting trick to create 180 billion in student debt to offset the shortfall of interest payments the Treasury can't pay if the they can't issue new debt by November 15, then what? How do they turn that 180 billion into revenues to cover the shortfall? Are they going to force the banks to dip into that 2+ trillion loans over deposit hyperleveraged derivative slush fund and somehow do some sort of a repo to cover the 180 billion next as a contigency plan?

I can see why the FED is doing this since this is a sideways monetization using a slush fund so no real debt has to be forgiven to cover the shortfall via monetization. I would imagine this is highly illegal but it is not like the law applies anymore so the only way to stop it is to stop people from breathing at this point and that ain't happening so far.

I am convinced if nothing else they are going to tap that slush fund to keep the liquidity going in the stock market if QE gets prematurely cut off by the debt ceiling, I think the FED is in too deep to not try it so they don't look bad when the QE dries up and everyone is caught naked without liquidity to move the market upward.

Mon, 10/07/2013 - 17:36 | 4031943 Questan1913
Questan1913's picture

The "American people" we are finding out have an infinite capacity to accept being lied to, and I think we will soon see that their capacity to be outright robbed will be tested and also found not to be wanting.  

Mon, 10/07/2013 - 17:51 | 4032018 Anonymouse
Anonymouse's picture

An ignorant question perhaps, but is this "adjustment" another addition to GDP?

Mon, 10/07/2013 - 18:13 | 4032083 lolmao500
lolmao500's picture

To that moon.

Mon, 10/07/2013 - 18:23 | 4032126 no more banksters
no more banksters's picture

If one take a look at the data, can see that the share of the US government debt held by the "Federal" Reserve reached record levels in 2011, reaching 11.2% of GDP, the highest since 1940 onwards, and possibly the historically higher. In 2012, this rate was also high at 10.6% of GDP. Only once this figure reached such levels, in 1946, i.e. shortly after the end of WWII, when it reached 10.7% of GDP.

Mon, 10/07/2013 - 18:33 | 4032159 Bullish_NoMatte...
Bullish_NoMatter_What247's picture

Did I miss the BTFD?  Must have been a massive move today.  sarc/

Mon, 10/07/2013 - 18:41 | 4032198 Teddy Tenpole
Teddy Tenpole's picture




You say Billion like it's some huge number.  This place can be so gay.


(but not Obama gay, just good ole gay)

Mon, 10/07/2013 - 18:46 | 4032215 Notarocketscientist
Notarocketscientist's picture

If you are a graduate carrying big debt - even if you are fortunate enough to have a job - do NOT pay your student loan.

Fuck Bernanke!  Fuck the Banks! 

You know that if enough of you don't pay up they will do nothing.  They'll just write it off.

Ethically when you see big banks being forgiven trillions + being given MOAR cash at Zirp to GAMBLE with - WHY SHOULD YOU PAY YOUR LOAN BACK?

The rich are getting over big time - you deserve a taste of free cash too!

Mon, 10/07/2013 - 18:55 | 4032268 q99x2
q99x2's picture

The problem is that if the FEDs can pull this shit then no one is safe and neither is the world.

Mon, 10/07/2013 - 20:21 | 4032543 max2205
max2205's picture

Btfd is on hold till Barry gets what he wants

Mon, 10/07/2013 - 20:22 | 4032544 max2205
max2205's picture

Btfd is on hold till Barry gets what he wants

Mon, 10/07/2013 - 20:44 | 4032603 markitect
markitect's picture

Fuck You Beardstanky

Mon, 10/07/2013 - 21:01 | 4032656 insidious
insidious's picture

Borrowing at exponentially increasing rates is a good thing? If the Bernank didn't say it was so I wouldn't believe it - I might even think exactly the opposite. But I guess that's why I'm only a software engineer and not an economist / Fed Chairman (and why I'm stupidly working my way down to zero debt as quickly as possible - the only outstanding debt is my house, and I should have paid that off a while back - but I didn't).

Tue, 10/08/2013 - 01:52 | 4033123 Bunga Bunga
Bunga Bunga's picture

Someone told them, if chart looks exponential, economy is fine.

Tue, 10/08/2013 - 07:33 | 4033251 kralizec
kralizec's picture

I require a shorter list...what don't they pull out of their ass?

Wed, 10/23/2013 - 06:14 | 4082093 Melody7773
Melody7773's picture

It feels like something bad is going to happen. Sadly, but for some reason government does everything possible to ignore students loan debt. And I can tell you even more, they do whatever they can to make things even uglier. They increase prices but same time they fail to improve the quality of education: how logical is that? And one more irrational thing: they make people go into a deeper debt with their students loans!


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