Paul Singer: The "Trapped, Harmful" Fed "Revels In The Role Of Atlas, Holding Up The World"

Tyler Durden's picture

"You don't need me to tell you that the developed countries, the US, Europe, Japan, are insolvent because of their long-term obligations."

That is merely one of the numerous punchlines uttered by Elliott Capital's Paul Singer, a long-term critic of Obama and failed socialist policies anywhere in the world, and of course, of the supreme enabler of destructive economic policies, Ben Bernanke and the Federal Reserve, during his interview with the WSJ's Gerald Baker at Heard on the Street Live earlier today.

Below are some other of Singer's musings which are largely in line for those readers who have been following our coverage of the hard-asset bull, and Fed fatalist's thoughts over the years.

On Confidence, the Future, and the Future of Confidence

"The future is something that is not something you can peer into from today. It will matter tremendously if confidence is lost. How can confidence be lost? Confidence can be lost in some combination of a rise in the price of commodities and gold, a consciousness of inflationary potential, a continued lack of accelerating growth, social unrest, and accelerating of QE. Forget tapering, I think tapering is off the table.

Considering the Japanese model: stable society, enough growth to keep people sort of happy, high savings, nobody really cares that they don't get a return on their savings: that's not necessarily where America and Europe are or will be."

Singer, who also noted that not once in 37 years has his hedge fund ever been able to predict future events, goes on to mock central bank "inflation targeting" principles saying a conversation focusing on specified inflationary thresholds is a conversation "that is possibly bereft of understanding of what happens when people may change their mind in a very significant way."

Singer observes that in discussing positioning for the future with investors in his fund, entities that cumulatively control "trillions in assets", nobody is positioned for inflation. His extrapolation is that the smallest change in behavior or perception - such as in May, June 2013 - when a slight change in perception that the "game of money printing was not accelerating" snowballed into a massive rate selloff, the result of which was that in September the Fed had to retract the very thing that it had leaked it would engage in, namely the Taper.

Crisis of fiat money

Next, Singer discusses about what is fundamentally at flaw - the current unsustainable monetary system - which itself is broken courtesy of what is now rampant, runaway currency debasement. The reason for the is that as a result of the terminal breakage of fiat's links with hard assets following Nixon's shuttering of the gold-dollar convertibility, "and after that it fell to central bankers, to the Fed, to maintain the demeanor, the policies, the words to give an impression of sobriety. And in the absence of any discipline in the numbers, because there is no discipline in the printing of the USD, that impression of sobriety is all that is standing between the holders of dollars and long-term holders of claims in dollars or any currency, and the oblivion of the purchasing power of their wealth."

Singer points out what most critics of the Fed are well aware of: that it was the Fed's low rate policy for a couple of years after the dot com bubble that resulted in the heads of the major financial institutions "kind of losing their heads in terms of their own balance sheets", the epic real estate and credit bubble and the great financial crisis of 2008; and fast forward 5 years later with the Fed once again keeping money sloshing around at effectively punitive rates (thanks to ZIRP and QE), and as a result "the conditions for a loss of confidence are here and now."

On Janet Yellen

Asked about where the head is taking the US, he notes that the "destination is not clear", and that if "somebody comes in who can exert the kind of disciple and sobriety that Paul Volcker did", then there is still some hope. Needless to say, the critic of easy money that is Paul Singer, does not think that Yellen is that person.

On what the Fed should (but certainly will not) do

I don't want to paint  a picture of clarity about the workout of this thing. Because once a society, a financial system gets in a position of the central bank being trapped, and being unwilling or frightened of stopping this merry go round, things get very dicey. They may move to stopping the money printing, markets collapse, then they panic, go the other way, so the reaction of stock markets, bond markets, interest rates, the economy, once you get to a place where the gears are grinding, is very uncertain.... We are in a period where confidence should be jostled and it could be lost at any time for a variety of reasons, how this works out nobody knows.

There is one right thing to do right now: after five years of 0% interest rates, after $3.5 trillion here and several trillion sprinkled around the globe, this Fed chairman, the next Fed chairman, should say: "We've done enough. It is up to the president and Congress to remove the impediments for growth and provide the catalysts for growth, and help this country grow. The country is capable of growing at a far faster rate than it has been. And I think that the Fed, which is the only central bank which has a dual mandate, has embraced this dual mandate in a very harmful way because they actually revel in the role of being Atlas, holding up the world by themselves.

Full clip of prepared remarks below:

* * *

Following the prepared remarks, Singer engaged in a debate panel, summarized by ValueWalk as follows. Singer says that the $50 trillion bond market is now basically controlled by central banks, with $15 trillion owned by the CBs. There is uncertainty as no one would know what would happen if this stopped regardless of how strong the economy is. Singer says QE ‘is gimmicky’ and an indirect solution, when a direct solution should be taken. Everyone has ideas on how to create growth. Very little of this has been pursued in the U.S., Europe or Japan.

Had these lists been pursued then you could say it’s time for QE’s grand finale. But because this was not done, recovery has been weak. Additionally, recovery has been unfair—only the rich have benefited.

Other panelists argue with Singer and ask—is the dual mandate wrong? Paul Singer says he is not a fan of the dual mandate but the issue is bigger. The Fed cannot/should not be solely responsible for economic growth. Through the Fed’s actions they have been an enabler of the problems in fiscal policy.

If you look at Fed minutes from 2004-2006, the Fed seems clueless about the financial system. Therefore, to rely on those people now is a bit foolish.

Sadly, the alternative to "those people" are those other people in Congress, whose stupidity has been enabled by the same people at the Fed, whose creeping take over of the world using monetary policy means has resulted in the peak impotence of the US fiscal apparatus and a Congress which is now, as is painfully evident, completely broken.

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The Shootist's picture

Fuck you Benjamin Shalom and Calamity Janet.

wee-weed up's picture

 

 

Uh, Ben, you piece of excrement...

that's not the world you're trying to hold up on your shoulders...

it's Obama's lyin' boney ass!

ACP's picture

Ben Bershankme is more like the Little Dutch Boy, saving his country from flood waters by sticking his finger in the Hillary.

wee-weed up's picture

Oh no!...

Now his finger will surely rot off!

Anusocracy's picture

Robbers used to hold up banks.

Now a bank holds up the world.

Troll Magnet's picture

and that's how the joos have managed to overstay their welcome.

for thousands of years.

Arius's picture

Summers was the ONLY one who had the balls, the will and understanding to say WE HAVE DONE ENOUGH and sent the ball to CON and POTUS ...

however, we did not want him .... we get what we deserve!

vxpatel's picture

Are you joking? lawrence sumners is a greenspan clone...same nonsense....

Fish Gone Bad's picture

Perhaps things are finally getting interesting...

All Risk No Reward's picture

The Federal Reserve isn't Atlas, it is a planetary financial toilet boil and Ben is simply delaying the final move into the the pipes in order for Biggest Finance Capital front corporations to loot trillions in cash and indebt society to even more inextinguishable debt.

It is fraud to bury people in debt that is impossible to pay, by definition.

Yet, the cock sure, arrogant ignorati that make up the chumptocracy vote for con people to impose this fraud upon them.

Pride and arrogance certainlny does come before a fall... or being purposefully flushed.

eatthebanksters's picture

Washington is never going to change...they will keep kicking the can until the people get so pissed off they stand up and revolt. With our sheeple that is either never going to happen or its a long way off.  Those fuckers in the gubmint are going to destroy us slowly, painfully one day at a time.

All Risk No Reward's picture

The politicians will continue to do what they are doing until the cost / benefit ratio flips FOR THE BIGGEST FINANCE CAPITAL INTERESTS THAT FINANCE GOVERNMENT.

They only trillions in dollars and trillions in debt paper.  Anyone who thinks they will directly hyperinflate that away is deluded or deceived.

They may hyperinflate, but not until they've offloaded their trillions in money and trillions in debt to purchase reality.

Toolshed's picture

Shockingly, I received an invitation to a local meeting to "get ready for Hillary". I nearly puked. That hideous rug eating bitch has less of a chance in 2016 than I do. However, I sure hope she spends many millions of her personal ill gotten gains in her futile attempt to be the first lesbian in the oval office.

Thomas's picture

It's not just Bernanke. It's the instution of the Fed. It has been flawed for many years.

Ghordius's picture

perhaps. after all, it's quite weaselly to have two mandates. but don't forget that generally speaking, a central bank can only monetize - i.e. "clean up after" - what it's Treasury produces

Ghordius's picture

does your Ben "Atlas" Bernanke really have to stick his fingers in our european faces, WB7? ;-)

I'm old enough to remember how Tricky Dick "shocked" us. it's your currency and our problem, remember?

your image somehow reinforces this funny recent notion that Ben is doing something for us. we would still vastly prefer to have a gold-convertible dollar, as originally promised

instead all we got is this exorbitant privilege setup

so the picture I'd have done is one with europe wearing a T-shirt that says: "we were promised a dollar "as good as gold". instead, all we got is this lousy T-shirt that says "not Uncle Sam's problem""

asteroids's picture

Did WB7 see Gravity last weekend? I see some similarities.

StychoKiller's picture

It's printers ALL the way down!

Bangin7GramRocks's picture

This is the problem. The economy CAN'T survive without the stimulus(QE). This bullshit about cutting taxes and regulations and the American prosperity engine roars to life is simply laughable. Bernanke may be an asshole, but he knows more than we do. And he knows we are fucked!

franzpick's picture

In another version, Atlas shrugged.

0b1knob's picture

But what if one day Atlas Shrugged?

eatthebanksters's picture

It needs to happen...the filth needs to be purged and cleansed naturally.

Keyser's picture

That swishing sound you hear is all of us being flushed down the porcelain convenience along with those that caused this debacle. No one will get out unscathed. 

 

neidermeyer's picture

Atlas is shrugging bigtime.. I know MANY people that are working at jobs WAY below their capabilities ,, starving the beast.. and now we have the ACA .. YIPPEE! We're all gonna die.

Never One Roach's picture

But the Bankers said TARP and the QEs have been very successful.

John Law Lives's picture

The banksters are laughing all the way to... the Hamptons... for hookers and blow.  Yes, TARP and QE has been very beneficial to them.

FUBAR.

GMadScientist's picture

Well at least I can rest content knowing they're headed for a life of life(possibly)long STDs and dopamine deficiency induced bilpolar disorder.

 

Legolas's picture

I was thinking this debt ceiling standoff was maybe more than just showmanship.  But, with all the talking heads out there, I'm increasingly of the opinion this may be the real deal.  We need to watching the rats closely in the next week.

 

http://usawatchdog.com/systems-are-breaking-in-treasury-bond-market-dr-j...

 

 


Zadok's picture

Good article. Like Jim Willie.
It may be the real deal because 'they' are choosing to make it so. There are no real limits, so create the diversionary distraction circus and bring it down. Please don't for a minute think this piddley side show is all there is. Get ready to have your mind bent with shock and awe saying 'they didn't really do that did they?'
Don't bother watching the ten year, it broke as an indicator about Sept. 6th as confirmed by JW. Have to look elsewhere for a genuine indicator.

Wishing you well!

http://www.eutimes.net/2013/10/pentagon-warns-to-expect-radical-change-i...

zhandax's picture

I would love to believe Boehner and/or his support has both a spine and a plan, but the last 50 years of history indicates that this, too, is a fantasy.

Legolas's picture

WTF ?  Wow, thanks for the link, Zadok.  Gotta go attend to my last minute items.  If he weren't such a narcissist, I wouldn't give any credence to the article.

Legolas's picture

It now makes sense that the Pentagon unfurloughed 400,000 employees.

It also now makes sense that the Republicans were called such awful names by the Democrat leaders (terrorists, anarchists, etc).

 

erg's picture

Atlas Shrugged doesn't refer to us, it refers to them. They wrote it.

They'll pull the plug and hideout in their high-tech bunkers until such time that we beg them to come back.

Implicitly, from that day forward we will service them.

Or so goes the plan.

Fred Hayek's picture

Uh, Ayn Rand wrote Atlas Shrugged and the guys going "Galt" weren't a bunch of fascistic CEO's getting bailouts from an overbearing government.

erg's picture

You're right, the shruggers were the kick-ass industrialists and hard-core entrepeneurs. The grist of society. That which stirs the complete drink. They're tried of being shackled by the fecund stupidity and wheedling that forever surrounds them.

That's how the power elite see themselves - we're lucky to have whatever tech that they allow to filter through.

The shruggers see us as useless eaters. something to be extirpated.

It's not counter-culture...it's the playbook being laid out for all to see

Grind everything to a complete halt. Company B can't get nut C to service engine G...you get the picture.

Ultimate order out of ultimate chaos. They love force-multipliers.

Atlas Shrugged in a nutshell. Crash the world economy by destroying the American economy and after the dust settles install a technocratic world government.

NidStyles's picture

Pretty sure the power elite see themselves as power brokers and politicians. Perhaps you should actually read the book before critiquing the philosophy it portrays?

 

You are one of the leeches, because you believe in the fantasy of power to keep those evil entrepreneurs in check, so they pay their "fair share".

 

The difference is that you have to hide the language and meaning behind clever worker struggle bullshit and use misdirection to convince everyone that you are for the little guy, when it's obvious that you just want to leech and continue your posh lifestyle at the expense of others. It's about time you "average" fascist Mericuns learned how the rest of the world lives within it's means.

 

butler401's picture

Excellent point, ... I mean you can tell this guy has never a read book, he just uses talking points.

Hell they made a movie recently based on the book, called "Atlas Shrugged", its a 2part 2+ hour movie, ... and it basically does a +10 case of presenting the story.

You can download the movie for free from Piratebay.se, or where-ever.

The actuality is in the Book the "BAD GUYS", are the DEM&PUG party, ... pro politicans as we have now, and they all advocate 'redistribution' to the dumb-fucking public as we have now,... eventually they pass a law saying only one man can own one company, so all the EDISON's have to give their company's away to the 'political elite', gradually the 'brains' and 'managers' disappear, leaving the 'politcal elite' with hollow company's, that simply collapse, but they never blame themselves, they see all their failure as 'sabotage'

Of course the morons, .. and idiots, ...they're told everyday the reason factory's collapse is that their are shortages, ... eventually society collapses, but it all ends well, cuz the 'john galts' all disappear to their paradise, where they can tinker and invent and nobody fucks with them.

***

Lastly let it be said here, that 'elite' are every bit as moron's as the working class, its only the 'john galts' that see the light :)

This is not a new story, in DEMIAN by Herman Hesse, he does a great narrative about CAIN & ABEL, and that CAIN slew ABEL because ABEL was a MORON, and CAIN was a "JOHN GALT", of course the christians are taught to HATE CAIN, ... but the principal idea of HESSE is that CAIN is the John Galt, and I'm sure that Ayn Rand, got her ideas from the very german view of parasitic human nature, ugly and stupid people.

butler401's picture

The 'power elites' are those who steal and redistribute with their elite click,

Most people are NOT john-galts, inventors and risk takers,

There are only 3 kinds of people,

1.) the parasites, the politicians

2.) The morons, who watch TV and cower in fear, and go to work ( the 95 % )

3.) The inventors and industrialists, who can go from idea to product, to manufacturing, ...

2 will always exist, ... they are the 95%, then the 1&3 out maneuver each other,...

But I agree with AynRand, there comes a time in a man's life, when he's SEE's that which the GUBMINT doesn't steal, they tax, ... at that point that man disappears, ... and kids here there are ton's of "JOHN GALT GULCHS", all over the world where us ex-inventors hide from the US Gubmint ... and life is good, ... one day you just wake up and say "why in the fuck do I even bother producing,... for the gubmint?" ..

All Risk No Reward's picture

Ayn Rand was a Rothschild squeeze.  She hooked up with the big money.

At best, she's controlled opposition so Greenspan could bullchit people into deregulating everything for the financial rapists to have their way with us and then Rand got tossed in the trash can as soon as her usefulness for manipulating the population was used up.

NidStyles's picture

Sure she did, that's why she died broke and penniless..

All Risk No Reward's picture

Some more information for anyone interested in following up...

https://cassiopaea.org/forum/index.php?topic=10890.0

It isn't 100% like debt money fraud, but it is something to consider.

Remember, Greenspan used Rand's philosophy to give the mega banks freedom to commit fraud and "let the market work it out."

Not that Greenspan would necessarily represent Rand correctly.

 

 

Fred Hayek's picture

I thought he played his scenes with Keanu Reeves in a bit too understated a fashion.

Smartie37's picture

When doth power yield?

Only when confronted with greater power, with great consequence if unyielding.

Time to yield, or...............................

Watch for more unexpected resignations

suteibu's picture

All of these warnings from Singer, Rogers, Faber, Schiff, etc., is a bit like Custer complaining that the Redskins ™ were attacking them in too great a force.  At the end of the day, complaining does not change the outcome.

The policies coming from Washington and Wall Street will change when those people decide to change them or someone reenacts the banker/politician version of "Who's Killing the Great Chefs of Europe?' and not one minute before.  Anyone who expects differently is simply fooling themselves.

The Shootist's picture

Then again, fiat currencies have undone many a regime. Granted, we are now in uncharted waters with universal fiat and universal raping banks.

suteibu's picture

True enough.  But do you believe that bankers will not remain on the top of the food chain if the dollar fails?  It is their game, their rules, their money.  Their home field advantage is too great to overcome.  The only way to win is...

NidStyles's picture

Their game ends when the paper ends. Then it's who has the ammo and the knowledge of how to feed themselves. Back to nature as it were.

Arius's picture

that is just scary talk ... why cant they come up with a new international monetary system and start over?

brettd's picture

Maybe. Maybe not. 

What if 20% of Taxpayers went on tax strike?

(that's only 10% of the USA population)

Nobody dies, but things would change!