Things That Make You Go Hmmm... Like The Freaking Fed

Tyler Durden's picture

The Fed has painted itself into an almighty corner with QE, and it looks as though we are finally getting to the point in the process where that fact begins to (a) occur to people and (b) matter.

Bill Fleckenstein has often spoken about the Fed's reaching the point where it "loses control of the bond market", and it is quite possible that we are rapidly approaching that point (the signs have certainly been strong in Japan). We may be there already. We won't know until we can look in the rearview mirror, I'm afraid; but the nonvirtuous circle the Fed has created is extremely clear:

The simple truth, as you can see from the diagram above, is that the economy and the markets are now 100% dependent on the largesse of the Federal Reserve to sustain them. What you CAN'T see from the diagram is the scary proposition that the Federal Reserve in turn is entirely dependent upon hope to get itself out of this unholy cycle.

The Fed is hoping (as are the ECB, BoE, and BoJ) that the economy recovers sufficiently through massive stimulus so that the recovery will be "self-sustaining"; but, as can clearly be seen by the action of the markets in recent weeks and months, that strategy (such as it is) appears doomed to failure.

Fortunately, Obama has finally been left with just nominated Janet Yellen as the new Fed chair, and she can be relied upon to continue Greenspan & Bernanke's work in conjuring unlimited free money out of thin air

Which is great for the status quo, but if we take another look at that chart of the US 10-year Treasury yield again, we see something that ought to set alarm bells ringing...

The retracement of interest rates AFTER the Fed's refusal to follow up their tough talk with a Taper has been far less marked than the rout that ensued after the subject was first tabled; and that spells trouble, because the housing market — the engine of the US "recovery" — cannot stand higher rates without being choked off...


Well, Janet Yellen might well confound everybody and launch the Taper as her first order of business. Or Buysenberg may even begin it as his last act in power; but either way, the market will now likely call the Fed's bluff, because it knows that the gun hanging on the wall in the shape of the Taper is not guaranteed to be fired. It may even turn out to be completely superfluous to the narrative; and if that is the case, then chances are it will never be fired.

Just as Walter White's honest intentions in trying to protect his family ended up trapping him in an ever-worsening spiral where countless millions of dollars only made his situation worse, Ben Bernanke is in a similar prison of his own making.


The Fed realizes the truth of that — hence the abandonment of both the Taper and their own credibility — but their chances of averting catastrophe are receding daily.

Full Grant Williams Letter below...


Ttmygh 14 October 2013

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kw2012's picture

Yep! the whole stupid premise of this is, as long as the Fed supplies excess liquidity, that eventually something NEW will come along and grow the economy so much faster that the Fed can end QE without any pain. That's never going to happen. EVER. 

localsavage's picture

But ........the NAR says that now is a great time to buy

Spastica Rex's picture

Buy shares in a cold fusion company.

Manthong's picture

Isn’t there an extra-terrestrial race out there somewhere that likes homo-sapiens tartar, to whom we could trade our immigrants, indolents, criminals and federal workers in exchange for gold pressed latinum, dilithium crystals, Cheetos or something else of value for?

economics9698's picture

Five years, 1716. 1717, 1718, 1719, 1720, 1721, 2008, 2009, 2012, 2011, 2012, 2013,  It's on soon.

Spastica Rex's picture

Then can we send the space cowboys out to slaughter the space Indians?

BigJim's picture

Guys, guys, you GOT to read this - Larry Summer's review of Greenspan's new book in the FT:

I've never had such a strong urge to pull my own eyes out.

NoDebt's picture

Banks hooked on constant Fed liquidity flows

Leeches, including the well-connected rich, hooked on government bennies of all manner and description.  EBT cards for the poor leeches, carried-interest exemptions for the rich leeches.

Big, influential corporations hooked on government largesse.

The government hooked on artificially low rates and the Fed's printing press to cover their deficit-spending asses.

I don't want to hear any bitching and complaining when this all stops going so marvelously.  I'll have little sympathy.

economics9698's picture

Go to the supermercardo, it's there for you to see.


CheapBastard's picture

I'm glad we don't need things like  'production' and 'manufacturing' anymore. I hate working.

Radical Marijuana's picture

For sure, BigJim!

One of my favourite books about the paradoxical self-referentials regarding "the map and the territory" was Douglas Hofstadter's Gödel, Escher, Bach: An Eternal Golden Braid.

See also:

In the end, we are self-perceiving, self-inventing, locked-in mirages that are little miracles of self-reference. ”   Douglas Hofstadter, I Am a Strange Loop


What is crucial to understand Greenspan's new book is that it is about almost INFINITE TUNNELS OF DECEITS, that are self-referentially about deliberate ignorance towards the fundamental fact that the Federal Reserve Board is based upon the triumph of organized crime, taking over the government of the USA, in order to legalize FRAUD, in the form of privatizing the public money supply.

As already pointed out by Zero Hedge:

Theater Of The Absurd: Greenspan Writes Book On Economic Forecasting


 Greenspan, like Bernanke, and now Yellin, are figureheads for the greatest scam in the history of mankind! For a somewhat over-simplified, yet entertaining, animated explanation of that, see:

The Biggest Scam In The History Of Mankind

Greenspan was a spokesman for the MOST EVIL and DELIBERATELY IGNORANT social institution that has ever existed in human history, while Larry Summers was already tainted by being too demonstrably corrupt and crazy to be able to take over the symbolic figurehead role for that institution, which then defaulted to being Yellin.

Tearing one's eyes out, of course, resonates with the Greek tragedy of Oedipus Rex! That evil self-fulfilling prophesy most appropriately describes the Federal Reserve Board, as the most astonishing example of the Bizarro Mirror World there has ever yet been! The figureheads of the Federal Reserve Board are symbolically the most deliberately ignorant people on planet Earth, and the only ones that are more evil than those who actually filled that role are the ones that were too evil to be able to fill that role!

mvsjcl's picture

The truly evil ones don't accept any public role. They shun the limelight with the same vigour that vampires exercise in avoiding sunlight. What vile fucking creatures they are!

emersonreturn's picture

RM, thank you for An Eternal Golden Braid.  as well as your insights.

falak pema's picture

Birds of a feather to be tarred together by history! 

TO pick up on the Oedipus theme: 

These guys are like the mad king who have been irked by his people claiming he change his despotic ways, tore out their eyes and subsequently derided them : Have you no eyes to see what catastrophe awaits you in the real world?

Adding insult to injury, just like this book and the laudatory review of fellow conspirator! 

logicalman's picture

Just give 'em space blankets infected with intergalactic pox.

El Vaquero's picture

Or wipe out the space buffalo so that they starve to death.  But not before trading worthless trinkets for their sectors. 

Debt-Is-Not-Money's picture

Watch out for those space herpes!

asteroids's picture

Ben is praying ... "and then a miracle occurs"

MiltonFriedmansNightmare's picture

Not necessarily implying an extraterrestrial origin, but there are those who believe that what you make reference to is the so called big brain species.

grid-b-gone's picture

The list of non-essentials was beta tested recently. Project Logan's Run is good to go. 

Running On Bingo Fuel's picture

How about, start a mega health care company. Force the people to buy into it or they will be jailed.

We need momentum. Any momentum.

Industrial revolution
Technology revolution
Healthcare revolution.

Get it?


falak pema's picture

cold fusion is italian spaghetti served cold. Awesome trying to unwrap that mess. Needs to be heated up and then it all goes soggy! 

Thats the trouble with nuclear : too hot or too cold! And it sizzles toxic.

But I get the gist of your thrust,  why boil water with fission when you can cool ice with fusion. 

Hot spots make you sweat, cold spots make you freeze to death. WHy can't we have a blond spot with the eyes of black jezebel to make our energy go that is poetic, even tho I burped it.

I am drunk on the energy thread, I do admit to that addiction. 

So who was that greatest american writer of all times?

Was it Burrows, Salinger, Kerouac, Capote or John Galt's lover?

If its Ayn gone randy your choice I'll need a lot of salt to buy that. 

StychoKiller's picture

My vote goes to Herman Melville

falak pema's picture

appreciate your comment in the doom n gloom of ZH drowning in TP withdrawal pains. Oh the feeling of hangover after the free for all in COngress fisty cuffs, Gop looking like Sonny Liston or George Foreman after being "lipped".

Well so be it, good ole Moby Dick was an awesome read! The great white whale; sounds like the FED printing to infinity.

layman_please's picture

"Buy shares in a cold fusion company."

as long as petro-dollar exists every major breakthrough in energy industry is a matter of national security and just won't happen.

TheFourthStooge-ing's picture


But ........the NAR says that now is a great time to buy

Sound the klaxons!

xamax's picture

How many S&P500 points did u miss, 600,1000??
Dont fuck up the nice party please!!

Lewshine's picture

Uh huh....why do I get the feeling that 10 years from now when the Dow is resting at 120,000, we are still gonna be asking these same questions?

The fed threw a party for 6 years and only those stupid enough to come have now become the top .001%.

It doesn't pay to be wise and discerning.

NoDebt's picture

"It doesn't pay to be wise and discerning."

It never does in a kleptocracy.

infinity8's picture

One of you guys shoot me now.

Landrew's picture

I am  beginning  to revert to the 2009 thought, stop listening and prepare for the worst. Bring out your dead, bring out your dead!

NoDebt's picture

Preparing for the worst is not something that you should do only when the mood strikes you.  It's a discipline that you practice every day.  It need not occupy your entire waking day, but it should occupy some part of every day.

deflator's picture

 All they are doing is managing terminal decline with a, "we will muddle through" strategy. They have no hope of economic recovery because they know it is impossible.

surf0766's picture

They have allowed their friends to move all their cash/ other into safe places. When they beging to tell the truth and everyone calls bullshit you will know we are close.

JR's picture

They say all politics is local but for multinational corporations paying taxes, it is not local. Case in point, giant Silicon Valley multinational corporations such as Google and Apple are knee deep in California politics, helping with its far out cultural changes and its tsunami of Third World immigration; but when it comes time to pay the rent (taxes), their profits as much as possible are parked offshore.

When it comes time, protection is available for these giants but when it comes time to help with the country’s finances, these multinationals are busy lobbying Congressional offices for every break available.

Meanwhile, the Federal Reserve makes up the slack caused by its friends, as you mentioned, with a printing press, courtesy of the stored labor and estates of the America people.

America’s tax system and its IRS need a major overhaul. And the people need to begin by ending the Federal Reserve.

Said Forbes in August, “Six of the biggest names in technology — Apple, Microsoft, IBM, Cisco Systems, Hewlett-Packard and Google – ranked in the Top 15 of the 100 publicly-traded companies (as measured by revenue) with the most money held offshore, according to a new report called ‘Offshore Shell Games’ by U.S. PIRG, a federation of public interest research groups.

“Many large U.S.-based multinational corporations avoid paying U.S. taxes by using accounting tricks to make profits made in America appear to be generated in offshore tax havens—countries with minimal or no taxes,” the group says in its 35-page report on the legal loopholes used to shift profits offshore. “By booking profits to subsidiaries registered in tax havens, multinational corporations are able to avoid an estimated $90 billion in federal income taxes each year. These subsidiaries are often shell companies with few, if any employees, and which engage in little to no real business activity.”

The Top 15 companies for 2012 are: General Electric, Apple, Pfizer, Microsoft, Merck, Johnson & Johnson, IBM, Exxon Mobil, Citigroup, Cisco Systems, Abbott Laboratories, Procter & Gable, Hewlett-Packard, Google and PepsiCo. Together, they held $776 billion off shore through a combined 859 tax haven subsidiaries.” …

Here are some of the other findings from the report, which says the use of tax havens is “ubiquitous” among the 100 companies it studied:

• As of 2012, 82 out of the top 100 publicly-traded U.S. companies operated, collectively, 2,686 subsidiaries in tax haven jurisdictions. …

• Only 21 of the top 100 disclose what they would expect to pay in taxes if they didn’t keep profits offshore. “All told, these companies would collectively owe over $93 billion in additional federal taxes. To put this enormous sum in context, it represents close to the entire state budget of California and more than the federal government spends on education.”

• The 15 companies with the most money offshore hold a combined $776 billion overseas., which is 66 percent of the approximately $1.17 trillion held abroad by the 100 companies studied.

• The average tax rate these companies currently pay to other countries on this income is just 6.9 percent, well below lower the 35 percent statutory U.S. corporate tax rate. …

You can find the complete report here or read it below:

Debt-Is-Not-Money's picture

I wonder how much $$$ these top 15 corporations bribed (oops-I mean donated to their campaign accounts) the congresscritters to get these loopholes passed?

Yen Cross's picture

  J.R. , My best to Sue Ellen.

I've known you since 2009-early 2010. You were instrumental in developing my currency trading.

  Why, with you're diverse education , do you waste your time on such menial/servile matters?

JR's picture

It’s because, in this case, Yen, Silicon Valley and Hollywood have taken captivity not only of California but of the Democratic Party and, thus, America.

It’s a story, as Matthew Continetti puts it, “about politics and power in the golden land, and it begins with the money."

It’s a story of “money so big that more of Obama’s 2012 campaign haul came from California than from any other state, where contributions from the Los Angeles-Long Beach metro area were behind only those from Washington, D.C., and New York City, and the president has drawn ideas and resources and personnel from Hollywood and Silicon Valley.”

It’s the story of the Democracy Alliance, “a secret, invitation-only organization of liberal moneybags that since its formation in 2005 has directed some $500 million in contributions to progressive groups,” with currency speculator George Soros perhaps its most famous member.

Continetti’s got it right when he says that “the dream factories in Los Angeles, California ought to have a reputation as the financial and ideological epicenter of Barack Obama’s America.”

It’s a mutual admiration society that needs exposing, an arrangement whereby one side makes huge political contributions and the receiving side awards back massive largesse from the taxpayers’ treasury as well as lucrative worldwide connections.

You know, like Jeffrey Katzenberg, the Hollywood mogul who in 2012 donated or raised more than $30 million for Obama, personally donating $2 million toward the production of ads accusing Mitt Romney of causing a woman’s death from cancer, and in return received “for his support of the president” a “$430 million tax break for Hollywood studios as part of the fiscal cliff deal, and White House support for a distribution deal with China that would open the dictatorship to additional Hollywood blockbusters.”

And when Chinese leader Xi Jinping visited Washington, D.C. in 2012, guess who “scored a seat next to Xi at a State Department luncheon” – Obama’s $30 million bell cow, Katzenberg.

And don’t forget it was the Google Factor, using its power of insider captured information in the Arizona presidential election, that threw the electoral vote to Obama.  Google provided the profiling information to the Democrat Party that would identify and link campaign workers on the ground to the Obama voters not likely to vote and get them to the polls.

In short, California, where Google rules foremost in Silicon Valley, is the connection to the Democrats’ political power. That’s where Obama gets his money for re-election; that’s where Feinstein and Boxer, two of the most dangerous senators in Washington, get their money.

The connection starts with the money in the Bay Area and Silicon Valley and on to Hollywood.

There’s no way to beat these people until the nation disallows government-connected monopolies the likes of Google – who trample grassroots support in elections, don’t pay their share in taxes, and yet determine the political and cultural direction of the nation.

If you want to read Continetti’s full article in The Washington Free Beacon, it’s here…

Sue Ellen says thanks, Yen, for all the good times. And hopes you're enjoying your new digs.

falak pema's picture

thats a pretty one sided picture of Corporate America and the time line  of Crony Democratic party elitist cabalism in California.

I could tell you another story that begins with Nixon and continues with Ronnie and the Bushes. It involves the MIC and the oil lobby and is centered around the names of Bechtel and Bohemian Grove and Yale and skull & bones. Its about the great Bush Machine and Houston and Midland and K's assassination mystery. Its about big oil and how the GOP cornered the Saud connection and Halliburton and Enron and Carlyle became their lead brand names.

Its about the two Kochs of Kansas, today. 

Its about a disease the world has seen since Pax Americana went global under Nixon's MIC/OIL/Petrodollar banking via BW revoke. Its about WS shenanigans under Ronnie and Bush's NWO leading into China delocal and ZIRP bubble. Thank you deregulation and greed is good.

That Clinton joined that wagon, that the Dems under him and Silicon and Hollywood "cut and pasted" the "all the king's men" scam of Watergate MIC cabalistic type crony collusion, is an evidence.

Democratic USA as lead player of Pax Americana went as crony corrupt and entitlement crazy as GOP USA was MIC and WS finance crazy.

So its the same thread and now red and blue mean the same thing : Corporate CP and FED cornered into print to infinity or its goodbye.

You forgot Donald Segretti and the "rat fucking" in California, JR; it all began under good ole Nixon. 

g'kar's picture

I'd go farther back to Woodrow Wilson in 1913. Federal Reserve, Income Tax, 17th amendment.

depression's picture

The Tea Party Extremists are destroying America... get back on message will ya... sheesh

Winston Smith 2009's picture

JR, you have nailed the core problem.  When money is "free speech" and every level of government is so dependent upon that money to successfully navigate our insanely long and mainstream media dependent nomination and election process, multinational corporations that are loyal to no nation will capture the legislative process. Without an educated citizenry to see through this, this will endure forever. 

dogmete's picture

No, the IRS doesn't need an overhaul, it needs to not exist.

logicalman's picture

They don't care about recovery - they just don't want to be blamed for the upcimig disaster.

grid-b-gone's picture

They "have no hope of economic recovery.."

There are actions that could reverse the trend of decline, but they involve shrinking government, reducing money from politics, and working toward a more even distribution of wealth. 

Mr. Potter isn't suddenly going to give George Baily and the Building and Loan Company a level playing field.

xamax's picture

What are these stupid charts??
Want NFLX @ 500 and TSLA @ 300 by year end