The New Normal?

Tyler Durden's picture

Submitted by Jim Quinn of The Burning platform

The New Normal?

Our government and financial “leaders” tell us that things are back to normal and we are well on our way to economic recovery. They report rising GDP, declining unemployment, and record corporate profits. The legacy media propaganda machines, controlled by corporations dependent upon the government and Wall Street to funnel them advertising dollars in return for reporting falsehoods and mistruths, have been informing the masses that all is well. Just go back to staring at your iGadgets and tweeting your every thought to your followers, because the best and brightest in D.C. and Wall Street have it all figured out. The new normal is here to stay.

I guess my interpretation of normal deviates slightly from our glorious leaders’ definition. During the long-term bond bull market, from 1982 until 2007 the 10 Year Treasury steadily declined from 16% to 5%. This was normal because inflation declined at the same rate. Inflation declined from 13% to 3% over this same time frame according to the BLS. In reality, measuring inflation as it was measured in the 80?s and early 90?s would have yielded an inflation rate closer to 6% in 2007. During the decade prior to 2007, which consisted of supposedly strong economic growth, the 10 Year Treasury ranged between 4% and 7%. Even during the 2001 recession, it never dropped below 3.5%.

In a normal world an investor in a 10 Year Treasury bond would require a yield 2% to 3% above the rate of inflation. If the yield was below the rate of inflation they would be guaranteed to lose money. Only a fool, Federal Reserve chairman, or a CNBC bubble headed bimbo would buy a bond yielding less than the inflation rate. The BLS reported inflation rate has been between 2.1% and 3.2% over the last two years. Over this time frame, the 10 Year Treasury  yielded 2% or below until the threat of tapering reared its ugly head this past summer. Would this happen in a normal free market? If things are back to normal, why aren’t supposedly free markets acting normal? The Chinese and Japanese reacted normally. They stopped buying Treasuries with a real negative yield.

The only fool willing to buy negative yielding Treasuries is none other than Ben Bernanke. He thinks they are the investment of a lifetime. He is so sure they are a can’t miss investment, he buys $2.5 billion of them per day, which just so happens to be the government deficit per day. Ben now has $3.8 trillion of bonds on his books, versus $900 billion in 2008. His balance sheet is leveraged 60 to 1, versus the 30 to 1 of Lehman and Bear Stearns prior to their implosions. When even the hint of reducing bond purchases from $85 billion per month to $75 billion per month caused 10 Year rates to jump from 1.5% to 3% in a matter of weeks, you realize how “normal” our economy and financial system is functioning.

If our financial system was functioning normally and free market capitalism was allowed to operate according to true supply and demand, the 10 Year Treasury would be yielding 4% to 5% and 30 year mortgage rates would be 6% to 7%. Think about that for a minute. This scenario was normal from 2002 through 2007. That is what normal looks like. Now open your eyes and observe what your owners are telling you is normal. The slight increase in mortgage rates from 3.5% to 4.5% has brought the Wall Street buy and rent housing recovery scheme to it knees. Imagine if mortgage rates were allowed to rise to their true market rate. Housing would collapse in a heap.

Allowing Treasury rates to adjust to a true market rate, based on true inflation, would double or triple the annual interest expense on the $17 trillion national debt and blow a gigantic hole in Obama’s already disastrous $1 trillion annual deficits. Does this sound like “normal” to a rational thinking human being with the ability to understand simple math? Luckily, there are very few rational thinking Americans left and even fewer with the ability to understand simple math. We have been programmed to believe rather than think. As long as the stock market continue to rise, then everything is normal.

Do you think Ben Bernanke and his cohorts at the Federal Reserve worry about the average person who doesn’t own stocks, has to fill up their gas tank, feed their kids, make the mortgage, auto, and credit card payments, and figure out Obamacare, while working two part time jobs? Quantitative Easing (MONEY PRINTING) has one purpose and one purpose only – to further enrich the owners of the Federal Reserve – Wall Street banks. The .1% own most of the stocks in this country and their greed and avarice can never be satisfied.

This artificial prosperity plan for Wall Street has the added benefit of allowing the captured politicians in Washington D.C. to continue their $1 trillion per year deficit spending with no consequences for their squandering of future generations’ wealth. Bernanke and Yellen will never taper, because they can’t. The Fed balance sheet will continue to grow by at least $1 trillion per year until they crash the financial system again. Except this time, there will be no money printing solution. We are all trapped like rats in this monetary experiment being conducted by evil mad scientists. No one will get out alive. Welcome to the new normal. Now eat your cheese.

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Vampyroteuthis infernalis's picture

"because the best and brightest in D.C. and Wall Street"

Wow! The bar is really low these days.

Bearwagon's picture

Correct! The bar is low. But that could be because the cheese-thing is known to only work with mice and rats. It doesn't work with humans the same way. The difference would be that mice running a maze in search of cheese eventually stop searching, if they never find cheese again. Men on the other hand must be lured into the maze with money as bait. And unlike rats or mice they will never stop running the maze for the money, regardless if there ever will be money. There once was - and that's all the reason they need to run the maze forever. They are still searching their bait today.

Running On Bingo Fuel's picture

The western gig is up fellas. Head east young man, head east.


strannick's picture

Trapped, cheeze-eating rats. America. Fuck yea

Xibalba's picture

They can't print foreign currency, and the rest of the world is slowly learning that they don't need the usd. Game over. 

AlaricBalth's picture

Here is a link to a chart (FRED) to visualize the phenomenon of which Mr Quinn writes. Normal has been redefined due to QEternity. Note the taper rumor tail on the 10 yr.

nope-1004's picture



If a pro sports team is facing a crisis and a new GM comes in to turn things around, what does it tell you if the new GM leaves well before the team realizes success?

Bernocchio is leaving the FED because he has proven his own theories on the great depression to be 100% wrong.  When an individual leaves mid term, or before realizing the success for which his policies were based upon, it speaks louder than any public statement about Green Chutes, Exit Strategy, Tapering, or whatever new blowhard term they invent next.

Bernocchio is leaving because he's has proven his own theories to be completely inaccurate, and he has proven to be a total financial failure of a chairman.


markmotive's picture

The fiscal cliff is coming. Nobody knows when. 1yr? 10yrs? 100yrs?

Peter Schiff on what to look for:

chubbyjjfong's picture

Thanks for posting that. Highlights in simple terms how 'full retard' the fed and government has become.  Failure is way too hard for them to either accept, or attempt to change and now the accelerator is full throttle to collapse.  

game theory's picture

The game isn't's just getting to the good part. China (and others) should have made a move five years ago. 

Running On Bingo Fuel's picture

They did, US debt got real cheap. They bought more.

ATM's picture

Exactly what I have been telling my kids. Get the fuck out while you still can and go somewhere where there is at least a chance for growth.

Landrew's picture

I think the better point is, it doesn't matter where you run, the WORLD is out of growth!

Pizza man's picture

I go to Asia A LOT! And let me tell you, there are some incredible places to visit, but live there?? Ouch!!!!

Running On Bingo Fuel's picture

It's not 'merica but once you get a taste for the beef everything else will fall into place. The alternative is to be financially drawn-and-quartered at home.


Lost My Shorts's picture

The air is poisoned.  The water is poisoned.  The food is poisoned.  There is no rule of law.  When they no longer need America, they no longer need expats either.  While know-nothings tout the Asian future, the elites of Asia all get passports or resident cards from some place that is not a poisoned pit.

If you are Asian race, and can speak the language and play the game as an insider, sure have fun.  Then run home when things get ugly.  But for big-nose, it's more like out of the frying pan, into the fire.

akak's picture

Or out of flying pan, into file.

So say the ananonymystics.

TheFourthStooge-ing's picture

Ah, ah, AnAnonymystics would arso brame US 'american' citizenism. Not surprising, given Chinese citizenism way of wok carring the cooking marmit brack.

akak's picture

When kicking the wokked dog down the Chinese Citizenism road, just make sure to not be kicking him onto the roadside --- that area is reserved for delivery of brown baby Maos.  One must never mix one's blobbing-up with one's blobbing-down.

TheFourthStooge-ing's picture

That is why Chinese citizenism citizens love to blob. Squatting and blobbing down corresponds to growing up a blob into a brown baby Mao.

It perpetuates the cycle of Chinese citizenish excremental illness.

akak's picture

I wonder if Chinese Citizenism children play "blobbing for road apples" on Harroween?

TheFourthStooge-ing's picture

Somehow must be the case, as traditional Chinese citizenish road apple harvestry always involves blobbing.

akak's picture

It would be making me laugh with double vigor to hear all the little Maos going door-to-door shouting "US 'american' citizenism or treat!".

thestarl's picture

Exactly.Going forward take China for example following the same trajectory as Japan net energy importer, demographics, corruption on a scale second to none,water issues,out of control pollution the list goes on.I agree with Kyle Bass on China and to quote him"just one big Roach Motel".

PacOps's picture

"I go to Asia A LOT! And let me tell you, there are some incredible places to visit, but live there?? Ouch!!!!"


I lived in SEAsia for 10 years '66-'76. YUM! Visiting just does not cut it. That is why I don't go back to visit for a week or a month. If I ever go back it will be permanent.

Headbanger's picture

Ha!  The photo reminds me of the "Pan-dimensional Hyper-Intelligent Beings" who were mice in the movie Hitchhiker's Guide to the Galaxy.

But you'll know it's time to leave this planet when you see this happen:

And don't forget your towel!

Quaderratic Probing's picture

I own all 5 books of the trillogy

Oliver Jones's picture

I will be going long Somebody Else's Problem Fields and Joo-Janta 200 Super-Chromatic Peril-Sensitive Sunglasses (for my visitors.)

y3maxx's picture

You're all Racist. Obama wasn't dealt a fair Hand in his first term. His Platform of "Hope and Change", after hiring Bush’s previous near exact Administration, with Democratic Majorities in both Houses plus a Nobel Peace Prize all got in the way of His Golf Game.

unununium's picture

You are boring and predictable part of the script.

Note: this is not a "pro-bama" post.

Jim in MN's picture

Your underappreciation of racially charged sarcasm just made me burp cheese.  Thanks a quadrillion.

Calmyourself's picture

Yes, truth is boring which is why so few face it.. And yes we all got your point it is the illuminati, .0001 overlords who are truly responsible and bamster is a puppet yada, yada..  He is most directly visible runnin' the scam, and that chuckles is the truth..

max2205's picture

1 trillion per year to prevent moar depression and prop up consumption.    How could this go wrong?

Deacon Frost's picture

Death by Utopia

John B. Calhoun and the Behavioral Sink


In the late 20th Century, John B. Calhoun decided to make Utopia; it started with rats.

In 1963 he produced his most famous creation, Universe 1.

The ‘Universe’ was surrounded by 16 tunnels leading to food, water and burrows. At least it began as Utopia.

Four breeding pairs of mice were introduced into Universe 1, doubling every 55 days. By day 315 the population reached 620. Then is stopped.

Mouse society broke. Young were expelled before they had been properly weaned and were arbitrarily attacked by excessive aggressive male mice. Females became more aggressive, non-dominant males became passive, not retaliating to attacks. Then there were no new mice.  

The purpose of the experiment was to examine overpopulation... No matter how he adjusted the ‘Universe’ the results were consistent, the mice moved from perfect to appalling.

After day 600, the male mice just stopped defending their territory, listless mice congregated in the centers of the ‘Universe’. These gangs would burst into pointless and sporadic violence. Females stopped reproducing and even started attacking their own young. Mortality rose. Roaming mice either attacked, irrespective of relation or gender, cannibalism and other acts of depravity consumed them. These were the feral ones. Then there were the ‘beautiful ones.’ The ‘beautiful ones’ withdrew themselves ever so quietly, removing themselves from the sick society. Solitary pursuits began to define them; eating, drinking and grooming among others. These mice behaved like a separate race.

In the end the population sank, even when it was back down to a tolerable level, none of the mice changed back. This tipping over into irreversible societal collapse came to be known as ‘The Behavioral Sink.’ John Calhoun called it the first death. Death of the mind and soul, leading eventually to the second death, of the physical form. What he meant was that after the first death, the mice were no longer mice and could never be so again.

viahj's picture

zombie apocalypse, we're being conditioned for the day it hits.

vulcanraven's picture

Man, I have been saying the exact same thing for years. +1000

americanreality's picture

Good post. Calhoun's work was also the inspiration behind the book "Mrs. Frisby and the Rats of NIMH", a childrens book written by Robert O'Brien.  

Kirk2NCC1701's picture

To their (and our?) surprise, it turns out that the "Dumbing-Down of 'Merika", is so successful, that they can afford to keep lowering the bar.

Come to find out, it's not so much of an Absolute but a Relative thing.

Croesus's picture

Yeah...."new normal"...where everything is acceptable, and the honest, decent people of society get hosed, because criminality, and weak character traits, are "socially acceptable", and considered "normal behavior", because "everybody's doing it".

LTFC: Let this F*cker Collapse. 

Personally, I got a bottle of bubbly chilling, just waiting for it to happen and don't really care if my 'investment strategy' pans out or not, or even if I survive it. There will be a whole lot of them swirling down the drain with me. 

Me Ne Frego! 




Headbanger's picture

Oh c'mon.  Don't you know "it's all good" ??

That has to be the most idiotic expression ever.

cossack55's picture

Always check your six for the Drano rush.

El Oregonian's picture

Yea, with all this doom, it has to be good for a 300 point jump in Stawks on Monday!!!


"The new normal"

unrulian's picture

Always check you nine for the G rush

jimmytorpedo's picture

I find Drano kind of burns.

But I like it anway.


Kirk2NCC1701's picture

I do NOT disagree, but since we've all pretty much agreed that This Old House is beyond repair or rehab, and needs to be bulldozed...

How about we try to pull in the demolition date?  Spend baby, SPEND!  Raise the Debt to $2T/yr, then $3T/yr, then...  After all, it's not as though our kids & grand-kids will do anything but repudiate the Debt-Sins of their Fathers.  The whole World is on the meat-hook on this one.

And until foreign Sovereign Hedge Funds pull the plug (lose confidence in an avalanche fashion), non-US entities will just keep buying US Debt and its Ponzi-Dollars.  And while they do, we will want to use some of those Ponzi FRNs to get more FRNs, and then convert them to Real assets.  And hopefully convert them JIT.

max2205's picture

All the promises needed to stay in the us for retirement will be not....I am looking for a nice and better bannana republic with better weather. convert my usd to something that may surive the shitstorm.

Medicaid and soc sec will not be enough to buy lunch when the time comes 

All that money you paid into these programs will not come back to you but will go to the FSA which will never stop growing


jimmytorpedo's picture

"better weather. convert my usd to something that may surive the shitstorm."


May I recommend precious and base metals?

RSloane's picture

The current bar is set very low indeed. At one time Detroit had one of the most expensive school sytems in the country [money spent per pupil], yet a recent study of their graduates revealed that 80% of adults in Detroit are functionally illiterate. How does this happen in a supposedly advanced Western culture where so much time and attention is devoted to issues involving education? I guess the answer would be to spend even more now, even though the schools are crumbling, much like the rest of the city.

starfcker's picture

Are you sure that bottom photo is not corzine meeting with the justice department?

GetZeeGold's picture



Now eat your cheese.


It's free! I'm sure your grandkids won't mind picking up the tab.

The WW2 era was called the Greatest Generation....not sure I want to know what we're gonna be called.