Guest Post: Larry Summers Admits The Fed Is In A Liquidity Trap

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Submitted by Lance Roberts of STA Wealth Management,


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Wed, 10/30/2013 - 15:37 | 4105972 FieldingMellish
FieldingMellish's picture

Well, duh?

Wed, 10/30/2013 - 15:48 | 4105995 FL_Conservative
FL_Conservative's picture

Big man, pig man, ha ha, charade you are

You well heeled big wheel, ha ha, charade you are

And when your hand is on your heart

You're nearly a good laugh

Almost a joker

With your head down in the pig bin

Saying 'keep on digging'

Pig stain on your fat chin

What do you hope to find?

When you're down in the pig mine

You're nearly a laugh

You're nearly a laugh

But you're really a cry.

Wed, 10/30/2013 - 15:49 | 4106020 THX 1178
THX 1178's picture

So THAAAATS why Summers turned down the FED job. At least he's smarter than Yellen... Whatever that means.

Wed, 10/30/2013 - 15:51 | 4106026 Keyser
Keyser's picture

Whenever I see larry Summers, over $600 trillion in derivatives comes to mind. 


Wed, 10/30/2013 - 16:05 | 4106114 zaphod
zaphod's picture

The fact that Larry turned down the job is the #1 indicator that things will fall apart in the next several years.

The FED job is the top aspirational goal of all finance types, it is equivalent to being president in those circles and forever enshrines them in history (as they see it).

The only reason someone like Larry would turn down the top spot is if they worry that the risk of holding the position during the wipeout outweighs the benefit of holding the role. The benefit of holding the role is high, so the risk in Larry's view must be higher.

Larry is privy to more real economic data then Yellen is, this is why he turned down and she accepted...

Wed, 10/30/2013 - 16:06 | 4106143 outamyeffinway
outamyeffinway's picture

And that is why Yellen got the job. Is Larry pissed?

Wed, 10/30/2013 - 16:15 | 4106181 knukles
knukles's picture

Oh shit.
This is probably the last guy I ever wanted to concede the point I been making for years now.  You all are my witnesses.  I been stating over and over again, that we're caught in a Liquidity Trap.  A monetary phenomenon brought about by non-monetary factors, those being a Credibility Trap.

Thanks a lot, Larry.

Why not somebody in whom I've a great deal of respect.

Then again, better late than never.

Nice of you to hang Janet out to dry under this circumstance.

PS... I'm not sure Larry turned down the job "voluntarily"
Just watch Paul defer on Yellen's approval without a complete Fed Audit

Wed, 10/30/2013 - 16:16 | 4106201 kaiserhoff
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But he looks so good eating crow:)

Wed, 10/30/2013 - 19:38 | 4106905 eatthebanksters
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Now we know why Summers was not nominated to head the Fed...he basically is telling the world that the Obama administration has failed to create an enviroment conducive to jobs and growth because their has been no adjustment in fiscal policy from the legislative and executive branches.  God knows the Repugs have tried to push some plans through only to be ki-boshed by the Destructocrats.  Unfuckingbelievable the amount of damage the lying asshat in the white house has done to our economy, yet his entitled sheeple lap up is bullshit like it was ice cream.

Wed, 10/30/2013 - 21:10 | 4107171 TwoShortPlanks
TwoShortPlanks's picture

Oh fuck me!

Yeah, Liquidity Trap one way, and Golden Valleys the other. The Fed is DISPOSABLE!!!!

US Gold Treason

Wed, 10/30/2013 - 19:37 | 4106907 lotsoffun
lotsoffun's picture

knuckles - you are the only guy that gets it.  i like watching the rookies, but they will learn saying he turned it down.  summers didn't turn down anything.  he wanted it bad, and infact, what's he got to do at the moment?  fuck all.  he wanted that acceptance to the club real bad, even if he knows the truth.  now he tells the truth, sour grapes.  he's just that kind of guy.  what did we call it as kids?  'sore loser'?  i promise you one thing, he's totally out of the club now.

Thu, 10/31/2013 - 04:00 | 4107824 daemon
daemon's picture

"... things will fall apart in the next several years."

Several ?


Wed, 10/30/2013 - 16:03 | 4106118 LawsofPhysics
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"Insufficient demand" - For what Larry?  There are 7+ billion (and growing) people all competing for a better standard of living.  There is plenty of fucking demand you corrupt piece of shit.

Wed, 10/30/2013 - 16:24 | 4106241 vxpatel
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americans are the number one consumer, and we're already obese, living in homes that are too big, filled with too many things, driving cars that are too big, taking out 2nd mortgages for student other words the sheeple are fully fleeced...there is no more macro demand....and the population curve is changing....

Wed, 10/30/2013 - 16:48 | 4106378 LawsofPhysics
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"..and the population curve is changing...."  - bullshit.   Especially not with all the "fucking" going on...

Wed, 10/30/2013 - 16:55 | 4106400 Stormtower
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Billions a chinese, latin amercia, mexico, india....there's plenty of demand. Only problem is you'd have to actually apy people wages. can't have that, where the hell would we get slave labor from??

Wed, 10/30/2013 - 23:25 | 4107516 StychoKiller
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Um, for-profit prisons?

Wed, 10/30/2013 - 16:54 | 4106166 greatbeard
greatbeard's picture

>> Summers turned down the FED job.

I'm pretty sure Larry turned down the Fed job for the same reason I wouldn't charge a machine gun nest naked and unarmed, there wasn't a chance in hell he was going to make it.  Larry didn't turn down the job because of some intellectual brilliance.



Wed, 10/30/2013 - 16:27 | 4106271 safe as milk
safe as milk's picture

let's see. first, timmy disappears, then ben says bye and then larry begs off. then they give the job to a woman while a black guy is in the white house. as a topper, larry makes sure to be on the record as predicting failure because the politicians won't do their job and the bankers don't have the right tools. you can't make this stuff up. the only question left is when does the sh*t hit the fan.

Wed, 10/30/2013 - 21:44 | 4107286 BigJim
BigJim's picture

 My belief all along has been and remains that a well thought out combination of both fiscal and monetary policy is the correct remedy for what ails the U.S. economy currently.

Er, yeah, that's right, the central planners in the Fed are insufficient, we need the combined wisdom of them and gubment to save us!

Give me a fucking break. The correct remedy for waht ails the US economy is to allow asset prices - ie, capital - to reflect real-life yields.

Wed, 10/30/2013 - 15:44 | 4106000 kliguy38
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Another banker trying to cover his tracks in history......BWAAAAAA......too funny

Wed, 10/30/2013 - 15:54 | 4106044 bob_stl
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That's why he didn't take the chairmanship position. He knows this is about to fall apart.

Wed, 10/30/2013 - 15:58 | 4106088 NoDebt
NoDebt's picture

Bob, you may be right.  Never thought I'd hear a Fed guy actually utter the phrase "liquidity trap".  That's supposed to be done by keyboard jockeys like me (having said this since the first day I showed up at ZH).

Wed, 10/30/2013 - 16:41 | 4106346 Crash Overide
Crash Overide's picture

Larry that prick was smart enough to not take the FED job, he didn't want to fall on the sword. At this point how can anyone defend what the FED and the USG is doing concerning monetary policy?

Wed, 10/30/2013 - 19:33 | 4106893 bubblemania
bubblemania's picture


Wed, 10/30/2013 - 15:38 | 4105982 falak pema
falak pema's picture

So Summer turns to autumn leaves, falling in Indian summer blaze, and soon to winter. 

That says it all!

Wed, 10/30/2013 - 15:39 | 4105985 CharliePrince
CharliePrince's picture

see im a good guy 

give  me a big  important position

i wont fuck it up--signed  larry  dummers

Wed, 10/30/2013 - 17:32 | 4106537 Everybodys All ...
Everybodys All American's picture

Politics at it's finest. Throws soon to be Fed chair Yellen and the money plunderers under the bus and elevates himself above the fray at the same time. For a dumb ass fuck up like Summers I got to hand it to him on this one.

Wed, 10/30/2013 - 15:39 | 4105986 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

And that is why they cut out Larry's legs from under him and went with yellow stain. I still don't like Larry but we don't need moar of the same when it isn't working as is.

Wed, 10/30/2013 - 15:55 | 4106059 11b40
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Can't help but wonder if old Larry is busy poisoning the well for Janet.

Wed, 10/30/2013 - 16:07 | 4106150 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Possible. I still think they threatened to drop some dirt on him if he didn't voluntarily drop out of the race since if nothing else he seems to come off like someone who will go against the script once he gets his position and the powers that be wanted the safest choice possible with no competition.

Wed, 10/30/2013 - 19:28 | 4106873 lotsoffun
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you would seem to be correct.  because he was really close.  and if he was that close, he was connected enough to know what the playbook was, even

at the time that he screwed up the harvard endowment, which means, he knew which way the ball was going to be tossed, but thought he could still end run and prove smarter.  loose cannon.  tough to get ahead.


Wed, 10/30/2013 - 15:42 | 4105992 Tinky
Tinky's picture

" this late stage of the current economic recovery cycle."

Really? We're nearing the end of the recovery cycle? of us really must be an idiot.

Wed, 10/30/2013 - 15:49 | 4106019 B.J. Worthy
B.J. Worthy's picture

Maybe he meant "late" as in "deceased."

Wed, 10/30/2013 - 15:42 | 4105996 carbonmutant
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Janet got the job because she didn't talk like this...

Wed, 10/30/2013 - 15:47 | 4106008 fooshorter
fooshorter's picture

Janet is TWICE the man summers is...... 

Wed, 10/30/2013 - 15:49 | 4106018 carbonmutant
carbonmutant's picture

She's gonna need some cojones....

Wed, 10/30/2013 - 15:52 | 4106034 101 years and c...
101 years and counting's picture

Janet is at least 3x the man Larry is.  My god, will someone harpoon that beast???

Wed, 10/30/2013 - 15:55 | 4106056 bob_stl
bob_stl's picture

Janet got the job because, she's dumb enough to take it.

Wed, 10/30/2013 - 16:44 | 4106358 quasimodo
quasimodo's picture

She certainly looks the part. She's got a face for radio, no doubt about that.

Wed, 10/30/2013 - 15:43 | 4105998 slotmouth
slotmouth's picture

I heard a rumor that Larry Summers and Alan Greenspan are starting a hedgefund.  

Wed, 10/30/2013 - 15:49 | 4106014 Tinky
Tinky's picture

They are, and it is rumored to be called Homina Homina and Homina

Wed, 10/30/2013 - 16:01 | 4106104 Hilts The Coole...
Hilts The Cooler King's picture

Hava Nagila


Wed, 10/30/2013 - 18:57 | 4106681 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"Homina Homina and Homina"

Thats good.

How about Short Term Capital Management (very short term).

Wed, 10/30/2013 - 16:33 | 4106308 Thebandplayson
Thebandplayson's picture

Funny, I heard a rumor that Larry and Alan take turns shoving their heads up each other's asses...

Wed, 10/30/2013 - 15:45 | 4106006 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

QE can be summed up like this old drug commercial.

I do coke so I can work longer,

So I can earn more,

So I can do more coke........

Wash, Rinse, Repeat

and the best part is someone starts singing I am chasing rainbows at the end of it. They forgot the unicorn part though

Wed, 10/30/2013 - 15:47 | 4106009 Kreditanstalt
Kreditanstalt's picture

"people hoard cash because they expect an adverse event such as...insufficient aggregate demand"

"Insufficient aggregate demand" merely means business conditions are crummy and there's no reason to invest. 

Makes sense - would YOU start a business now?

Yet the Keynesians HATE this, calling it "criminal", "theft"., "stealing from the state" and such nonsense.

Wed, 10/30/2013 - 15:52 | 4106033 Keyser
Keyser's picture

What do you expect from liberals? 


Wed, 10/30/2013 - 15:54 | 4106046 falak pema
falak pema's picture

I expect truth and justice; but I'm an oxymoron.

Wed, 10/30/2013 - 22:16 | 4107319 mjcOH1
mjcOH1's picture

"people hoard cash because they expect an adverse event such as...insufficient aggregate demand" "Insufficient aggregate demand" merely means business conditions are crummy and there's no reason to invest."

I thought it meant they expect the government to steal any asset they buy and leave within the custody of a business subject to federal regulation, as the entitled vote themselves one final 2 year all expense paid orgy of Ripple and Obamaphones on the tab of the dwindling number of workers left to fund the free shit army.

My bad.

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