David Einhorn's Three Questions For Ben Bernanke

Tyler Durden's picture

From David Einhorn of Greenlight

The amount of media and market attention focused on whether the Federal Reserve will taper its quantitative easing (QE) would border on comical if it weren’t so serious. In August, the San Francisco Fed published an economic research paper that estimated that the $600 billion spent on QE2 added a meager 0.13% to real GDP growth in late 2010 (about $20 billion) and that the benefit fades after two years. Given that, what practical difference does it make whether the Fed buys a monthly $85 billion or $75 billion or no additional securities at all for that matter?

We maintain that excessively easy monetary policy is actually thwarting the recovery. But even if there is some trivial short-term benefit to QE, policy makers should be focusing on the longerterm perils of QE that are likely far more important. Here are some questions that come to mind:

  • How much does QE contribute to the growing inequality of wealth in this country and what are the risks this creates?
  • How much systemic risk does the Fed create by becoming what Warren Buffett termed “the greatest hedge fund in history”?
  • How might the Fed’s expanded balance sheet and its failure to even begin to “normalize” monetary policy four years into the recovery limit its flexibility to deal with the next recession or crisis?

No one is sure what the Fed is focused on. After spending several months bracing the market for fewer QE donuts, the Fed decided that it was premature to taper. Even a token reduction (from a baker’s dozen to a dozen?) was ruled out despite the fact that the economic trajectory has not materially changed. We responded the next morning with our own stimulus by ordering jelly donuts for the entire office.

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LetThemEatRand's picture

Fourth Question:  Why do you pretend that you work for anyone but the Rothschilds?  

Fifth Question:  Does anyone really believe that the .01% became exponentially wealthier the last few decades by accident?


Running On Bingo Fuel's picture

6th question: Did you lie when you said that you bought jelly donuts for the office?

7th: If you'd lie about that what else do you lie about?
(hint, telling the office that ZH reader luv you)


VD's picture

why ask questions when lies will be the only answers. we all know the score. hopefully sheeple will-- strike that..

macholatte's picture




she likely netted around $400,000 for her paid gigs at Goldman over the course of six days.

Hillary Clinton’s Lucrative Goldman Sachs Speaking Gigs

LetThemEatRand's picture

GS = our government.  

EDIT:  Tea Party favorite Cruz is married to a GS exec.

Harbanger's picture

That's why I love you Lola.  You always find a way back to the fire.

LetThemEatRand's picture

So I'm wrong about Cruz's wife?

Harbanger's picture

Yes.  I'll tell you when you're right.  And you know I always do.

LetThemEatRand's picture

So you are now on record that Cruz's wife is not an exec at GS?

nmewn's picture

When did Cruz's wife do a senate fillibuster against the ObamaCare fascism?

I musta missed it.

LetThemEatRand's picture

GS is good at theatre.  Remind me what it accomplished.

Harbanger's picture

It's irrelevant, politics doesn't matter.  The societal dye was already cast, look forward.  I'm teaching my 3 year old multiplication and division.   She already learned the tables verbatim. It's not difficult, she's not special, the difference is caring.  I'm slowly introducing the concepts of trigonometry and calculus before we get to algebra.

DoChenRollingBearing's picture



I would be satisfied with just one question, but to Treasury Secretary Lew:

Why are you not buying any gold?

I suspect that he would either not understand the question or sic the Secret Service (Dept. of the Treasury!) on whomever asked...

(Unlike most countries, "our" gold is held by the Treasury, not the Fed.  The Fed mostly holds other countries' gold, and a small part of ours.)

spine001's picture

Sixth question: Do you understand that the equity market valution is directly correlated to the rate of change of your balance sheet?
Seventh question: What do you think is the effect of continuous balance sheet increases on the stability of the financial system as a whole?

Jam Akin's picture

How many objectives can one central bank pursue simultaneously?

The Alarmist's picture

What is your name?  "I am Bernanke, king of the Bankers"

What is your quest?  "I seek to avoid Great Depression 2.0"

What is the terminal velocity of money in a debt-laden economy?  "What? I don't know ... aaaaaaah!!!"

CHX's picture

Good questions - no answers from Ben, ever.

jcamargo's picture

I can hear his trembling voice already.

Everybodys All American's picture

Question: At what interest rate will the Fed have to declare bankruptcy?

NihilistZero's picture

The Bank "never goes broke." If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper. - Monopoly Rules

Everybodys All American's picture

Check your history the "bank" has gone broke multiple times.

unemployed's picture

If Einhorn is talking his book again,  just how is he shorting the world's most leveraged hedge fund?

q99x2's picture

The question he should ask is why has the FED assisted the Washington D.C. globalists in building the DHS up with weapons enough to wipe out the citizens of the United States of America--the ones that supported your operations for over a hundred years?

Do you plan assisting in the genocide of the population of the United States of America?

Why are you not assisting the Government in building large food banks if you anticipate a collapse of the US economy?


StychoKiller's picture

All right, which one of ya got me on this mailing list? (Thanks!)

One And Only's picture

I wonder how much the NSA snoops on Einhorns convos/portfolios/personal moments.

Or any other portfolio manager.

We do live in a society where the government (or the secret government that Obama apparently knows nothing about) has a dossier on everyone...for security purpose.

remain calm's picture

How hot is it in Hell?

FieldingMellish's picture

"QE is a nothing event." So don't worry, be happy.

nightshiftsucks's picture

 This is just stupid.We saw with taper that interest rates jumped and stocks dropped.So if they taper then we go right into a recession and then they will start increasing QE again,taper will never happen and stocks won't drop.

logicalman's picture

The question that should be asked is "would you like a blindfold?"

asteroids's picture

From Nov 2008 to present (6 years) you've had a LOT of time to think and implement a plan that satisfies your dual mandate. Do you think you've suceeded? If not, who pays for your failure?

buzzsaw99's picture

a question from the bernank for einhorn: why look a gift horse in the mouth you ungrateful bastard?

SandiaMan's picture

Why are we paying the FED to print our money at interest when the CONSTITUTION states "That Congress shall have the authority to coin. So we pay a Third party interest on something the Congress should be doing. What a scam!

max2205's picture

We should cut the Fed salaries and let them print cash every 2 weeks and hand it out to the employees

Dewey Cheatum Howe's picture

Einhorn is doing what he does best, play Texas Hold Em style poker here. The only question is what is his strategy. Winning big at the table takes more than just the cards you hold in this game.

Reaper's picture

Einstein's insanity quote updated for the Fed, Ben and Janet: "Insanity is printing or electronically creating money and expecting a different result?" Does your office as Fed Chair sanctify your acts and give divine protection from consequences? How many Nobel prize winning economists does it take to validate a historic failed policy?

NDXTrader's picture

Why not $1 trillion a month? If QE is having no adverse impacts according to the Fed why are they doing this Chinese water torture style. They've already done that much QE this go around, why make us wait for these amazing results?

NDXTrader's picture

I would also like For Bernanke to have to produce a flow chart explaining how changing the unit of measurement of goods creates a job

Sizzurp's picture

There is nothing to be learned from asking Ben any questions, except that he is delusional, a liar, or both.  Attempts to discredit Ben with clever questions don't really matter to the power elite that are reaping all the benefits from this system. The Fed is fully committed to the Keynesian chariot ride to hell and there is no getting off.  That is because going cold turkey off the Fed juice would require rare leadership, something like Patton. Most people would find it intolerable.

yogibear's picture

"How might the Fed’s expanded balance sheet"

Their balance sheet is BS. Probably a lot more off balance sheet. Mark to fantasy, just like their member banks.

Constitutional Republic's picture

Pertinent questions from Mr Einhorn, but the Fed exists to protect its own power as the Wizard of Oz. See gold leasing and rehypothecation of same as the latest example.

Own gold and silver sister in sufficient ratio to cover your liabilities before the reset which is surely coming as China leads the world in replacing the USD, and doing deals in local currencies. All with the approval of the money masters of course, now that they have bankrupted the USA...those resource rich and questioning colonialists whose Constitution and Bill of Rights has been a thorn in the side of the old world money masters in Britain particularly, and its satellite banks elsewhere.

They hate upstart Americans, and they intend to ruin you.


The money masters bypassed the constitution for the last 100 years and many times prior since our founding. The rule of law never stops them from their criminal activity. The will have a new ponzi scheme ready when they crash this one, you can bet your sweet arse on that.

F-Tipp's picture

Everyone thinks they are so clever by asking the obvious. There is no point to any questioning, there is no point to any congressional hearings, or testimony, subpoenas, forums, town halls, etc. The idea that any serious question could truthfully be answered by anyone involved in this, the greatest scam the world has ever seen, is ludicrous.

If we could get 2 minutes of uninterrupted ad time during the super bowl its enough to get people thinking. Someone kickstart it.

Constitutional Republic's picture

No wealthy ad agency would commit  suicide by doing what you suggest, and neither would any political party. Yer on your own, pal. Sorry.

Running On Bingo Fuel's picture

Don't forget the FCC license to broadcast. Freedom!


holdbuysell's picture


When the financial elite start joking at the Fed's expense, you know the Fed has lost credibibility.

When this goes more mainstream, get out of the way.

Anyone notice that ZH is identifying an increasing number of financial elite who are beginning to look at the Fed's actions with incredulity?

Get enough of them in the same stance and we have ourselves a tipping point with a very itchy trigger finger.

Notarocketscientist's picture

Who is your proxy for buying and storing your gold?

Bob Sacamano's picture

#3 - How might the Fed’s expanded balance sheet and its failure to even begin to “normalize” monetary policy four years into the recovery limit its flexibility to deal with the next recession or crisis?

Answer: There are no limits to what the Fed can do with regard to printing more money.  Limits would only apply to an entity that must worry about the amount of "equity" on its balance sheet or "losses" on its P&L.  The Fed can solve either of these problems with more printing. 

Lux Fiat's picture

I do not know the inner workings of Wall St. or the gov't, but some dots seem to connect (whether they actually do is another matter):

1 - 2005 change in bankruptcy laws gives priority to derivatives counterparties (they go to the head of the line based on what I've seen in MF Global, Sentinel)

2 - JP Morgan Chase, BoA etc. move lots of derivatives into their retail banking units, ostensibly because counterparties are concerned about collateral

3 - Bail-ins appear to be the future path for dealing with bank solvency issues (which derivatives could help bring about)

4 - A hedge fund supposedly hedges its positions - is the Fed hedging its massive treasury holdings with lots of interest rate swaps?  If so, one would expect its counterparties to be quite large, perhaps TBTF?  Could the above changes be to bolster Fed solvency when interest rates can no longer be suppressed?