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Peter Schiff On Janet Yellen's Mission Impossible
Submitted by Peter Schiff of Euro Pacific Capital,
Most market watchers expect that Janet Yellen will grapple with two major tasks once she takes the helm at the Federal Reserve in 2014: deciding on the appropriate timing and intensity of the Fed's quantitative easing taper strategy, and unwinding the Fed's enormous $4 trillion balance sheet (without creating huge losses in the value of its portfolio). In reality both assignments are far more difficult than just about anyone understands or admits.
Unlike just about every other economist, I knew that the Fed would not taper in September because the economy is still fundamentally addicted to stimulus. The signs of recovery that have caused investors and politicians to bubble with enthusiasm are just QE in disguise. Take away the QE and the economy would likely tilt back into an even more severe recession than the one we experienced before QE1 was launched.
Given the Fed's failure to initiate a tapering campaign in recent months (when it was highly expected) it is surprising that most people still believe that it will pull the trigger in the first quarter of 2014. But if the Fed could not take action in September, with Ben Bernanke at the helm and the nation as yet untraumatized by the debt ceiling drama and Obamacare, why should we expect tougher treatment from Janet Yellen? This is particularly true when you consider Yellen's reputation as an extreme dove and the uninspiring economic data that has come in recent months.
Rather than explicitly describing the possibility of a reduction of asset purchases, recent Fed statements have merely said that policy would be "adjusted" according to incoming data. It has never said what direction that adjustment may take. Yet somehow the market has concluded that an imminent reduction is the only possibility. But the opposite conclusion is more likely. Recession avoidance is really the Fed's only concern and it will always come down on the side of accommodation. Therefore an expectation for a 2014 taper is just wishful thinking.
But that does not mean that QE will go on forever. It will come to an end, but not because the Fed wants it to, but because the currency markets give it no choice. A dollar crisis would ultimately force the Fed's hand, and the longer the Fed succeeds in postponing the inevitable, the more damage its policy mistakes will inflict on our economy.
Yellen's second task will be equally impossible. Since the QE campaign began in 2010 the Fed has more than quadrupled the amount of bonds that it holds on its balance sheet,to more than $4 trillion of Treasury and mortgage-backed bonds. To accumulate this massive cache, the Fed has become by far the largest buyer in both markets. Its purchases have pushed up the prices of those bonds and have kept long term interest rates low for both consumers and businesses.
When the QE was first launched, Ben Bernanke tamped down fears of the program by saying the Fed would one day sell the bonds that it was buying. But as the Fed's balance sheet ballooned, many in the market began fearing that the unwinding of these trades would crush the market for Treasuries and mortgage-backed securities. Bernanke soon allayed these fears by saying that the Fed would not actively sell, but would simply allow bonds to mature. But this is just a convenient fiction.
If stock or real estate prices were to enter into bubble territory (which I believe has already happened), or if inflation were ever to surge past the Fed's low target range (which I believe is certain to happen), then the Fed would have to sell bonds to get in front of these trends.
Through Operation Twist, the Fed has already swapped a very large portion of its short-term bonds for long-term bonds. The slow process of waiting for bonds to mature is unlikely to slow down asset bubbles or inflation. The argument also does not account for the fact that the Treasury will have to sell new bonds in order to retire the principle on the maturing bonds. Since the Fed is the primary buyer of Treasury bonds, the Fed would have to add to its balance sheet when it's trying to shrink it. Such a cycle is just a debt rollover that leaves the size of the Fed's balance sheet unchanged.
Unless other buyers of Treasuries or MBS can be found to replace the Fed's prodigious buying, the Fed will remain the only game in town. Given these realities, how can we possibly expect Janet Yellen to actually diminish the amount of assets the Fed holds? She won't be able to do it and any expectations to the contrary are pure fantasy.
So we should not be asking when Ms. Yellen will begin withdrawing stimulus and shrinking the Fed's balance sheet. Instead we should be asking how the markets will react when she runs out of excuses for delaying the taper, or ultimately decides to expand QE rather than contract it.
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Come on, Peter. Just say it is deliberate and drop the "mission impossible" theme. There will be no taper. Yellen will print money for the bankers until there is a complete collapse and they can openly lord over the rubble in which we stand. You are spot on that it will destroy the economy, but call a spade a spade.
Their supercomputers and AI programs tell them that they can. Good enough for me.
Re: "A dollar crisis would ultimately force the Fed's hand..."
Actually Peter is wrong on this one. The probability of EUR or JPY crisis is much greater than USD crisis. Also, you don't need a dollar crisis for the Fed to lose control.
Peter sells fear, a dollar crisis and precious metals. Therefore everything has to be interpreted to cause an increase in value of the products he sells.
The more likely scenario is the Fed loses control of the bond and stock markets, and as the result, the dollar actually spikes higher and gold plunges.
Unless other buyers of Treasuries or MBS can be found to replace the Fed's prodigious buying, the Fed will remain the only game in town
ummm...aliens?
possibly equipped with ameros?
http://www.planbeconomics.com/2013/10/peter-schiff-on-alex-jones-show-wa...
We can expect shorter tenure for Federal Reserve chair going forward. Each will fuck it up much and leave in a hurry. This way no one person can be blamed for the collosal failure
This is a clusterfuck waiting to happen ladies and gentlemen! We all know this house of cards will crumble, problem is when, if one could answer that question, WOW!!!
I like Schiff, he is a man of facts and logic; plus, he knows economics and markets. I would not put down what he says too much, he was one of the lone voices calling out 2007 bust. Just because he constantly warns of something that has not happenend yet is no using your noggin.
It is only a matter of time my friends, 6 mos, 1 year, 5 years or 10 years, it will crash.
I say, good person, prepare accordingly!
It's all just a big bullshit cartoon.
The fact that both stocks and bonds are valued in dollars a loss of control over there pricing would imply a loss of confidence in the dollar. Gold UP!
Nernanke's own son loaded up on debt with over $400,000 of debt. The Fed members know their only option is to print the value of debt away. It's their Ace in the hole. All their members think the same way. Inflate, inflate, inflate against a deflationary collaspe.
The currency is as only as good as the people having faith in buying it. People loose faith in the currency you'll have both rates going up while the US dollar is falling. That would destroy the Fed's control.
Look at the Fed's action, not what their telling you.
He is talking his book, but I know enough about him to believe that he believes what he says.
How unsurprising that you would launch an ad hominem attack.
Schiff's post is substantial, and yet you are able to offer no serious criticism.
Tinky In case they missed it:
http://youtu.be/2I0QN-FYkpw Peter Schiff was right 2006
http://youtu.be/s_z5dZbgTDM 2009
http://youtu.be/fpIL2sWY6CY 2010
http://youtu.be/Tak9ODlBJgM Taper Edition
2014 Yellen edition coming soon, stay tuned..................
Gold Soars edition coming soon, stay tuned...................
Market Crashes edition coming soon, stay tuned............... :-)
A dollar crisis would ultimately force the Fed's hand, and the longer the Fed succeeds in postponing the inevitable, the more damage its policy mistakes will inflict on our economy.
What will prevent a dollar crisis is that every other Central Bank is doing the same thing. They are all in the same boat: slowing growth and populations that are both aging and (in the West), increasingly entitled. In addition, technology is replacing more and more labor. No one really knows how will pay for people to exist when the vast majority of production is automated.
You forget that the cetral banks are not the people. When people loose faith and try and turn to something else and everything else is the same they will turn to what they have always done. Gold/Silver/Whiskey/Whores
You forgot weed and tobacco.
The dollar is at the base of the house (skyscraper) of cards and can be brought down from anywhere. It could start with the Euro, Yen or even from some small bank in Tulsa going tits up.
However it begins, the dollar will fall, and fall hard.
And based on the "taper" drama this past summer, the FedRes has already lost control--it's "Boston brakes" from here on out.
+1
Because it is all connected, as you suggested. The financial and banking sector is to interconnected, one little glitch somewhere, or lost of trust elsewhere (Snowden drama, China's De-Americanization etc.) and everything or at least the West's economy will go South.
Europe has a balanced trade amongst one another, the rest of the world own dollars, so any default within the Euro area won't cause a currency crisis . the US dollar can be dropped like a hot snot from its creditors which will cause the crisis
the answer is as simple as it obvious:
in the next round of recapitalizing the IMF, countries will not contribute rehypothecated Au to the pool
instead, they will convey their physical or digital FRNs
trillions of them
absorbed into the ether underpinning the SDR
presto change-o, problem solved
A: Find a larger carpet.
Q: What do you do when you can't hide more shit under the carpet?
Everyday gold does not explode upwards the more he finally seems to come around to calling the truth out a bit more.
If he is perplexe now wait until it becomes apparent the fed is going all the way and yields collapse instead of explode. He is right that the collapse will have to come from the dollar, but when everyone is on the same team, I'm not sure it has to happen for a long time.
Agreed it could take a long time. Rome didn't crumble in a day. But it does seem like the craziness is picking up pace.
LTER, Every army tries to out-think "legends"... There's no valor in death!
I deeply respect you. You're honest, and I feel it...
dup
by 1923 we will pay 4,789,711 for a loaf of shitty bread. a tera bite drive will pay the bills on line...
"A dollar crisis would ultimately force the Fed's hand"
you mean "will"
"the longer the Fed succeeds in postponing the inevitable, the more damage its policy mistakes will inflict"
it's like Fukushima
That little toad grapples with two big tasks every time she takes a dump and it's time to wipe: her big fat ass cheeks.
I've been doing a lot of research about Peter Schiff lately. I'm a straight shooter. I'll call a spade when it's 4 kings.
Is Schiff really all he's cracked up to be ? Fonz?
I am sure everyone on here knows by now I have a soft spot for him. Having read up on his Dad I at least believe he is the real deal, and comes from a place everyone on here could appreciate.
Lately he has been acknowledging what is really going on. The markets are just a small piece of it. We are in the process of watching the middle class landslide down into poverty. The 1% are trying their best to grab it all and make it seem like it's all good. At the same time the police state is locking down a bit more each day. Schiff knows that, and I think that is what he is more scared of than anything. He believes there is still time to stop it. I doubt it. When you add in automation and how many people are being displaced, I just can't see how this ends well.
As for Schiff's predictions of interest rates soaring and the dollar collapsing and gold taking off...I think he, like many others underestimate the fact that the central banks and all the big banks are not out to wreck anyone anymore. They know it's a domino effect. So they are complicit in the greatest ponzi ever, and the sheep are certainly more than happy to expand the free shit army with little resistance. So while we all see more and more signs of strange shit, I don't know that the markets have to reflect it.
I do believe that zirp is taking it's toll. It has ruined the idea of saving, the nest egg etc. etc. for those who have the ability. I know everyone thinks we are in a bubble that has to pop. We shall see.
Fonz, Don't take this the wrong way. I've great respect for you.
Is Peter Schiffs "Father"a convicted felon?
same goes both ways Yen, I'm sure you know it Yen,
Schiff's dad is in jail. He presented a danger to the system and was dealt with accordingly. It's worth reading up on.
One could look at his dad and the info he was peddling in a few different ways. However, not only was he given a draconian sentence, but they banned his book.
Let me say it again: "They banned his book."
Fonz, If you feel comfortable with Schiffs ideas, I'll back you up.
He IS a felon, and the worst kind - he disputed his taxes!
That's like being a murderer, but even worse, because it's murdering everyone in society!
Or so the judge appeared to think.
.
Fonz , I hate Doc. Lets bet a Philly. I'll unlock my Z/H vault. $20 for the sandwich? Or I'll go Ruths CXriss on your ass.
People also forget (not suggesting you or others here) that he has a business to run. I think many of us believe that Peter knows what is really going on, but it's more difficult for him to come out and say it. He has his investment strategy, which many people believe in, and it aligns with what he understands about this whole grand scheme.
As far as I'm concerned, even if he doesn't call out the Fed for the criminal activity they have pursued, he still is waking people up. At this point, it's more important that people who don't read ZH or listen to others like Schiff are woken up. It's probably too late, but better late than never.
What do you mean "mission impossible"?
Repeat after me: There is no possible problem that printing more money can't solve. The only mistake is giving that money to limp-dicks like bankers or politicians. I guaran-fucking-tee you that mailing one trillion dollars to each mailable address in the United States would "get it started right now".
That "it" is otherwise called hyperinflation!
Yellen is yet another puppet. Her whole career so far has been a me too, boot licker.
Was listening to a recent Lindsey Williams interview
Yeah, I know, a Pastor. What the heck would he know. But he seems to have focused and upped his game from his previous ramblings (note, TradeWithDave, there's hope for you yet). For an old guy without financial industry background Lindsey was lucid as never before ... and I home in on lucid.
There might just be something to his 'elite' contacts spheel.
Accordingly:
1) look for pension/401k/IRA confiscation in U.S. (likely in increments, i.e. "boiling frog" style).
2) look for USD lost of reserve currency (would that be a jim willie predicted type scenario playing out). That translates to far higher import costs.
3) Finally, the main event. Look for rise in interest rates (due to Fed tapering ...or EVEN hint of tapering ...this would be the cabal pulling the pin of the grenade, tossing it on the system. The Global Reset kickoff) , causing a interest rate derivative meltdown/causing interbank lending meltdown/causing peon account freeze due to lack of bank overnight liquidity, subsequent Bail-in and poof, it's gone. (You know, because of fractional reserve lendings main drawback and the fact that it's been written into legislation by whore politicians that your bank deposits take a back seat to paying off the 1%ers derivatives bad bets).
Bank Account freezes changes everything as commence comes to a halt until our esteemed leaders devise a solution (oh thank you sir, may I have another crumb).
Cue DHS well armed goons,Drones,facial recognition systems,surveillance cameras and omnipresent NSA snooping to ensure you stay meek & respectful to your masters, nor conspire together and plan revolt. Perhaps you'll luck out though in that Obamacare will cover your forced anal probes.
Added kudos to Lindsey for recognizing the significance & implications of JP Morgan Chase soon ending International Bank Wire transfers and $50k withdraw limit on business accounts (essence commentary... important to watch if the other cabal too-pig-to-fails fall into line behind Morgan. If so then it's a huge tip off on the shape of things to come i.e, widespread capital controls, USSA LOCKDOWN).
P.S. anyone want to guess on the odds of PMs continuing being hammered short term. Anyone care to venture that China's and Russia's fervent acquisitions of the barbaric relic is just an expensive head fake.
sounds like lindsey williams has been listening to jim sinclair - those points are exactly what jim sinclair has been telling his readers for some time now.
to clarify the point on chase bank - some sites have hyped/spun the truth on that matter - it is only one type of business account, the most basic one, that has limits in place for wires and cash transactions. it's worth keeping an eye on, but don't believe what a number of sites have inaccurately reported on this matter.
Watch if the Morgan Chase restrictions spread. That would add support to the theory that the PowersThatBe are locking the theater doors prior to starting a fire.
Perhaps on the other side of this lays a new monetary system.
And for the FOFOA fans out there, remember his incessant quoting of his prophet FOA.
"If you hated the last financial system, you'll hate the new one"
Disclaimer: I respect FOFOA and he has given a good accounting of himself, but I have to wonder if he'd be such a cheerleader for change if he didn't expect big personal gains.
agreed. definitely keeping an eye on the banking situation, as i said.
i can only speak for myself, that even if i hadn't positioned myself similarly to fofoa, i would still be a cheearleader for change as you put it. a corrupt system with constant government intervention affects every aspect of our lives, destroys true price discovery, makes it impossible to plan for the future.
regardless, change is coming whether we like it or not: what is unsustainable, will not be sustained.
you say much-no big disagree-time will tell
more one predicts more one will be wrong.
If the fed is alive and well in 2014 i am declaring war on the ussa. fucking retards.
Is Mrs. Debtfire capable of of stimulating anything other than Big Ben's tool...?
Is this just a cynical plan by the white master class financial oligarchs to lay the blame of the destruction of civilisation at the hands of blacks and women?
No más. What's more important is when!
Yep, you caught us evil old white bastards. We're also gonna take back the NFL and the NBA. Send all them mouthy women back to the kitchens too.
"Recession avoidance is really the Fed's only concern and it will always come down on the side of accommodation" ...
No, the FED's only concern is that it's banks make moar money and avoid insolvency while its members make hay while the Market stays afloat before the programmed smack down and guting of the entire middle class.
"Unless other buyers of Treasuries or MBS can be found to replace the Fed's prodigious buying, the Fed will remain the only game in town." ...
The only remaining asset of any size not anchoring some leveraged derivative is the American IRA. When the FED stops the Treasury will confiscate; default is not in the cards.
Which end of the curve? I like 2's and 5's?
P.S. Thanks for stepping up Bear.
All Hail Mr. Yellen!
At the very least, Peter Schiff is entertaining...
SEE KARL DENNINGER'S STOCK PICKS BELOW--MUST SEE!!
https://www.youtube.com/watch?v=XqWIS0O2gIk
Hey Peter,
Check out my funny music video "WORLD OF DEBT" below. I'm sure you'll love it... it's right up your ally.
https://www.youtube.com/watch?v=99xsqxzJnXs
Run.
"Assad bene e trascorsa D'esta moneta gia la lega e'l peso, Ma dimmi se tu l'hai nella tua borsa."
The real issue is what will Mr Yellen buy once he's got 100% of the federal treasury and mortgage market issuance. My guess is college loans,car loans, and munis. As far as unwind is concerned there won't be any. The Fed will just sit on this forever. There you have it. Free money forever - or at least until other countries no longer take us fiat. Maybe they'll take that fables 1Trillion platinum coin - don't want to make it bigger than a quarter since inflation and dollar devaluation may make it worth 2Trillion. Welcome to our subprime Obamanation.
they've effectively orphaned that MBS. i think they'll use it to kick start inflation, (which they use to counter punch the long term deflationary economic mess) everytime they sell a bit of it (at a loss to taxpayers) asset prices will fall, and the real economy will pick up. like you live in Apple Land (the fruit not the toy) and the government bought all the Apples, and sells them for $5, but nobody buys, so nobody grows, things are stuck, then once in a while the government sells a few Apples for buck, and that gets everyone excited, you cant sell them all at once of course that would unleash a deflationary typhoon.
If the Fed os truly federal who cares what losses it books?
+55
"FED losses" is an oxymoron, since their real cost basis is ZERO.
You have a point there.
But is it really possible for the Fed to own everything in the Galaxy without a minor glitch popping up somewhere?
And one more angle to the picture with ECB Rate Cut:
Peter Schiff: With ECB Rate Cut FED Has More Room To Increase QE Now
Peter Schiff warns everybody: do not be fooled by all this Taper talk, the moment FED removes the QE we are going in recession. ECB Rate Cut gives more room for FED to increase QE now. The action in Gold and Gold miners will be the very good indicator of the real state of the financial markets. Any discussions will stay only the words without money flowing into the sector. China is buying record amount of Gold this year and now you can add countries like Thailand and Turkey into the mix as well. Thailand's biggest domestic gold importer expects to more then double purchases this year to 200 t from 92 t last year. Turkey's gold imports have doubled this year and purchases have reached already 251.4 t from January - the biggest tonnage increase since at least 1995, according to ZeroHedge.
What do they know the others don't? The real situation with Gold at the Central Banks being leased out or Record Low COMEX inventories? http://sufiy.blogspot.co.uk/2013/11/peter-schiff-with-ecb-rate-cut-fed-has.html#
People would have to be idiots to think Yellen has any power to stop transferring the remaining wealth of the United States of America to the FED's member banks.
It is way too late and obvious that the globalist bankers have declared physical war against the United States of America. We are under attack.
People would have to be idiots to think Yellen has any power to stop transferring the remaining wealth of the United States of America to the FED's member banks.
It is way too late and obvious that the globalist bankers have declared physical war against the United States of America. We are under attack.
As more poor people continue to die and more upper middle class families get robbed the war will escalate.
I've never seen anything like this take place on United States soil before.
Schiff has hit it on the nose. The limiting factor for QE is the strength of the US$. If it starts to head down, the end is near. At that point the Fed can let the system blow up by continuing to print, the Weimar approach, or taper or even reverse the flow by selling Treasuries, creating high interest rates and a colossal collapse in the economy. I think they will choose Weimar, but it could go either way, including whip-saw.
they'll try to rewind the liquidity clock using the old tools, REPO and POMO, the problem pre 2008 was that the money supply was being expanded OFF market, through private debt creation and leverage, now they have full control of that, which they always wanted because private debt creation is zero, but the Fed has learned its lesson, and they will sit on the credit markets like an 800 lb gorilla its just impossible for them to say, yeah we want 2% inflation and then try to goad private markets into doing it for them. (they cant create more debt than already exists, only congress can do that they are tapped out) the expansion of credit (and control of that expansion is what the fed wants) so dont be surprised if yellen throws a few inflationary probes out, to get things moving. that might be as simple as unwinding some of the balance sheet. from out perspective they are playing with stagflationary forces, but what do they care what we think, they only want control
I am thinking something new will be proposed. Maybe something like a new retirement saving vehicle. Proposing the 4 Trillion as manditory saving vehicles for a new type of 401K maybe in conjunction with Social Security....
They will never admit defeat....
Yellen is a bank family villain using socialist sorcery language to beguile her victims - us. Kill her and kill you if you buy this bullshit.
I'm not going to say "fuck" when I mean "kill". I mean permanently get rid of these parasites. KILL ALL THE CRIMINAL PARASITES
martin was followed by burns who presided over the end of what was left of the gold standard.
burns was follwed by martin who presided over stagflation and record high interest rates
martin was followed by volcker who presided over the worst recession since the depression
volcker was followed by greenspan who presided over the near collapse of the dollar with a 40% overnight devaluation
greenspan was followed by bernanke who has presided over the credit collapse and the worst economic conditions worldwide since the great depression.
bernanke will be followed by yellen who will preside over the collapse of the western monetary system?
in every case of a new fed chairman since burns a huge economic calamity followed within a year of their appointment.
According to BMO Capital Markets:
https://app.box.com/s/38q5x8x29vv25ujcg7ef
November 8, 2013
In Search of the Mythical Market Correction
Strong Market Performance Has Amplified Correction Chatter
Many clients we speak with are convinced that the market is on the verge of correction. Sure, the stocks have been on an impressive and almost uninterrupted run these past few months, but we believe performance patterns alone are not enough to justify directional market calls. Instead, investors should consider the macro and fundamental backdrop along with risk-taking levels to determine whether or not the performance is justified. From our perspective, the data simply do not support the correction talk and we remain committed to our optimistic market outlook through year-end and into 2014. As such, we believe those investors waiting to “buy on the dip” are likely to be disappointed.
Performance Patterns Have Followed the Script
Despite the fact that it has been over a year since the last major market pullback, recent performance patterns are not totally unprecedented. In fact, the current bull market has already produced as many 5%-10% and 10%+ pullbacks as the prior six bull markets dating back to 1970, on average. The main difference has been the duration between corrections, which has been roughly half the average since 1970 even with the latest correction free period. Therefore, the past year or so can be at least partially viewed as a reversion to the mean since more investors are beginning to accept this market for what we believe it is – the early to middle stages of a secular cycle that has at least five more years of life in it.
Macro Trends Contradict the Correction Talk…
The one thing that almost all market corrections during bull markets have in common is that they are usually triggered by a Fed rate hike or a spike in oil prices. In addition, high levels of confidence, expensive market valuation, and underperformance from Financials are also typically associated with bull market corrections. Fortunately, most of these conditions are nonexistent in the current environment making the probability of any sort of major market correction very low over the near term, in our view.
…As Does the Absence of Excessive Risk Taking
Excessive risk taking has been another common precursor to meaningful market pullbacks based on our experience. However, the risk measures we track suggest no indication of excessive risk-taking by investors.