This page has been archived and commenting is disabled.

The Biggest Difference Between QE3 And QE2

Tyler Durden's picture


Back in 2011, in an exclusive analysis, Zero Hedge showed how virtually all the reserves created as a result of QE2 ended up as cash on the balance sheets of foreign (mostly European) banks operating in the US. Some suggested that this was due to a change in FDIC rules which was being arbed by foreign banks which were able to engage in a mini carry trade affecting the Fed's excess reserves. We disagreed, and suggested that this was nothing short of yet another way in which foreign banks abused the Fed's "Bernanke Put" to bail themselves out at a time when the Eurozone and its currency seemed like they would implode any second.

QE2 came and went, and was replaced by QE3. And, having lasted nearly a year now, it has allowed us to observe the main way in which the Fed's open-ended QE3 has so far differed from the QE2 of 2011.

Recall that while the Fed's Quantiative Easing programs are largely determined by what securities the Fed monetizes: i.e. the sources of funds, what is always left unspoken is where the Fed's created reserves end up, or the "uses" of funds, or rather, reserves. Luckily, as the chart below shows and as tracked by the Fed's H.8 statement, there is a perfect correlation, and causation, between the Fed's newly created reserves parked at banks, and the corresponding change in cash held on the books of either domestic (large and small) and foreign commercial banks operating in the US.


What may not be quite visible in the chart above is that during QE 2, virtually all the newly created cash ended up at foreign banks. This is shown far more clearly in the chart below showing the change in cash balances at large domestic commercial banks and foreign banks between the start and end of QE 2.


So while the Fed was explicitly pumping the deposit base of foreign banks in 2011 - and thanks to JPM and the entire deposit collateral pathway we now know that this cash was used to satisfy collateral requirements needed when purchasing risk assets, even if the banks never explicitly used the Fed's cash to buy up risk - what has it been doing so far in 2013? The answer is shown below.


Surprisingly - if only to all those who claimed our assertion that the Fed was bailing out Europe's banks was bunk due to "regulatory arbitrage" - entirely unlike during QE 2, this time around, virtually every dollar newly created by the Fed has landed on an equal basis at both large domestic commercial banks, and foreign banks operating in the US. But... but... whatever happened to the regulatory arbitrage of QE2?

To those still confused, here is the best visualization of the cash change in domestic vs foreign banks under the two QE regimes:


Indeed - a pretty clear summary of what the Fed's deisgnated bailout audiences was under QE 2 (European banks) and QE 3 (everyone on an equal, pro rata basis).

The above, far more importantly than what the Fed is monetizing in order to build up its reserves, gives us a clear snapshot of the other part of the equation - where the Fed's reserves end up.


All of this should perhaps once again spark the debate over just why has the Fed parked a record $1.3 trillion in cash not with US-based banks, but foreign ones, and just for whose benefit - since by now it is quite clear that QE is solely for the benefit of the 0.1% of the population and, of course, the banks - was QE designed.

Because it is one thing to bail out the rich, at least they are America's rich. But when more than half of the proceeds of QE to date... 

...have ended up at foreign banks, perhaps at least a theatrical congressional hearing is in order?

Source: H.8


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 11/10/2013 - 20:32 | 4141558 knukles
knukles's picture

Because of counter-party risk.
All them interest rate swaps, credit default swaps, foreign exchange transactions, due froms and to, you name it...
There is really no such thing from a global systematic risk standpoint when one gets into the large banks, as domestic and foreign.

It's one big Gordian Knot as they exist now.

One of 'em goes, they all will be impacted.

To wit:  Lehman.  A second tier non-depository investment bank/bond dealer gets slammed and look what the repercussions were... global, bigger than just big, took the financial system to the very edge.
That's why the overwhelming liquidity supplied to the markets, globally.

Gee, but for the good olde days of a bazillion small banks.
But then again, there'd only be small campaign contributions, small cash envelopes and small transfers of funds to offshore havens.

Sun, 11/10/2013 - 20:33 | 4141578 Bay of Pigs
Bay of Pigs's picture

Huh? You mean they don't want a shitpile like Deutsche Bank blowing up in their face?

Sun, 11/10/2013 - 20:45 | 4141612 ZerOhead
ZerOhead's picture

"...have ended up at foreign banks, perhaps at least a theatrical congressional hearing is in order?"

First roll out the Yellen... next release the Grayson...

Sun, 11/10/2013 - 20:47 | 4141620 UP Forester
UP Forester's picture

How about a "cyber-war test" in London the same week as Grid Ex II, just to shake things up?

Sun, 11/10/2013 - 20:50 | 4141626 The Alarmist
The Alarmist's picture

Payback for taking the losses for all those shitty CDOs and CLOs back in 2008?

Sun, 11/10/2013 - 20:55 | 4141638 Dear Infinity
Dear Infinity's picture

What's a trillion between friends?

Sun, 11/10/2013 - 21:11 | 4141666 max2205
max2205's picture

Don't be long Yankee bonds when the taper man knocks on the door

Sun, 11/10/2013 - 21:27 | 4141707 Zer0head
Zer0head's picture

not to worry

the taper man can no longer knock

it's a bitch when someone not only chops off your penis but your hands as well.

Sun, 11/10/2013 - 21:59 | 4141799 Ranger4564
Ranger4564's picture

CHANNEL STUFFING, at it's very best. Why try something new when the old still works quite well? This is the easiest way, cheapest maybe even, to get the foreigners to continue to honor the ka $ ching. If the FED had not "rescued" the foreign *cough* oligarchic circle jerk *cough* with $'s, then the $ might have been toilet $ paper. This heist, foisted on both the people of the US and the foreign *cough* banks *cough* basically kept us in debt but temporarily delayed the run on the currency.

I think it's worse to have given it all away than to have lost it all... but as I'm sure these scumsucking douchebags will say as way of explanation... if you lost it, you don't have another hand to play except start over and rebuild, but if you gave it away, you might be able to resurrect the economy to recoup the "gift", i.e. take it back.

Of course, we should all know by now that there is no recovery and no intention to recover the "gift" so the country was sold into debt, same as parents in godforsaken nations abuse their children by marrying them off for ka ching. The FED owns us, and now, thanks to the loans, owns the foreigners, and all with no assets / collateral / right to do this kind of fucking shit. Same kind of evil, both should rot in hell where I will meet them to mete out their eternal punishment.

I object. Buy gold and silver, end this evil nightmare. OK, enough already, for god's sake, end the fucking bickering and buy the gold and silver, end this damn nightmare. Ultimately, if the nay sayers are right, what does it matter, the economy continues to be manipulated and all "asslessets" continue to climb, you still have your asslessets just denominated in gold and silver. If the yay sayers are right, the world is indeed collapsing and gold and silver will save your ass, ka $ ching will bury your ass.

Yay. If it has not yet occurred to the nay sayers, gold and silver are a protest move, to diminish the flexibility of the oligarchs to manipulate our wealth. If we all agreed to use gold and silver, we'd be in control, they'd be holding a bunch of assless ka $ toilet $ ching $ paper. Get with the program, and stop allowing the divide and conquer strategy to work your wife and kids. I mean it.

Sun, 11/10/2013 - 23:12 | 4141950 Oldwood
Oldwood's picture

Can it not also be that more and more people are removing themselves from the ranks of the employed as a protest to this economic system. I mean people have been doing it since its inception but now, with seemingly pending doom and all, I think more people are stepping back and finding ways to get by with less. Partly in protest and partly in self preservation. If nothing else, if we simply refuse to buy stocks and bonds and refuse to borrow money, it would go a long way towards ending this tyranny. But of course, this is why they are winning as we refuse to accept austerity as something healthy like exercise and dieting, insisting on never missing a "meal" of returns on investment. It is this thirst for easy money that keeps those enabling all of this at the top of the pyramid. We were never supposed to be able to live on the interest from our savings. We were supposed to save for our retirement and bad times, but due to government policies creating inflation, it has become SOP to "invest" for the specific purpose of retaining value, but as all things morph, it is now about profit. Greed is the end of all things, and not just at the top. It is a virus that easily spreads from person to person and countries to countries. We are in an epidemic of greed with symptoms of full on denial.

Sun, 11/10/2013 - 23:52 | 4142031 markmotive
markmotive's picture

Argue about the rationality. It doesn't matter.

What matters is that the 99% hate the fat cat bankers. These people are revolting because of they are destitute and they could care less about counterparty risk.

Russell Brand of all people has become the spokesman for the 99%

Mon, 11/11/2013 - 00:58 | 4142115 smlbizman
smlbizman's picture

ranger......i agree, but ur post about buying gold and silver meme, is failing us.... to a degree in part, imho, for this reason......we are not saying...." put ur savings in gold and silver and not a fucking broke ass bank...use the bank for checking and transactions as needed, but keep ur (labor) savings in the shiny...we also need to discuss what is the best ways to liquidate these savings if  needed....we are all guilty off this. we need to adjust our the metals to store ur savings....

and as a parallel point...i dont buy bitcoins because of some realities, but mostly my lack of abilility to understand the transaction part...i will and have bet a 75-1 horse that couldnt lose, and he won by 15...and i was down to my last eight dollars when i bet him, so risk isnt the issue...its the difficulty i find in the people that are soooo ignorant to the whys of metals, will continue to stay ignorant because of the whys, and the same manor that as of yet, anybody has been able  to explain the simplicites of bitcoins to my ignorant i  will keep my labor in metals, but i also would love to bet on bitcoins at 75-1, i just dont know where the window is at...  

Mon, 11/11/2013 - 09:12 | 4142336 Ranger4564
Ranger4564's picture


Although I don't get into all of the hype in the articles / interviews, I read the KingWorldNews blog fairly regularly. if the rss doesn't work to display the written text, go to the blog linked on the left. Just skim through some recent articles. I am not saying the interviewee's are right, just that there's a perspective there.

I shifted all of my savings into gold and silver once I realized the bankers / governments were manipulating currencies and economies that I saw a greater risk of losing my savings through their actions than the loss in value of gold and silver. I am now at a little loss even with my dollar averaging because I made the decision to buy more when Silver was at $49. I don't regret it, but the magnitude of banker / government fraud was less clear to me then than it is now. However, blind or not, I don't think I would have stayed in stocks or held cash even if I realized the fraudsters would raise market valuation, because I don't want to support their actions and be guilty of the destruction they're causing, and even if you overlook that, there was no clear indication of when the market would be summarily plummeted. And that's also why I mostly stay out of it still.

So I asked myself this basically... if governments can't be trusted, why buy their bonds, if corporations are complicit and devastating civilizations across the globe, why buy their shares / bonds, if banks are fraudulent and engaging in outright theft, why keep my savings in their warehouses, if currencies are what enable these entities their power, why use their currency. Keep asking the questions, and you have less and less to store your savings in. I refuse to buy other commodities because I do not want to be responsible for making the price of food or fuel too high, resulting in the starvation of people around the world. I don't want to invest in real estate because the bankers / governments will use eminent domain / increased taxation / inflation / bankruptcy / outright corruption to evict you from your property should things go to the extreme I envision they might. If Greece is forced to sell physical assets, if the US is selling physical assets, then why would people believe their property is safeguarded?

I believe the objective of the oligarchs is to extract so much wealth that it shifts the entire global economy away from individual wealth to a 2 tier system, rich and poor, with very few rich. I call it the return of feudalism. We are being robbed in every way possible. Real estate values will be manipulated until all wealth is in the hands of the oligarchs.

So given the options, gold and silver seems the best place to park my savings. I am aware gold and silver mining is harmful to the people who mine and the environment in the processing, plus the energy used to extract / refine it, but it was a compromise I chose to make for greater good.

Gold and Silver is like the other protest no one attended... Occupy. If people don't participate in the protest, then those who do get arrested. So if people don't realize the arguments I'm making above or are otherwise complicit with the fraud, then those who do bother to protest are at greater risk for loss.

I really don't think people will tolerate the dramatic decline that I see still to come, and I think people will ultimately drum up some courage to oppose the bankers / governments, but I have been screaming my message for many years now... the longer you wait to stop the train, the harder it will be to stop the train... momentum... it's easy to steal all of the pensioners money in Detroit or LA or Poland when it's done one locale at a time, but it's harder to steal pension funds from everyone. If people who are being robbed don't receive support from people who have not yet been robbed, moral and physical support in protests, then society will be destroyed, and if it can be, it maybe should be. Maybe this version of civilization just isn't robust enough to preserve human dignity...

It depends on what threshold people set for suffering. I can't understand human greed or cowardice actually, not to the extent people are exhibiting it. I see these bankers destroying the lives of people all over the world and of future generations, and the citizenry seem to have no concern, not even for their kids and grand kids. They seem to only worry about whether they can adjust to the 10% of their pensions they'll be allowed to collect.  Like there is no other option. Hello, stop the bankers.  It doesn't seem to be crossing anyone's mind to go arrest the bankers, stop supporting their system, to stop allowing the theft, to restore a semblance of normalcy, and ultimately, with the fraudsters out of the way, maybe even improve conditions.

But, I suppose the people know the truth behind the economy, profit and surplus is coming at the expense of someone else, and it's better to have a henchman go collect the profit and have it delivered to you than to go try to collect it yourself. So people realize perhaps, they've been engaged in a fraud, and they're just receiving their punishment now. I see a lot of parallel between Madoff and average citizenry.  Or maybe people fear further losses if they do something, say something, see something. Maybe people just don't want to know the world is falling apart. I know a lot of people who refuse to acknowledge reality, from rapes / killings to Chernobyl / Fukushima to Coke / water rights to Monsanto / GMO, people refuse to acknowledge the destruction, because they're cowards.

I figure most of these people will be dead when the transition occurs, so whether gold and silver ultimately have a use is debatable. For me, gold and silver is a withdrawal from the system. I figure gold and silver offers the opportunity to buy some land and some food should there be a need when the dust settles. I don't know if gold and silver will be accepted or used during the collapse, I don't know the collapse will take very long. The Just In Time system was implemented to ensure the control of the populace pre-collapse, and the quick collapse of the civilization when the time was right.

All I can say to people is, have courage, do something to save humanity. I don't believe this politico-economic system is the one to preserve, but I'm not trying to ensure that, I'm trying to prevent genocide by the intentional devastation of the citizenry. Ultimately, we need better systems, it's called progress, and as we learn more, as we see the mistakes / failings, we change our mode of operation. We don't need money, but we sure as hell want to keep what money we do have out of the hands of those who believe money is power. I don't want to empower the thieves.

Mon, 11/11/2013 - 09:32 | 4142380 superflex
superflex's picture


I might speculate $1000 in BTC if the system wasn't so difficult to understand and manage.  

Thta's why I like my LCS.  I walk in with cash and walk out with stacks.

Cant say the same for the cryptocurrencies.

Mon, 11/11/2013 - 12:47 | 4142857 smlbizman
smlbizman's picture

ranger, i also 3 yrs ago and over a 2yr period closed our self directed iras....i am all in on hard assets...paid for homes and rentals and metals...the problem is, if you want or need to liquidate ur metals and raise substantial amount of cash quickly.....if you need 50k quick it gets to be an issue...and that is saying without taking a beating on price, paper work, if there are ways to do this without the foreseen problems i and others may like to know.....any thoughts?

Mon, 11/11/2013 - 14:56 | 4143193 Ranger4564
Ranger4564's picture

Unfortunately, I have no secret insights. Only thing I can think of is to keep a certain amount of cash or holdings in assets that you can transfer quickly, if you need that kind of liquidity. I keep a minimum in cash that I know is at risk... and I keep the rest in gold and silver, which I realize is also at risk. How much cash I keep depends on what I plan to do in the next few months. You may want to see if holding some of your money in foreign currencies is advisable. A friend of mine has 50K in cash, recognizing he's lost 10% in the past 5-10 years. But he needs that flexibility. I think the general advice is to not put into metals any cash you need in the short term, because you don't know which way the market will go. I've reconciled that if I need cash in an emergency, the loss in metal price is something I'll just have to absorb.

Maybe someone else can chime in and suggest what you might want to hold your money in when you want quick access. Right now, I don't feel any asset class is secure, except that with metals, ideally you could hold onto them until they are more useful.

I wish I had more insights... best of luck. Let us know if you think of anything.

Mon, 11/11/2013 - 00:48 | 4142096 Ranger4564
Ranger4564's picture

For the most part what you say is true.

These thoughts are still being analyzed in my brain so I could be wrong in what I write here, but I wanted to share while considering the merit of this line of thinking. There's an irony that I've been thinking about. There are a lot of people who argue for the republic form of governance, but at the same time argue for a free market system. The irony or contradiction or illogic is, a republic is a top down model, where a few know it alls dictate to the ignorant masses, but at the same time, the masses are supposed to be intelligent enough to engage in commerce / consumerism, and any top down gestures are seen as not only interference but market rigging. I just don't think a market contrived through an organization such as the republic can ever really be free or unmitigated, so there is an inherent catch 22. I actually think the world is presently heading more and more into a supra-national form of republic, i.e. feudalism, and the people who are in control view us the same way some of us view those deemed unprepared to judge for themselves. Was the republic ever a fair or just system, or was it always tacitly or knowingly an exploitative system of advantage? I'd say it was the latter. And so the same phenomenon is blown up to multinational scale, and the exploitation / advantage is even more severe.

I don't believe in the republic or the entirely free market... mediated society / society in which members negotiate with each other already distort a free market. I don't entirely believe in a top down controlled market either. I think a combination of market interaction and policy by the citizenry would work... some regulations, some agenda, some free interaction. I believe a genuine democratic system is the only viable long term solution and I also believe the problem of ignorant masses is not ignorance but social engineering / conditioning, so the solution is not to create a form of governance that disenfranchises a large portion of the population, it's to erase their ignorance by introducing the information in manageable chunks so ultimately, their children will be able to rule themselves. That allows me to logically argue against the oligarchs as being ruthless, instead of illogically arguing that they're ruthless in not allowing me to be ruthless. I know, there's no significant illogic there. Just the sentiment doesn't wash.

Anyway, most times when I think about the things people defend and argue, I find there to be tremendous logic gaps. Those logic gaps tell me the world is controlled / manipulated / engineered, not that we're just morons.

I bring all of this up because a portion of your explanation does not really consider this or its consequence to society.

Sun, 11/10/2013 - 21:09 | 4141665 max2205
max2205's picture

Shocked....shocked that ZH had to be the one to publish this...still shocked

Mon, 11/11/2013 - 01:02 | 4142117 smlbizman
smlbizman's picture

let me fix that for you if i may.....shocked that zerohedge is the only one to publish this.

now back to our regular programming.

Sun, 11/10/2013 - 20:33 | 4141579 kaiserhoff
kaiserhoff's picture


  Diversification, as in more opportunities for rehypothication, bail ins and grand theft Corzine.

  As soon as some one sneezes, the whole fucking world gets the plague.

  We used to call that mutually assured destruction, but it's different this time, right?

Sun, 11/10/2013 - 20:44 | 4141609 knukles
knukles's picture


Now it's called too big to fail.
Such a politically correct statist (thievery) term of endearment to make the otherwise unacceptable seem ever so necessary.

Sun, 11/10/2013 - 20:47 | 4141621 kaiserhoff
kaiserhoff's picture

Nothing is either good nor bad, but spin meistering makes it so.

                      With apologies to the Seventeenth Earl of Oxford.

Sun, 11/10/2013 - 21:14 | 4141672 OldE_Ant
OldE_Ant's picture

I'm thinking since British/US banking interests have led whole other regions into this fiasco AND caused massive consolidation in virtually every business space (what space has more smaller businesses, vs. less larger ones - the internet I honestly can't think of one.  haha).  The gordion knot was twisted and tied throughout the entire 20th century.

The problem is like an anaconda their knot has started to squeeze the life out of everything.  TBTF is one of the highest piles of crap ever created and guess what after all the jawboning about it, everything is even bigger now.  The coils of the anaconda winding more and squeezing tighter.

This is precisely why the FED has no choice but to keep the QEroin flowing.  Ultimately there will be an event that will toss the system into chaos, and guess what doubling QE won't do shit.  It will require governments to interviene and 'bail out' whomever.  Numbers will be between 1-5T.

Sun, 11/10/2013 - 22:06 | 4141817 ZH11
ZH11's picture

Let's 'solve' the Gordian knot just like Alexander then.

By putting a great big fucking sword through it!



Mon, 11/11/2013 - 00:02 | 4142037 disabledvet
disabledvet's picture

see other comment above/below. I agree with this....Great Depression on a massive scale...only in Europe instead of the USA. (we had massive gold reserves then but the dollar wasn't a reserve currency...the Pound still was top dog.) what they're doing can be construed as yet another albeit "backdoor" way to provide massive amounts of liquidity to Wall Street and the banks. a kind of "monetary trade deficit effect" where all that bailout money goes straight from Washington to Europe and then right to New York City and "he Twitter IPO." not that I'm saying "buy Twitter here" just saying that kid is now a billionaire too. no word yet on nuptials of course.

Mon, 11/11/2013 - 00:30 | 4142083 edwardo1
edwardo1's picture

It's true that they are all connected in a giant daisy chain, but what is really at the heart of the matter is that all these instruments, regardless of their provenance, ultimately rest on top of a dollar based system. And it is that system, the dollar based International Monetary and Financial System, that has the sword of Damocles precariously perched above its neck. This is why The Fed is extending largess to foreign banks, because, ultimatley, they are not foreign.

Sun, 11/10/2013 - 20:26 | 4141561 0b1knob
0b1knob's picture

why does the Fed...continue to bail out non-American banks?

why is the dollar still the reserve currency of the world?

Sun, 11/10/2013 - 20:37 | 4141598 Kirk2NCC1701
Kirk2NCC1701's picture

It wouldn't be to create artificial demand for the Dollar, is it?
I mean, with the natural demand for USDs and USTs just growing to new highs and all.

Sun, 11/10/2013 - 22:01 | 4141807 Ranger4564
Ranger4564's picture

Bingo !



Mon, 11/11/2013 - 00:06 | 4142048 disabledvet
disabledvet's picture

appears to be to create a "rampa-palooza" effect in equities. I know if they do that press conference thingy with the Chief Fed dude that's the one and only question I would have: "is the whole idea to have Wall Street go hog wild and that's the solution?"(sound of crickets chirping.)

Mon, 11/11/2013 - 02:45 | 4142175 Urban Redneck
Urban Redneck's picture

What would be interesting is to see the other side of the transaction, what type of crap paper is the fed trading for, and what terms are they offering vs what a bank could get on the open market-

Sun, 11/10/2013 - 20:30 | 4141565 LetThemEatRand
LetThemEatRand's picture

Anyone still wonder who owns and controls the Fed?  Or why the Fed refuses to be audited?  

Sun, 11/10/2013 - 23:13 | 4141955 AlaricBalth
AlaricBalth's picture

This clip never gets old.

Bernie Sanders: Mr Bernanke. Could you please tell us to whom you lent 2.2 Trillion dollars of taxpayers money?

Ben Bernanke: No!!!

Mon, 11/11/2013 - 00:52 | 4142110 putaipan
putaipan's picture

mmmm. the vatican? the crown? i dunno, who?

Sun, 11/10/2013 - 20:29 | 4141567 Kirk2NCC1701
Kirk2NCC1701's picture

Self-interest. To keep them from dumping the USD, and thus keep the Ponzi going.

"There is no honor among thieves", so they must be bribed and propped up.

Sun, 11/10/2013 - 20:32 | 4141572 LetThemEatRand
LetThemEatRand's picture

If the Fed didn't give them dollars, they would be required to obtain them by other means.  That would drive up the dollar, not vice-versa.  It would also crash the stock market and other risk assets.  This is an intentional transfer of wealth from American taxpayers to foreign banks.  The dollar is being devalued as a result.

Sun, 11/10/2013 - 22:09 | 4141823 Ranger4564
Ranger4564's picture

It's a bit more complicated / sophisticated I think.

The money being lent is being put on our ledger as debt, and also on the foreign banks as debt. FED wins.

The money is being handed out as $ so the $ retains its mystique and parlay as a global currency.

The devaluation you speak of is intentionally slowed down... boiling pot, not raging inferno. The frogs have to be kept in the pot for the soup to be ready.

The wealth transfer is occurring, but not to foreign banks in the way you say... it's wealth like when you borrow money to buy a car. It's money being lent to pay for loans and obligations already imposed on the foreigners by the oligarchic circle... IMF / BIS / WB, the necromongers. They collapsed these countries economies, and are lending them more so they can drown them now.

But correctly, both the citizens of the US and Europe are being pillaged.

Sun, 11/10/2013 - 20:29 | 4141568 EscapeKey
EscapeKey's picture

The banks in question are surely more like supra-national, rather than foreign.

Sun, 11/10/2013 - 20:32 | 4141576 nmewn
nmewn's picture

If the Fed doesn't conjure up cash from thin air, who will buy US government bonds? ;-)

Sun, 11/10/2013 - 20:36 | 4141586 LetThemEatRand
LetThemEatRand's picture

The Fed is buying the bonds.  Transfering cash conjured from thin air (which is future taxpayer debt) to foreign banks to buy bonds is merely creating a middle man and making it a little less obvious.

Sun, 11/10/2013 - 20:39 | 4141601 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

see Hayek "The Road to Serfdom" for more info.

Sun, 11/10/2013 - 21:20 | 4141643 LetThemEatRand
LetThemEatRand's picture

And before Hayek figured it out and blamed it on "socialism," there was actual serfdom orchestrated by the guys who always take over when there is a power vacuum.  It is not a binary equation.  It is possible to have government elected by the little guy, doing things for the little guy, and not have bare knuckled capitalism as the alternative.  Hayek recognized this in theory, but his desired economic model ignored it.  Hayek had a lot of things right, but the messy world of reality does not lend itself to simple solutions.

Sun, 11/10/2013 - 22:11 | 4141833 Ranger4564
Ranger4564's picture

I could not agree more. Very well said indeed.

1000 +'s

Sun, 11/10/2013 - 20:46 | 4141617 knukles
knukles's picture

Not only making it a "little less obvious" but the Fed by Law Cannot Directly Monetize Treasury Securities... so that's where the open market operations come from...
With Goldie and JP taking a commish.

Waddascam, waddascam

Sun, 11/10/2013 - 20:56 | 4141639 LetThemEatRand
LetThemEatRand's picture

The ultimate loophole.  And of course our elected politicians won't do anything about it because they are bought and paid for (both Teams) by these same interests.  Paging John Corzine.  John, you have a call on Line 3.  It's your Get Out of Jail Free Card calling.

Sun, 11/10/2013 - 20:33 | 4141582 seek
seek's picture

This just underscores that in 2008 the global banking system collapsed, and the Fed "rescued" everyone, not just the US banks, in subsequent rounds of QE.

When it happens again I don't think a rescue will be possible, and the chain reaction of imploding fiat will be glorious, even if the consequences of it are ugly.

Sun, 11/10/2013 - 20:44 | 4141614 Bay of Pigs
Bay of Pigs's picture

As I recall it was over $11T too, not just the $700B thrown at the TARP.

Sun, 11/10/2013 - 22:51 | 4141901 kliguy38
kliguy38's picture

correctamundo.......the 700B was just pocket change to give the illusion there was a "solution" and to put some bonus money in the banker's pockets...........the real money was the Dirty Digital Benny

Sun, 11/10/2013 - 20:35 | 4141590 Goldilocks
Goldilocks's picture

Beck - It's All In Your Mind, music video (3:19)

Mon, 11/11/2013 - 00:57 | 4142112 putaipan
putaipan's picture

uh-oh. you mean it's the thetanists?

Sun, 11/10/2013 - 20:35 | 4141591 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

our reptilian overlords don't give a fuck about nations, just keeping the game going

Sun, 11/10/2013 - 20:48 | 4141624 knukles
knukles's picture

Well, not entirely true, in that they want to dissolve all nations in favor of a New World Gubamnit.... kinda....

Quit sticking your tongue out it's not polite..
Look! A fly!

Sun, 11/10/2013 - 20:58 | 4141641 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

True! And I don't mean reptilian literally...well maybe.  Either way we're talking about cold blooded killers, but they prefer deaths by a thousand (printed paper) cuts.

Sun, 11/10/2013 - 21:11 | 4141664 knukles
knukles's picture

I know it sounds like the Mad Hatter, but what with everything else come true, all the rumors, behind the scenes dealings and intrigue, the Conspiracy Theories turned Fact, I'm just gonna go with the Reptilians as per Annaukian shape shifting cold blooded Vampire Squid like eaters of Human Flesh, worshipers of Mammon and Magog, comet Ison/Nibru and the revisiting of the Precession and pole shifts along with a couple dozen big assed CME's thrown in for good measure.

Between that, Boardwalk Empire and a taping of last nights fights interspersed with a good novel by Robert Littell, I can stay sane until tee time tomorrow...

Sun, 11/10/2013 - 21:11 | 4141667 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

Don't forget Moloch!

Sun, 11/10/2013 - 23:13 | 4141953 therevolutionwas
therevolutionwas's picture

and Pooh Bear

Mon, 11/11/2013 - 01:03 | 4142118 putaipan
putaipan's picture

 oh bother !

hudes vs fulford- i.e. the chinese families are frontin' for the vatican-

then keenan jumps on the bandwagon if you wanna keep watchin'....

Mon, 11/11/2013 - 00:41 | 4142097 yepyep
yepyep's picture

the reptilian conspiracy is about the only one left not proved as fact anymore..

and i must admit david icke pleads a good case for it :)


their behaviour definately validates them as reptiles.

Mon, 11/11/2013 - 08:13 | 4142295 newworldorder
newworldorder's picture

You are correct knukles;

- They do want one world government. It is the only way to control the planetary resources for the benefit of the elite Banksters.

- This can only be accomplished by the destruction/capture of ALL Nation States, as well as the destruction of all natural economic systems. The new economic system requires that a FED like entity exist. It functions as a benevolant "rich uncle" handing out free momey to any central bank/sovereign entity that needs it, without a visible "dictator/overlord."

Sun, 11/10/2013 - 20:44 | 4141610 The Heart
The Heart's picture

"And why does the Fed, with $1.3 trillion in cash parked at foreign commercial banks or more than half of the reserves created under QE1, 2 and 3, continue to bail out non-American banks?"

Some country hick's best guess: Because NO banks are American owned. All banks are owned by the rottenchild empire of dust that created the control methodology of the mighty paper god, money. What slave can live without it?

Sun, 11/10/2013 - 21:07 | 4141661 dick cheneys ghost
dick cheneys ghost's picture

que francis_sawyer


now, connect the dots btw the the fed and the ECB rate cut

Mon, 11/11/2013 - 01:25 | 4142132 putaipan
putaipan's picture

the venitians? the baylonians? .... ooh ooh! i got it ! - the thinagouge of thetans! 

(think-    l. ron hubard doing his best francis sawyer dukie icke with a heavy truman capote accent)




Mon, 11/11/2013 - 18:41 | 4142481 RaceToTheBottom
RaceToTheBottom's picture

"And why does the Fed, with $1.3 trillion in cash parked at foreign commercial banks or more than half of the reserves created under QE1, 2 and 3, continue to bail out non-American banks?"


Because the goal is to save the banking system, not just individual banks.  And banks as so intertwined that they need to spread it all over. 

Plus I think once American banks realized that they were backstopped by the FED they took on MORE risk so they went ALL-IN to the risk areas, which were everywhere, mostly in Europe.

Sun, 11/10/2013 - 20:47 | 4141622 Goldilocks
Goldilocks's picture

'SILVER AND GOLD' In Stereo (1:51)

Sun, 11/10/2013 - 20:53 | 4141635 starman
starman's picture

lets just be more specific , Chinese and Japanise banks.

Sun, 11/10/2013 - 20:59 | 4141647 ZH11
ZH11's picture

Well done Zero Hedge for doing the ball aching job of tracking the money to answer the most important question which results from this insane worldwide QE, that is, qui bono?

This type of information should be all over the national papers in the US and Europe but I imagine this will not be covered at all given it shows up what most of the visitors to this site are now fully aware of, the game's bent and merely the feeding of parasites.

With the above information taken with the fact that this hasn't been used to repair the damage they did to the real economy by squeezng the credit system it is nothing but a heist of the US taxpayer which is real treason and should be dealt with in that manner.

A pure scandal from top to bottom.


Sun, 11/10/2013 - 22:15 | 4141838 Ranger4564
Ranger4564's picture

The "money" is being lent abroad, so it's a heist^2. Just killing a few birds.

Sun, 11/10/2013 - 23:31 | 4141997 ZH11
ZH11's picture


You think they're going to ever see it return?

I think even returning the nominal sums is beyond them.

Sun, 11/10/2013 - 23:49 | 4142025 Ranger4564
Ranger4564's picture

Uninsured depositor / creditor, plus the money doesn't have to come from the Bank, it has to be extracted from the country.

Sun, 11/10/2013 - 21:04 | 4141656 Caveman93
Caveman93's picture

Mexican Standoff with ourselves?

Sun, 11/10/2013 - 21:27 | 4141706 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

Blazing Saddles - Nobody move or ...

Sun, 11/10/2013 - 21:13 | 4141669 JR
JR's picture

Central Banks: The True Centers of Political Power by Thorsten Polleit - 

November 8, 2013

Thorsten Polleit of the Frankfurt School of Finance, and an Associated Scholar of the Mises Institute, recently spoke with the Mises Institute about central banks and fiat money.

Mises Institute: Central banks keep increasing the money supply, and yet it looks like there’s still confidence in those fiat currencies.

Thorsten Polleit: Indeed. Policymakers obviously succeeded in taking panic out of the markets and, at the same time, creating the impression that their actions would “rescue” the economies without causing inflation. Their propaganda turns out to be rather successful.

MI: The strategy that the central banks have been using in recent years appears to be working so far.

Polleit: It clearly shows how far central banks’ manipulations can go to uphold the fiat money regime, which is actually a “monetary Ponzi game.” However, one should be aware of the fact that without severe market manipulations such as the suppressing of interest rates to basically zero, and the printing of new money for propping up ailing banks and governments, the fiat money system would presumably have collapsed already.

MI: So if the current strategy fails, what will happen?

Polleit: The critical issue is the demand for fiat money. If people are no longer willing to demand the rising supply of currency, the fiat money system starts unraveling. Treating devalued currency like a hot potato, people would try to exchange their fiat currency against non-fiat money assets. In this process, commodity prices would go up and the purchasing power of money go down. The extreme outcome of this process is hyperinflation: the heavy debasement or even an outright destruction of fiat money.

MI: Back in 2008 and 2009, there were fears of a wider collapse, but that never materialized. Why is this?

Polleit: I could imagine that back then many investors had ignored the fact that in an unfettered fiat money regime, central banks can provide governments and commercial banks with any amount of newly created fiat money, putting them in a position to service their debt in full. This is exactly what they did: “Default panic” was printed away by central banks. This was also the reason why the gold price fell from its all-time high of 1,900 US$ per ounce to currently around 1,300 US$ per ounce.

MI: So you still expect serious inflation?

Polleit: I sure do. Inflation will be one among other measures through which governments will try to get rid of excessive debt. You see, the fiat money regime has brought about a situation in which many borrowers — in particular governments and banks — are no longer in a position to pay down their debt. In other words: The damage has been done, the only question is: who is going to pay for it?

MI: So who is going to pay?

Polleit: Governments and banks will presumably employ higher taxation, confiscation, suspending payments on outstanding debt and, of course, inflation through money printing. One thing should be certain: holders of government and bank debt will be on the losing end. Either they will suffer from not getting back their money or from getting back just inflated money.

MI: The economies — be it the US, China, or even the Euro Zone — appear to be recovering at the moment and we’re told this means the crisis is over.

Polleit: The latest set of improving data is at best indicative of an artificial and eventually unsustainable economic process. It has actually been set into motion by highly distorted interest rates and a new round of fiat money injection. Malinvestment is on the rise again. It is just a question of time until this so-called “upswing” will turn into yet another “bust.” Fiat money creation has caused the malaise. Creating even more fiat money won’t solve the problems. It will make them even worse.

MI: What do you expect central banks to do going forward?

Polleit: Central banks have been captured by commercial and investment banking interests. I would assume that they will do more of the same: manipulating markets first and foremost by suppressing interest rates and printing new money to keep banks and the financial industry afloat.

With central banks running wild, we’ll be moving toward even more severe “boom-and-bust” cycles, even bigger government, less freedom and liberty, a distribution of income and wealth which is increasingly at odds with true market forces.

Central banks will become the real centers of political power. You could even say they are on the way to assuming the role of a “Politburo.” Central banks will effectively decide who is going to get credit at what conditions. They will decide which governments, which banks, and which kind of business sectors and companies will flourish or go under. The truth is that if the fiat money regime is not brought to an end — either by political will or by economic collapse — the economies will end up in a kind of socialist-totalitarian dead-end. But I tend to be optimistic: namely, that the fiat money scheme will break down before such a situation is reached.

MI: If not fiat money, then what?

Polleit: Gold is the ultimate means of payment. Everybody should own some gold. Under current conditions the gold price should be trading between $1,600 and $1,800 right now. At the same time, one would still need to earn an income stream, and by owning productive capital the investor may also protect himself to some extent from government interference: Even cold-blooded socialists know that the nationalization of the means of production means “killing the cow you would like to milk.” That said, owners of productive capital may suffer from higher profit taxation, but not outright expropriation.

The Best of Thorsten Polleit

Thorsten Polleit is chief economist of the precious-metals firm Degussa Goldhandel GmbH. He is also an honorary professor at the Frankfurt School of Finance & Management. He is an adjunct scholar of the Ludwig von Mises Institute and was awarded the 2012 O.P. Alford III Prize in Libertarian Scholarship. His website is 

Sun, 11/10/2013 - 21:14 | 4141673 holdbuysell
holdbuysell's picture

My question is who is coordinating the transactions such that in QE2 the US banks backed off and only the European banks stepped up and now it's different?


This doesn't happen by accident.

Sun, 11/10/2013 - 21:19 | 4141685 Seasmoke
Seasmoke's picture


Sun, 11/10/2013 - 22:02 | 4141810 Bay of Pigs
Bay of Pigs's picture

You know the William Dudley is in the middle of it (President and CEO of the NY FED).

"In 2012, Mr. Dudley was appointed chairman of the Committee on the Global Financial System of the Bank for International Settlements (BIS). Previously, Mr. Dudley served as chairman of the Committee on Payment and Settlement Systems of the BIS from 2009 to 2012."


Sun, 11/10/2013 - 22:37 | 4141881 JR
JR's picture

You've found it, in my opinion, Bay, the gold nugget.

Ultimately, the final arbitrator is the cartel that runs the Federal Reserve Bank of New York. Once you see the breakdown of responsibilities of the various sections of the Federal Reserve, you realize that the real governing power is the New York Bank. This cartel is private, totally independent of political oversight and its organizational structure is so structured as to ultimately serve only the cartel. All decisions to implement the System’s monetary policy are made in secret, giving the cartel immense power over politicians and the elective process.

All the leading financial institutions ultimately lead to this Fed cartel and Rothschild’s City of London - from the IMF and the World Bank to the ECB, to the BIS and all of the TBTF banks, “all are part of a single looting system that has built up a derivatives pyramid of an estimated $1.4 quadrillion.”

It was in mid-2009 that Jill Keto reported in the Huffington Post that “it is currently estimated that there are $684 trillion in outstanding derivatives and another $800 trillion in "shadow" or off-balance-sheet derivatives (which are impossible to calculate because they are not reported), totaling well over $1.4 quadrillion.

G. Edward Griffin concluded in his famous tome, The Creature from Jekyll Island:

 “The Creature has grown large and powerful since its inception on Jekyll Island. It now roams across every continent, and compels the masses to serve it, feed it, obey it, worship it. If it is not slain, it will become our eternal lord and master.” .

In the Appendix to Jekyll, Griffin, in No. 5 of the Natural Laws of Human Behavior in Economics, gave this warning: “The power to create and extinguish the nation’s money supply provides unlimited potential for personal gain. Throughout history the granting of that power has been justified as being necessary to protect the public, but the results have always been the opposite. It has been used against the public and for the personal gain of those who control. Therefore,

LAW: When men are entrusted with the power to control the money supply, they will eventually use that power to confiscate the wealth of their neighbors.”

Sun, 11/10/2013 - 21:17 | 4141682 Seasmoke
Seasmoke's picture

Why are people still allowing this to continue ? Stop working. Stop paying taxes. Stop using debt. REVOLT !!!

Sun, 11/10/2013 - 21:24 | 4141700 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

A man's gotta eat.  Might as well trade FIAT for food... while you still can.

Sun, 11/10/2013 - 21:27 | 4141708 holdbuysell
holdbuysell's picture

Might as well DUMP FIAT for food... while you still can.

Fixed it for you.

Sun, 11/10/2013 - 23:04 | 4141926 therevolutionwas
therevolutionwas's picture

Read Hans Hermann-Hoppe, What We Must Do.  A revolution from the bottom up.  It's worth a try.  Maybe it's what Colorado secessionists are up to.

Sun, 11/10/2013 - 22:03 | 4141798 q99x2
q99x2's picture

The Central Banks have co-mingled all funds of Western nations prior and in anticipation to merging Canada, Mexico and the United States into a larger centrally controlled state. The European Union is under the same centralization program. The globalists first had to take over nations finances and merge them before rolling out drone, surveillance, homeland security (Stazi) and so on. Of course the NDAA is also tied to the financial interests of the Central Bankers.

Unless there is reason to think otherwise this is the treason and roll out of the takeover of the United States of America by the Washington D.C. globalists and the Central Banking system.

Excellent article and thanks for exposing the Central Banks treason. With all the shit that the NSA has on Washington D.C. politicians I am not hopeful. But I do believe some generals are about to bring change.

Mon, 11/11/2013 - 00:46 | 4142103 Constitutional ...
Constitutional Republic's picture

Semper fidelis.

The litmus test for current high military command is: 'Would you shoot Americans?' Many are failing to answer in the affirmative. That explains O'bombas clear out in record speed of some very senior military personnel, still ongoing.

See my earlier post regarding Chinese troops on U.S. soil for the first time under the pretext of an emergency drill in Hawaii on November 13 during the power grid takedown test nationwide in the U.S., Canada and Mexico.


Mon, 11/11/2013 - 01:36 | 4142141 putaipan
putaipan's picture

man-o-nash! we're gonna have to be really savvy about this- i just gotta neat hit on how cool this might be to watch go down .... whooda thunk it was gonna be as easy as sittin' back and watchin' the blue helmets, the red white and blue patriots, the chinese and the russians all fightin' together against the black banker pretorian swat xe's and their snoops and drones for the liberation of america on our soil! woohoo. i bet we win.

Sun, 11/10/2013 - 22:07 | 4141815 new game
new game's picture

i tried to buy a glock at the gunstore for a tube of ae silver(same value); no interest. offered same tube to many sellers on gunbroker-still no interest. and one would think gun dealer/sellers would have some interest. not the case. so proof you cant shoot silver...

Sun, 11/10/2013 - 22:57 | 4141914 therevolutionwas
therevolutionwas's picture

not yet, anyway.

Mon, 11/11/2013 - 01:43 | 4142147 putaipan
putaipan's picture

and not fer another while yet.

one lesson i've learned in the last year. p.m.s are soley for the preservation of wealth. good on the other side. when they gotta be spent- you'll be robbed. on the otherside, sure, good as gold b'ziatches! but the popcorn during the flick's gonna cost ya.

Sun, 11/10/2013 - 22:50 | 4141836 essence
essence's picture

Why would the Fed be so concerned about the health of foreign banks?

Would it be because the owners of the Fed are to a significant degree European based and have major holdings in Euro banks?

The single individual most involved in the origination and initial nurturing of the Fed was the German immigrant Paul Warburg. Actually he came from a wealthy German family that was part owner of the German Central Bank. Paul cut his teeth doing apprenticeships in European and UK banks then was hired on with a NewYork based Rothschild owned bank . Young Warburg came over to the U.S. expressly to lay the groundwork for the Fed. He was at the Jekyll Island meeting and the only one with Central Bank experience. Warburg went on to be the first Fed chairman. After that he headed the Federal Reserve Bank of New York.

Follow the money people.  The Fed stock was snapped up by the big Wall Street banks at the time. Who do you think owned them ... little old ladies in Kansas who in aggregate owned Wall Street?  Get real. Big, entrenched, established Money Power founded the Fed and bought it's stock (well hidden behind many layers so as to make it near impossible to find the individuals behind it all).

Audit the Fed.  With a fine tooth comb. Including tracking down to the individual level who the current owners are. After that let folks like Zerohedge piece together the trail such as ..... hmm, the Feds owners are xxx, and the Fed is also bailing out foreign Banks owned by xxx.





Sun, 11/10/2013 - 22:53 | 4141903 Atomizer
Atomizer's picture

That mother-in-law from hell Yellen is going to break the news about the Federal Reserve not renewing the charter. They needed a mommy figure to tell you. 

Sun, 11/10/2013 - 22:44 | 4141888 Atomizer
Atomizer's picture

Great comments. Did everyone forget about Operation Twist? 

Sun, 11/10/2013 - 22:54 | 4141908 Trimmed Hedge
Trimmed Hedge's picture

Wouldn't it make more sense to cut every individual a check, so they can pay off their debt & be debt-free, so then the banks can get their money back & they can be in a good shape, too?

I know, it's just crazy talk...

Sun, 11/10/2013 - 23:26 | 4141985 QQQBall
QQQBall's picture

$1.3T to furners? Wonder why the US economy lack exit velocity?

Sun, 11/10/2013 - 23:31 | 4141995 kchrisc
kchrisc's picture

"...theatrical congressional hearing is in order?"


Try dog and pony show.

Sun, 11/10/2013 - 23:37 | 4142006 OldE_Ant
OldE_Ant's picture

Sounds like a joke in the making.

The difference between QE2 and QE3?  A greek hooker, A spanish priest, and A German banker!?

Mon, 11/11/2013 - 00:11 | 4142055 ItsDanger
ItsDanger's picture

The whole theory behind QE is flawed well beyond the usual explanations on this site.  Innovation and competition can solve the issues much better than making bankers and the wealthy more rich at the expense of everyone else.  Bernanke is just playing a shell game to hide the truth.  He cant stall the correction forever. 

Mon, 11/11/2013 - 00:21 | 4142067 World of Debt
World of Debt's picture

Great charts... we're so screwed!!



Mon, 11/11/2013 - 00:33 | 4142082 Constitutional ...
Constitutional Republic's picture

Why does the un-Federal no-Reserve Board bail out foreign banks with $ backed by the American taxpayer? Because it is a foreign owned entity serving its globalist shareholders who plot and plunder worldwide, abusing the hospitality or ignorance of every host nation they occupy.

Their geo-political and money interest is shifting East. By the way, an interesting off shoot of that is that Chinese troops will be on American soil for the first time ever on November 13 in Hawaii under the pretext of an emergency exercise during the power grid drill takedown in the U.S., Canada and Mexico.  Interesting that the rootless cosmopolitans are confident enough to hide in plain sight.

Mon, 11/11/2013 - 04:58 | 4142219 The Abstraction...
The Abstraction of Justice's picture

The rest of the world sees the US as the problematic 'foreigner'


Given that there is no gold left in America, it may just be that its government has been told all US assets will be seized if it does not stop the bailout or seized if it does not hold the gold. It is easy to blame Europe for the woes of the USA, but here we have the same problem, the gold is largely no longer in the vault, and the bit that remains is owed to third parties.


We have all been betrayed, and it is no wonder so mnay of our elite are planning to retire in a Chinese suburb.

Mon, 11/11/2013 - 02:58 | 4142182 tradewithdave
tradewithdave's picture

Because... because Obama.

Mon, 11/11/2013 - 07:07 | 4142268 damicol
damicol's picture

The answer is to the question posed is actually quite simple,.

Not only are Europeans on the block but the US citizens are too. and the reason is quite obvious if you really think about.


Economic collap0se of both the dollar and the ponzi euro scam voucher are  ging to happen like it or not.

Cycles come every 40 years or so and it is coming, its the final death thoes and it is convusing upwards in an ever higher spiral and will not collapse to the Zimbabwe situation of hyperinflation as Zimbabwe had a standby, the US $ to fall back on.

This time there is no fall back currency and the two are so intertwined now with trillions in commercial contracts that one takes the other down.

Druggy draggy will start printing  just as the fed is doing and both will great;ly accelerate that printing through 2014.

There is no alternative, unless ther US  doubles or triples printing and apportions two thirds or three quarters to foreign banks.

Either way we  are more than 95 % of the way to collapse, and it can be seen in some very interesting derivatives charts on the entire US  bond market since 2006 where the daily risk changes are now averageing more than 60 times the daily risk changes back throughout the entire 2006 and first half of 2007 period.


It means that not one single day has the change in the overall risk changes been at a low enough level to anywhere meet the highest point during the 2006/7 period.

In fact that applies all even to all of 2010 with the exception of a single days change that year.

Those changes are directly linked to the size of the bond market and  changes in risk across the market and  can only ever grow larger on average.

It follows a perfect rise which is a almoct a perfect hyperbolic curve  with a R^2 of 0.998 covering every single days yeild data from 2006 for every class of bond.

In the first 100 days trading on 2006 the level was 0.06 and the last 100 day trading period ending in July was 59.98 and so far after just  66 days of this 100 day trading session is already at 66.31.

By October 2014 it will on current trends reach 245.48 and by the end of 2015  will reach 593.64.

10 times the level of today.

There is no other path, The risk changes will still grow even if the taper came in or the bonds were taken out or neutered or cancelled.

It would very rapidly reach a point where the changes in risk would either  wipe the bond values out totally one day and then reinstate therm the next day. Where volatility would rise to the point no one could play in such a casino.

The only thing I can see left of any real value as I believe all gold will be confiscated again is land.







Mon, 11/11/2013 - 07:32 | 4142274 Singelguy
Singelguy's picture

What makes you think land is safe? Ever hear of emminent domain?
Besides, they don't have to confiscate the land. They just have to raise the property taxes to a pont where you can no longer pay them, and then they take your land by default. The great advantage of gold is that it is portable and you can hide it. The bastards have to find it before they can confiscate it.

Mon, 11/11/2013 - 09:07 | 4142346 Ranger4564
Ranger4564's picture

Exactly. I'm mystified why more people don't see that.

Mon, 11/11/2013 - 11:36 | 4142661 damicol
damicol's picture

I didn't suggest you buy land in the USA, not once did I say that, But land is not made anymore,  and if you pick the right spot it can be c bought and it can be held safely and it will always have value.

I bought land in the Philippines. Through a Philippine corporation that is controlled  offshore by a trust.

And the problrm with gold is the same as having a stash of crack cocaine..

 You can hide it and its safe but when you need to spend it you have a problem, Thats when they catch you and thats when you lose the lot.

Mon, 11/11/2013 - 09:47 | 4142403 Mediocritas
Mediocritas's picture

QE2 was intended to boost reserves of banks operating within the Eurodollar system (the other USD system, even less regulated than domestic USA), in anticipation of major eurodollar runs caused by a messy collapse of Greece.

Only Greece didn't end up collapsing, so QE2 was pointless (although I'm sure Fed insiders would argue that QE2 stabilized Europe enough to prevent a Greek collapse), so those extra reserves were instead used to backstop further speculation, contributing to rising food prices and causing the Arab Spring. Shown simply here:

Unintended Consequences and all that. Talk about a fuckup. I'll bet Pentagon strategists were raging behind the scenes at those banksters for diddling with the security of oil supplies.

Mon, 11/11/2013 - 10:09 | 4142443 hooligan2009
hooligan2009's picture

the foreign deposits at the fed are the foreigners giving the fed back what it has no use for, in pretty much the same way that US banks do.

the same is happening for deposits held at the ecb via ltro et al, for european banks and non-european banks (mostly US). 

the two way back scratching by central banks is the central banks attempt to monetize coupon paying debt of trillions issued by governments to obfuscate the fact that there are insufficient investors to finance fiscal deficits and accumulated government debt.

governments are broke...central banks are printing money to hide that have only one side of the global capital markets story here.

and...don't forget that Japan is trying to be relevant also and is further obfuscating the parlous state of government debt.

one final point...governments are owned by people, so central banks simply remove the ability of people to manage the affairs of their own governments.

Mon, 11/11/2013 - 12:07 | 4142757 mumbo.jumbo
mumbo.jumbo's picture

why, why...


because the real divide is not along borders, but between rulers and subjects.

Do NOT follow this link or you will be banned from the site!