Beware The 'Head-Fake' Taper As "Markets Have Now Discounted Their Own Dishonesty"

Tyler Durden's picture

Submitted by James Howard Kunstler of,

The financial wires and pod-waves are all lit up these days like it was happy hour at the Lottery Winner’s Lounge.  It appears that the American economy - capital management division - has found the long-wished-for magic alternative energy source: horseshit. It is fueling the conversation all over the Web and over the senile mainstream media megaphones. One technical analyst, celebrity Tweeter Ralph Acampora of Altaira Wealth Management, actually said this week that the USA would be “energy independent by 2016.” That’s rich. We’d only have to come up with 8.5 million new barrels of oil a day, or give up driving cars altogether.

Apparently, the Federal Reserve is not just hosing down the markets with liquidity (i.e. money for nothing), but has also turned its headquarters in lower Manhattan into the world’s biggest stationary crack pipe. Meanwhile, more than a few professional observers of the financial scene say there can’t be any bubble because that’s the only thing everybody talks about and bubbles only form when nobody notices them.

That’s just not true. Plenty of people were hollering and finger-pointing about the housing bubble years before it blew up the banking system, including yours truly in a book published in 2005 (The Long Emergency). The reason there is so much anxious chatter about the current bubble is because the bubble is there for all to see, and when it pops it is sure to leave a lot more rubble on the ground than the last time — for instance, the wreckage of trust in all paper investments, which would be quite an historic financial innovation. Since the interventions and manipulations of markets and interest rates are perfectly obvious, one would have to conclude from the current sentiment that faith in the crookedness of finance has completely solidified. The markets have now discounted their own dishonesty.

The story making the rounds these days is that the USA’s industrial economy is on the rise again; that the housing market has “recovered;” that (according to Meredith Whitney) the “central corridor” of the nation (Texas to Minnesota) is the second coming of Japan in the 1960s; that we have more oil than we know what to do with; that the nation has bred a super-race of intrepid entrepreneurial risk-takers like unto no other society in history; and finally that whatever else we are or are not, America is the cleanest shirt in the laundry basket of Mother Earth.

This is all horseshit of course, being smoked in the New York Fed’s crack pipe.

Here’s what’s actually going on. The Federal Reserve can only pretend to have any option besides force-feeding “money” into Wall Street as if it were a Strasbourg Goose with Crohn’s disease. What passes through goose is a vile toxic substance called malinvestment, which turns the energies of society into activities that produce nothing of value, like hedge fund employee bonuses, NSA operations, Tesla car promotion, Frank Gehry condo towers, drone strikes against Afghani wedding parties, Obama photo ops, inflated auction prices of oil paintings, and Barney’s new Jay-Z holiday fashion collection.

The Fed makes regular noises about ending the force-feeding program (a.k.a. “quantitative easing” or “bond purchases”) issued in the recorded minutes of its Open Market Committee (FOMC). The propaganda is called “forward guidance” to give it the appearance of seriousness and rectitude, but its actual nature is more like what goes on in a Jerry Lewis movie of the 1960s — a kind of antic mugging. Lately it’s referred to as “taper talk” in reference to the threat of tapering the Fed’s purchases of US Treasury bonds and other debt paper, which runs at around $85 billion a month. Sometime soon, the Fed may announce a tiny taper of say $10 billion a month. This head-fake taper will cause the interest rates on the ten-year-bond to shoot up north of 3 percent and threaten to bankrupt the government — which is too broke to pay interest that high on the loans it takes. The markets will have a whack attack over the tiny taper. The Fed will freak out at the odor of deflationary depression and go back to full-tilt force-feeding of the sick goose.

The outcome will be some combination of a complete loss of faith in paper currency and the “assets” denominated in it, a complete loss of trust between banks that they are solvent enough to do business with each other, and a conclusive implosion of Wall Street and all the institutions in and around it, extending to the executive branch of the federal government. The sorry little appendage to all that, US economy, will be left in the cold and dark, whimpering for its mommy.

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rubearish10's picture

That's a healthy dump!

NotApplicable's picture

Hope our "have to taper" Tyler has read this.

Vampyroteuthis infernalis's picture

Moar QE, Taper this, blah blah blah. The Fed will start to secretly taper with the big boys in the know. Short of the Century for those who are luck. F*%k rest of us.

aVileRat's picture

Nah it is going to be a trial taper, a 8% plunge. Fed saying the Taper is here. Market drop 40%. Fed walk back Taper. Market rallies 4% the next day. Cycle resets for another year of trading fees and comissions.


El Oregonian's picture

Did you say "Taper" on, or Diaper" on?

Oracle 911's picture

Actually horeseshit is a high quality manure which improves the soil. Please don't call it Bernanke, because that thing can't improve even the soil.

doctor10's picture

Someday mebbe they'll buy a clue!!

The USA is abig nothing burger. Capital is worthless. Your ideas vacuumed by the NSA. Your business regulated and taxed beyond all resaonable utility.


Until most of the chattering class can't  pay the Georgetown condo mortgage-nothing much will change

firstdivision's picture

With all the chatter about taper, no bubbles, housing recovered, and markets rising to pull in retail, are the four horsemen of the apocalypse

fonzannoon's picture

The middle class desperately wants the market to crash to give some legitimacy to it's demise. The market is telling the middle class to go fuck itself, and it will be just fine without it.

firstdivision's picture

Would be fun if everyone on under the 1%er's cashed out leaving all the players left to cannibalize each other.



Pegasus Muse's picture

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."  --Henry Ford

nickels's picture

Expect a Fed taper (they are not crooks), when all the bad paper is off the banks' books. ---Burma Shave

maskone909's picture

 "roll that shit, light that shit, smoke that shit"

then SHORT that shit

iLiquid's picture

The market can stay irrational longer than you can remain solvent.

TrumpXVI's picture

It's even worse than that...the Fed can print money and buy Treasuries and septic MBSs longer than you can remain solvent.

Headbanger's picture

"Good thing we didn't step in it" ---  Cheech and Chong

FreeNewEnergy's picture

We can only hope for change.

If you like your insolvent bank, you can keep your insolvent bank. Period.

Bobbyrib's picture

Look at that dung, if you are not an executive for the company you work for, that is how much your employer values you.

W74's picture

No worries.  If the "market" crashes downward they'll just recind the orders and make everything whole again.  To the Moon!!!

max2205's picture

Lets make it 6 years we have to read dooooom

cowdiddly's picture

That there is a picture of an unencumbered asset having a store of value.

At least it will have value as a ferti;lizer for growing food.

RSDallas's picture

Do you feel better?  At least end your rant with ways we can avoid stepping in the horse dump.

astoriajoe's picture

I think we're already sitting in it.

Tall Tom's picture

There ARE NO SOLUTIONS. DENIAL is even worse.


So enjoy the Shitpile that you, by your participation, have contributed.


America DESERVES this. Collapse baby collapse.


Happy Holidays. Be sure to go shopping on Friday. Spend lots of money that you do not have. Create your own QE...Credit Money out of thin air. Wall Street is dependent upon you.

vote_libertarian_party's picture buy buy?!?!?!?!

djsmps's picture

What's a holiday week Monday without a SHELTER IN PLACE order?

Diogenes's picture

Bureau of Alcohol Tobacco and Firearms, sounds like a fun place to work.

JohnG's picture

What kind of scotch pairs with an M16?

Depends on what you're smoking...

espirit's picture

Chevas works for me...

orangedrinkandchips's picture

The Federal Reserve can only pretend to have any option besides force-feeding “money” into Wall Street as if it were a Strasbourg Goose with Crohn’s disease.



cossack55's picture

You may call it extortion, I call it a well crafted sentance that made me laugh.


Same pile as usual, they just stopped spraying that pleasing room spray to cover it up. USSA being energy independent by 2016 is entirely possible with rollout of fuel cell technology.

donsluck's picture

Ha ha ha, I didn't down vote you, but I can tell why others did. Fuel cells CONVERT energy, they do not produce it. We may have cleaner skies (amen) but that is it.


donsluck             Fuel cells run on natural gas and water other than H2. We are silly with natural gas and oil here in the USSA. Hydro powered vehicles will come out for consumer purchase at reasonable prices in 2015 which will change the mindset of Americans toward energy. Have seen some of the consumer products that will be available, the muppets will be impressed.  

Socratic Dog's picture

Christ, is it time to roll out the "fuel cells will save us, it's free energy" horseshit again?  Well, it's about 10 years since it was last rolled out, so maybe it is time.

A little secret: fuel cells run on hydrogen, a very light gas.  Transporting it in quantity is not feasible.  So it needs to be generated where it's used.  How is it generated?  By electrolyzing water.  Just like it sounds, that takes electricity, lots of it.  Fuel cells produce electricity.  Quite a bit less than it takes to electrolyze that water.  See any problem there?  Elsewhere known as energy return on energy invested, it's a concept that doesn't get much play on TV. I wonder why?

If you were being sarcastic, I apologize.


Hydro vehicles will be offered in 2015 by Honda, Toyota and Hyundai, look it up.

Radical Marijuana's picture

Nihilist Cipher, you do not appear to be consistent with your name!

There are plenty of creative alternatives. However, the world is being strangled to death by legalized lies, backed by legalized violence, while all the "democracies" are dying due to international treaties, etc. ... The problem with all of the creative alternatives is that nothing can actually be done within our currently established systems unless it makes rich people richer, by creating more debts, in the form of money made out of nothing, as debt, to finance any possible creative alternatives within the established social pyramid systems. Despite there being plenty of possible creative alternatives, the real world is locked into a downward spiral of debt controls backed by death controls, where the debt slavery numbers have become debt insanities, which most probably means that death insanity numbers will follow that.

The "solutions" are most probably going to become mass murders ... and so, the only possible creative alternatives will have to survive through that situation. ... The current problems started back when the counterfeiting of the public money supply by private banks was first legalized. That has paradoxically enabled the Anglo-American (Zionist) empire to become the most globally dominate, and able to back up its financial frauds with militarized police force. However, that history of debt slavery has segued into globalized electronic frauds, backed by atomic bombs, where the debt slavery has driven its numbers through exponential growth to become debt insanity, backed up by the threat of death insanity numbers, through the credible threats from weapons of mass destruction. Inside that context, where nothing can be done unless it makes rich people richer, while the vast majority go deeper into debt, (but they are already way too far in debt to be able to continue doing that in any sane ways,) the back-up systems are the psychotic breakdowns to social storms in the form of more genocidal wars, along with democidal martial law.

Meanwhile, althought there is no doubt that there are plenty of creative alternatives, HOWEVER, without the crucial core set of alternative death controls, to back up alternative debt controls, then the currently combined money/murder systems can not do anything but automatically drive their debt slavery to become worse and worse debt insanities ... which will eventually reach some turning, tipping points, towards collapses into chaos, and social storms of magnitudes nothing like ever before in human history, since the collapse of systems of global electronic frauds, backed by atomic bombs, has never been seen before, while that was all building and building accumulated systemic risks, which pretty well encompasses everyone on the planet. Any possible creative alternatives, in every other area of human endeavour, of which there are an abundance, are going to have to, maybe, survive through the genocidal wars, and democidal martial law, as well as maybe survive through the ways that Neolithic Civilization's evil deliberate ignorance has enabled human beings to destroy the natural world at an exponentially accelerating rate.


Unless there are some real creative alternatives to the ways that civilization is being strangled to death by the paradoxical effects of too much success at backing up lies with violence, controlling everything that it is doing overall, then none of the possible lesser creative alternatives come close to being in the ball park of those problems. My point is not that there are no creative alternatives possible, because I am sure that there are an abundance of creative alternatives, in every area that one looks. My point is that the system as a whole is dominated by money/murder systems, of electronic fiat money frauds, backed by weapons of mass destruction, while THERE IS NO AGREEMENT WHATSOEVER ABOUT WHAT SHOULD BE DONE OTHER THAN KEEPING THOSE INSANE SYSTEMS GOING.

There is practically no agreement on the basic nature of the problem, which is the creation of "money" out of nothing, as debts, by private banks, while everything else is based on that insanity prevailing and continuing to grow greater and greater. There is even less agreement about what should be done other than that, because the established systems depend upon the continued success of the best professional liars and immaculate hypocrites continuing to trick and fool enough of the people enough of the time ... BUT, IF THEY FINALLY FAIL TO BE ABLE TO CONTINUE TO DO THAT, THEN WE RETURN TO THE REALITY THAT THERE HAS TO BE SOME NEW SYSTEMS OF ORGANIZED LIES, OPERATING ORGANIZED ROBBERIES, IN WHICH NEW SYSTEMS OF DEATH CONTROLS BECOME THE NECESSARY CORE TO THOSE NEW SYSTEMS, AS THEIR CENTRAL FEATURE, OR KEYSTONE TO ANY SYSTEM OF POSSIBLE ALTERNATIVES, OR THE LYNCH PIN TO HOLD TOGETHER ANY ALTERNATIVE SYSTEMS OF ASSEMBLING THE POSSIBLE CREATIVE ALTERNATIVES.

Obviously, the only possible way to get through the current system of legalized lies, backed by legalized violence, pushing its inherent contradictions through to psychotic breakdowns and resulting social storms, is for the possible alternatives to MAYBE survive through the resulting genocidal wars, and democial martial law mass murders, to MAYBE emerge on the other side, IF it turns out that we have not already destroyed the natural world too badly for it to be able to recover enough to make anything like that possible ???

This article above has raised questions regarding how "Markets Have Now Discounted Their Own Dishonesty." While the ways that that was discussed were cute, it was also childish, in that it fails to perceive the full magnitude of the Markets' Dishonesties! Our whole civilization is based on a long history of triumphantly legalized lies, backed by legalized violence, enabling political economy to run away with the short-term success of those systems. Not only has that driven extreme social polarization, that evil deliberate ignorance has also allowed for the runaway destruction of the natural world. All of those things maximized the short-term benefits of those who were the best at being dishonest, and backing their claims up with coercion, while the full longer term costs of doing that were able to be socially denied and suppressed.

Therefore, the markets have barely begun to discount their own dishonesty, because they mostly do not have the slightest clue about the degree of their full dishonesty, and do not want to know any of those real social facts or natural facts. More radical truths about anything that Neolithic Civilization has been lying about more and more for thousands of years are barely on the public agenda of the kinds of "corrections" which are necessary. The extreme paradoxes of advances in science and technology being channeled through a social pyramid system fundamentally based upon backing up lies with violence, in order to keep the vast majority of people ignorant and afraid, so that they could be controlled and exploited, is reaching some serious turning points, where that whole thing could tip over, since that social pyramid system has become extremely steep, while it also undermined the foundations of the natural capital that it was originally able to be built upon.

OF COURSE, IN OUR BIZARRO MIRROR WORLD, WE ARE REACHING THE POINT WHERE MARKETS ARE BEGINNING TO DISCOUNT THEIR OWN DISHONESTY. HOWEVER, THEY HAVE NOT YET COME REMOTELY CLOSE TO COMPREHENDING THE FULL MAGNITUDE OF THEIR DISHONESTY! The currently established "markets" are extremely good at maintaining their kinds of evil deliberate ignorance. In that context, they are still light years away from appreciating the full magnitude of the ways that everything they have been doing for Centuries has been based on legalized lies, backed by legalized violence, which is still automatically getting worse, faster, at the present time. The corrections coming to those markets appear to require events beyond human control, since everything actually being controlled by human beings is so totally dominated by successful professional liars and immaculate hypocrites, that any more radical truths about anything they are doing has no reasonable chance to change anything, unless there are events beyond their ability to control anymore, which force them to change?


Radical Marijuana       You seem to be very consistent with your name with that post. Daaaaaaaaaaamn that's some seriously heavy shit you been smoking. A little too dark in spots but hang in there and keep on posting. The markets have always been dishonest, and nobody knows how truly rotten and disgusting the ruling elites are more than me, but they have a saying "never let them see it coming." You are forgeting that the phoenix rises from their majick. The new ideas and inventions have been waiting in the wings for the new play, act one to begin.

lasvegaspersona's picture

I don't think the USG's ability to pay interest is the issue with the 10 year. It's more immediate effect (going to 3%) is that the interest rate derivatives go bad. Some large SIFI banks hold trillions of these all leveraged over any reasonable ratio. When they have to start paying on these it is game over!

Thus we see the chess game ending as each move is studied and rejected and the next likewise. The question is does the game end civilly with the King placed sideways, or does the loser wipe the table with an angry forearm slap.