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Felix Zulauf Warns Of "Another Deflationary Episode" As "The Mother Of All Bubbles" Pops

Tyler Durden's picture


"There is a valuation problem with most global equity markets - the most with the US," warns Felix Zulauf in the following brief clip, adding that sentiment "is extremely one-sided," but the classic bear-market-inducing recession, he notes, is not on the immediate horizon. Instead, he warns, other problems may be the catalyst for a correction in the US - specifically China's "mother of all bubbles", fragility in Asian banks, and balance of payments crises continuing in emerging markets. Zulauf suggests "you have to be short stocks, own US treasury bonds, and also buy gold as panic and risks go up."


Via WSJ,



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Sat, 02/15/2014 - 18:05 | 4440427 TeMpTeK
TeMpTeK's picture

Whos Bullish.?.... They print prices rise.. this isnt bullish... its BULLSHIT!


Sat, 02/15/2014 - 19:29 | 4440630 DOT
DOT's picture

Agreed.   Bullish it.

Sun, 02/16/2014 - 04:46 | 4441644 The Vineyard
The Vineyard's picture

Deflation deflation deflation.  Learn it, live it, love it.  Bitches.

Sun, 02/16/2014 - 09:32 | 4441829 new game
new game's picture

summation in 10 words or less: tuesdays burger today , bitchezz, = bad case of indigestion...

Sat, 02/15/2014 - 18:06 | 4440431 hamstercheese
hamstercheese's picture

I used to think a condiment was when you complemented a condom.  [off topic].

Sat, 02/15/2014 - 18:13 | 4440445 ShrNfr
ShrNfr's picture

No. they are what you serve at the open house for your condominium when you try and sell it.

Sat, 02/15/2014 - 18:55 | 4440531 NoDebt
NoDebt's picture

I thought it was that little white cake they put in the bottom of the urinal.

Sat, 02/15/2014 - 18:12 | 4440441 ShrNfr
ShrNfr's picture

Physical assets are not the asset of choice in a deflation.

Sat, 02/15/2014 - 18:49 | 4440506 BKbroiler
BKbroiler's picture

i was just thinking that.  gold deflates like everything else.

Sat, 02/15/2014 - 19:09 | 4440567 Peter Pan
Peter Pan's picture

If deflation turns into a rout I would think gold will shine when paper assets don't just deflate but actually evaporate.

Sat, 02/15/2014 - 19:15 | 4440592 kliguy38
kliguy38's picture

gold will perform VERY well in a deflationary collapse go back and look at previous ones.........miners were up 300% during the great depression gold also did fine......its called FEAR!!!!!!!!!! and loss of your homework

Sat, 02/15/2014 - 20:20 | 4440744 Soul Glow
Soul Glow's picture

Look no further than the crash of '08 - gold bottomed in the fall while equity bottomed in the spring, when the money printing ramped up.

It is true - gold does well during deflation, and considering the money supply is vastly greater than ever before and global debt is too, gold will shine like the star it is.

Sun, 02/16/2014 - 10:09 | 4441872 sessinpo
sessinpo's picture

Your statement is not accurate. Mine below clearifies that. Actual physical PMs decline during deflation. That is different from mining stocs.




Sun, 02/16/2014 - 10:05 | 4441865 sessinpo
sessinpo's picture

I was expressing this about a year ago as inflationist could not grasp it with all the printing. It just made no sense to them that all the money printed disappears because of greater amounts of debt that overrides inflationary printing.

What good is it if you get an extra $100 dollars if you have also gotten $1000 more in debt? Sure, you may be able to make a few more interest payments with that $100 dollars, but you are in the cebt trap that. Eventually, the interest payments exceed your income.

Additionally, I also stated that even PM's would fall but would be a better investment relative to others. If history is to repeat, mining stocks should to well, better then the actual PM itself.

Cash will be king as people need to raise cash to service debt. Eventually the fiat currency collapses which is why a modest position in PMs is proudent.

Right now the size of the coming collapse makes food, guns and ammo the best investment, if you can fend off the government.

Sun, 02/16/2014 - 18:36 | 4443037 NidStyles
NidStyles's picture

When credit and debt are the only thing that is backing your currency it doesn't matter if the credit pumping itself stops as the interest will still accumulate and keep the currency in a constant state of devaluation.That sir is called inflation. When people are trying to raise cash as you put it, the government will be subsidizing and bailing out someone. They always do.


I swear you idiots need to learn more before trying to "school" anyone as you thought you were.

Sun, 02/16/2014 - 10:05 | 4441866 sessinpo
sessinpo's picture

I was expressing this about a year ago as inflationist could not grasp it with all the printing. It just made no sense to them that all the money printed disappears because of greater amounts of debt that overrides inflationary printing.

What good is it if you get an extra $100 dollars if you have also gotten $1000 more in debt? Sure, you may be able to make a few more interest payments with that $100 dollars, but you are in the cebt trap that. Eventually, the interest payments exceed your income.

Additionally, I also stated that even PM's would fall but would be a better investment relative to others. If history is to repeat, mining stocks should to well, better then the actual PM itself.

Cash will be king as people need to raise cash to service debt. Eventually the fiat currency collapses which is why a modest position in PMs is proudent.

Right now the size of the coming collapse makes food, guns and ammo the best investment, if you can fend off the government.

Sat, 02/15/2014 - 19:12 | 4440583 realWhiteNight123129
realWhiteNight123129's picture

ShrNfr you obviously do not know what you are talking about.

Deflation is one of the form when promises of future cash flows (debt and equities) are too abundant in connection with the circulation of present goods (goods and services and consumable commodities). 

If the money can not be printed, you should hold money (coins in the old system of XIX century, or ECB notes in Cyprus).

You should avoid financial asset and currency deposits in this configuration of fixed money. And you will be much better with wheat in a warehouse than with a bank deposit (ask the Cypriots about that). The fall in prices is very temporary for inelastic demand commodities, if there is a fall it is typically because of a total banking collapse. In XIX century you would see a fall for maybe 18-20 months, you are still better off than than with bank currency from a bankrupt bank. The best is obviously base money.

However in today´s system you are almost guaranteed to see the threat of delation fought with a devaluation of the currency. A devaluation of the currency through money printing has the following sequence: 

1. interest rates going lower

2. land price moving up

3. price of secutiries moving higher

4. Finally the base money enters the circulation and inflation picks up. (We are getting close to phase 4 in teh US after the China episode of imported deflation).

Anyway there are too many finanical assets (promises of future cash flows) in relation to GDP (goods and services and consumable commodities). 


Sat, 02/15/2014 - 22:19 | 4441058 gatorengineer
gatorengineer's picture

lets count it and score it they have been trying like hell to devalue the currency for a long time now...


1) interest rates going lower, not so much..

2) land prices moving up... Nope...

3)  Price of securities moving higher... well one for 4....

4)  Inflation picks up... NOPE.....


Goes back to Tyler 101, its flow......  they have to keep printing....  Best lesson I learned from Zero hedge...  They have to keep the flow up...

Sun, 02/16/2014 - 09:18 | 4441806 ArmyofOne
ArmyofOne's picture

The Spice must flow.

Sun, 02/16/2014 - 18:38 | 4443041 NidStyles
NidStyles's picture

The inflation has been low in the local region because it's being exported.


If any of you have actually ever traveled you would know that the dollar is losing ground against quite a few other currencies.

Sun, 02/16/2014 - 18:28 | 4443020 NidStyles
NidStyles's picture

If it were even a real deflation you might have a point. Unfortunately everyone throws that word around without actually knowing what it means.

Sat, 02/15/2014 - 18:13 | 4440446 q99x2
q99x2's picture

Deflation is good for people that don't have debt. Like me. And it will also keep the price of gold and silver from rising.

My student loans (in the future) will pay for a larger house. And, I'll be able to travel more often. Also the wealthy will become less wealthy because of debt and I will rise up through the middle class to become dictator of the world a lot sooner than otherwise.

Sat, 02/15/2014 - 18:23 | 4440457 gafgroocK
gafgroocK's picture



'Loans in the future'??


LOL, good one!  

Sat, 02/15/2014 - 22:21 | 4441065 gatorengineer
gatorengineer's picture

my mortgaged house deflates too much, I toss the keys back to the bank.


Your paid off basement residence is worth less......  who wins....

Sat, 02/15/2014 - 18:32 | 4440471 RafterManFMJ
RafterManFMJ's picture


Sat, 02/15/2014 - 18:49 | 4440512 Anthony Migchels
Anthony Migchels's picture

As long as we don't get rid of the banks and their usury and wholly artificial boom/bust cycle, this nonsense is going to continue.

These suckers all own each other, it's one massive cartel.

Sat, 02/15/2014 - 20:21 | 4440755 Soul Glow
Soul Glow's picture

They aren't Masters of the Universe, they are masters of the paper universe.

Don't forget that.

Sat, 02/15/2014 - 18:53 | 4440518 buzzsaw99
buzzsaw99's picture

when they break out the charts grab your wallets. this mofo is clueless at best, disingenuous at worst.

U.S. margin debt as a percentage of GDP has now hit 2.6%, the same extreme as in 2007 at the peak and close to the all-time high of 2.8% in 2000...

IRRELEVANT! In 2000 and in 2007 the fed raised rates. The fed will never raise rates again in any significant fashion within our collective lifetimes. This bubble, bubble, toil and trouble fake market will keep doing what it's doing 4 EVAH. this thing is and enron put together times infinity. they will never pop this fucker. Party like it's 1999 because that's where the S&P is going bitchez.

Sat, 02/15/2014 - 18:52 | 4440521 ebworthen
ebworthen's picture

My only issue with the article is "...the unintended consequences of QE..."

I think it was intended.

Sat, 02/15/2014 - 18:54 | 4440524 trailsend
trailsend's picture

The end is nigh. I'm buying canned goods.

Sat, 02/15/2014 - 18:59 | 4440544 greatbeard
greatbeard's picture

>> I'm buying canned goods.

I'm canning my own out of my garden.



Sun, 02/16/2014 - 07:37 | 4441731 Disenchanted
Disenchanted's picture

The only cans I can find are dented...

Sat, 02/15/2014 - 19:00 | 4440547 BadDog
BadDog's picture

Deflation. I don't think that word means what you think it means. Disintergration more like it.

Sat, 02/15/2014 - 19:10 | 4440571 Anthony Migchels
Anthony Migchels's picture

Deflation, by the way, is a total disaster, for all involved.

It is bad for debtors and the whole world is drowning in debt. It destroys economic growth, because it encourages hoarding of money. Deflation means depression, the money supply tanked dramatically in 2008 and is still way below trend.

The Austrians have wreaked havoc with our economic common sense and their wholly bogus defense of deflation is simply outrageously intellectually dishonest.

Austrian Economics, Apostles of Austerity Defending Deflation

Sat, 02/15/2014 - 19:13 | 4440585 FredFlintstone
FredFlintstone's picture

What if you are sitting on a pile of loot?

Sat, 02/15/2014 - 20:32 | 4440790 hobopants
hobopants's picture

Deflation does not exist in a vaccuum, it is a force like gravity. Gravity is good because it keeps me grounded on the planet, but it would be bad if I jumped out of an airplane without a parachute. Deflation as a result of an efficient economy is a good thing as it reduces the cost of goods and adds value to savings. This is the same thing you see in ecology as diversity allows for the more efficent recycling of energy within a system.

Right now deflation is bad because it is the result of a credit boom caused by the supply side idiots you're so fond of. In a shit economy where no one is making any money, deflation and inflation are both bad, because they both act to reduce purchasing power, one from the value of the money, the other from the lack of it. But the disease is the crap economy created by the fed, excessive deflation or inflation are merely the symptoms created by the imbalance caused by intervention.

The economy is a complex system and subject to the same laws and interactions as an ecosytem, the highest order of understanding of any system, is the understanding of consequences. There is no "good" or "bad" there is only action and reaction. Energy was displaced in the system like pushing a air filled ball under water, the deeper you try and push and the more force you use the greater reaction you get back in return.


Sun, 02/16/2014 - 10:19 | 4441894 FredFlintstone
FredFlintstone's picture

Fond of supply side idiots? Assume much?

Sun, 02/16/2014 - 16:46 | 4442724 hobopants
hobopants's picture

Yabba dabba doo! Guess I do Fred. Probably a bit reactionary on my part. At my university I'm constantly having this deflationary argument with the apostles of krugman. I guess somewhere in my brain I formed an association between Deflation is Bad = Supply side moron. They often seem to go hand in hand.

Big fan of your cartoon by the way, but how did you find internet access in the stone age?


Sat, 02/15/2014 - 19:19 | 4440599 Stanley Lord
Stanley Lord's picture

"Deflation, by the way, is a total disaster, for all involved."

No it isn't, that is the meme the Fed puts out to justify intervention 24/7.


Sat, 02/15/2014 - 21:47 | 4440919 Deathrips
Deathrips's picture

Shit, thats the best they can do....really?

Let me try- Spoken by a proud multiethnic man with children behind him clapping

The USD is too strong after 100 years of ("debasement" redacted) value creation by the FED. The USD was created by the FED to save the blind american children from the deflation monsters severe anal raping. (Subliminally add "You will all respect this papers awesome ability to levitate, forward for the children".) It is soo strong that it will kill the global economy for good "IF" we dont print MOAR and save this fiat currency from having too much purchasing power.


It wont happen again baby I love you, let me give you some ice.


"Yes, its missing a /s/ tag...i know." (anyone adding this to the POTUS teleprompter gets a hall pass)






Edit: this guys a tool he probably spent all week on this..i just though up the stupidest shit I could think of in 5 minutes. I constantly forget that the truth has no value.

Sun, 02/16/2014 - 10:16 | 4441886 SilverSavant
SilverSavant's picture

Deflation can be a huge problem for the banks, or they can buy things up after on the cheap.   So, be aware of the "after" and make sure there are no banker owners left alive after. 

Sat, 02/15/2014 - 19:25 | 4440619 fijisailor
fijisailor's picture

"The Austrians have wreaked havoc with our economic common sense"

Where've you been the last 100 years?  Hiding under a rock someplace?  Keynsian economics has driven the world to the brink of economic disaster with this inflation meme.

Sat, 02/15/2014 - 19:51 | 4440683 realWhiteNight123129
realWhiteNight123129's picture

The problem is not deflation, the problem is accumulation of bad debt in the first place. You can thank the idiots managing the system for this excessive accumulation. 

Either way excessive future cash flow promises (debt of finanical assets if you will) need to shrink in relation to GDP (present goods i.e. --- goods and services circulated in teh economy, that includes consumable commodities). 

If you wack the numerator (debt and bankruptcies) or push the denominator (inflation in GDP), you restore the balance. Eitehr way excessive promises of future cash will shrink in relation to present goods (which include gold).


The problem with resolving by devaluation first and later morphing into inflation is that you have moral hazard. In the XIX century the Bank of England forced the small people not to have bank notes but gold coins. This way during a bank meltdown, the small people would be unscathed, while the speculator, the overextended merchants, the imprudent bankers would be wiped off clean. The debt destruction would be swift, and new cycle would start. 

The problem of preventing deflation early (Strong in 1926) or Greenspan in 2001-2002 and Bernanke in 2008 is that instead of having a small deflation and a few bankruptcies, you keep accumulating bad debt and increasing total debt to GDP, which only guarantees a large problem down the road. 

Having a wipe off of banks at a relatively moderate total debt ot GDP helps prevent a total meltdown at a much larger debt to GDP. Your other alternative is to debase teh currency so much that you end up like Argentina. 

There are no easy ways out of debt, blaming the other side does not make your own alternative (theft of savers) a better way. At least in bust and deflation you do not have moral hazard and you get rid of imcompetent people. With the money spigot the incompetent people actually get more power while the guys which were trying to save their dollars, expecting that home price would finally come affordable to buy them with a decent level of equity as percentage of value get robbed to bail-out all the other idiots.




Sat, 02/15/2014 - 20:35 | 4440795 ThroxxOfVron
ThroxxOfVron's picture

"At least in bust and deflation you do not have moral hazard and you get rid of imcompetent people. With the money spigot the incompetent people actually get more power while the guys which were trying to save their dollars, expecting that home price would finally come affordable to buy them with a decent level of equity as percentage of value get robbed to bail-out all the other idiots."

That cannot be repeated often or loudly enough.

Recessions are natural healthy purges of accumulated incompetency and misallocation.

The imprudent and incompetent are supposed to pay for their imprudence and incompetence; it's how nature forces incautious and unkilled people to pay attention to what they are doing and learn things if they want to survive.

It is flat out evil to reward stupidity and hubris.

Sun, 02/16/2014 - 10:17 | 4441891 sessinpo
sessinpo's picture

And what about deflationary periods such as 1837 when US public debt was at a minimum?

Sat, 02/15/2014 - 23:26 | 4441241 andrewp111
andrewp111's picture

Deflation leads to world war. Been there, done that in 1933-1945. Want to have a repeat in an age of deliverable nuclear weapons? No wonder the Fed and all other central banks are desperate to avoid deflation at any cost.

Sun, 02/16/2014 - 01:33 | 4441472 TheReplacement
TheReplacement's picture

You mistake natural deflation due to efficiencies and man mad deflation due to anti-market policies.  One is good.  The other is bad.  Guess who gives us the bad ones?  Hint:  It isn't Austrians.

Sun, 02/16/2014 - 11:18 | 4442007 RaceToTheBottom
RaceToTheBottom's picture

ANthony, you should have used a sarc

Sun, 02/16/2014 - 18:42 | 4443054 NidStyles
NidStyles's picture

Deflation is the process that clears out the bad investments and the junk bonds/stocks. It's what keeps people honest, or at least forces them to come to terms with their artificial wealth. That is why it's a good thing and needs to happen on it's own accord to reduce the trauma and impact that it has on the general economy when pushed off for decades.


In other words, the Austrians got it right, and they are not trying to create a Utopian economy that can not exist in reality.

Sat, 02/15/2014 - 19:17 | 4440595 spellbound
spellbound's picture

"Mismanaged economies like Argentina?"

Managed economies, like everyone. Fixed it for ya.

Sun, 02/16/2014 - 18:46 | 4443069 NidStyles
NidStyles's picture

The issue is that these retards can't understand that you can not manage an economy.

Sat, 02/15/2014 - 19:33 | 4440631 Element
Element's picture

These sorts of catastrophe pages are like cheesecakes ... terrific ... when real.

OK ... that didn't come out right ...

Sat, 02/15/2014 - 20:50 | 4440828 pupdog1
pupdog1's picture

Yes it did...

Barron's has always been the mouthpiece of Big Insider Wall Street pretending giving carefully designed advice to muppets.

Very, Very Squid.

Sat, 02/15/2014 - 19:36 | 4440655 Goldilocks
Goldilocks's picture

Seal Barking (0:27)

Birth of an elephant seal (4:52)

Sat, 02/15/2014 - 19:39 | 4440661 Element
Sat, 02/15/2014 - 20:26 | 4440767 Goldilocks
Goldilocks's picture

SEAL Team 6 Was Murdered (7:39)

Sat, 02/15/2014 - 20:05 | 4440716 TheRideNeverEnds
TheRideNeverEnds's picture

Holy mother of god!  Will someone please stop the deflation?!?

I don't think I can't deal with prices of things declining!  

Oh the humanity!!!



Sat, 02/15/2014 - 20:25 | 4440765 Soul Glow
Soul Glow's picture

Well, considering how tied pensions are to the stock market, it is bad for the many who rely on institutions to make them money, thus why Ol' Yellen will indeed continue to ramp the inflationary policy.

Of course, this whole system is a sham and people will have to deal with the reality when their illusions crumble.

Sat, 02/15/2014 - 22:25 | 4441076 gatorengineer
gatorengineer's picture

ah who has a pension tied to the stock market.  Would like to know.....  Probably less than 1% of america  90 percent of private sector america has no pension.  Giverment pensions are all defined benefit....

Sun, 02/16/2014 - 18:48 | 4443076 NidStyles
NidStyles's picture

Uhh, what do you think a 401K is?

Sun, 02/16/2014 - 18:52 | 4443091 akak
akak's picture


Holy mother of god!  Will someone please stop the deflation?!?

I don't think I can't deal with prices of things declining!  

Oh the humanity!!!

"Constant inflation-adjusted prices prove that there is no inflation".

-ZH poster JimmyJames

Sat, 02/15/2014 - 20:47 | 4440821 JamesBond
JamesBond's picture




i confess.....  couldn't control my attention long enough to read the entire essay....  scrolled down through most of it to get to the comment section.

I feel dirty. 




Sun, 02/16/2014 - 18:53 | 4443100 NidStyles
NidStyles's picture

When I have that issue I figure it's my common sense telling me to not waste my time reading drivel, note to all I did not read the article. I don't care what this guy thinks. He's getting paid the more he can influence people to invest in his drivel, so of course he's going to ham it up a bunch.


Three things I have learned in life.

1) Wrap it before you stick it.

2) Do not keep your wealth in the bank, it only makes the bankers rich.

3) If someone's personal wealth is tied up in their appearance or their reputation they are likely either going to work hard and build both by being honest, or they are going to take the quick and easy path and ham it up and BS their way around to give the perception to those that do not know them that they have that reputation and appearance.

Sat, 02/15/2014 - 21:02 | 4440851 Goldilocks
Goldilocks's picture

Talking Heads - Life During Wartime (5:50)

Sat, 02/15/2014 - 21:12 | 4440865 Jack Burton
Jack Burton's picture

If I didn't know better, I would say that it seems the capitalists and financiers really don't have a fucking clue what they are doing or playing at. Manipulation of markets and central bank central planning are about as effective in the long term as the Supreme Soviet of the USSR was in long term economic and market central management. Bubbles don't come from the markets, they come from central bank printing and market manipulation for the so called wealth effect form of economic growth.

All these bonus taking bankers and big financial trading houses are in bed with the central banks to runa massive wealth tranfer scheme, looking at income growth by sectors, we can see this is successful, but it trasfering all income growth to the 1%, thay have killed main street economics, and I hate to tell you, but most all of us live in that main street economy. If you want more of the same, I suggest voting. Voting allows Americans to have a say in the greatest democracy and free market on earth. Republican promise prosperity and freedom, and as we can see, Bush delievered, Obama offered hope and change, and he delivered. Thus must give voters a feeling of true democracy at work, we vote and our leaders respond, just as the founders planned. I suggest in the next election, to look carefully at your free choices and pick either a prosperity republican, or a hope deomocrat. Either way, no body can silence the voice of the people at election time.

Sat, 02/15/2014 - 22:08 | 4441036 Deathrips
Deathrips's picture

Dude... those arent capitalists.


They are plunderers.



Sat, 02/15/2014 - 23:03 | 4441174 wisehiney
wisehiney's picture

Good citizenship is now an underground, black market thing. I was a good citizen before good citizen was cool. 

Sat, 02/15/2014 - 21:18 | 4440891 Stuck on Zero
Stuck on Zero's picture

The U.S government cannot deflate without default.  There is too much debt.  It i a one way street with a dead end.


Sat, 02/15/2014 - 21:27 | 4440907 Clowns on Acid
Clowns on Acid's picture

I dunno.. I think Felix Z. is falling for the same mistake a lot of people have, including myself. There is no way the Fed will allow deflation with a $4Trillion balance sheet. They will destroy the USD before they accept deflation.

I didn't think that the Fed (it doesn't matter Bernanke or Yellen as long as Stanley Fisher is around) and its sponsors would be bat shit crazy enough (corrupt and immoral is what I really mean) to go past QE1. Of course I was wrong.

Felix Z. thinks that the Fed will continue with taper and just "see what happens", and therefore deflation. The Fed announced the Taper but will print anyway and surreptiously get the $$ into the market. There is no way that the Fed will allow deflation. It should have happened in 2008. Is too late now for the Fed to accept deflation with a $4 Trillion balance sheet.

Deflation may come but that will be long after the Fed has spent all of its bullets destroying the USD.

Sat, 02/15/2014 - 23:20 | 4441224 andrewp111
andrewp111's picture

But isn't the Fed out of bullets? Will Yellen illegally buy stocks, junk bonds, and munis - and risk impeachment for doing so?

Sun, 02/16/2014 - 11:39 | 4442043 DrunkenMonkey
DrunkenMonkey's picture

Zulauf is right about deflation imo, but the crap on the banks balance sheets that becomes or turns out to be worthless will be bought for 100 cents on the dollar by the friendly (neighbourhood) Fed.

As usual, bankers will be made whole.

Ultimately, we all know there will be another crash (and subsequently another bailout), but if we are prepared for it (physically, economically - and most importantly, politically) then there will not be a third time around.

Sat, 02/15/2014 - 21:33 | 4440922 GoldenDonuts
GoldenDonuts's picture

I am sure that fifty of you guys will correct me but when QE is phased out and all of the "investments" that bankers have in emerging markets are liquidated the money comes back to the states.  It appears to be showing up in the stock market, gold, and bonds. 

This repatriated money is now no longer locked up in a digital vault somewhere and will be causing real inflation in the states.   No?  Inflation in the states? 

Sat, 02/15/2014 - 23:18 | 4441217 andrewp111
andrewp111's picture

I don't know. The global economic machine has so many moving and interdependent parts that I have usually been wrong in the past predicting anything. And so is almost everyone else.

Sun, 02/16/2014 - 19:06 | 4443137 NidStyles
NidStyles's picture

You are correct, that is a very likely outcome. That is what the Austrians have been saying for years now...

People that live in debt eventually have to repudiate. To be honest in the larger scope of things, it doesn't matter if you have debt int he US or not. What will matter is where you are when it happens. If you live in the US when it happens, even if you have zero debt obligation but no hard assets you will be in the same boat as the assholes with millions in debt and no way to generate revenue. The only people that will have more than dirt and a shovel in the US will be those that hold hard assets and property. The rest of the people are liekly fucked.


The Great Depression nearly wiped out everyone, and this one is promising to be even worse...

We have a very similar setup as that particular time period, and this time the thieves have the police/military at their beck and call just like that last time period.

My advice, move to Asia and learn to deal with the living standards for a while.

Sat, 02/15/2014 - 22:04 | 4441019 wisehiney
wisehiney's picture

Zulauf, you on are my top ten list of dudes I would like to buy drinks for.

Sat, 02/15/2014 - 22:35 | 4441105 gatorengineer
gatorengineer's picture

Ok, Lets get real for a minute.  The Fed is looking for the Goldilocks scenario.  Going Krugman didnt help one dam bit.  It did keep it out of the ditch however in the short term.  The fed is trying to solve for as long a road to kick the can as possible.  If they can minimize the damage at 25 B a month, they can keep it going all that much longer.  They had to let the market get some altitude so when they pulled back it had some room to move before a complete crach.  Cutting 20 and still at all time highs, they will cut more.  

If they make the yellow mans eyes pop (china) in doing so, well guess what the end game was in the first place.

Lets say at 30 B a month (Mortgage and Tbills combined)  the S&P is at 1400... Gold at say 1300..... I think they would be happy as hell.  The manipulated unemployment numbers would be sub 6%.  and GDP manipulated would be 1.5%.....

They would be happy to run there until they owned all of the mortgage paper in the US, and 2/3rds of the treasury market....


Sat, 02/15/2014 - 23:04 | 4441179 eddiebe
eddiebe's picture

Oh sure, go long US Treasuries, thanks. WTF

Sat, 02/15/2014 - 23:41 | 4441266 JR
JR's picture

King World News

Richard  Russell - Why the Collapse in the US Will Be Terrifying

February 15, 2014

With continued chaos and uncertainty in global markets, today KWN is publishing an incredibly powerful piece that was written by a 60-year market veteran.  The Godfather of newsletter writers, Richard Russell, is warning that what is left of the middle class in America is imploding as the world remains mired in a depression and the US government continues to lie to its people.  He also warned that the once massive U.S. gold hoard is now gone.

Is there any way of discerning the truth about the US economy?  Famed John Williams of Shadow Government Statistics makes a living by dissecting government statistics and providing us with the truth.  The following is from his most recent report:

If the economy will not grow, just redefine it.  The US economy continues to stagnate and turn down anew, as part of the deepest and longest economic downturn seen since the Great Depression.  With actual business activity moribund, the US government once again has turned to redefining a major economic series, so as to boost a reported activity.

This agrees with my previous observation that the US economy is sinking, regardless of stock market-top fluctuations.  How long, I wonder, before the real truth decorates newspaper headlines?  Frankly, I’ve never seen a stock market so obsessed with current news.  I grew up thinking that the stock market discounts conditions as they will materialize months in the future.  Americans must be confused as they note the harsh conditions of their current  life when compared to what the Federal Reserve and the government tell us.  Ultimately the truth will come out.  And I believe that John Williams is telling us the truth.  This is indeed the longest economic downturn seen since the Great Depression.

I note that Walmart, with its slipping sales, is now being called “too expensive for the middle class.”  This tells us something about the struggles of the middle class, which are now exiting Walmart, in favor of … well, staying home.  For the middle class, these appear to be hard times.  Interestingly, the last two generations are the first two generations in America history that have never seen hard times — that is, unless they’ve heard descriptions of hard times from their parents, who braved the Great Depression.  Now we hear more and more of children moving back in with their parents, or parents moving in with their older children.  I’m thinking that we will see a good deal of novel living situations as the months go by.

Read the rest of the article

Sun, 02/16/2014 - 03:41 | 4441612 pupdog1
pupdog1's picture


There is no interview with Richard Russell at this link.

Sun, 02/16/2014 - 00:33 | 4441359 Paracelsus
Paracelsus's picture

They are using fear to prevent a bank run worldwide.Gasoline goes up and down but bananas have been $.69 a pound at the store for two years?


Sun, 02/16/2014 - 03:39 | 4441611 pupdog1
pupdog1's picture


Sun, 02/16/2014 - 05:34 | 4441674 Spungo
Spungo's picture

We need to stop deflation at all cost. America will never prosper unless housing prices rise 3x faster than wages.

Sun, 02/16/2014 - 06:36 | 4441701 mach777
mach777's picture

Trouble with deflation at this point is that it will be a deflationary collapse. When defaults begin to happen, it will come crushing down, far beyond your mental idea of what deflation means.

Hypertiger, the ultimate doomer, was right all along.

Sun, 02/16/2014 - 07:46 | 4441738 Ranger19
Ranger19's picture

I am just going to keep buying gold and silver. If it gets so low its worth less than bonds, I can always melt it down and make bullets. 

Sun, 02/16/2014 - 14:07 | 4442336 novictim
novictim's picture

Ironically, this credit bubble which has fueled the increased home prices, stock prices, gold/commodity prices, everything BUT increased production and manufacturing (because there is not need for more manufacturing), continues to be fueled by the same actors for the benefit the same players.  


The most recent error (deliberat error) started with that 2008 TARP spending and bailouts where public dollars were dished out to gamblers and failed investors (for free!) in order to create a TRICKLE DOWN wealth effect.  Instead of nationalizing the failed banks, breaking them up, and making the home owners sitting on underwater mortgages whole, we let the banks "work their magic"?  Crazy.

Has that EVER worked?  No.  Who argues differently?  

Obama did this.  The Bushs did this.  Clinton did this.  Reagan did this.  But we still haven't learned that a consumer economy is driven by...CONSUMERS?!  The American economy has been a story of decreased standard of living for the consumer/worker for 40 years!

This is not rocket science.  So criminal machinations/nepotism/corruption are the only explanation for the repeat "errors"


So now we have a broke consumer/worker population, massive excess of productive capacity/sidelined workers and factories with no one left to buy goods in sufficient quantitites and we scratch our asses and then pump even more money into the banks and financial institutions with the ZIRP?  Huh!?

I smell corruption.  It's so strong that even my vomit is curdling.

Sun, 02/16/2014 - 14:16 | 4442371 novictim
novictim's picture

CONSUMER/Workers make this system of ours run.

Any policy that will set things to rights and restart the economy must be a policy that increases the wealth and spending power of the consumer.  That should be obvious.

But we, apparently, will get no such policy because you ZH zombies think the Market will deliver a miracle.

News flash: The Market is a mindless beast and it does not have a "motive" to create wealth equality or decency.  

Society has to fix this through political means. The longer this society fails to act, the more dystopian our world will become.


Sun, 02/16/2014 - 16:40 | 4442725 assistedliving
assistedliving's picture

these Swiss are precise, logical, thorough, evidential, fact based...and wrong.

Marty Zwieg (RIP) taught us to never 'fight the Fed'.  We arent tightineng for crissakes, we're slowing the

loosening...and Chair Janet "shall be tested and soon" Yellen will soon be fast and loose whereupon all bets are off

Sun, 02/16/2014 - 21:24 | 4443530 datapanik
datapanik's picture

Mr. Zulauf, in a sagely, paternalistic manner, warns of a deflationary correction and increased volitiltiy in the markets and then, without the flicker of any irony, recommends shorting the Turkish lira. Thats like swimming to a drowning man only to hold his head under when you reach him. So we should all jump on board and drive the lira down even lower by the big short. What about the Turkish people if their currency collapses?

Mon, 02/17/2014 - 00:00 | 4444081 Cdn1
Cdn1's picture

Currencies vs Imports chart is scary but dubious. Is Zulauf saying EM currencies were final straw that broke the subprime camel's back?  Generally, not enough data shown and evidently EM's now have more dollars and better budgets, so recent huge drop in EM currencies not causing much drop in imports so far.

 Zulauf was predicting doom some time ago with EU hurting USA. He seems to underestimate how bamboo and wire structures can hold up for a long time, focusing only on how it is not steel and concrete.

  Much else here is about % stocks not trading above 200 day MA. Is this bible?


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