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When Even "Erudite" Economists And Journalists Blast QE

Tyler Durden's picture


Are you saying it took the highbrow economist cadre five years to figure out and agree with what we first said in 2009, and for which we received endless ridicule, abuse and accusations of fringe insanity? Yes. We are saying that.

First, from the "erudite" economists at the IMF, and its just released report titled "Monetary Policy in the New Normal":

Should unconventional policy tools become conventional? During the crisis, central banks employed unconventional tools (such as bond purchases and forward guidance) to provide economic stimulus as the policy rate approached zero, and to ensure transmission despite disrupted financial markets. This raises the question of whether unconventional tools should also be used in tranquil times. We conclude that with the exception of forward guidance, the costs seem to exceed the benefits.

And then, from the "erudite" journalists at The Economist:

When QE was first announced, it was the equivalent of emergency surgery. Then, further rounds were needed to help the economic patient recover. The third step was for the Bank of England to hand back to the Treasury the interest it earned on government bonds, in the name of good accounting. And now what was originally a temporary arrangement has been turned into something more permanent.


All along, the authorities have denied that this process represents “monetisation” (the monetary financing of government debt), which is something of a taboo in central banking. But the cumulative impact is similar. The British government has in effect ended up with an interest-free loan from its central bank, financed by money creation. The debt has not been formally cancelled, but it might as well have been.


[A]nother reason why monetisation has always been frowned upon is that it is an easy option. Why should governments finance spending with unpopular taxes or borrow from suspicious bond investors when they can get the money from a friendly central bank? The process makes democratic leaders less accountable; by boosting asset prices, which are mostly owned by the rich, it may well have led to a rise in inequality, without the sanction of any vote. Perhaps in ten or 20 years’ time, recent events will be seen as the moment the world crossed a line.

Wait a minute, that is what we said five years ago!

So, based on the preceding, all we can conclude is: "Those damn tinfoil-hat, conspiratorial, fringe bloggers at the IMF and the Economist."


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Tue, 04/08/2014 - 08:51 | 4635166 buzzsaw99
buzzsaw99's picture

friendly central bank? no such thing. bankers are parasites.

Tue, 04/08/2014 - 08:56 | 4635190 smithcreek
smithcreek's picture

Unconventional tools?  They flatter themselves.  They are all a bunch of conventional, standard, every day, run of the mill, plain old tools.

Tue, 04/08/2014 - 09:02 | 4635204 knukles
knukles's picture

That's because (the erudite blasting QE, finally) everybody's become embarrassed by Paul Krugman and nobody wants to be seen in the same room with him... er something like that.


PS  Excessive QE is like toilet papering over turds.  A sticky situation demanding lots of Shitgum

Tue, 04/08/2014 - 09:15 | 4635264 negative rates
negative rates's picture

Well not everybody.

Tue, 04/08/2014 - 09:32 | 4635316 Stackers
Stackers's picture

I noticed how they left the biggest taboo with debt monetisation --- hyperinflation and a complete collapse of the currency.

Tue, 04/08/2014 - 09:15 | 4635266 Headbanger
Headbanger's picture

To answer Tyler(s)'s question..


Tue, 04/08/2014 - 08:56 | 4635193 GetZeeGold
GetZeeGold's picture



When I told my grandkids what they were doing....boy were they pissed!

Tue, 04/08/2014 - 10:07 | 4635425 BandGap
BandGap's picture

"What were once vices are now habits".


Tue, 04/08/2014 - 08:57 | 4635199 replaceme
replaceme's picture

Crocodiles are friendly, too.  Nice crocodile, nice.

Tue, 04/08/2014 - 09:12 | 4635252 BLOTTO
BLOTTO's picture

Erudites and Edomites...oh my.

Tue, 04/08/2014 - 09:37 | 4635326 kaiserhoff
kaiserhoff's picture

Barracuda smile.  They are glad to see you;)

Tue, 04/08/2014 - 09:47 | 4635359 petolo
petolo's picture

Old African aphorism : Don't insult  the crocodile till you have crossed the river.

Tue, 04/08/2014 - 09:57 | 4635389 williambanzai7
williambanzai7's picture

Tue, 04/08/2014 - 10:05 | 4635413 Cpl Hicks
Cpl Hicks's picture

Somebody give this loser in a Raiders tee a big hot cup of STFU.

QE is for the winners in this world.

Tue, 04/08/2014 - 08:51 | 4635169 yrbmegr
yrbmegr's picture

October will be interesting.

Tue, 04/08/2014 - 08:57 | 4635200 ArkansasAngie
ArkansasAngie's picture

I hope it gets interesting long before October.  In part, because then November will be even more interesting.

Leave no incumbent in office.


Tue, 04/08/2014 - 09:44 | 4635348 nickels
nickels's picture

The incumbent is dead. Long live the incumbent. Let's fix one "broke" thing and make banking a utility.

Tue, 04/08/2014 - 09:50 | 4635365 petolo
petolo's picture

Pitchforks, shovels, hempen rope, guilotinnes ready to go General Durden!

Tue, 04/08/2014 - 08:52 | 4635177 toys for tits
toys for tits's picture

When Krugman capitulates the apocalypse begins.

Tue, 04/08/2014 - 08:57 | 4635197 CHX
CHX's picture

Sell in May, get some gold, and come back in about 10-20 years.

Tue, 04/08/2014 - 10:09 | 4635432 BandGap
BandGap's picture

He'll use big words so we'll think he's smart.

He'll jump when he's close to the boats, not before.

Tue, 04/08/2014 - 08:59 | 4635182 Mercury
Mercury's picture

And now what was originally a temporary arrangement has been turned into something more permanent.

Just wait until they realize that there can be no permanent, stable equilibrium with constant market manipulation, pervasive central planning and private wealth destruction.


Tue, 04/08/2014 - 09:03 | 4635212 ArkansasAngie
ArkansasAngie's picture

I'm counting on them learning that one the hard way ... by letting the door smack'em in the arse on their way out to stand in the soup kitchen line.

Let's have some moral hazard wealth redistribution.  Those that fail has to liquidate to those who have not.

Tue, 04/08/2014 - 09:05 | 4635221 Rainman
Rainman's picture

  Clusterfuck, noun, (military origin)

  A bungled or botched undertaking ; A situation, state of affairs or gathering that is disorganized or chaotic.

Tue, 04/08/2014 - 09:11 | 4635249 yogibear
yogibear's picture

Anytime they announce reducing QE the market responds by dropping.

The Fed will eventually get scared, reverse and pump in even greater QE.

It won't stop until everyone is fleeing the US dollar.

Tue, 04/08/2014 - 08:54 | 4635187 ugmug
ugmug's picture

BlogHeads United .....the football team for tinfoil-hat, conspiratorial, fringe bloggers....

Tue, 04/08/2014 - 08:55 | 4635188 zorba THE GREEK
zorba THE GREEK's picture

Zero Hedge may have been right about QE, but I still think the World is flat.

Tue, 04/08/2014 - 09:00 | 4635213 knukles
knukles's picture

Would you like to go to a testicular cancer survivor meeting with me?

Tue, 04/08/2014 - 09:17 | 4635272 negative rates
negative rates's picture

ur kiddin right?

Tue, 04/08/2014 - 09:35 | 4635321 Uncle Remus
Uncle Remus's picture

Marla will be there - well, so I hear.

Tue, 04/08/2014 - 09:07 | 4635227 y3maxx
y3maxx's picture

...and Earth is the Centre of our Universe...wait a minute...and is the "Council for Foreign Relations" the Centre of our Planet?...

Tue, 04/08/2014 - 09:10 | 4635245 BLOTTO
BLOTTO's picture

'They' think our Sun is at the centre of the Universe...hence why they worship it.

Tue, 04/08/2014 - 08:55 | 4635191 Cattender
Cattender's picture

so simple to understand. yet these phd holders just don't seem to get it..

Tue, 04/08/2014 - 08:59 | 4635208 H. Perowne
H. Perowne's picture

There are levels of human stupidity only attainable by intellectuals. The rest of us poor tyros can only dream.

Tue, 04/08/2014 - 08:59 | 4635214 buzzsaw99
buzzsaw99's picture

that's like saying a monkey wrench doesn't get it

Tue, 04/08/2014 - 08:58 | 4635205 Cheyenne
Cheyenne's picture

"And now what was originally a temporary arrangement has been turned into something more permanent."

No shit, Sherlock. That's because the mega-bank house of mirrors is one huge ongoing control meta-fraud in which member institutions are themselves bankrupt--which is another "fringe" position that zh took 5 years ago and that happens to be true as well. Must we really wait until 2019 for the legacy media to wake up to this reality?

Tue, 04/08/2014 - 09:06 | 4635235 Seasmoke
Seasmoke's picture

Perhaps. But every day we get one day closer to 2019. That's the thing about time. 

Tue, 04/08/2014 - 08:59 | 4635206 NoDebt
NoDebt's picture

I think it's become "fashionable" to poo-poo QE and such now that the Fed is tapering (remember- never fight the Fed, not even in your stated opinions).  The next down-turn in the economy or the next "banking crisis" they'll be right back at it, though, and everyone will agree it's a good thing (again).

Tue, 04/08/2014 - 08:59 | 4635210 orangedrinkandchips
orangedrinkandchips's picture

fringe insanity? Lunatic fringe......Theme song for ZH!!!!!


Try this.....

Tue, 04/08/2014 - 08:59 | 4635211 Peter Pan
Peter Pan's picture

You can fiddle with the level of asset prices but when unfunded liabilities continue to mount then it is really quite clear that QE has provided only a veneer of success while the unsustainability mounts.

Tue, 04/08/2014 - 09:00 | 4635215 larry david
larry david's picture

The IMF and Economist finally caught up to ZH? Wasn't April Fool's last Tuesday???

Tue, 04/08/2014 - 09:00 | 4635218 agstacks
agstacks's picture

I'm surprised they didn't throw in, "and until this very report was released, no one, we mean NO ONE, knew that QE was a net negative. We were the first to make this breakthrough discovery."

Tue, 04/08/2014 - 09:15 | 4635263 inky
inky's picture


lol that ones probably coming next.

But we at ZEROHEDGE know different.

Tue, 04/08/2014 - 09:02 | 4635224 larry david
larry david's picture

Next thing you know the Wall St Journal will run a piece touting physical gold as high quality capital that boasts 0 counterparty risk. 

Tue, 04/08/2014 - 09:02 | 4635225 Dr. Engali
Dr. Engali's picture

Once the financial markets start to collapse due to the lack of stimulus they will be singing another tune. We have seen the damage that tapering is doing. Just wait until Qe is completely withdrawn (if ever). They will be screaming like little bitches.

Tue, 04/08/2014 - 09:20 | 4635286 Uncle Remus
Uncle Remus's picture

."hey what's that sound
everybody look what's goin down"

Tue, 04/08/2014 - 13:56 | 4636294 Wait What
Wait What's picture

QE will never be 'wound down'. the rate of growth might reach zero (not likely either) but they'll still be buying TSYs to maintain the 5 trillion.

rats that 1st jump ship from the 'QE is good' boat jump best, which is why the FOMC has so many vacancies for its governorships. expect to see more of this as the lie that 'QE is good' gets further exposed as such, as well as a gift to old wealth that does nothing but move paper around looking for interest and dividends.

Lagarde is already whining about the damage tapering is doing to the global economy, it will soon become a cacophony as everyone realizes the liquidity trap is real. but they'll keep screaming the same lunacy:


kudos to TD for enlightening the world long before people were ready to acknowledge QE Fail.

Tue, 04/08/2014 - 09:03 | 4635229 thegekko
thegekko's picture

And that's just part of the reason why ZH is the best financial website in the world. Your track record speaks for itself and I sincerely hope that one day ZH gets recognition for(hopefully) helping change the landscape & culture of global financial sector. Who knows, maybe one day we'll see all the Tyler's on the cover of Time magazine as man(or people) of the year. One thing's for sure, like most ZH followers I'd just love to know who you are, your professional backgrounds, your level of education, and your impeccable sources.

Tue, 04/08/2014 - 09:11 | 4635250 knukles
knukles's picture

That'd kinda be like knowing God's plan. 

Tue, 04/08/2014 - 09:14 | 4635261 Uncle Remus
Uncle Remus's picture

There's a plan?

Tue, 04/08/2014 - 09:19 | 4635277 negative rates
negative rates's picture

There was supposed to be.

Tue, 04/08/2014 - 09:25 | 4635291 toys for tits
toys for tits's picture

If only there was some website, magazine, or newsletter that God published. Maybe it's this one.

Tue, 04/08/2014 - 14:06 | 4636340 Wait What
Wait What's picture

if i'm not mistaken, i believe the plan is called Project Mayhem

Tue, 04/08/2014 - 19:41 | 4637452 StychoKiller
StychoKiller's picture

Operation Mayhem?  Never heard of it!

Tue, 04/08/2014 - 09:21 | 4635287 Notsobadwlad
Notsobadwlad's picture

Zero Hedge, a tiny little division of Goldman Sachs.

Tue, 04/08/2014 - 09:42 | 4635342 Latitude25
Latitude25's picture

Here's everything you'd like (or not like) to know about the background of ZH:

Tue, 04/08/2014 - 10:11 | 4635442 insanelysane
insanelysane's picture

From the article: "His (ZH) readership of angry traders and anti-government malcontents celebrated his newfound power."

Umm, I'm not a trader so I must be an anti-government malcontent.  Of course I am not anti-government in the sense that government is a means to efficiently pool resources of residents of a community but I am anti the current amalgamation of Big Politics Rs and Ds and their selling of my freedoms and stealing my labor.

Tue, 04/08/2014 - 09:07 | 4635232 inky
inky's picture

This just shows ZEROHEDGE is waaaaay ahead of its time and the Economists And Journalists in forcasting the truth and markets.

Who`s laughing now muppets!

Tue, 04/08/2014 - 09:10 | 4635243 Doubleguns
Doubleguns's picture

THE Economist 5 years late?!. Nuff said. Krugman must be their editor in chief. 

Tue, 04/08/2014 - 09:10 | 4635246 Peterus
Peterus's picture

Assets prices fall.

People that could not afford them - can now buy them. They do in increasing numbers. Disaster strikes! Like in the terribly deflationary environment of rampant price decrease in electronic goods and computing. Destitute industry cuts back on everything unable to get to grips with the new situation. Now they have to fire workers and that will cut even further into consumption. Everybody has a mobile phone now and some models are pretty much handed out for free - leaving entire section of economy on the brink of destruction.

Assets prices rise.

Whoever owned them while they were rising in price has an increase in wealth. Prosperity is here! Now the rich are richer, while they may consume slightly more exuisite dishes and fly some more on their jets - they will invest most of the increase. This leads to wealth effect all around (obviously, proles can't save in exactly the same manner choosing what to do with not consumed income, when proles have any leftover money it's best to force "sound investment" on them with pyramid scheme-like retirment account or sth of this nature). Well, if it won't work that's not a problem anyway, as these guys already won and we are either them or their friends so we'll be just fine.

Tue, 04/08/2014 - 09:14 | 4635259 Rodders75
Rodders75's picture

Sorry to piss on the campfire, but the S&P was at 1000 in 2009. Since then it's risen 85%. Being bearish from the sidelines has been quite expensive. But on a long term view...etc etc. 

Tue, 04/08/2014 - 09:13 | 4635260 NaiLib
NaiLib's picture

Note that IMF Boss Catherine Lagarde has been extremely loud in demanding QE from ECB... Does she have her own French agenda?

Tue, 04/08/2014 - 19:44 | 4637463 StychoKiller
StychoKiller's picture

Zut alors!  But of course, meshooo!

Tue, 04/08/2014 - 09:18 | 4635276 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Hey, it worked for China.

Gotta be good for us.

Global rebalance bitches.

Tue, 04/08/2014 - 09:43 | 4635334 khakuda
khakuda's picture

The joke is going to be when they go into the next downturn with an already bloated balance sheet and rates still at zero.  That is when Stanley Fischer jumps up and says it is time for the government to print money to buy equities.  At the point when the government owns the means of production, central planning will have achieved its ultimate socialist goal.

Tue, 04/08/2014 - 14:13 | 4636391 Wait What
Wait What's picture

he did it as head of Israel's CB, then when his long AAPL trade backfired on him, he got the boot.

shows that failure is no obstacle to employment prospects in central banking circles.

Tue, 04/08/2014 - 10:05 | 4635402 whidbey-2
whidbey-2's picture

Nothing very new in either opinion.  Historically governments and banks have been partners in money and banking exploits .  Recently we have had a great expansion in bank-government accomodation.  Is that a poor habit?  Probably, but like sin "small doses" are not fatal, nor a total cure for human nature: it is merely helpful while refoming bad habits after which the habits of mankind will be sin free, or better in any case.


What habits? will buying votes with someone elses money. Claiming government or bankers know something no one else does.  Getting back to normal is means doing things right this time around.  Just little white lies.  You know you can't handle the truth about being a human!!!

Tue, 04/08/2014 - 11:02 | 4635587 Baldrick
Baldrick's picture

Tyler I can't thank you enough for starting ZeroHedge and providing a free education for the likes of me.

Tue, 04/08/2014 - 11:07 | 4635600 Spungo
Spungo's picture

Destroying a currency makes people lose faith in that currency?????

Tue, 04/08/2014 - 11:11 | 4635627 EggSlayer
EggSlayer's picture

The Economist is a joke. I guess we will have to wait and see. You can say that abnormal monetary policy is the new norm, but what the Fed actually does is a different story. It will be clear within two - three years after QE ends.

Tue, 04/08/2014 - 11:31 | 4635711 Neo
Neo's picture

So we are to believe that these captains of finance dont know basic math?

I don't buy, I will not give these people a pass by excusing their evil as stupidity.

When the shooting starts, stupid will not save you.

Tue, 04/08/2014 - 11:41 | 4635740 SystemOfaDrown
SystemOfaDrown's picture

Collector: "Bring out your Dead! Bring out your Dead!"

Serf: "I got one!"

Collector: "He's not Dead!!??!!"

Serf: "Almost! He's a Bankster."


Collector: "Aright, throw him in."

Tue, 04/08/2014 - 14:56 | 4636564 RaceToTheBottom
RaceToTheBottom's picture

I used to expect the next phase was to print to remove the need for taxes, but now, I think people are just tooo checked out to care.

Tue, 04/08/2014 - 15:26 | 4636652 olenumbersix
olenumbersix's picture

Be kinda nice if these dipshits would give ZH a little credit so we could all smile an all knowing smile and go all main stream and shit. Still ZH was right and they was wrong. <sticks a feather in the ZH tin foil hat > grats on the call tylers. spot on-spot on

Wed, 04/09/2014 - 01:30 | 4638314 mkhs
mkhs's picture

Digital dickweeds. 

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