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Janet Yellen Is Wrong About Inflation

Tyler Durden's picture


Submitted by Bill Bonner of Acting-Man blog,

Noisy Figures



Janet Yellen has dismissed rising inflation figures. They were “noisy,” she said. She didn’t like the sound of them. Valid numbers are harmonious. Invalid ones are cacophonous.

But after so many years of listening to such loud noise coming from her own colleagues, poor Ms. Yellen may be tone deaf. At least, that is one explanation for her nonchalance toward the threat of inflation.

As we pointed out yesterday, the Titanic-like US markets glide over the smoothest seas in nearly a decade. The squalls and swells seem to have disappeared. The VIX, which measures the market’s expectation of 30-day volatility, shows little fear. Portfolio protection is as cheap as it’s been in the last quarter century.

The S&P 500 has not moved as much as 1% on any trading day in the last 45. Investors no longer lock their doors or even put on their seat belts.



Financial Grotesquerie

All the while, the Fed pushes down interest rates. With so much cheap money available, people find ways to put it to use. Speculations … lifestyle enhancements … silly and worthless projects.

One of the main uses of corporate debt has been stock buybacks. Even start-ups are buying their own stock as soon as the post-IPO lock-up period is over. Our jaw drops at the thought of it. A start-up that can’t think of anything better to do with cash than buy its own shares?

But if you aren’t staggered by that, here’s another example of the financial grotesquerie that has become so common: Central banks are speculating on stocks, too.

The whole hullaballoo is so remarkably cockeyed, it deserves further commentary.

The banking cartel – with special permission from government – offers free money to choice borrowers. Corporations borrow this free money and use it to buy their own shares and cancel them (making outstanding shares more valuable).

And to prop up the market even more, central banks – searching for the yield they’ve denied savers (and themselves) on their bond portfolios – buy stocks.

Who can be opposed to it?


commercial and industrial loans

Commercial and industrial loans – into the blue yonder, via Saint Louis Federal Reserve Research – click to enlarge.


More Inflation = Less Growth

With so much cash pushing them forward… and the soft cushion of central bank guarantees trailing behind them… is it any wonder stocks move higher and higher?

Still, there are always a few things that could wreck this program.
China could collapse in a crisis. War could breakout in the Middle East or in Eastern Europe. Central banks might lose control of interest rates – at the long end of the curve. Bonds could dive.

But the most obvious risk is money itself. Money that comes “out of thin air” might someday go back from whence it came. The dollar could fall against foreign currencies. Or it could fall against the goods and services it is called up to buy. Either way, it could send the sleek touring car into a ditch.



Money, after having fallen into the ditch


That is why the measure of inflation is so important. If consumer prices are rising faster than the authorities say, it means two important things:

First, real GDP is not growing. Real GDP growth is adjusted for inflation. More inflation, less real growth. Second, the real cost of borrowing is much lower than we think. If inflation is higher, the real interest rate is lower. So what’s the story?

The Fed says 2% is the right number for consumer price inflation. MIT’s (more accurate) Billion Prices Project puts the annual rate of consumer price rise at 3.91%. And since 2000, Washington says consumer prices are up 39%. Trouble is we can’t find any significant price that is up so little.

Crude oil is up 314%. A dozen eggs rose 106%. College tuition is up 68%.
The typical house has risen 50%.

Is this noise too?



On the way to pay for a hot dog before its price rises …


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Wed, 06/25/2014 - 11:28 | 4893468 stinkhammer
stinkhammer's picture


Wed, 06/25/2014 - 11:36 | 4893497 crazybob369
crazybob369's picture

A fine sentiment. But how exactly? Too many piggies feeding off that trough.

Wed, 06/25/2014 - 11:43 | 4893533 stinkhammer
stinkhammer's picture

slaughter the pigs

Wed, 06/25/2014 - 13:34 | 4894147 Nigh Eve
Nigh Eve's picture

Andrew Jackson did it.

Wed, 06/25/2014 - 11:38 | 4893503 Ghordius
Ghordius's picture

interesting idea. but how? fiat money has a life of it's own. and usually dies, eventually. by mis-management

how is it that all the "End the FED" proposers never ask for splitting the USD? there are twelve FED banks. now this would be doable

NY/Wall Street could call their dollar the American Pound, just to keep the mirror image intact

Wed, 06/25/2014 - 11:42 | 4893530 NotApplicable
NotApplicable's picture

How many banks should the Euro be split into?

Wed, 06/25/2014 - 11:53 | 4893545 Ghordius
Ghordius's picture

currently, the members of the ECB are 18 national banks. but usually it's all about Greece or Germany that - depending from who talks - should exit the club. reasoning varies, depending from who is talking

this is without counting the currencies that are pegged to the EUR. and I forgot how many will join next year. I think it's two more

anyway, after all those years of hearing and reading that we should break up... why does is this "sound advice" not followed through at home? hint, hint

Wed, 06/25/2014 - 11:54 | 4893609 Haus-Targaryen
Haus-Targaryen's picture

Wait wait wait wait wait ..-

You'Ve gotta be shitting me.  You are FOR the division of the USD into 2 or more differing currencies, but you want to keep the EUR status quo? 

el oh fucking el.

Wed, 06/25/2014 - 12:04 | 4893665 Ghordius
Ghordius's picture

first, this is ZH. It could be sarcasm, couldn't it? second, it's like divorces. for some, anathema and unnecessary, for others absolutely necessary

I am just reacting to this "End the FED" with a constructive proposal. If I was American and I was planning to do something about the FED, I'd propose exactly that

you want to break the EUR. you should be providing the reasoning why my counter-proposal is wonderful. think about that

Wed, 06/25/2014 - 13:02 | 4893984 franciscopendergrass
franciscopendergrass's picture

Im all for competing currencies.   It will one of them honest as a store of value

Wed, 06/25/2014 - 14:29 | 4894458 Parabox
Parabox's picture

An honest store of value would probably be a bridge too far for the banking elite, but at least a competing currency might highlight the corruption of the other competing currencies, assuing they dont all just secretly fix to each other.

Wed, 06/25/2014 - 14:30 | 4894459 Parabox
Parabox's picture


Wed, 06/25/2014 - 16:30 | 4895063 gcjohns1971
gcjohns1971's picture

I am fine with any number of currencies, defined on any basis you might like, regional, state, town, even local bank...(that would take us back to the 19th Century).

All of those are fine, because a currency is only the numerator in the transaction. What is pertinent is the denominator.

So long as the denominator is constant, the numerator doesn't matter.

Wed, 06/25/2014 - 12:19 | 4893694 Ghordius
Ghordius's picture

further, you could be creative about that. instead of territorial (a kind of system that does not reflect current American thinking and smacks of outmoded) division, it could be in... political parties

a Republican Dollar and a Democratic Dollar. with a Republican national debt and a Democratic national debt. how about that?

Wed, 06/25/2014 - 12:20 | 4893745 El Vaquero
El Vaquero's picture

Come on Ghordius.  The only differences between the Republicans and the Democrats are over specific issues.  Gun rights, (faux) religious issues and gay rights are the biggest ones.  Other than those issues, Democrats and Republicans are the same party.  It's a farce.  When you get down to NSA spying, economics, big government and foreign policy, they are the same party.

Wed, 06/25/2014 - 12:21 | 4893755 Ghordius
Ghordius's picture

for being the same party, the levels of partisanships are astounding. and increasing

Wed, 06/25/2014 - 12:27 | 4893780 El Vaquero
El Vaquero's picture

Yet we have continuity of policy in terms of government spending, in terms of foreign policy, in terms of NSA spying, etc...  The continuity of policy taken in conjunction with the fact that when somebody fucks up, big time, the worst that they have to worry about in most instances is getting grilled by a congressional committee, only to go home at night and sleep, safe and sound, should tell you that a lot of that partisanship is for show.  Look where the action is and look where the theater is.  The people here may be extra partisan, but the government certainly only yells about being partisan.  It does not act on it.

Wed, 06/25/2014 - 16:25 | 4895051 gcjohns1971
gcjohns1971's picture

They are not nearly so different as that.


They are the exact same people in many cases who change one speech writer for another with their party affiliation.  One of them is an imaginary party.  If I had to pick I would say the Republicans are imaginary, because the policies they choose are inevitably those the Democrats have maintained since the 1930's.

Truly, the stump speech is different.  That and only that.  Not the votes on issues, not the faces, not the advisors are different. All are party interchangeable.

Wed, 06/25/2014 - 11:45 | 4893541 Tasty Sandwich
Tasty Sandwich's picture

"End the Fed" makes a good bumper sticker.

Go ahead and end the Fed.  Shut down the empire and see what happens.

Like I care.

Wed, 06/25/2014 - 11:51 | 4893563 Ghordius
Ghordius's picture

the empire consists in one plucky hegemon and many trusty allies. which might complain about your cavalier way of setting strategic policy

I'll give you an alternative: why don't you let us allies vote too for your president and/or your senate?

Wed, 06/25/2014 - 11:51 | 4893583 Tasty Sandwich
Tasty Sandwich's picture

MMIII - LGM-30 Minuteman III Simulation


Tear it down and start again.

Wed, 06/25/2014 - 12:00 | 4893637 Haus-Targaryen
Haus-Targaryen's picture

That would be an exceptionally shitty day.

Wed, 06/25/2014 - 12:02 | 4893656 Tasty Sandwich
Tasty Sandwich's picture

Would be over in a flash.

Just make sure you're outside.

Wed, 06/25/2014 - 12:56 | 4893941 Tall Tom
Tall Tom's picture

Ideally near Ground Zero at a Primary Target...


You will not feel a thing.

Wed, 06/25/2014 - 12:57 | 4893948 Tall Tom
Tall Tom's picture

That would be the best day of my life...Shitty for whom?

Wed, 06/25/2014 - 12:00 | 4893646 overmedicatedun...
overmedicatedundersexed's picture

Ghordius, if american people had a vote, your american bases would have long gone from the EU.

Wed, 06/25/2014 - 16:19 | 4895027 gcjohns1971
gcjohns1971's picture

They do.

Haven't you been following the US Immigration issue?

Haven't you been following how the courts struck down identification for voters?


Come see for yourself. 

All you need is a bill, such as a utility bill,  in your name sent to a US Address to show which district you reside in (whether or not you actually reside there). 

With that you can go to the board of elections to be a registered voter, and subsequently vote. You can even have your US absentee ballot sent to your European address.

Millions upon millions of foreigners vote in our every election.

You didn't think WE chose Obama did you?

Wed, 06/25/2014 - 11:49 | 4893571 NOTaREALmerican
NOTaREALmerican's picture

Indeed, competitive currencies provided a way of comparing the relative "honesty/efficiency" of the various nations of Europe.    Having 12 currencies in the US would be a way of decentralizing the power, which - of course - is why the Boyz in Brussels and NYC wouldn't agree.

Wed, 06/25/2014 - 11:58 | 4893632 Ghordius
Ghordius's picture

are you sure about your argument? first, it just showed which were more dis-honest. by devaluing more

second, it brought us in intra-european currency wars. and lots and lots of external speculation. from London and NY, in particular

Dr. Krugman would be delighted to see the return of this great breaking of windows, but I can tell you it was not good for trade or biz or value adding of any kind

Wed, 06/25/2014 - 12:30 | 4893724 NOTaREALmerican
NOTaREALmerican's picture

Well,  (thinking like an economist here) if I pull an assumption out of my ass that:  All larger powerful organization WILL be run by the smartest-n-savviest asshole sociopaths it follows that the smart-n-savvy asshole sociopaths would want larger organizations.  

All I did was reverse the assumption I pull out of my ass:   if the smart-n-savvy asshole sociopaths benefit from large centralized organizations, what's the opposite of large centralized organizations?

I'm just assuming (like an economists) that the only protection the normal people have is to somehow force the smart-n-savvy asshole sociopaths to spend SOME of their time fighting with each other instead of being able to concentrate solely on screwing the normal people.  

Wed, 06/25/2014 - 12:32 | 4893649 Urban Redneck
Urban Redneck's picture

Well, since you asked - in 8 (relatively) easy steps, that can be incorporated under a single convenient and marketable theme.

Wed, 06/25/2014 - 16:13 | 4894995 gcjohns1971
gcjohns1971's picture

fiat money has NO life of it's own, but springs from the imagination of the people who issue and accept it, and usually dies for that reason eventually - by mis-management.

There. Fixed that for you.

Wed, 06/25/2014 - 11:43 | 4893532 Thought Processor
Thought Processor's picture



The ONLY inflation the FED recognizes is WAGE inflation.


This is why all other inflation data points have been eliminated over time, ie: food, energy, and anything else required for normal people to live.  If you do not include it, it must not exist.  


Therefor No wage inflation = no inflation in the FED's eyes.


The big banks are only concerned about rising wages and a big part of their job is to help keep the inflation of those wages in check.   It's Crony Corporatism run amuck.


And we wonder why things are so fucked up.

Wed, 06/25/2014 - 11:51 | 4893581 NOTaREALmerican
NOTaREALmerican's picture

The peasants must be kept in their place.   If they a bigger percentage of the pie they'll just waste it.    Best to let the job-creators create more jobs with it.

Wed, 06/25/2014 - 13:05 | 4894004 island
island's picture

Yeah. "The small people" are just superfluous to the powers that be.


--- as for inflation --

INFLATION can be a sign  of a growing real economy.

INFLATION does not CAUSE a growing real economy.

It is friggin' amazing ignorance is so prevalent in the ivory towers, and beyond.

Wed, 06/25/2014 - 13:08 | 4894023 island
island's picture

Janet apparently doesn't do her own grocery shopping. 

Wed, 06/25/2014 - 12:28 | 4893789 rubiconsolutions
rubiconsolutions's picture

'They were “noisy,” she said....'

No. Noisy is my wife coming home from shopping and suggesting somewhat sarcastically that we take out a second mortgage to feed our family. Noisy is listening to my neighbor complain because gas prices are going through the roof and how it has impacted his business. Noisy is listening to my parents who only five years ago had a very nice nest egg and today survive on Social (in)Security alone becuase ZIRP has decimated their savings while inflation has gone through the roof. Screw you Janet and your "noise" problem. End the Fed and repeal the 16th amendment.  

Wed, 06/25/2014 - 12:56 | 4893943 tempo
tempo's picture

Those that define inflation say there is no inflation. That's it.

Wed, 06/25/2014 - 11:32 | 4893479 orangegeek
orangegeek's picture

so now that Q1 GDP has been adjusted down (they subtracted stuff from Q1 to push it into Q2) all is good, right?


problem has always been deflation, so none of these Yellen-antics should have an impact


you can put lipstick on Yellen, but it's still a pig

Wed, 06/25/2014 - 11:34 | 4893492 CrashisOptimistic
CrashisOptimistic's picture

"problem has always been deflation"


The bond guys almost always get it right.

Wed, 06/25/2014 - 11:45 | 4893509 LawsofPhysics
LawsofPhysics's picture

"Deflation" is a fucking myth.  The central banks know this, and why they and their owners are always concerned about ownership. Who has title to land, control of resources etc.

No society/currency has ever collapsed or died because their purchasing power was too strong.

These fuckers also know full well that there is no political or monetary solution to resource scarcity.  Hedge accordingly. Remember is a global economy now, what awaits the earth is a global Weimar.


Wed, 06/25/2014 - 11:52 | 4893590 CrashisOptimistic
CrashisOptimistic's picture

LoPguy, my read is this: Do they understand the oil issue, or not?

It's possible they do not.  The Fed would go out and get opinions from various "well regarded" consultants, and of course they became well regarded by spending their careers telling oil executives whatever they wanted to hear.

So the Fed may not know.


They may know.  They may know they are fighting a rear guard action to buy time for . . . the great miracle of oil replacement.  They MAY be engaged in precisely that -- buying time for a miracle to occur.

I suspect it's the former.  That's too big a secret for staff not to leak.


Wed, 06/25/2014 - 12:07 | 4893688 NOTaREALmerican
NOTaREALmerican's picture

Why do we assume they are anything except highly educated people with economic OCD? 

Wed, 06/25/2014 - 12:38 | 4893803 Urban Redneck
Urban Redneck's picture

You definition of deflation is incorrect.

Increased purchasing power is a derivative and byproduct of deflation. A more appropriate description (if you want to avoid a money supply based definition) would be an environment where the price of money rises, ceteris paribus.

You might think there is an overabundance of dollars in existence. However, there are "only" about 12 trillion of them to meet the daily needs of 300 million people and heir bankster overlords, the US Stock market is 20 trillion, the US bond market is 40 Trillion, then there are those insane ferners who develop a fetish for Yellen's dirty linen in time of crisis.

Deflation is scarcity of USD resources. And the bankers will most certainly take advantage of their position in the event of deflation- to trade their worthless fiat for ownership of more real and productive goods. Same as it ever was.

Wed, 06/25/2014 - 13:49 | 4894241 LawsofPhysics
LawsofPhysics's picture

"Deflation is scarcity of USD resources. And the bankers will most certainly take advantage of their position in the event of deflation- to trade their worthless fiat for ownership of more real and productive goods"  -- FAIL, this is only true if people still accept those dollars.  If no one wants those dollars, there is no "scarcity".

What part of all fiat goes to zero don't you understand?

Wed, 06/25/2014 - 15:14 | 4894667 Urban Redneck
Urban Redneck's picture

Only on a long enough timeline...

In the mean time... if the banksters and institutional wealth decide they don't trust counter-parties again... there isn't enough money to go around.

The odds of the world waking up very soon and no one being willing to accept GOLD for transaction settlement in the major economies greatly exceed the odds of the world waking up one day soon and no one accepting USD for transaction settlement in the major economies.

Criminalization does that to sheeple. In the meantime, there are legal tender and contract laws the world over to deal with the settlement of debt (-based money).

The aggregate demand of you me and 99% of the global population doesn't amount to squat compared to the transactional denomination preferences of less than 0.000001% of the population, and whether by accident or by design - these people are very capable of creating a deflationary shock and scarcity of USD, which would likely result in the accelerated collapse of American empire/hegemony.

Wed, 06/25/2014 - 16:09 | 4894966 gcjohns1971
gcjohns1971's picture

Tell that to Germany.

CB's know that Gold is valuable, that Gold is money.  That is why they persist in holding the 'Barbarous Relic'.

You probably knew that.

Your odds statement is demonstrably incorrect BECAUSE Central Banks who issue fiat want to store Gold. 

Even if no one would give me products for gold in my neighborhood, I could always find someone who would give me the local currency in return for Gold.

The odds of no one accepting dollars are INFINITELY HIGHER - or there would be no talk of tapering QE.


Wed, 06/25/2014 - 18:12 | 4895251 Urban Redneck
Urban Redneck's picture

Actually my statement is not demonstrably false. Furthermore, it is precisely because governments and central banks (who don't give a shit about YOUR rights) value gold, that the statement is true.

Where do most people spend/transact the bulk of their money- in stores (via credit/debit card or paper fiat) or in person to person transactions (via paper fiat or specie)? The legal tender laws are quite clear for the former.

Wed, 06/25/2014 - 11:32 | 4893480 pods
pods's picture

Why is it people think that Mr. Yellen works for the people?


Wed, 06/25/2014 - 11:32 | 4893483 orangegeek
orangegeek's picture

the actually believe


the problem is that they don't think


just saying

Wed, 06/25/2014 - 11:40 | 4893485 Bioscale
Bioscale's picture

Nobody told them they don't belong to those people.

Wed, 06/25/2014 - 11:42 | 4893529 Ghordius
Ghordius's picture

good question. the British posed the same one and... nationalized the Bank of England in 1946. and this might be the answer: nationalizations go against the grain. too much political capital invested in the meme of "we don't nationalize, here"

Wed, 06/25/2014 - 11:59 | 4893636 NOTaREALmerican
NOTaREALmerican's picture

It's an interesting concept, but centralizing the power of any powerful organization simply means it's easier to capture for the sociopaths.    Decentralization is the only way to somewhat limit the power of the sociopaths, but the smart-n-savvy people (being smart-n-savvy) naturally centralize all power (they are smart-n-savvy that way).

Wed, 06/25/2014 - 11:48 | 4893561 Space Animatoltipap
Space Animatoltipap's picture

Dogs are easily Pavloved. Many people too. The fantasy of democracy is one of the big Pavlovian problems. The fantasy of humanism another one. 

Wed, 06/25/2014 - 11:54 | 4893611 NOTaREALmerican
NOTaREALmerican's picture

"Fantasy" is just another word for "bullshit".   Societies are organized with bullshit.    The smart-n-savvy people manipulate the dumbasses with bullshit.    None of the ISM's - on the "left" or "right" - can possibly work without the "fantasy" that most humans aren't self-serving assholes and sociopaths (well,  except for the ONE natural ISM:  fascism). 

Wed, 06/25/2014 - 12:05 | 4893674 Space Animatoltipap
Space Animatoltipap's picture

Aryan culture. Vedic kings advised by the priestly class rule the place. 

Wed, 06/25/2014 - 11:33 | 4893484 madcows
madcows's picture

what is the timeframe for the houses, tuition, eggs and oil?  I can guess that it is since obama took oriface, but I don't know.  That's based on my recollection that gas was about $1.35 back in '08.

I do my own inflation calcs.  I've got it at about 10% YoY.  Mostly clothing and household goods.  Food is up around 7%.

Wed, 06/25/2014 - 11:34 | 4893488 blindman
blindman's picture

22 June 2014
David Cay Johnston: The Impact of American Inequality

"It is to be regretted that the rich and powerful too often bend the acts of government to their own selfish purposes...

No free government can stand without virtue in the people and a lofty spirit of patriotism, and if the sordid feelings of mere selfishness shall usurp the place which ought to be filled by public spirit, the legislation of Congress will soon be converted into a scramble for personal and sectional advantages...

It is one of the serious evils of our present system of banking that it enables one class of society--and that by no means a numerous one--by its control over the currency, to act injuriously upon the interests of all the others and to exercise more than its just proportion of influence in political affairs."
Andrew Jackson

Wed, 06/25/2014 - 11:34 | 4893489 crazybob369
crazybob369's picture

Janet Yellen Is Wrong


There. Fixed that headline for you.



Wed, 06/25/2014 - 12:02 | 4893658 the grateful un...
the grateful unemployed's picture

when she said she had no idea where the economy is going i was amazed. this is the head of fucking economic central planning?? and she doesn't know where the economy is going? either she isn't sure if her policies are correct, or they are working, or she hasn't read the fed charter, or she doesn't listen to the politicians and the president at whose pleasure she serves. now she must at least know where the economy IS at this moment, since projected monetary policy into the future is not her role, and she thinks the numbers are noisy?? is this what happens when the interns take over the office?

Wed, 06/25/2014 - 12:05 | 4893675 NOTaREALmerican
NOTaREALmerican's picture

The Wizard of Oz story?   The guy pulling the levers?    That's actually the way it is.     Really.

Wed, 06/25/2014 - 11:36 | 4893494 Cthonic
Cthonic's picture

At least audit the fuckers, preferably at least every two years, and open all dealings older than that to public scrutiny.  edit: that was in response to stinky's post

Wed, 06/25/2014 - 11:35 | 4893496 Stoploss
Stoploss's picture

Falsely inflated growth is a myth anyway.  There is no turning back from this point.

Buy gold, sell paper, will be the order of the day.

Wed, 06/25/2014 - 11:39 | 4893513 NOTaREALmerican
NOTaREALmerican's picture

Savers wear many hats;   sometimes they are ripped-off by the Financial "Institutions" and sometimes they are ripped-off by inflation.  

Regardless, only pessimists save; and anybody who is pessimistic about the world's greatest country is a trrrrsss.

Wed, 06/25/2014 - 11:51 | 4893586 the grateful un...
the grateful unemployed's picture

between the financial institutions and inflation when exactly is it that I am not being ripped off

Wed, 06/25/2014 - 16:01 | 4894911 blindman
blindman's picture

in the sanctity of your spirit.
all this is driving home that
particular point. no?

Wed, 06/25/2014 - 11:46 | 4893546 blindman
blindman's picture

[KR618] Keiser Report: Wall Street Jihadists

Posted on June 24, 2014 by Stacy Herbert
23 June 2014
Gold Daily and Silver Weekly Charts - Standing on the Deck of the Titanic
"Legitimate if you can, coerce if you have to, accommodate if you must."
Jürgen Habermas, as paraphrased by Robert Johnson
don't miss the Robert Johnson clip/quote. Standing on the Deck of the Titanic ..........

Wed, 06/25/2014 - 11:46 | 4893547 SillyWabbits
SillyWabbits's picture

“One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back.”

? Carl Sagan

Wed, 06/25/2014 - 11:57 | 4893623 blindman
blindman's picture

"...The movie, The Matrix, is a true depiction of life in the West. The population lives in a false reality created for them by their rulers. A handful of humans have escaped the false existence and are committed to bringing humans back to reality. They rescue Neo, “The One,” who they believe correctly to have the power to free humans from the false reality in which they live. Morpheus, the leader of the rebels, explains to Neo:

“The Matrix is a system, Neo. That system is our enemy. But when you’re inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system, and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it.”

I experience this every time I write a column. Protests from those determined not to be unplugged arrive in emails and on those websites that expose their writers to slander by government trolls in comment sections. Don’t believe real reality, they insist, believe the false reality. " ... pcr

Wed, 06/25/2014 - 13:11 | 4894044 SillyWabbits
SillyWabbits's picture

“The snake which cannot cast its skin has to die. As well the minds which are prevented from changing their opinions; they cease to be minds.”


? Friedrich Nietzsche


“A mind needs books as a sword needs a whetstone, if it is to keep its edge.”


? George R.R. Martin, A Game of Thrones


The world is shaped today by attitudes and not opinions.  The dialog is dueling metaphors and not cognitive thought.  All this from the best educated population in American history.  It must be that it is not what is NOT being taught; but what is being taught.


Too many people get by on their brains.  Brains which have never been developed into minds.  They do not have minds of their own, and their brains have been conditioned to accept the safety of "similar minds tautology" rather than independent analysis.


TV should stand for Tautology Vision as each pseudo-intellectual spins the same "fact" to suit their audience, hoping to attract other viewers of similar minds.  Minds that have been "brain washed"; not minds that have been developed.


Cognitive Dissonance rules the land.


Perfect example: Political Correctness = Free Speech.


A brain may accept it as syntactically correct; a mind will dispense of it as illogical.  Hence, no one speaks their mind any more.  They use their brain to figure out what is the acceptable thing to say: not necessarily the correct thing to say.

There is an elephant in every room, which everybody sees, but nobody mentions.


“There are some ideas so wrong that only a very intelligent person could believe in them.”

George Orwell

Wed, 06/25/2014 - 15:43 | 4894798 blindman
blindman's picture

“The truth will set you free, but first it will piss you off.”
Gloria Steinem
“The truth will set you free. But not until it is finished with you.”
David Foster Wallace, Infinite Jest

Wed, 06/25/2014 - 11:48 | 4893562 overmedicatedun...
overmedicatedundersexed's picture

yellen, is never wrong it can't happen she is a yew and they are never ever wrong..just ask the bernak or greenspan, they can't be wrong they are yews.

Wed, 06/25/2014 - 11:57 | 4893627 the grateful un...
the grateful unemployed's picture

if it gets a bit noisy, then it might be time to take away the punchbowl.

Wed, 06/25/2014 - 12:44 | 4893790 HardlyZero
HardlyZero's picture

Maybe Janet is 'old school' and the noises are gassy eminations which may be smelly.

Maybe those are the noises she is speaking ?


When Yellen starts standing on her head, spinning around, legs and skirt flying, and noises swans and rumbles may follow.

Witchy thing.

Wed, 06/25/2014 - 12:01 | 4893639 Sam Spade
Sam Spade's picture

Sometimes I wish ZH would just make up its mind.  Are we headed for hyper-inflation, per this and other articles posted, or deflationary collapse (per Albert Edwards, he of the ice age thesis).  Or will it just be a couple of lost decades like Japan, a generation of low growth and low interest rates as described here by Lacy Hunt.  The Tylers are apparently agnostic regarding each, and only seem to agree that the outcome will be negative, in one way or another.

Wed, 06/25/2014 - 12:03 | 4893668 NOTaREALmerican
NOTaREALmerican's picture

Why do you assume there's a "known" single answer?    There's a probability of all three outcomes.    Those with economic OCD debate the three probabilities continously, but - in the end - it's still a probablity exersize until "the event" happens.

Wed, 06/25/2014 - 12:18 | 4893722 Sam Spade
Sam Spade's picture

There's also a possibility of something in between all three, and that's just a muddle-through recovery that gains traction and tail winds from white swans like hydraulic fracking, new technologies that we haven't thought of yet, etc.  It's just interesting to me that ZH focuses on the negative theses, even when they happen to contradict one another.

Wed, 06/25/2014 - 12:19 | 4893748 NOTaREALmerican
NOTaREALmerican's picture

Oh well,  this is an anti-hopium site.   If it's NOT negative it's not worth considering.    We're the opposite of Jim Cramer or any Real-Estate agent.

So,  yeah,  the basic "theme" of the site is:   economic morality as defined by frugality and punishment of the non frugal.  ALL articles will have a "frugal morality" theme.

Wed, 06/25/2014 - 12:11 | 4893705 homiegot
homiegot's picture

No one has the specific answer. We just know it's not good and things are fucked up. Enjoy your day.

Wed, 06/25/2014 - 12:29 | 4893793 HardlyZero
HardlyZero's picture


Chaos before the RESET.


Wed, 06/25/2014 - 12:24 | 4893737 blindman
blindman's picture

a thought ....
perhaps we are debating the failure of a criminal
money system imposed on a modern nation with a
large military component, the certain failure could
go either way depending on the actions of the monetary
authority; they could destroy it in either direction,
and they will, because it is a pyramid scam that assumes
infinite growth and infinite resources to sustain any
grossly uneconomic endeavor, provided one is a "made"
insider criminal bank. it is as if reality was
clint eastwood with his hand cannon and the money authority
was the perp and clint is saying, "so what's it gonna be..."
" i feel lucky..." c.e./d.h.
here is one opinion ......
The Fed's Hobson's Choice: End QE and Zero-Interest Rates or Destabilize the Dollar and the Treasury Market (June 24, 2014)

Wed, 06/25/2014 - 15:45 | 4894803 gcjohns1971
gcjohns1971's picture
Fire and Ice

Some say the world will end in fire,
Some say in ice.
From what I’ve tasted of desire
I hold with those who favor fire.
But if it had to perish twice,
I think I know enough of hate
To say that for destruction ice
Is also great
And would suffice.

- Robert Frost


That is because the Fed's policies walk a knife's edge, with death-by-inflation as Fed Printing continues and the world loses coinfidence in the dollar on one side, and death-by-deflation where the Fed tapers and everyone goes bankrupt together on the other.

I can tell you only these two things:

Thus far in the last 100  years they have always chosen inflation; even during the Great Depression, though not enough by some people's standards.

The blade of the knife's edge they walk is getting sharper, and eventually they will make the choice of one or the other whether willing or no.

Wed, 06/25/2014 - 15:49 | 4894836 blindman
blindman's picture

brilliant post,

Wed, 06/25/2014 - 18:33 | 4895524 AdvancingTime
AdvancingTime's picture

The problem is it is very difficult to see how this will play out. It could go either way and it is possible that since 2008 we have been in the deflation part of the act so when inflation does kick in watch out. Both inflation and deflation tend to be self feeding loops that once started feed on themselves and grow stronger.

I contend the primary reason that inflation has not raised its ugly head or become a major economic issue is because we are pouring such a large  percentage of wealth into intangible products or goods. If faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar. Like many of those who study the economy I worry about the massive debt being accumulated by governments and the rate that central banks have expanded the money supply.

The timetable on which economic events unfold is often quite uneven and this supports the possibility of an inflation scenario. A key issue being one of timing. If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment or stop driving the twenty miles to work? Answer, it could be months before your car is repossessed so you buy gas.

 It is important to remember that debts can go unpaid and promises be left unfilled. If this happens where does it  leave us? Chaos and major disruption would result from such a scenario. As we have seen from the economic crisis of 2008 and following many other unsettling developments legal actions can continue to drag on for years.  More in the article below.


Wed, 06/25/2014 - 12:06 | 4893681 ThroxxOfVron
ThroxxOfVron's picture

Real inflation has been consistently super low for over 30 years !

...Real WAGE inflation that is.

Wed, 06/25/2014 - 12:10 | 4893697 homiegot
homiegot's picture

YellenTurtle's head slowly poking out of shell for a nibble of lettuce. That is all.

Wed, 06/25/2014 - 12:47 | 4893887 blindman
blindman's picture

here a funny thought.
the fed, the congress and the administration
approval rating drops to zero and .....
nothing happens.
deal with that.

Wed, 06/25/2014 - 12:54 | 4893930 NOTaREALmerican
NOTaREALmerican's picture

Many many years ago there was an article in the Atlantic or New Yorker on the topic of: "Most Americans consider government as obsolete or irrelevent".    So,  if the approval rating did fall to zero, that would just prove the article true.  

Wed, 06/25/2014 - 14:58 | 4894596 blindman
blindman's picture

government is a weapon. the people need to realize
it and take it up or be slayed by it; not obsolete,
that is a sleeping pill.

Wed, 06/25/2014 - 13:09 | 4894030 starman
starman's picture

so where is blue yonder? google earth unable to locate it?

Wed, 06/25/2014 - 14:12 | 4894367 Colonel Klink
Colonel Klink's picture

Mr. Yellen is a fart smeller.

Wed, 06/25/2014 - 16:28 | 4895062 blindman
blindman's picture

[KR617] Keiser Report: Rise of Bondzilla
Posted on June 21, 2014 by Stacy Herbert

Wed, 06/25/2014 - 16:37 | 4895094 blindman
blindman's picture

I give it what I got and am informed
it is " as useless as a yoga matt at
a chili cook off."
so it goes.

Wed, 06/25/2014 - 16:41 | 4895121 blindman
Wed, 06/25/2014 - 18:25 | 4895496 AdvancingTime
AdvancingTime's picture

 Janet Yellen has been head of the Federal Reserve bank long enough that we no longer need to speculate as to her job performance. As we begin to critique her ability to perform we must remember perception is often just as important as reality. Another issue that comes into play is how you stack up or compare to the person who held the position previously, this often extends to style as much as it does to substance.

As expected it appears Janet Yellen has chosen to take us down the same the rabbit hole as Bernanke on a journey to prove that if we just continue doing what is not working, all will turn out fine. Caution, this path leads down, and down, and down, farther and deeper then most can ever imagine. If asked to critique "Old Yellar" now playing in theaters everywhere I would by way of the reasoning above have to give her the maximum two solid thumbs down. More on this subject in the article below.


Wed, 06/25/2014 - 21:08 | 4896078 SweetDoug
SweetDoug's picture




Question from a newbie.


If loans are going up so fast, why is the velocity of money at an all-time low?



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