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Things That Make You Go Hmmm... Like The Fed's Misplaced Confidence

Tyler Durden's picture




 

"Where does [The Fed's] confidence come from?" demanded Stanley Druckenmiller recently.

Grant Williams has an answer:

Their “confidence” comes from a series of academic models and a lifetime spent studying ntheoretical finance and then applying it to real-world situations, often with disastrous effect.

The day these people admit to themselves (let alone to the public) that what they have believed to be foolproof doesn’t actually work, is the day they render pointless their entire lives’ work.

The alternative to grappling with hard realities — in this case to continue waltzing down the path of Keynesian folly — is, sadly, far more palatable. Eventually, though, the markets have a habit of demonstrating, beyond any reasonable doubt, that natural forces are far more powerful than the whims of a few academics. And that is, I fear, what we are setting ourselves up for.

Elk Theories — observations which are not, actually, theories but rather simply minimal accounts — are commonplace amongst today’s breed of central bankers, and for the time being there are no obvious signs of their legitimacy being challenged.

But that could change in a heartbeat. Should all the Elk Theories currently being espoused (yes, Messrs. Carney & Kuroda, I left you out of this week’s edition, but I haven’t forgotten you) be simultaneously recognized for what they are, then we will see some fireworks.

If Yellen would stop clearing HER throat long enough, her own Elk theory would, I strongly suspect, sound like this:

This theory, which belongs to me, is as follows... (more throat clearing) This is how it goes... (clears throat) The next thing that I am going to say is my theory. (clears throat) Ready?

 

We are absolutely convinced beyond any doubt whatsoever that we can, through the manipulation of interest rates and the theft of savings, extricate the world from its growth-free, post-2008 malaise and at the same time extricate ourselves from our $3.5 trillion dollar balance-sheet expansion.

 

We are quite certain that we can manipulate headline inflation to exactly where we need it to be and that any aberration can be blamed on the weather without so much as a whimper from the investing public.

 

We believe that bubbles are impossible to see until they burst, and we believe that we have played no part in generating the bubbles which have periodically plagued the world over the last several decades.

 

We know beyond question that holding interest rates at artificially and ridiculously low levels for several years will have no ill effects on the economy whatsoever; and we can assure you, with the utmost conviction, that we will be able to complete the taper without any damage being done to the equity markets.

 

That is my theory and what it is too.

Like those of Draghi, Yellen’s theories are nothing more than minimal observations which hardly stand up to scrutiny but for the fact that she has stated something which IS true currently.

 

Full Grant Williams letter below...

TTMYGH_Jul_28_2014

 

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Sat, 08/02/2014 - 18:03 | 5038724 Newsboy
Newsboy's picture

I'm confident that if I say this lie convincingly, I'll keep getting paid the big bucks.

Some people can lie without reservation. Sociopaths. GW Bush types.

Sat, 08/02/2014 - 18:10 | 5038740 worbsid
worbsid's picture

"If you like your doctor, you can keep your doctor. Period" 

Sat, 08/02/2014 - 18:24 | 5038783 nmewn
nmewn's picture

"Jobs saved or created!"

Sat, 08/02/2014 - 18:50 | 5038836 Da Yooper
Da Yooper's picture

"Where does [The Fed's] confidence come from?"

 

Can you spell delusional boys & girls ?

 

I knew ya could

Sat, 08/02/2014 - 20:14 | 5039027 NoDebt
NoDebt's picture

Yeah.  If people were rational, they would look back on the last few decades and say "hey, wait a minute here!"

But they're not.  They WANT to believe somebody knows what's happening, what the future holds and how to modify it to their desires.

The Fed knows this well and plays the part to a tee.  They are the Wizard of Oz.  All knowing, all seeing, all powerful and more than just a bit of a fraud if you look behind the curtain.

Sun, 08/03/2014 - 08:02 | 5039908 BrosephStiglitz
BrosephStiglitz's picture

Agreed.  The central bank function is purely political in nature.  They dabble in markets under the disguise of doing common good in order to provide a financial return for their stakeholders in the good times, and a safety net in the bad.

It seems to me that most of the political organizations which surround banking and finance are full of ignorant theorists, cunning liars (career politicians), or profiteering con-artists and the latter two groups are not necessarily mutually exclusive.

Sun, 08/03/2014 - 06:51 | 5039841 grekko
grekko's picture

Is that good for Yellen's shrink as well?  Does Obamacare cover straight jackets?

Sat, 08/02/2014 - 18:14 | 5038749 B2u
B2u's picture

Ah....Hope and Change....

Sun, 08/03/2014 - 10:01 | 5040060 doctor10
doctor10's picture

Even if Draghi hasn't admitted it yet-it looks like the IMF already acknowledges and is planning for the inevitable

 

The German Mark is the currency in Germany (DE, DEU).  The German Mark is also known as Deutschmark, and Deutsche Mark. The United States Dollar is also known as the American Dollar, and the US Dollar. The symbol for USD can be written $. The United States Dollar is divided into 100 cents. The exchange rate for the German Mark was last updated on August 1, 2014 from The International Monetary Fund. The exchange rate for the United States Dollar was last updated on August 1, 2014 from The International Monetary Fund.

 

http://coinmill.com/DEM_USD.html

Sat, 08/02/2014 - 18:09 | 5038735 Seasmoke
Seasmoke's picture

you forgot the very first word..................... SO !!!!!!!!!!!!!

Sat, 08/02/2014 - 18:09 | 5038736 Fuku Ben
Fuku Ben's picture

It's all smoke and mirror

There's smoke coming out of Yellen's eyes, arse and every other orifice in her body

And the mirrors are so she can see around her big floppy gunt and check how its coming out downtown

https://www.youtube.com/watch?v=hWZ59PhSVDM

Sat, 08/02/2014 - 18:12 | 5038743 TheSecondLaw
TheSecondLaw's picture

In summary:  This will work, and if it doesn't, it's not my fault.

Sat, 08/02/2014 - 18:12 | 5038746 B2u
B2u's picture

I have learned I can predict with 100% accuracy that it will be dark at night.  For those who live near the North Pole and South Pole...you are on your own.    

Sat, 08/02/2014 - 18:15 | 5038755 Reaper
Reaper's picture

The sheeple were trained to trust in their government, their central bank and Yellen, by extension. Who is the greater fool, the sheeple who trust Yellen, or Yellen who trusts in herself? Delusion with money always ends badly.

Sat, 08/02/2014 - 18:14 | 5038756 Cattender
Cattender's picture

um... no. i am NOT confident that they KNOW what the hell they are doing...

Sat, 08/02/2014 - 18:17 | 5038763 Cycle
Cycle's picture

The day these people admit to themselves (let alone to the public) that what they have believed to be foolproof doesn’t actually work, is the day they render pointless their entire lives’ work.

 

This also applies to the global warming modelers and the foreign interventionists.

Sat, 08/02/2014 - 18:36 | 5038811 Escrava Isaura
Escrava Isaura's picture

How about religion?

Sun, 08/03/2014 - 06:48 | 5039840 grekko
grekko's picture

Will somebody please shoot Isaura and put him out of my misery?  Besides, he looks like Michael Jackson.

Sat, 08/02/2014 - 18:38 | 5038815 Escrava Isaura
Escrava Isaura's picture

How about family?

Sat, 08/02/2014 - 18:45 | 5038827 Escrava Isaura
Escrava Isaura's picture

How about the indoctrination camps? I mean, education?

Sat, 08/02/2014 - 18:18 | 5038771 Atomizer
Atomizer's picture

Individuals not participating in the Ponzi, what a shock. We need a index to gauge daily activities. 

/sarc

Sat, 08/02/2014 - 18:20 | 5038777 nmewn
nmewn's picture

"If we all stop believing in the lie. we'll all die!" - with apologies to Jesse Jackson & Paul Krugman for quoting somewhat out of context ;-)

Sat, 08/02/2014 - 18:26 | 5038791 Duc888
Duc888's picture

 

 

It's all a game to those at the top.  They can go "clickity, click, click" and deposit ones and zero's into each others accounts for ever.  Only assholes work for a living, the smart people "skim".

 

Even the Orange Lady Lagarde never pays incnome taxes.

 

See how this works?

 

 

Sat, 08/02/2014 - 18:30 | 5038797 kchrisc
kchrisc's picture

"Things That Make You Go Hmmm... Like The Fed's Misplaced Confidence"

I am confident that the Fed will continue to steal.

 

"My guillotine likes to say of banksters, 'Great taste, less filling'."

Sat, 08/02/2014 - 18:38 | 5038809 Caviar Emptor
Caviar Emptor's picture

Alarming news for the Fed: the state of the yuppie is in grave peril today.
Billionaires got richer, those falling off the rails were kept from starvation.
But without legions of wannabe baby billionaires, buying useless crap from the four corners of the earth to stoke their egos, the core engine of the economy is in a deflationary state of gradual contraction.
Oh they tried hard to get 'em going again: CNBS still produce "reality" shows telling us how in LA, 20-something "real estate brokers" are raking it in moving multi-million dollar homes, doing the deals from their massage tables over smart phones. Remember "Lifestyles of the Rich and Famous" anyone? One long infomercial that defined and stimulated the decade of excess and greed. Everyone could claim a small piece of it and feel like a Jillionaire Yuppie! Ahhh it was so easy back then....
But today nobody but the 0.001% feels legitimately rich. And another turn of the biflationary screws makes all but the oligarchs feel poorer much faster than mere inflation or stagflation ever did. Rising costs and sinking incomes will do that.
Without the yuppie dream, this economy is just in a chronically sour state.

Sat, 08/02/2014 - 18:42 | 5038819 Escrava Isaura
Escrava Isaura's picture

"doing the deals from their massage tables over smart phones."

I want that too! Can I have that?

I need it!

It will help the economy.... I promise.

Sat, 08/02/2014 - 19:12 | 5038897 Caviar Emptor
Caviar Emptor's picture

Yes, there's a lurking yuppie in all of us

Sat, 08/02/2014 - 21:20 | 5039170 OldPhart
OldPhart's picture

I'm not smart enough to use a smart phone.  I'm still keeping my tali-phone...it's much cheaper.

Sat, 08/02/2014 - 18:42 | 5038822 Chippewa Partners
Chippewa Partners's picture

Money ain't nothin but the chicks are free.............well, they were.  

Wishing all of you an EBOLA free weekend.............

Sat, 08/02/2014 - 18:44 | 5038823 VWAndy
VWAndy's picture

Playin dumb! Thats My schtic damit.

As if they did not know. They knew.

Sat, 08/02/2014 - 18:52 | 5038832 Sudden Debt
Sudden Debt's picture

They are beyond other options.
The industry is going after 2 decades of shipping it all abroad.
The bureaucracy is now to big and steams like a mamoth tanker without brakes.
The lobbying has created all the rules to destroy any potential competition thus making sure no new economies can be created.
The passion for our nation has been replace with disregard for our leaders.
The empire will not be gone directly, it might even take 2 more decades but it will crumble, no question, and everything that's happening... We deserve it as nobody cares about the future but his own.

Sat, 08/02/2014 - 19:00 | 5038868 Skateboarder
Skateboarder's picture

What is this world in which I live, where a "lawmaker" is given apathetic approval to do whatever it pleases?

The echoes of the liberty and community that my forefathers once enjoyed, still flows through me.

A human by itself is alone. It can master the secrets of the universe, but it has no one to share it with. That is why we cherish each other, and in times past, community.

Sat, 08/02/2014 - 19:09 | 5038893 Escrava Isaura
Escrava Isaura's picture

Skateboarder, you said: "What is this world in which I live, where a "lawmaker" is given apathetic approval to do whatever it pleases?

Are you talking about the "The Founding (Lawyers) Fathers"?

Sat, 08/02/2014 - 19:30 | 5038939 Skateboarder
Skateboarder's picture

No, I am talking about the mindsets of people in today's world.

Sat, 08/02/2014 - 20:34 | 5039072 Escrava Isaura
Escrava Isaura's picture

Well, I would strongly recommend that you get ‘curious’ about how US was created. Then, how this British colony became an Empire.

It will change your mind set… to say the least

Sun, 08/03/2014 - 06:43 | 5039836 grekko
grekko's picture

Go back to the pit prepared for you.  -Gandalf

Sun, 08/03/2014 - 06:42 | 5039835 grekko
grekko's picture

I see in your eyes the same fear that would take the heart of me. A day may come when the courage of men fails, when we forsake our friends and break all bonds of fellowship, but it is not this day.

-Aragorn

Sat, 08/02/2014 - 19:12 | 5038896 Escrava Isaura
Escrava Isaura's picture

Sudden Debt: 2 more decades to crumble

I hope you are right
Sun, 08/03/2014 - 00:58 | 5039616 Carpenter1
Carpenter1's picture

Why? You like watching slow deaths? Or you figure you'll be one of the last ones standing, either way you're on the wrong forum. 

Everyone will be better off the second this vampiric system dies, even if you think you've got it made cause you make 6 digits and have benefits. You're still a slave and have no idea how good things could be when we put a dagger through the heart of this debt based, system of enslavement. 

Sun, 08/03/2014 - 06:39 | 5039832 grekko
grekko's picture

Two thumbs up!

Sat, 08/02/2014 - 19:00 | 5038862 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Elk's Club Theories is a better characterization given that the club members all read from the exact same script too.
Yellen says the same shit as Bernanke, Geithner, Summers,
Greenspan, Rubin, Paulson, et cetera. When do they say anything different from the old Elk's Club battle cry for
more pharmaceutical FED money-pump printing and government certified FED usury?

President Andrew Jackson nailed it.

Sun, 08/03/2014 - 06:37 | 5039831 grekko
grekko's picture

Yep!  Andy "I Killed the Banks" Jackson.

Sat, 08/02/2014 - 19:48 | 5038960 Yen Cross
Yen Cross's picture

  I've got CONfidence leaking out of every orifice...

It's old, and likely, the figures are even moar exaggerated. Tyler really opened my eyes with this chart.

 

 

Sat, 08/02/2014 - 19:56 | 5038986 Spungo
Spungo's picture

Janet Yellen is further proof that life isn't real. She's just like a character from South Park.

Sat, 08/02/2014 - 20:17 | 5039011 Yen Cross
Yen Cross's picture

  Mr.Yellen that crazy crossdressin "Incubus Bitchz" that tried to get married to chef?

Sat, 08/02/2014 - 20:55 | 5039119 q99x2
q99x2's picture

Arrest her. Don't let her escape (although it looks like she already did).

Sat, 08/02/2014 - 21:19 | 5039167 Billy Shears
Billy Shears's picture

Band of treasonous charlatans! I do so hope people wake up and these internationalist banksters are shown the door; and by that I mean with foot firmly planted in ass.

Sat, 08/02/2014 - 21:55 | 5039259 Billy Shears
Billy Shears's picture

I'll say it again, Janet Yellen and Jamie Dimon seperated at birth. Take a good look around the eyes... .

Sun, 08/03/2014 - 20:03 | 5042007 Who was that ma...
Who was that masked man's picture

Yeah, and they both have a dick.

Sat, 08/02/2014 - 22:09 | 5039285 e_goldstein
e_goldstein's picture

Things that make you go Hmmm...
Like is Mr Yellen post or pre-op? 

Sat, 08/02/2014 - 22:40 | 5039376 Who was that ma...
Who was that masked man's picture

So, if some guy gets caught rolling off a few near perfect $100 dollar bills in his basement, he'll get slammed with racketeering and counterfeiting charges and end up locked in a little room with a small bed and a stainless steel toilet, ostensibly because he's "stealing from all of us" by "diluting the money supply" but Janet Yellen and the Federal Reserve can do EXACTLY the same thing on an unimaginably massive scale but, somehow, that's okay.  How does THAT work?

Sun, 08/03/2014 - 02:37 | 5039702 NihilistZero
NihilistZero's picture

Because they have AUTHORITAH and you will respect it :-)

Sun, 08/03/2014 - 01:24 | 5039646 Downtoolong
Downtoolong's picture

A long but good read.

And, very cosistent with the excellent documentary, Fiat Empire, (http://topdocumentaryfilms.com/fiat-empire/) where Dr. Edwin Vieira, Ph.D., J.D. from Harvardstated the most salient and simple fact:

“Tyranny is the exercise of power that no one should be allowed to exercise.”

That’s you Janet.

 

Sun, 08/03/2014 - 03:46 | 5039741 jack stephan
jack stephan's picture

I have to live here too, I'm not a jew basher, never been. I'm not real hateful, maybe a little but if you want to see things change, if your Jewish then fix this amiably because the us isn't that nice .

They just want to shoot stuff and have someone point at it. Sorry get another profession like a hallmark greeter.

http://www.youtube.com/watch?v=i7AUpGXLDdk&sns=em

I don't like either side, you're both stupid now I'm going to finish my beer, fuck you

John cocktoastin

Sun, 08/03/2014 - 05:30 | 5039799 GreatUncle
GreatUncle's picture

The central banks reckon they can just print money (QE or otherwise) to overcome the social problem of ever increasing human efficiency.This is your inflation or most of it now if you remove all money creation likely you get deflation The deflation they look to fight is generated by themselves and the few most priviliged to hold all the value and worth as the real economy lower down grinds to a halt.

What good is holding a billion dollars for the economy if the economy ceases to function and luckily the fed print 80 billion a month  more handing a large portion to this group did nothing for the real economy.

Too late now though,even handing it to ordinary people, the economic system so designed by the fake corporations just siphon up all this value so the FED has been repeating the money creation to a mighty tune of 80 billion a month.

This is what they used to do but it does require a real size of economy to apply. The economic system is primed for a period where we have growth, cyclical because it is central banker manipulated only to be burned later for a period to get the debt out of the system. THEY DID  NOT GET THE DEBT OUT DURING THE LAST BURN BECAUSE IT WOULD HAVE TOTALLY DESTROYED THE REAL ECONOMY.

So we are now moving forward with doubled up debt and this is significant because going forward the debt on debt will be growing far faster than the economy ==== LIKE JAPAN.

Got to admit I would like to go to Japan just to see their real economy at the lowest level how it is functioning because something tells me all the LIES of a central banker would be revealed.

Sun, 08/03/2014 - 07:48 | 5039896 slowimplosion
slowimplosion's picture

So many here seem to think that the Fed thinks it can fix things with tools like QE and ZIRP.  Nonsense.  It isn't that stupid, it's just that the only way the BANKERS can survive is through the use of those tools.  The survival of the big banks is the ONLY thing the Fed cares about.

Sun, 08/03/2014 - 10:38 | 5040118 chris8000
chris8000's picture

A first step in solving American financial problems is to round up and put the disloyal dual citizens parasites of the tribe who infiltrated the US govt in jail and subjecting them to military courts.

Sun, 08/03/2014 - 14:25 | 5040890 Chuck Knoblauch
Chuck Knoblauch's picture

The Federal Reserve's mission is to support Communism.

They have done a good job with helping to make it a reality.

Sun, 08/03/2014 - 15:39 | 5041158 Clesthenes
Clesthenes's picture

I’ve got a feeling that we will have to endure such “throat clearing” bureaucrats until they are held fully accountable for the damage they do.

Of course, we certainly can’t depend on existing forums of redress, which are dominated by bandit and useful-idiot classes: they thrive on disasters made by above bureaucrats (or Congressmen).

Perhaps we should employ the only historically-proven method that has ever brought meaningful redress.

Sun, 08/03/2014 - 22:54 | 5042485 AdvancingTime
AdvancingTime's picture

Regardless of what you name it the "Federal Reserve Nightmare" or the "Yellen conundrum", the box Ben Bernanke made when he painted both himself and the Federal Reserve in a corner remains. Bernanke has by passing the chairmanship to Yellen escaped from the QE trap but left the rest of us fully in its grasp.

With a policy of loose and cheap money  and an inflation target of just 2% the Federal Reserve  continues to please those gambling that not fighting the Fed guarantees profits.

As many Americans are forced to pay higher food, gasoline, and health insurance premiums, I wish someone would let the Fed know we have already passed their target. Any thought that inflation is not higher has come from the false illusion brought from lower payments on things like auto loans and mortgages, this is a one off and will not continue. Trouble lurks ahead. More on this subject in the article below.

 http://brucewilds.blogspot.com/2014/06/exit-strategy-from-qe-remains-elu...

 

Sun, 08/03/2014 - 23:54 | 5042595 Downtoolong
Downtoolong's picture

I think, therefore I am, I think…the most important person on the planet deserving of your absolute trust, belief, loyalty, support and commitment to me and my causes.

Janet Yellen, or Kim Kardashian…take your pick.

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