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Russell Napier Asks: "What Evidence Is There That QE Works?"

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From Russell Napier of ERIC

Easy’s Getting Harder Every Day

The job of the investor is to answer that impossible question, ‘ What is the correct valuation for this financial instrument?’ There is almost never a right answer to this question, but there are, of course, many wrong ones. Eliminating wrong answers, especially when valuing an investment which already discounts the future, is an important strategy in coming up with better answers than the competition.

So there is really good news for investors: the current, prevalent answer to the question, ‘What is the correct valuation for this financial instrument?’ is clearly wrong. It is demonstrably wrong because the answer is ‘Whatever the central bankers say is the correct value’. It is clearly wrong because it has never been true in the past. It was recognised as clearly the wrong answer as early as 1810 in the words of the so-called ‘ Bullion Committee’-

‘The most detailed knowledge of the actual trade of a country, combined with the profound Science in all the principles of Money and circulation, would not enable any man or set of men to adjust, and keep always adjusted, the right proportion of circulating medium in a country to the wants of trade.’

      Report of the Select Committee of the House of Commons 1810

The ‘Bullion Committee’ of 1810 realised the virtual impossibility of the United Kingdom remaining off the gold standard when the war with the French had concluded. It realised a simple truth: that no ‘man or set of men’ could provide the appropriate amount of money for an economy. And thus it has been true ever since that central bankers, when freed from any form of monetary anchor, have created the wrong amount of money. All we have to decide is which side of wrong are they on --- too much or too little? Market movements now clearly indicate that the answer is too little.

The world is beginning to see that central bank action is insufficient to overwhelm the forces of deflation. The reported deflation of 2009 lasted only briefly. The consensus view is that it was defeated by developed world central bankers flooding the world with money.

The consensus view is wrong. Since 2009 almost 80% of the increase in the world’s money has come from Emerging Markets in general, and China in particular. It is the rapid slowdown in EM, exacerbated by the strong US$ discussed in the previous Fortnightly Solid Ground, that is bringing deflation to the world. The developed world will feel that deflationary wind and it will raise real rates of interest at a time when the central bankers cannot reduce nominal rates of interest. The chart below shows how, even in the USA, inflation expectations are declining and real rates of interest rising.

US 5 Year Treasury Inflation Protected Securities- Inflation Breakevens

Since July the markets expected average annual inflation rate, over the next five years, has declined from 2.1% to just 1.6%. After five years of QE inflation expectations are right back where they were in the final quarter of 2009. With no ability to reduce nominal rates further, the efficacy of monetary policy rests almost entirely upon its ability to generate inflation and depress real rates of interest. Monetary policy is failing to create inflation and if the central bankers don’t control this variable they certainly don’t control the price of financial instruments.

This is the third time that inflation expectations have dived in the post QE world and, on each occasion when expected inflation has neared 1.5%, the S&P500 has fallen sharply. It falls sharply because, in a land of near-zero nominal rates, the success or failure of the Fed is gauged solely on its ability to produce inflation. On both previous occasions when inflation expectations got this low the Fed responded with even easier monetary policy, causing inflation expectations to rise; but crucially inflation did not.

The bell has rung for Pavlov’s dogs twice before, but the meat of higher inflation has not been delivered. Now the bell is ringing for the third time. With the key driver of inflation events well beyond US shores, the inability of the Fed to generate the meat of inflation will be much more apparent on this occasion. After five and a half years of QE there is still no meat for the dogs: real rates of interest are rising rapidly and almost all financial market instruments are overvalued. If you believe that the correct price for financial market instruments is the price decreed by the Federal Reserve, you need to look at the chart above and ask yourself a simple question, ‘With inflation expectations back at 4Q 2009 levels, what evidence is there that QE works?’

Financial markets continue to price in the God-like omnipotence of central bankers, while the evidence mounts of their all-too-human mortality. When it comes to central bankers, do not forget the words of the Wonderful Wizard of Oz from the great monetary allegory of the same name. Unmasked and accused by Dorothy of lying about his great powers, he could only remark-

Oh, no, my dear… I'm… I'm a very good man. I'm just… a very bad Wizard.

The current Chair of The Governors of The Federal Reserve system may not be a man, but she is also no wizard.

 

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Fri, 10/24/2014 - 09:42 | 5371865 LULZBank
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         LOL

Fri, 10/24/2014 - 09:43 | 5371872 GetZeeGold
GetZeeGold's picture

 

 

I'm rolling in so much cash.....I don't know what to do with it.

 

Keep it coming......screw your grandkids.

Fri, 10/24/2014 - 09:45 | 5371887 Divided States ...
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QE works for wealthy Jews. Just asked them, they are always on CNBC 24/7

Fri, 10/24/2014 - 09:47 | 5371900 Rememberweimar
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And CNN...

Fri, 10/24/2014 - 09:57 | 5371941 JRobby
JRobby's picture

It is a relief that the continuously fraudulent inflation "scare tactic" will never materialize. There is some relief in oil prices that actually is making a difference for people right now.

Sadly, the oil price manipulation is a Fuck Putin move rather than an effort to let Struggling Citizen up for air for a couple of seconds.

Evil people are doing this.

 

Fri, 10/24/2014 - 10:10 | 5372009 Ghordius
Ghordius's picture

is it really oil price... manipulation? Or just the Saudi Kingdom showing off it's power of being perfectly capable to sell under cost, for a while?

I remember Saddam Hussein being the butt of a similar manouver, and him being livid with Kuwait and SA about how he was supposed to pay the debt he accumulated while spilling river of blood on attacks on Iran, as requested by his backers, and then being so bloody mad about it that he approached the US Ambassador, who then said "it's all business among you guys", which then resulted in Iraq's invasion of Kuwait

this was of course when we still had "just" wars, perfectly authorized by the UN on the ground of... invasion and annexation. before "Freedom Fries" being a result of "they hate us because they don't believe us about the possession of WMDs by the enemy", and way before "enemy combatants" and burials-by-flying-helicopters

Fri, 10/24/2014 - 10:19 | 5372017 JRobby
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Sorry Ghordi. I don't read your shit.

Thanks

Fri, 10/24/2014 - 10:20 | 5372054 Dr. Richard Head
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"The meat of higher inflation has not been delivered?"  Tell that to the 16.2% increase in ground beef year over year - http://www.nbcnews.com/business/economy/hows-inflation-really-doing-ask-cheeseburger-n215036

Fuck the FED

Fri, 10/24/2014 - 10:23 | 5372071 pods
pods's picture

Has anyone seen that picture of all those bankers' heads on poles lining Wall Street?

No?

QE works just fine.

pods

Fri, 10/24/2014 - 11:29 | 5372425 PAPA ROACH
PAPA ROACH's picture

Who said inflation isn't prevalent? When the government tries to hide inflation to keep entitlement payouts from running up, sure it isn't higher. Anyone who lives and breathes knows everything is skyrocketing; food, healthcare, etc.

 

The reason inflation cannot and will not solve our problem is because; so many are not un-employed/under-employed, and wages are not increasing. Simple math- if shit is getting more expensive and you aren't getting paid more to keep up with it, what happens? Central bankers should be tried for as criminals for what is transpiring.

Fri, 10/24/2014 - 12:01 | 5372544 Boris Alatovkrap
Boris Alatovkrap's picture

Inflation is not natural occurrence economic operation, but is artifact of fiat monetary regime in control of corrupt and dishonest ruling class.

Fri, 10/24/2014 - 12:42 | 5372727 Theosebes Goodfellow
Theosebes Goodfellow's picture

~"QE works just fine."~

That's the funny thing about QE. It works..., until it doesn't. But don't worry, when that moment comes that it doesn't, you'll have far more urgent things to worry about than something old-fashioned and silly like whether QE works. You know, serious shit like "why don't the printing presses at the Treasury make any difference any more?", and "We're ruined! Our Dollars are worthless!" You won't even think about QE then.

Fri, 10/24/2014 - 10:41 | 5372164 LawsofPhysics
LawsofPhysics's picture

The fact is that QE/ZIRP is doing exactly what your owners want it to.  The data on where all the wealth is going is very clear on this.

Fri, 10/24/2014 - 10:51 | 5372214 pods
pods's picture

That is what irks me about all of these posts about QE (and central banking in general). Why is it that only nutcases like me can see how things operate?  Not like all the information is hidden. Hell, the BOE stated how reserves are created!

How can anyone post an article on ZH under the assumption that QE was for anyone other than the bank's benefit?

pods

Fri, 10/24/2014 - 12:08 | 5372567 Boris Alatovkrap
Boris Alatovkrap's picture

Modern banking system is only elaborate apparatus for theft of labor and wealth from working class by power organ class. But is model after old regime establish by ancients, only replace mace and battle axe with banking deposit slip and atm card.

Sat, 10/25/2014 - 05:49 | 5375760 BrosephStiglitz
BrosephStiglitz's picture

QE is the greatest example of subsidization in human history.  And 75% of the population don't even know what it is, or how it functions.  Does anyone really wonder why shit like the Patriot Act gets passed (and is then extended in scope) when most people are too ignorant to see what's hidden in plain view?

Fri, 10/24/2014 - 10:52 | 5372228 Dr. Richard Head
Dr. Richard Head's picture

Exactly.  People and talking heads (who are not real people in my opinion) are arguing over inflation/deflation.  I think the debate is a misdirection.  Economist vodoo doctors are speaking about inflation or deflation as it relates to the "assets" of the politically connected elite.  The common man/woman is talking living expenses.  Distraction for the masses either way.

 

FUCK THE FED!!!

Fri, 10/24/2014 - 10:20 | 5372055 Ghordius
Ghordius's picture

and you block my comment - I was just coming back to the main theme of "does QE work" - with a comment that you are both sorry and you don't read my shit? civility does not really work that mathematically, you know? Otherwise I'd be using my ancient bullwhip on people I dislike and then very courteously excusing myself, and really, really enjoying myself for being even with them

anyway, Does QE Work? Well, look at Japan. Stagnant economy with Zombie Banks for one generation, and now Full Blast QE. Do you see a difference? Or is it still "a bug in search of a windshield"?

Fri, 10/24/2014 - 10:23 | 5372073 JRobby
JRobby's picture

Wow! Scary guy.

Fri, 10/24/2014 - 10:28 | 5372100 Ghordius
Ghordius's picture

lol. did I push some of your buttons? when? in the last 26 weeks and 22 hours?

Fri, 10/24/2014 - 10:30 | 5372109 JRobby
JRobby's picture

Here is some advice: get out your ancient bull whip and hang yourself with it.

Fri, 10/24/2014 - 10:46 | 5372130 Ghordius
Ghordius's picture

JRobbie, now you just proved that you do read my shit

you still have not written why. I do sense some animosity, you know? does my avatar disturb you? or something I wrote? come on, let it out. do you mind me giving a comment to your comment?

don't be shy

Fri, 10/24/2014 - 12:21 | 5372642 JRobby
JRobby's picture

Sorry for the delay. I was doing something else.

Blowhards with superiority complexes / attitudes vs. the rest of mankind really bore the shit out of me.

You almost never find them in contact sports clubs or even in racing situations because they might get beat by someone stronger. So it is really nothing personal. I ID'd you a while ago (I do not quantify the time frame like an OCD freak show) and I don't think much of you. So avoid my posts ant I will avoid yours.

Fri, 10/24/2014 - 10:18 | 5372047 LULZBank
LULZBank's picture

 

Or just the Saudi Kingdom showing off it's power of being perfectly capable to sell under cost, for a while?

 

Another possibility could be that Saudi oil fields are depleting and what they are getting out now is some cheap high sulphur sludge/condensate crap, which would explain both the lower supply as well as the price.

Just a thought.

Fri, 10/24/2014 - 10:25 | 5372078 Divided States ...
Divided States of America's picture

You mean kinda like pink slime in ground beef, except they put in worthless ink for oil??

Man, the markets have NO liquidity today...maybe setting up for a hell of an afternoon close into a weekend full of surprise and stupidity.

Fri, 10/24/2014 - 10:26 | 5372084 Ghordius
Ghordius's picture

or they think it's more valuable in the future. there is this Austrian School view about lending rates expressing a time preference. inversely, if you push rates down to near nothing, it would make investments in the far future more valuable and appropriate

Fri, 10/24/2014 - 14:27 | 5373212 Kirk2NCC1701
Kirk2NCC1701's picture

"QE works for wealthy Jews..."

I do NOT disagree, but... would suggest we replace the well-polished "Wealthy Jews" ladder with a different and more useful ladder:  "Poor Christians".  WHY are Christians poor?

No matter whom you're talking about (fucking Martians or Klingons, for all I care), anytime 2% of the population gets the better of the 98% of the population, my rational brains says... "Whoa, time out!"  What is it about these two populations (their Vision + Values + Attributes) that causes this VOLUNTARY outcome?  Cause there's NO fucking way you're going to convince me or any sane person that the 2% has somehow, magically, divinely FORCED the 98% into submission and subservience.

IOW.. the True Root Cause is NOT in the 2% (playing only the Blame Game), but in the 98%.  It is THEIR Worldview, their Vision, their Values and their Attributes that are to blame.  It's PURE DARWINISM.

As I've suggested MANY times before, IMO, the True Root Cause is the BASTARDIZATION and HIJACKING of so-called "Christianity".  The Romans have built it (Homogenized and Standardized it) as a "Religion for the Plebeian Masses", not the Elite.  When that happened, it became "useful" to Emperor Constantin, and to EVERY "Christian" leader since then.  Be it a secular leader or clerical leader:  They ALL enjoyed its  Shepherd-Sheep biz model, to sustain their wealth and lifestyle.

"Christianity" as we have it today, does well against less developed or less aggressive/predatory cultures/religions, but absolutely gets its ass kicked by more aggressive/predatory cultures and religions.  E.g. Jews, Modern Chinese, Koreans.  It's PURE DARWINISM:  Deal with it.  Adapt or perish, you damn "Christian sheep".

p.s. I have suggested time and again that it is Christianity itself that needs to be reborn as a faith -- so that people are not "reborn" as sheep (the current system), but reborn as Real People who are able to successfully deal with even Predatory Cultures and Religions.

pps. Given that these principles are so SELF-EVIDENT, I tend to be extremely suspicious of anyone who persists in playing the Perpetual Victim ("Them Jews!") and playing the Blame Game ("They've done this and that to me, to us all!").  If a person cannot or will not stop playing the Christian Victim, and keeps playing the Blame Game, then they either need some serious fucking Therapy, or they might be Chosenite Shills who keep deflecting and redirecting the Argument into all sorts of false directions, avenues and alleys.

Fri, 10/24/2014 - 15:27 | 5373694 daveO
daveO's picture

For those that don't already know. 

FED policy, since August of 1987, is as easy as 1,2,3.

1) New Chair Satan is installed.

2) Raise rates (This time, just let the real rate creep up) and crash markets. 

3) Counterfeit Trillions more. 

 

Fri, 10/24/2014 - 10:22 | 5372069 tempo
tempo's picture

All QE is zero sum game. Initially, zirp helps home owners refin w savers income. credit card rates are unchanged. Now the refin/home buying high is over savers are left w less income to live on which offsets the initial plus. W declining real wages and zero interest income, the economy is dead. But stock prices go higher for the giant spx companies as they use 60-70% of operating income for stock buybacks rather cap ex which would create economic activity and jobs. CAT, IBM, KO, XOM all have declines sales but record stock prices because of massive buybacks, but over time they are essentially liquidiating.

Fri, 10/24/2014 - 09:43 | 5371873 Bell's 2 hearted
Bell's 2 hearted's picture
Russell Napier Asks: "What Evidence Is There That QE Works?"

 

None

 

and "experts"  saying over and over it helped ... though never exactly how ... makes no difference

Fri, 10/24/2014 - 09:59 | 5371953 ejmoosa
ejmoosa's picture

And just like every other government program they will need just a bit more money and time to make it work....to infinity and beyond!

Fri, 10/24/2014 - 10:24 | 5372080 Badself
Badself's picture

This is very complex article and worth another read.   BTW 2 Hearted is my favorite brew and that is a clever user ID. 

Fri, 10/24/2014 - 11:45 | 5372503 sandhillexit
sandhillexit's picture

Instead of government monopoly on foreign exchange and a fixed or near fixed exchange rate, China could allow its companies to keep & spend USD and EUR.  China would have just as much foreign money but on corporate and personal balance sheets (like here), not in the CB in Beijing/Singapore.   No need to offset financial flows from trade by buying in USD with new-printed CNY.  Less Chinese inflation/land speculation...where would they spend the USD?  QE leaks abroad and the Chinese government rides the inflation tiger. 

Fri, 10/24/2014 - 09:44 | 5371881 JustObserving
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It has worked like a charm for the 0.1%. Does anyone else matter in a fascist, police state?

Fri, 10/24/2014 - 09:50 | 5371907 Rememberweimar
Rememberweimar's picture

Arrest the Federal Reserve Chosenites...

Fri, 10/24/2014 - 09:57 | 5371949 JRobby
JRobby's picture

Detain indefinitely as "enemy combatants"

Fri, 10/24/2014 - 09:46 | 5371893 Iam Yue2
Iam Yue2's picture

Long View: Historian sees S&P fall to 400
May 16, 2011 : Stock market historian and CLSA consultant Russell Napier discusses with head of Lex John Authers his warning that the real bear market in the S&P has yet to come and could push the US equities index down to 400, plus he explains how emerging markets could trigger a leap in US Treasury yields.

Fri, 10/24/2014 - 09:48 | 5371899 Brazen Heist
Brazen Heist's picture

None, that's why they're using it. Times are desperate indeed. Low interest rates for 5+ years is bound to turn out well /sarc off

Fri, 10/24/2014 - 09:47 | 5371901 Dre4dwolf
Dre4dwolf's picture

QE is all about social planning.

They want to sway the habits of the population.

If they want housing to become un-affordable for the next generation, the central bank counterfeits money and dumps it into fraudulent home loans.

If they want poverty, they print money and inflate the price of food.

etc.

 

Every achievement/failure of each generation is planned before hand to create a certain type of desired "culture" and to curb reproduction, pre-planned social and economic pressures as a form of population control.

 

 

 

Fri, 10/24/2014 - 09:53 | 5371926 Bell's 2 hearted
Bell's 2 hearted's picture

you give them way too much credit

 

 they didn't have a clue ... and still don't ... of what they are doing

Fri, 10/24/2014 - 10:05 | 5371977 LULZBank
LULZBank's picture

They very well know what thay are doing.

Until I see a big bank deposit in my account by mistake, I dont buy the they dont know what they are doing shit!

Have you ever realised no matter wha these alleged incompetent sods do, it always work to our disadvantage and their advantage.

Think again about your they dont have a clue notion.

Fri, 10/24/2014 - 10:15 | 5372026 Bell's 2 hearted
Bell's 2 hearted's picture

believe what you want - but they have no clue

 

take it for what is worth, but i have a friend who knows betsy duke (a FR governor till summer of 2013) ... saw her last fall after she left FR ... the crap she told him was the EXACT crap they say publicly ... QE saved the US from a Great Depression

Fri, 10/24/2014 - 10:23 | 5372068 LULZBank
LULZBank's picture

 

the crap she told him was the EXACT crap they say publicly

 

They, I suppose, are honest folks then with integrity and honesty strongly embedded in their character?

They would never even think about killing somebody or bombing a country for some material gain and ofcourse never lie about things, despite being politicians?

Fri, 10/24/2014 - 10:28 | 5372094 Bell's 2 hearted
Bell's 2 hearted's picture

again, i think you give them too much credit.

 

I honestly believe they think they are helping.

 

Did you read the Bernanke comments from yesterday (wednesday?)? ... a lot of ivory tower / never worked in the real world nonsense ... might sound good in a textbook, though

Fri, 10/24/2014 - 10:54 | 5372231 LawsofPhysics
LawsofPhysics's picture

you are correct, I have had a similar interaction with a FR board member and ivy-league educated venture capital guys.  It really is a club and they really believe the bullshit they are selling.  If history is any guide, the will believe it until they die, by guillotine or otherwise.

Fri, 10/24/2014 - 10:22 | 5372070 madcows
madcows's picture

oy vey.  If they want to argue that TARP saved us from depression by bailing out banks, preventing a bank run, and thus saving everyone from losing their money, then fine.  But QE is didn't save any citizen anything.  all it's doing is helping banks to recapitiliza by stealing from the savers.  FU FED.

Fri, 10/24/2014 - 10:45 | 5372190 SeattleBruce
SeattleBruce's picture

I wouldn't put it past FR people to talk like that in polite company - at the cocktail circuit. And who knows maybe the do believe that somehow they can pull this off and bring back the 1950s economic arrangement between their masters and the peons. However what QE actually does do, as is evidenced by Japan, is kick the can of real market consequences down the road, by among other things keeping zombie banks afloat and the super rich consuming. I maintain the distance the can is able to travel is getting less and less and the can is getting heavier and heavier..

Fri, 10/24/2014 - 09:57 | 5371936 Ghordius
Ghordius's picture

are you sure you can attribute all those very complex plans to QE? I have a much, much simpler explanation: moar

which is the neologism for a very old sin: greed

and yet (intellectual) sloth has also a part: it was "making housing affordable" that hurt the camel's back. that was the project of creating a certain type of desired culture

Fri, 10/24/2014 - 10:00 | 5371955 JRobby
JRobby's picture

Good point. Who can afford to have kids anymore?

Ebola

Etc.

 

Fri, 10/24/2014 - 09:59 | 5371957 madcows
madcows's picture

no way.  The banks are bankrupt.  Do you remember TARP?  QE is keeping zombie banks alive. Oh, and we're not just talking about local and national banks.  The FED is fucked and they know it.  Remember that the FED is made up of all the regional banks.  if the regional banks are bankrupt, the FED is bankrupt.  And, the FED has lent Trillions to the federal government, which is also bankrupt. 

QE is all about the FED trying to save its own skin and keep the game going.

Fri, 10/24/2014 - 15:44 | 5373756 daveO
daveO's picture

You 'jumped the shark'. They simply want to extract every last dollar out of your pocket before you die and pass it off to your Goyim kids. Watch as the baby boomers die penniless and, probably, homeless as well. Slaves are 'assets' until they can no longer work. 

Fri, 10/24/2014 - 09:47 | 5371902 BouncingCat
BouncingCat's picture

I guess is depends on your definition of "works".  Like Obamcare the reasons used to convince the sheep that QE is a good thing are very different from the results it produces.  So, the proponents keep saying it "works" even though the sheeple are saying, "Well is suppose I'm just unlucky and eventually this'll help me and those around me".  It takes a long time for some to realize the line you're in is the one that leads to the slaughter.

Fri, 10/24/2014 - 09:49 | 5371905 toros
toros's picture

Fed balance sheet up $7.3B last week.  $37.2B this month. 

Fri, 10/24/2014 - 10:00 | 5371959 JRobby
JRobby's picture

Oh? They are still doing accounting over there?

Well I am obviously not informed......................

Fri, 10/24/2014 - 09:50 | 5371906 LULZBank
LULZBank's picture

Listen fucking fuck, to understand the game you have to go back to its origins.

When the TPTB got together and conspired to print the first Dollar (or any fiat for that matter) was printed, what was the idea behind?

They had all the dollars and people had all the physical assets and labour.

The idea was to get the people to exchange their physical assets and labour in exchange for those printed dollars (by passing legal tender laws). That was the first QE in essence, but it was small and flew under the radar.

However, over the years because of the interest component and exponential function, a lot more needs to be printed to keep the system going and cover the previous obligations, settling a debt with another debt (dollars), round and round in circles.

Previously it was covert printing, now because f the sheer size it has gone overt and this QE talk by experts etc is just bullshit to keep the masses unaware, in a trance. Lipstick on a pig.

Fuck of Banalysts.

Fri, 10/24/2014 - 09:52 | 5371916 Rememberweimar
Rememberweimar's picture

It's way past time we the people take our money printing press back from the chosenites and print a few Trillions for ourselves, buy all their assets from them, and see how THEY like it...

Fri, 10/24/2014 - 09:54 | 5371927 LULZBank
LULZBank's picture

SPOT ON, Brother!

Fri, 10/24/2014 - 10:57 | 5372243 GetZeeGold
GetZeeGold's picture

 

 

 

Have you seen the light?

http://www.youtube.com/watch?v=lX5tfRdkoY0

Fri, 10/24/2014 - 09:54 | 5371923 LawsofPhysics
LawsofPhysics's picture

Correct.  Moreover, this blatant fraud/manipulation by people in power has happened throughout history numerous times, but usually in very isolated econonomies/societies.  This time is very different.  This time the fraud is global.

Fri, 10/24/2014 - 09:57 | 5371944 LULZBank
LULZBank's picture

This time there were faster means of communication and travel, thanks to electronics and oil, so going global was a scammers logical choice.

Why limit yourself to a village or a country, when you can OWN the World!

What do you think the secret black knowledge/arts was that is handed down from one generation to another by some secret societies over the centuries?

Fri, 10/24/2014 - 10:41 | 5372001 LawsofPhysics
LawsofPhysics's picture

Of course, but the hubris of men always ends the same way...

history is very clear on how this gets worked out.

Fri, 10/24/2014 - 10:53 | 5372230 Livermore Legend
Livermore Legend's picture

...."the hubris of men always ends the same way..."

'Nuff said'.

Fri, 10/24/2014 - 12:34 | 5372284 RaceToTheBottom
RaceToTheBottom's picture

"history is very clear on how this gets worked out."

Bring on the rope.  Afterward, turn WS into a museum on corruption to reduce it in the future.

Fri, 10/24/2014 - 09:59 | 5371947 Pool Shark
Pool Shark's picture

 

 

Bingo!

 

Funny how people actually believe that printing receipts for goods and services is the same as creating more goods and services...

 

 

Fri, 10/24/2014 - 10:04 | 5371970 Notsobadwlad
Notsobadwlad's picture

Exactly: trade nothing for something... but make the something look like it has value. Parasites can never produce for themselves. They need to feed off of others.

Giving free fiat to companies through public offerings and then enslaving them with debt and covenants has everyone working for them. Bribe those at the top so that they are part of the theft and fraud.

The public has no real ownership of stocks now because all of the shares are actually owned by Cede and Company ... and people are only beneficiaries of the shares, not the owners. They tried to do the same trick with MERS. They got us all to give them free unsecured loans with banks deposit accounts, 401Ks and IRAs. They have the fiat in their possession and we are simply unsecured creditors.

My guess is that there will come (another) day of reckoning. People will eventually wake up... and those parasites who purport to rule us will be overcome by their slaves. Hopefully it will be done before they wipe us out again.

Fri, 10/24/2014 - 10:06 | 5371975 JRobby
JRobby's picture

Real Asset Inflation is needed to erase the massive explosion in bad first tier assets (loans) and the uncountable level of second and third tier financial "assets" (casino)

Derivatives not used for hedging = cancerous death to banking and monetary systems.

Fri, 10/24/2014 - 10:39 | 5372154 QQQBall
QQQBall's picture

Linear thinking is for dummies. Inflation will fix everything. Idjit

Fri, 10/24/2014 - 10:05 | 5371979 new game
new game's picture

plus thousand/1000 to get a histrionics view of it all...

Fri, 10/24/2014 - 10:13 | 5372021 rejected
rejected's picture

 

31 U.S. Code 5103 United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.

Notice it only prohibits Foreign gold or silver, not domestic. I see no reason you cannot do business with domestic gold or silver. Of course Bernard Von Nothaus was convicted of counterfeiting using silver rounds. The u.s government said because they were round americans were too stupid to determine the difference.

By the way.... He still has not been sentenced. It's now going on 4 years.


Fri, 10/24/2014 - 16:01 | 5373815 daveO
daveO's picture

Here's the good news...

Although he was convicted in March 2011, the U.S. government has still not reached a sentencing decision for Von NotHaus. Since his trial, The New York Times has said that some people describe Von Nothaus as "the Rosa Parks of the constitutional currency movement." As of December 2013, he remains free pending sentencing.[13]

 

http://en.wikipedia.org/wiki/Bernard_von_NotHaus

http://en.wikipedia.org/wiki/Liberty_Dollar

Fri, 10/24/2014 - 09:51 | 5371913 LawsofPhysics
LawsofPhysics's picture

it "worked" because there are no "tanks in the streets" or guillotines in D.C...

same as it ever was...

Fri, 10/24/2014 - 10:03 | 5371924 new game
new game's picture

printed money is the definition of free. we all know there is no free lunch. so free is theft.

it is sooooooooooooooo simple, printers are theives. they are rewarded, honored and put on status of untouchable.

this is what is wrong.

how to correct.

let i's and u's figure that out....

i remember a time when horse theives were......

edit,  everything else is a distraction, kinda like the r and d game. gdp, unemployment, ect are distractions with the biggest of all being the stalk markets. watch the bonds/dolla for demise and then saddle up for a ride. ps, don't forget lots a rope...

Fri, 10/24/2014 - 10:00 | 5371937 Chuck Knoblauch
Chuck Knoblauch's picture

It works because everyone else in the world allows the U.S. to do it.

With a Rotchild central bank in every port in the world, it's easy.

Welcome to the NWO.

Do you like it so far?

Reality is what the state says it is.

Fundamentals only matter when the state wants them to matter.

Fri, 10/24/2014 - 10:08 | 5371992 Smiddywesson
Smiddywesson's picture

Precisely, this is how the affairs of man operate, from markets right down to Little League Baseball.  It's all a sham for the priviliged to get their way.

Fri, 10/24/2014 - 09:56 | 5371942 The Phallic Crusader
The Phallic Crusader's picture

Proof?

The proof is rhetorical - you will be asked to prove a negative, in effect - prove not only that it didn't work but that things would not be worse without QE.

There;s the rub - they will always say it wasn't enough money/printing/future taxes on labor - but that thngs would have been worse without it.

 

Naturally - the banks should have been allowed to fail, bondholders should accept the losses they risked, and people should rely more on smaller and community banks.

 

 

Fri, 10/24/2014 - 10:03 | 5371965 Lady Jessica
Lady Jessica's picture

The disproof is Japan.

Fri, 10/24/2014 - 10:08 | 5371990 JRobby
JRobby's picture

+1000

Fri, 10/24/2014 - 10:10 | 5371999 Bell's 2 hearted
Bell's 2 hearted's picture

affirmative

 

i call it the "Rumsfeld Defense"

 

i used to watch the almost daily pressers rumsfeld had the first few years of OIF ... ALWAYS portrayed himself as the smartest man in the room ... (and no matter how FUBAR'd the situation in iraq) would explain if US operated in any other matter than it did ... results would have been worse

Fri, 10/24/2014 - 10:02 | 5371961 Lady Jessica
Lady Jessica's picture

Failure to create inflation is one thing.

WHAT IF QE IS ACTUALLY DEFLATIONARY?

Fri, 10/24/2014 - 10:10 | 5371998 JRobby
JRobby's picture

What if???????

It certainly has to be in a no - negetive GNP environment.

Fri, 10/24/2014 - 10:39 | 5372141 centerline
centerline's picture

I believe it is at this point.

However, the trick is that the effects are not directly realized as most people expect.  They appear as distortions - some sectors inflating (food per se) while other sectors are outright collapsing, requiring massive loans, increasing fees/taxes, and/or bailouts to avoid outright failure.  It is "can-kicking" for the politicians, legalized "theft" for the insiders, and a modern form of warfare (because it all boils down to real resources anyhow - oil, gas, food, water).  Net effect is  negative in real terms though.  A complex form of redistribution.

Sooner or later, reality will assert itself and the magnitude of what happens afterwards will be directly proportional to the extent of which reality has been avoided - at minimum.

Ah, the "jet engine" that is modern finance.  Too bad we find out too late that it is used to power a bone grinder.

Fri, 10/24/2014 - 10:06 | 5371981 Smiddywesson
Smiddywesson's picture

QE operates to transfer money to the shareholders of the big banks.  From the only perspective that matters, it works just fine.

Fri, 10/24/2014 - 10:09 | 5372003 SheepDog-One
SheepDog-One's picture

And the shareholders of the big banks is the Fed.

Fri, 10/24/2014 - 10:05 | 5371982 aliki
aliki's picture

really depends on who you are:

if rich with lots of risk assets (house, stocks, bonds), its worked just fine.

if a middle-class citizen looking to put kids thru college or save for retirement, its crushed you.

so, just make sure your the former, and your ok!

Fri, 10/24/2014 - 10:08 | 5371994 SheepDog-One
SheepDog-One's picture

QE was obviously never about anything but bailing out the Feds own central banks. Banks bailed out at the publics expense, job done.

Fri, 10/24/2014 - 10:08 | 5371996 Panic Mode
Panic Mode's picture

Of course it bloody works. I never dreamt that I can buy junk metals so cheap.

Fri, 10/24/2014 - 10:17 | 5372036 tawdzilla
tawdzilla's picture

"The consensus view is that it (deflation) was defeated by developed world central bankers flooding the world with money.

The consensus view is wrong. Since 2009 almost 80% of the increase in the world’s money has come from Emerging Markets in general, and China in particular."

If Napier is right, its about time to fasten your seatbelt and put on your helmet.  Crash approaching in 3, 2, 1... 

Fri, 10/24/2014 - 10:24 | 5372072 Youri Carma
Youri Carma's picture

The funny thing is that every number the FED brings up for proving that QE works has been rigged by that same FED. The stock market, low gold prices and even the unemployment number is totally bogus not counting the people statistically kicked out of the workforce. It really all is magic. Magic propaganda.

Fri, 10/24/2014 - 10:27 | 5372092 WorkingPawn
WorkingPawn's picture

I'm happy to see deflation.  It drives down the price of canned goods, gold, firewood, ammunition - all of the stuff we'll need for the next phase of Federal experimentation!

Fri, 10/24/2014 - 10:27 | 5372095 Badself
Badself's picture

I wonder if Russell still thinks another bust is coming?  He predicted in 2011 a S&P bottom of 500.

Fri, 10/24/2014 - 10:40 | 5372158 Sick
Sick's picture

I have always considered a University education important to learn certain skills and knowledge but more important about learning how to think for ones self.  This is where the academic economist fail.  But maybe they are just shills doing the devils work.

Fri, 10/24/2014 - 10:46 | 5372189 Downtoolong
Downtoolong's picture

Of course, the Fed response to this lack of proof goes something like, “Just imagine how bad things would be if we hadn’t done QE.”

And my response to that is, “I’m tired of trusting your imagination too. Let’s get physical, experience it for real, then we’ll decide which outcome is best or worst.”

I’m beginning to think the only thing transparent about the Fed is its amazing capacity for self-admiration. It champions itself for avoiding non-existent problems that it dreams up and for attempting to correct real problems that it caused in the first place. 

Fri, 10/24/2014 - 10:47 | 5372197 Livermore Legend
Livermore Legend's picture

......."The job of the investor is to answer that impossible question........"

Wrong.....

The Job of every SPECULATOR is to Know when to Enter and Exit Position.........

Not "Impossible", but requiring a High Level of Skill and Knowledge, Developed over Time....

Much more than most are willing to put forth......  

 

Fri, 10/24/2014 - 11:08 | 5372317 Spungo
Spungo's picture

Of course the shit works. Wealth inequality is at an all time high. Mission accomplished.

Fri, 10/24/2014 - 12:34 | 5372369 RaceToTheBottom
RaceToTheBottom's picture

 

 

1)  Wealth inequity at all time high. Check

2)  Half the country on some type of assistance.  Check

3)  Middle class at all time low.  Check

4)  Legalizing drugs to deaden the population. Check

 

Everything going according to plan.

Fri, 10/24/2014 - 11:30 | 5372472 csmith
csmith's picture

‘With inflation expectations back at 4Q 2009 levels, what evidence is there that QE works?’

Plenty...the fact that prices have not collapsed into ABSOLUTE deflation is evidence that QE has "worked" as well as could be hoped. The Fed can prevent deflation, it just can't make the economy grow.

Fri, 10/24/2014 - 11:36 | 5372487 csmith
csmith's picture

‘With inflation expectations back at 4Q 2009 levels, what evidence is there that QE works?’

Plenty...the fact that prices have not collapsed into ABSOLUTE deflation is evidence that QE has "worked" as well as could be hoped. The Fed can prevent deflation, it just can't make the economy grow.

Fri, 10/24/2014 - 11:36 | 5372489 csmith
csmith's picture

‘With inflation expectations back at 4Q 2009 levels, what evidence is there that QE works?’

Plenty...the fact that prices have not collapsed into ABSOLUTE deflation is evidence that QE has "worked" as well as could be hoped. The Fed can prevent deflation, it just can't make the economy grow.

Fri, 10/24/2014 - 12:33 | 5372711 dadichris
dadichris's picture

QE is a clear and present danger to the national security of the US and should be treated as such.

Fri, 10/24/2014 - 12:48 | 5372788 BuddyEffed
BuddyEffed's picture

"Oh, no, my dear… I'm… I'm a very good man. I'm just… a very bad Wizard. "

As I recall, in the Wizard of Oz, he was futilely pulling a shitload of levers.

Lever pulling requires the fulcrum to be appropriately placed.  Bernanke/Yellen fulcrum placement optimum point of deploy seems to be somewhere near Uranus.

Fri, 10/24/2014 - 13:05 | 5372874 VWAndy
VWAndy's picture

They are laughing at us. Just sitting there and laughing at us all. The idea that they saved us from a greater depression? Ha they worked very hard for decades to put us in this spot. With the help of our government and media and academia. They all fn knew from the start too.

 Stop pretending it was anything other than intentional from day one. Well if nobody else will say it I will. Fiat must come to an end planet wide.

 

 

 Repete after me. FIAT MUST BE STOPPED PLANET WIDE.   The sooner the better.

 

   Inflation is theft. Krugster knows this as does Yellen and all the leaders too. So please stop pussy footing around it. Fiat is theft and anyone that is for it a thief. Coin must have a real measurable value or it is theft. And no they dont teach that in school!

Fri, 10/24/2014 - 13:24 | 5372978 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Janet Yellen is Dorothy, but she can't tap her 'ruby slippers' three times because Alan Greenspan kept the ruby slippers so he could dress in drag for 'trick or treat' night on Halloween. Without the ruby slippers, or the Good Witch of the North, the bitch is dead in the water just like the USA

petro-dollar and the economies of the West. Gravity dictates that whatever goes up must eventually come down.

Fri, 10/24/2014 - 13:32 | 5373019 optimator
optimator's picture

Evidence that QE works?  Take a ride through upper Long Island and the Hamptons.........

Fri, 10/24/2014 - 13:34 | 5373028 VWAndy
VWAndy's picture

Where the thievs live?

Fri, 10/24/2014 - 15:59 | 5373866 limacon
limacon's picture

They pretend that the economy is growing , and you pretend to spend non-existent money .

 

You see why 

https://www.academia.edu/8942403/The_Hysterical_Focus_is_your_friend_

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