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Uncork the Central Bank Bubbly!

Bdelande's picture




 

 

 The StealthFlation Blog 


What a glorious global economic gala!  Apparently, contracting world GDP growth, monumental sovereign debt loads, ballooning central bank balance sheets, crashing commodity prices, competitive currency devaluations and synthetically suppressed interest rates, as far as the eye can see, are all great tidings to be joyously celebrated throughout this holiday season.  Well, at least that’s the takeaway from the whooping wonderful world of capital markets.  Have no fear, all is perfectly in order.  Jamie Dimon, Jim Cramer, Larry Fink and Company have our back.  The rest of us mere mortals are simply supposed to stand aside and take their professional word for it, silently sipping the financial establishment’s spiked eggnog until we attain a sheepish state of stupid stupor.  After all, the money experts at the Fed are on the case, what could possibly go wrong?

Joy to the world!  Yes, it’s true, your Nation too can enjoy the very same blissful state of economic euphoria, all you need is the will to turn your monetary policy completely on its head, a la festive freeloading Fed.  No need to maintain the integrity of your means of exchange, that’s so old school.  That’s right, you too are absolutely invited to enter the ZIRP zero bound party zone, just buy out all your own newly issued treasury obligations and be sure to lap up any illiquid debt that may be languishing.  Set it and forget it, that’s it, nothing to it.  In the end, it will all take care of itself according to the all knowing fabulous Fed heads and the crazed Keynesian collegiate kooks that orchestrated and obliged this opulent banker blowout.   No worries, Father Allen, Brother Ben and Sister Janet figured out how to turn the universe’s economic waters into wine.

Oh, there is one important caveat which needs to be pointed out, along with the monetary ecstasy ease regime, your Nation is also required to unequivocally serve the United States’ geopolitical ambitions and global economic interests, otherwise, no monetary marmalade for you! Just ask Vlad on that score.  His toast is badly burnt, his olive oil spread is spoiled, and his Ruble is now rubble.  No money honey for comrade Putin until he bows down to the high and mighty masters of the badass bully banking USD monetary system hegemony.

Make no mistake, the same goes for his bummed broken BRIC buddies too.  No IMF SDR soup for you!  Might be time for the Putinator and his pissed off pals to invite Goldfinger to the festive grand global gala, and have him pour some leveling liquid gold libation into the overflowing currency punchbowl, but I digress, that’s for another sordid Santa story. As an aside, should you want to specifically understand Putin’s general take on things these days, you may want to review his Presidential annual address to the Russian Federal Assembly which was delivered over the weekend.  I’ll simply post it here for you, seeing as CNN would rather cover Al Sharpton’s latest bowel movements 24/7.

Enough with that sobering slavic seriousness, back to the global gala at hand, let’s get the party started. The all pro U.S. Central Bank was certainly instrumental in choreographing the QE easy street superbowl shuffle, and its really catching on now. Just like the Macarena did a few years back, the mo mad money endzone jig has gone viral.  The BOJ is doing it, the BOC is doing it, the ECB is doing it, the BOE is doing it, the SNB is doing it, and of course the FED’s Hail Mary QE pass jump started it all.  It’s simply fantastic, a fantasy football free-for-all moneyball abbondanza for the Fed’s frenzied financial fanatics!

Who needs genuine productivity in an underlying economy to generate the necessary excess savings essential to legitimate capital formation, when all you need do is turn the vast volume valve on the Fed’s free funding fire hose to the maximum flow rate position.  I guess you can print your way to prosperity after all.  Well, everyone seems to think so these days, anyways. Take a quick look at the global equity indices, they’re going great googly gangbusters, the crazed Christmas carnival party has clearly already started, let’s dance!

I do have one question for you eternal equity enthusiasts that’s been bugging me.  Why are the kids of today not dancing along side with you all? Doesn’t youth typically hit the dance floor first to flaunt their funky new flashdance moves?  It seems the bald brooding bouncer at your posh money club only invites the more mature loaded fat cats past the velvet ropes, these days, outside the fabulous frolicing fast money hotspot.  Unless, of course, you should happen to be a young gun hailing from Wall Street, sporting the obligatory Hugo Boss pinstripe suit and tasseled Alden loafers, then, you go straight to the head of the line at Studio QE54, no questions asked.  It’s all good, you get a great table at the groovy gratuitous greenback grill, where the money fabulously flows through endless magnums of bubbling big bottled Champagne.

Wait a minute!  Did someone just mention bubbles?  Pop, pop, pop!  Was that simply a few more careening champagne corks exuberantly launched across the smoke filled room of the Moar Money Lounge?  Or, rather, was it a disenfranchised group of angry young men stealthily lobbing multiple molten molotov cocktails from the lofted balcony above the open bar?

By the way, incase you weren’t aware, just a heads up.  Along with the resentful, uninvited, unemployed and utterly disillusioned average American youth that’s been locked out of the Moar Money Club, I hear the Italian, Spanish, French, Greek, Portuguese, Brazilian, Russian and Arab kids actually want to torch the place.  What’s up with that?  Any ideas?

I guess unabashedly abusing the world reserve currency to your ignoble advantage for years on end does eventually have its blowback comeuppance consequences to deal with.  The Fed and it’s owners print and party, while the rest of us work and weep.  Not a good look. You didn’t really expect the largest transfer of wealth known to man, picking the average citizen’s pocket and placing their hard earned cash directly into the billfolds of your most well to do citizens, would go smoothly and without a hitch, did you?  Goosing the glaring inequality gap are we? Always thought the ideal of America was to enlarge the middle class, not eviscerate it?  And besides, how are you going to expand the tax base if you extinguish it?   Don’t we have some monumentally fat federal fiscal bills coming due?  Are you simply gonna pay those off with more funny money as well?   Is that the pitiful pathetic political plan?

Speaking of unpaid bills, who’s paying for the EU’s Champagne tab?  Boom!  Pop goes Brussels!  Bring on Le Pen, Farage, Tsipras and Grillo, all hell’s about to break loose in the soon to be bubbling over erupting European Union. Andalusia!  Catalonia!

Finally, and for the record, what many of you consider to be endless equity elation, some of us consider to be insidious Stealthflation.  What?  You’re not familiar with the term?  Here, let me spoil the party for you:

STEALTHFLATION:  An intractable economic condition that inevitably arises as excessively issued fiat currency compulsively pursues non-productive wealth assets in a grossly overleveraged economy, which has been artificially reflated by monetary authorities in a misguided attempt to synthetically engineer growth via extreme monetization.  (Money Printing & Interest Rate Suppression)


This effectively prevents the real economy on the ground from realizing the healthy normalization of free market forces necessary to genuine bottom up capital formation from earned savings, which is essential for generating legitimate sustainable economic growth.


Under the imposition of StealthFlation, asset prices are inordinately inflated while the generative velocity of money is eviscerated.   Worse still, the seeds of hyperinflation are sown, as the overtly financialized economy becomes increasingly dependent upon the interminable monetization.

Put away your party caps and stems my festive friends.  It’s not about today’s high flying Stock Market, nor the Dollar and U.S. Treasury safe haven bid, it’s about tomorrow’s confidence in our monetary system.  Are you confident in the malignant malfunctioning monetization mayhem?

Enjoy your pandering pilfering partying while it lasts, as a nasty notorious New Year looms large. The great off tempo American band, The Talking Heads, says it best:

“This ain’t no disco, this ain’t no fooling around”  &  “Hold tight wait till the party’s over.  Hold tight we’re in for nasty weather.  There has got to be a way.  Burning down the house”

 

Happy Holidays from The StealthFlation Blog!  Be sure to stuff your kids stockings with some shiny gold bullion.

 

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Sun, 12/07/2014 - 23:21 | 5527388 AdvancingTime
AdvancingTime's picture

 For a while I was one of the people concerned we would see the world tumble into a massive deflationary cycle as debts went unpaided and credit collapsed. Now I have come to think inflation is getting closer every day.

This would mean the "major deflationary period" is mostly behind us and it has not been disinflation as much as inflation being kept in check because of several factors, including where the money flowed, weak demand, dropping velocity of money, and the onetime benefit of lower interest rates. Before you discount the possibility that we will move directly from where we are into stagflation then hyperinflation please consider that hyperinflation paves the way for governments and those in power to make a transition to a replacement currency and a reset of the whole system.

 http://brucewilds.blogspot.com/2014/11/deflation-i-think-not.html

Sun, 12/07/2014 - 20:47 | 5526986 Son of Loki
Son of Loki's picture

Zero yield on savings has been a facilitator of the Middle Class annihilation imo ... along with many other destrcutive factors engineered by the CB and Wall Street and facilitated by Uncle Sam ... just as Lawrence Lessig predicted in some of his early works.

 

I encourage everyone to read some of his works. They are eye-openers.

Sun, 12/07/2014 - 21:31 | 5526932 essence
essence's picture

Exactly WHO are the owners of the Fed?

Traced down to the individual/family level.

I'm not interested in holding companies,trusts,structured vehicles or any what-so-ever level of obfuscation.  I MEAN THE EXACT, INDIVIDUAL OWNERS.

Yes I've seen the decades old text based figure charts, but really, doesn't that need to be updated with an in-your-face expose of EXACTLY who controls America.

Do they even live in the U.S. ?

----

And while I'm on the general subject, who controls the Bank of England. When they went public/government controlled 40 years or whatever ago, the result was this weird ownership structure. As I recall, there's this very strange structure/sub structure.
Look for yourself

-------from wikipedia
"In 1977, the Bank set up a wholly owned subsidiary called Bank of England Nominees Limited, (BOEN), a private limited company, with 2 of its 100 £1 shares issued. ...
Bank of England Nominees Limited was granted an exemption by Edmund Dell, Secretary of State for Trade, from the disclosure requirements under Section 27(9) of the Companies Act 1976 , because, “it was considered undesirable that the disclosure requirements should apply to certain categories of shareholders.” The Bank of England is also protected by its Royal Charter status, and the Official Secrets Act"

Ahhh, those Brits. They excel at protecting their pedophiles and oligarchs (actually one & the same).

------------------

Same with the BIS.
Not interested in the figure heads. Who is really calling the shots behind the stick figure puppets?

----

As an aside, note to all that think Russia/China are a serious counterpoise to the western elite run Banks. Last time I looked, Russia/China have Central banks and their heads regularly attend the bi-monthly meeting at the 'Vactian/City of London' like, quasi autonomous city/state BIS headquarters in Switzerland. (who the hell has the political clout to be exempted from Governments?)

BIS, effectively exempted from taxation and governmental controls worldwide (no doubt because they're doing "Gods work")

Question is, what God. The light or the dark.

 

 

 

 

Sun, 12/07/2014 - 21:55 | 5527160 JeffB
JeffB's picture

That's an interesting question, and one that should not be so convoluted and opaque that few of our government "leaders" know the answer, much less the citizens... even those most interested and motivated to find out.

One article I found interesting as to the actual legal structure of the Fed was posted on Seeking Alpha by Sarel Oberholster:

The Independence of the Fed

 

Sun, 12/07/2014 - 22:14 | 5527192 essence
essence's picture

Unfortunately that article is behind a need-to register screen. Screw that.

 

Here's another tidbit. I recall reading an article by Dean Henderson where he used a U.S. Freedom Of information request in an attempt to discover the ownership of the Too-Big-To-Fail U.S.Banks.
It was denied on grounds of "National Security".

 

Question:  The owners of the Fed wouldn't per chance, also be the owners of the BOE and BIS.

(hint:  think 26 Trillion USD in freebee loans with a goodly portion going to Europe)

Sun, 12/07/2014 - 23:16 | 5527371 JeffB
JeffB's picture

Sorry about that, they didn't require registering in the past just to read the articles. Here it is on his blog:

The Independence of the Fed

 

Sun, 12/07/2014 - 20:07 | 5526911 DeficitAlchemist
DeficitAlchemist's picture

Bored of the Hyperfaltion.. comments... we cant hyperinflate only stagflate... Hyperinflation is deep in Double digit inflation and in cases can be 3 & 4 digit etc.. as in Zimbabwe.

 

The minute we start making tentative an approach to marginally higher interest rates we fail AND HAVE DEBT RESETS... 3% will be enough for all the major zones US/EU/JAPAN the debt is tooooo big..(Japan already pays 40% plus of tax receipts on interest). FOR HYPERINFLATION... Instead we stagflate... stubborn levels of inflation (currently intentionally disguised and understated circa real cost of living squeeze) in a low/no growth environment, currently overstated with QE & its bubble enhancing effects... you grind on like this till the balacing act on real inflation or growth fails..

Sun, 12/07/2014 - 20:42 | 5526922 Bdelande
Bdelande's picture

Has zero to do with inflation or deflation or stagnation for that matter................you hyperinflate off of a currency confidence event.............same as it ever was.

 

They will reflate................There won't be growth..............There will be blood!

 

Capiche my bored brother?

Sun, 12/07/2014 - 16:03 | 5526339 ebworthen
ebworthen's picture

Good stuff Bruno.

"Set it and forget it!"  LOL.  Reminds me of the "Popeil pocket fishermen"; we have the "Popeil pocket economy" - it fits in your pocket, and even better, it is invisible and has no working parts!

Sun, 12/07/2014 - 14:43 | 5526185 Notsobadwlad
Notsobadwlad's picture

I would prefer they see salvation rather than hell. Not my choice, but theirs and God's.

Sun, 12/07/2014 - 16:04 | 5526342 shovelhead
shovelhead's picture

That's why everyone should have stayed Catholic.

If you get that last confession in, then you're good to go.

You might have to do a 3-nickle stretch in Purgatory for being married and tearing off some strange or rolling back the odometer when you were a kid, but all in all, it beats the cosmic fryolator.

Look at it as Heaven's waiting room.

Protestants screwed themselves out of the best deal around.

Sun, 12/07/2014 - 23:51 | 5527465 10mm
10mm's picture

Nice try. But a Catholic named Luther had a awakening. Kinda what Smedly Butler had and Red Pill takers. Walk into a Catholic church, slide into a pew and attempt to retrieve a bible.

Sun, 12/07/2014 - 22:59 | 5527333 JeffB
JeffB's picture

Not really.

Repenting means that you're truly sorry. That if you could turn the clock back you would make the right decision. That you have every intention of changing and amending your ways, & will try and avoid even the near occasion of sin.

Saying you're sorry while crossing your fingers and plotting your next sexcapade is NOT repentence.

Sorry.

Sun, 12/07/2014 - 14:13 | 5526102 blindman
Sun, 12/07/2014 - 13:37 | 5526014 kchrisc
kchrisc's picture

Uncork the guillotines.

An American, not US subject.

Sun, 12/07/2014 - 13:37 | 5526013 blindman
blindman's picture

JJ Cale & Leon Russell at the Paradise Studios, LA 1979
https://www.youtube.com/watch?v=IaHxPi9dM7o

Sun, 12/07/2014 - 13:26 | 5525984 messymerry
messymerry's picture

Bruno dude! Talking Heads. You're awesome!!!!

Your article is savagely funny and oh so true. I don't think this party will last another two years. People are getting tired and having difficulty coping. Add to the above so very well described financial/economic shenanigans, the unrelenting pressure of popuilation growth and the "Information Age" and you have an explosive mix. Meanwhile, the dipshits at the top are madly shaking the bottle as they drunkenly insult the dance floor.

Rave on dipshits, there's 500 of us for every one of you, and the party is almost over...

Sun, 12/07/2014 - 12:16 | 5525816 didthatreallyhappen
didthatreallyhappen's picture

HEY, THANKS FOR THE LARGE PRINT

Sun, 12/07/2014 - 06:57 | 5525467 Squid-puppets a...
Squid-puppets a-go-go's picture

well, whatever

psssst: as of this friday gone, theres only 20 tonnes of elligible gold left in Comex

720 000 oz - thats all we have to take delivery of, and the beast is dead. pass it on. 

http://srsroccoreport.com/

Sun, 12/07/2014 - 01:31 | 5525286 USisCorrupt
USisCorrupt's picture

The New World has arrived in all its Glory.

 

The Cops will make sure it holds together.

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