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The Fed Is Out Of Options, "QE Is All It Can Do Here" Art Cashin Predicts
Weakness in commodities "is not transitory," Art Cashin tells CNBC, if you look at things like copper, "this is really a deflationary push... where things can get a little out of control." The Fed says they must get off zero interest rates because,, as Cashin notes, "they can't do anything else." However, as the venerable floorman who has seen it all explains, "they're in a kind of silly loop where they did QE expecting a reaction... didn't get it.. and then they did QE again because it didn't live up to their expectations... but I think they have no other options, if things get negative on the economy, QE is all they can do."
Which is exactly what we said a month ago...
GUNDLACH SAYS IF FED TIGHTENS, WILL HAVE TO CUT AGAIN. Actually it will have to do QE4 which is the whole point
— zerohedge (@zerohedge) July 15, 2015
Even the CNBC anchors realize the folly of Fed ways now, noting "but aren't they just pushing on a string?" Indeed they are and as Scotiabank's Guy Haselmann noted earlier, it will cost us...
Fed policy today and over the past several years may prove to be counter-productive in the long-run.
Sustainable growth is best served by an interest rate where capital is deployed efficiently. The long-run consequences of policy during the past few years could easily mean lower long-run potential growth and inflation. Today’s consumption and market speculation was paid for with huge amounts of accumulated debt.
Tomorrow’s revenues will have to be steered toward servicing that debt. Future revenue will also have to replenish the deficient levels of R&D and infrastructure investment of the past few years.
Cashin explains The Fed's bind...
h/t Lesley M
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QE is good for paper assets like stocks and bonds and even real estate, which is a paper asset because of the debt necessary to purchase any. My guess is that stocks go higher. With a Shiller PE of 27, although over-valued, it has a lot of room to run until it hits 1999 or 1929 levels. As crazy as it sounds, Dow 20,000-25,000 is not at all unlikely. Commodities will continue to slide.
When interest rates go negatve and stocks hit 22,000 and gold miners go bankrupt... wake me up. That will be the time to go into hard assets. Until then, betting on gold is a losing proposition.
Anyone who stayed in shitastic MKE and didin't move I would not trust. Not a good track record for sound decision making.
"Until then, betting on gold is a losing proposition."
In US Dollars yes, in periferal currencies not so much. In dollars the price of gold is down some $900 pr. oz. In many other currencies the price of gold is hovering close to 2011 highs(down 10% or less).
when it goes, you'll want some, but if you don't have it you won't get any.
Literally dropping money out of the sky would be more effective than QE at actually stimulating economic growth, and with less moral hazard. This next round might fail even worse though, because the corporations themselves can hardly justify taking on any more debt.
Two poisons. Choose wisely.
1. Keep rate zero bound: risk destroying the pension plans of all kinds, all insurance companies, all long term commitments, etc. In short, keep your limbs, but you might die.
2. Raise rates and let the failures fail. cut off your limbs, but you sure will live.
Choose wisely......but, hey, I already knew the verdict: die, not live.
I think there thoughts are this for each option:
1. Pensioners can get new jobs (walmart greeters) or go on SS. Insurance companies will go broke but someone else will step in.
2. Raising rates and creating failures creates deflation...this is the feds Kryptonite, holy water, silver bullet. This will never happen.
Think it is option #1 and they will keep the foot on the pedal until it 'slings a rod' or runs off a cliff.
No,
They keep rates zero bound, or initiate the reckoning immediately. What do you think they'll choose?
Art plays both ends against the middle.
And I believe his real last name is Cash In.
A used car salesman who made it big fuckin'other people. That's all.
you really don't now what the fuck you're talking about dude. Stop while you're ahead.
Obvviously QE is all it can do, it's all it could ever do!
Psychology 101- Behavior Experiment
You start with a cage containing four monkeys, and inside the cage you hang a banana on a string, and then you place a set of stairs under the banana.
Before long a monkey will go to the stairs and climb toward the banana. You then spray ALL the monkeys with cold water. After a while, another monkey makes an attempt. As soon as he touches the stairs, you spray ALL the monkeys with cold water.
Pretty soon, when another monkey tries to climb the stairs, the other monkeys will try to prevent it. Now, put away the cold water. Remove one monkey from the cage and replace it with a new monkey.
The new monkey sees the banana and attempts to climb the stairs. To his shock, ALL of the other monkeys beat the crap out of him. After another attempt and attack, he knows that if he tries to climb the stairs he will be assaulted.
Next, remove another of the original four monkeys, replacing it with a new monkey. The newcomer goes to the stairs and is attacked. The previous newcomer takes part in the punishment - with enthusiasm -- because he is now part of the "team."
Then, replace a third original monkey with a new monkey, followed by the fourth. Every time the newest monkey takes to the stairs, he is attacked. Now, the monkeys that are beating him up have no idea why they were not permitted to climb the stairs. Neither do they know why they are participating in the beating of the newest monkey.
Having replaced all of the original monkeys, none of the remaining monkeys will have ever been sprayed with cold water. Nevertheless, not one of the monkeys will try to climb the stairway for the banana. Why, you ask? Because in their minds, that is the way it has always been!
This is how today's House and Senate operates........ AND.........this is why, from time to time, ALL of the monkeys need to be REPLACED AT THE SAME TIME! DISCLAIMER: This is meant as no disrespect to monkeys.
Face it, Peter Schiff is correct.
It's QE4, then QE5, QE6 until there is a currency crisis.
The Fed will get more inflation than they bargained for.
No shit feckin Sherlock. I always appreciated Art Cashin but he has been irrelevant since 2008, when the immoral TARP bailout and subsequent QE theft programs began.
There was noting left for Art to analyaze, or anyone for that matter, once QE started. the only issues was how many QE's there was going to be.
Art was always CashIn , now he sounds like Art CashOut.
When does this finger nail, water boarding cease? This constant delaying of truth? This propping up of the domno fall?
It is only Tuesday and I am melting into Friday gin. WHEN 99% of people are not let in on the secrets and machinations. Guess what we got a problem.
This is beyond belief. And accelerating into way beyond belief.
Its like a snake eating its own tail, thats eating another snake who's eating its own tail, thats eating a.....................................................
Beautiful fractals of nature
We call that newsoutlet
Inflate or die
Most of us don't need Art to tell us what we already know. We have been saying the same thing for the better part of 2 years. Of course he's on TV.
I'm going to start using we for I because it sounds so much better and I can sound like to paraphrase Cletus Del Roy Spuckler, " One of them TV analcyst queers"
We have been saying the same thing for 8 or more years. there fixed it for you.
I love Art Cashin. He coined the expression "money heaven." Which is where money that is lost goes.
I'll bet after QE from the Fed, he's on the trail of "money resurection."
QE is All it Can Do Forever. Fixed it 4 U
.
(the military may have a different idea.)
Hey, I wonder if Art knows whether the Fed has to inform the public every time it prints $10 trillion or under?
The FED: spending [by devaluation] other people's money/savings/entitelment as long as there are any left...
Another option is not saving the market. Burn the electorate for going Trump.
Anyone bothering to vote in a presidential election at this point is an idiot. Trump is just the exclamation point.
I told her it would not hurt with a proper lube and Quantitative easing. I told her that she would enjoy the ride.
A little off the subject but... I would certainly like to to know that with that chick more intimately.
World War III --the war to end all banking.
"The Fed Is Out Of Options, "QE Is All It Can Do Here" Art Cashin Predicts"
============================================
Is'nt that what Marc Faber predicted six years ago?
I just wrote a waltz...
1,2,3... 1,2,3.
All I can do... is all can do...
is sing my old songs...
to somebody new.
economics,
one oh one.
man
.
one month ago
we stole the show
.
as time goes by
we loosen our fly,
.
swingin' in the breeze
we check for flees
discovering none
expansion must come.
.
or die, come or die.
.
p ^tm anywaypoems.
(a gender specific perspective)
What's wrong with that ?
Free Money for the Banks, and it's the Public that pays the price.
If it was the other way around, there's is no way in 'ell they would even contemplate thinking about thinkin' 'bout it.
One might think at some point people might stop talking thier book. But nope. Art fucking knows the fiat game and where we are at in it.
Technically, is it still "quantitative easing" at this point?
The drug cartels do a better job of managing their finances.
quantitative implies the intrinsic trait of being able to be measured - this bullshit - not so much
I knew there was a punch line, and that being robert reich.
When interest rates are held too low for two long, instead of inventing the next mouse trap, companies borrow money and buy their own shares back, and pay dividens with the borrowed money. They don't hire anyone new, and existing jobs are out sourced, no innovation by long term invested employees, just fill the job title get paid and repeat.
It's more profitable to buy and sell pieces of paper than do any actual work. That is where I see us now.
Now inflation ... if we take out iphones, just about everything we really need is rising rapidly. food, medicine, housing, utilities all rising must sharper than wages.
gas is down for now, but it is really. I remember paying 1.20 not too long ago.
A few grand in the pockets of every citizen should get the ball rolling again.
The entertainment industry has prepared us, kinda for what we'll see here. Instead of the "Walking Dead though it will be the running hungry. The outcome will be the same, we will have to kill our fellow man or be eaten.
Why isn't the beefcake in zerohedge's Twaddle avatar wearing a bowtie? Jesus, talk about circus. The whole goddamn thing is rotten.
QE doesn't actually increase the circulating money supply. It vectors into financial paper, and that paper trades with itself usually outside of the real economy. It also vectors into banking reserve loops. Why? The fed has a window where they interact with private banks, the overnight market. It is there that the swaps/trades take place. The FED simply creates keyboard money to swap for a bond or TBill.
This swap action definately vectors into channels that are not productive; this action pushs asset classes related to bonds/Tbills.
Debt instruments then move toward the FED expanding its balance sheet. It also makes some vacuum in the supply where new debts might be hypothecated. Removal of old debts makes room for new ones. In actuality it was financial Casino that borrowed cheaply to then do carry trades, it was also captains of industry that borrowed from banks cheaply, to boost stock prices, to then pad their options. None of this financial engineering is actual wealth building.
The FED also pays for money held in reserves, further keeping the "trap" going.
Banks do not lend reserves. The reserve loops are mostly for clearing checks. Reserves help the capital position of banks, which help them lower interest rates . The transmission mechanism of QE money into the general economy is weak. One transmission path is for tbtf primary dealers to make a new loan, to then buy new Tbills on the primary market.
An independent FED really means that it is captured by private interests - wall street and its owners which are TBTF banks, and behind TBTF are ancient money powers ...including City banks, owned by Rothschilds. City is code for london, a banking center.
The Fed advanced $27 trillion to financial institutions through the TAF (Term Asset Facility), the TALF (Term Asset-backed Securities Loan Facility), and similar facilities. A new facility could be constructed easy enough.
A new infrastructure facilty could be opened up, allowing FED to inject into municipalities by trading for muni bonds. Remember, double entry ledger mechanics require a swap of some sort. A facility to inject in this way would soon allow people to work their way out of debt, especially as jobs were created to improve infrastructure. Muni bonds could be long term at low interest rates.
The Best solution is to scrap the debt based system of course. But, there are sneaky ways to make the debt system work, and the powers that be, are not even trying sneaky solutions that will help. A new facility does not take much imagination; so where is the imagination of the FED?
Financial Oligarchy really is peopled by psychopaths.
If the country really wanted to, the TREASURY could spend directly ...greenback style at ANY TIME. Congress has the power.
Congress also has the power to convene a court of law, and then start examining fraudulent debts under fradulent conveyance laws. Fraud should be prosecuted, not rewarded.
Get to work politiicians ...you dirt bags.
QE money does eventually circulate into the real economy. Just in the form of higher prices. Been that way for many years. Quantative Easing simply means bond buying on a a large scale. CPI even shows that, and credit even shows that. Money printings benefits the first owners of the new money. That's it. You make it seem like new money creation does not ever reach the consumer, or working class. IT DOES. Just in a form of higher prices.
The FED pays interest on money held in reserve loops, to then prevent a rate collapse to zero.
But, there is no direct path from reserves loops to buy things, it is separate. But, I bet an insider would be able to find ways they cook the books. Mostly the keyboard money enters the money supply when it trades for a bond. These bonds are pulled out of both the primary and secondary bond market, as they eventually find that keyboard money.
Primary dealers are supposed to make the market ready for FED purchasing, so it is the primary dealers that collect the cash in the first place in advance of the bond buying. I suspect that the primary dealers are making loans to themselves, and then settling later with the FED.
One would have to be an insider to see the exact mechanics.
The FED should be beneficial, and should work. It should have the long-term view of a narrow band of objectives -inflation and inflation. Employment is Government's problem. They should also get to audit the Government's books and enforce a balanced set of accounts every year. The $18 trillion should be written into that, paid off in 50 years.
All they have to do is remove 2/3 of the bankers from the FED, and replace them with outsiders.
Overnight.
All we have to do is either work harder, find more natural resources, or reduce our standard of living -better still all three.
There's a 99.99% chance the Federal Reserve will do QE4, QE5, QE6 (if they make it that far before it all collapses.
Once people realize the Fed is stuck doing 0% interest rates and QE_to_infinity they will at some point lose faith in the dollar.
Debt saturation and monetizing debt to infinity is a bitch.
Joining the economic status of Zimbabwe, Venezuela and Brazil will be painfully evident at some point.
Nobody is raising rates EVER!! If they do they cause an immediate collapse, and insolvency of sovereigns and the monetary system period. They fucking know that too. That's why they've been threatening to raise rates for years without actually doing anything. They CAN'T!!!!
raise rates = immediate detonation
Removed duplicate post.
Predicting QE4 to QE96 assumes that everything stays in realtive equilibrium. That is highly unlikely. At some point an event will take place that is not relevant to a QE strategy. With no more CB confidence inflating tools available, investor confidence quickly collapses. Because nearly every player is all in on the financial asset trade, there is no way to rebalance to a new equilibrium without clearing the table.
I know there are a lot of Peter Schiff haters here...
...but he's been calling QE4 for at least 6 months now (poss much longer).
How all this printing doesn't eventually end in hyperinflation is beyond me.
Tick tock, tick tock....
wrg,idt
Sgt Toe, if the estimated 15T of FED QE entered into the real consuming part of the economy, that would have created high inflation.
In 2009 US GDP was 15 trillion.
Don't be a dumb ass. Where the money vectors and how it interacts matters a lot.
Anybody with a two digit IQ could see if that at least 15T was spent at the base of the population, there would be no private debts, and likely it would have overstimulated the economy.
The overseas windows for emergency lending in 2008 would push FED lending beyond 15T. The FED is somewhat opaque as they refuse to be audited, and what they do is often only revealed later.
Much of the working economy is in DEPRESSION. If long term unemployed are counted, the actual unemployment figures is 27 percent according to shadowstats.
There is sector inflation, usually related to FIRE (finance, insurance and real estate)
A lot of people don't like hearing what I say, because they have pre-conceived notions about how things work, and those notions are often WRONG. Hell, most economists think that money is a neutral veil, witness Paul Krugman ... and yes, he would be a dumb ass too.
A debt money system has certain rules that predicate its behavior. Double entry mechanics means that one persons debt asset is another person's liability.
A debt money system has certain rules that predicate its behavior.
Could you elaborate on that. It seems there is some delay between the creation of the debt and its liability?
A debt money system has certain rules that predicate its behavior.
Could you elaborate on that. It seems there is some delay between the creation of the debt and its liability?
Debt as money doesn't flow, it surges in an accounting periodicity. It's period is a function of the debt instrument that recalls it. When the debt instrument and the credit as money get together they destruct into nothing. What came from nothing returns to nothing.
Yes, there is a time shift, especially if the debt instrument is a long term. The credit will spin in the supply for longer allowing a transaction medium. So, one can see that there are different kinds of credit.
Try telling that to an economist, or even some of the people here who think they are smarter than they are, like Sgt. Toe above.
The double entry ledger also means that one side of a ledger is tied to another and that is tied to another and so on, which makes a dominoe.
This domino(e) can cause contagion of destruction, which is why bankers freaked out in 2008. If Joe doesn't Pay Maria, then Maria cannot pay Brian and so on. Eventually the debt instruments, which are held by bankers become nonperforming. Then the bankers are not getting paid.
If one steps back just a bit and looks at the crazy system, it can be seen that bankers should not hold debt instruments, and that dominoes of contagion should not be present in a system. Also, money that surges and disappears is not conducive to any economy that has a base level of activity and has some savings needs.
Scrap the damn private as credit banking system. Even when somebody like me comes here and says, "Hey, you can open a facility to QE into municipal bonds easy enough, there is silence or disbelief."
There is no doubt at all, that zero interest loans would stimulate activity in municipalities in this fashion, and it would lead to general employement and activity. This long term "credit" would eventually pay down private debts. OK. FED are you listening. But, private bankers want a compliant debt burdened society - so they won't do it. Their business model is selling debt - get it. They want the usury. They live for the usury.
It is private debts that were built up in the bubble years causing dislocations and problems, called a balance sheet recession. One cannot fix a problem if they cannot even diagnose it.
The double entry ledger is the balance sheet, where the assets were driven up (housing) to unsustainable levels. The ledger is now recalling its former credit and this MAKES depression/recession. The credit is recalled to destruction, making this part of the transaction economy depressed. We are so damn stupid we don't even diagnose the problem, and the problem is a balance sheet recession.
Yes, the double entry ledger predicates an output. Right now, land and other fungible assets are hypothecated, thus the FIRE industry creates the credit needed for industry - a mismatch.
Scrap the private/credit system. We need a real intermediated money system. The private credit system is a private playground for rentiers, who then harvest whole populations. A surging disappearing money supply that also is guranteed to drain faster than it sources, is insane.
sovereignmoney.eu
Thanks. I have wondered about that aspect from time to time. I just assumed its was hidden in the magical derivative pools until a sucker could be found.
The only QE that will work is the only QE that the powers that be won't do. That is debt free money to the masses to first and foremost pay off their debts. Anything left over can be spent. Then break up the banks, cut government and military at least in half, deregulate so that starting a business is not an exercize in futility. Oh and go back to actually supporting freedom and pursuit of happiness.
Maybe at that point the light at the end of the tunnel would not be an approaching train.
Qe works so dam well that Canada is considering it!
When something fails in every other country, You must try it in your own country.
http://www.macleans.ca/economy/economicanalysis/if-the-economy-worsens-g...
The only QE that will work at this stage is a general debt forgiveness directly to the US consumer in order to expand consumption hence trigger inflation. This can take the form of a general amnesty on taxes or alternatively a direct tax refund. Definitely not a corporate refund but strictly consumer/individual tax payer refund.
Its called the road to hyperinflation stopping off at stagflation street on the way
aka limp dick humping
USD / RUB 65,05
http://www.forexpf.ru/chart/usdrub/
3m51s " at some point you're pulling [sic] on a string"
what a dick
If QE is their only weapon (%$?"XX*), then they have to do it differently. They have to do it down at consumer level by scrapping income tax. QE to the banks and big corporations was a hopeless idea, there was no trickle down. And in fact unemployment went up with it -they are not "where they want to be on inflation", they have picked a false unemployment no. and are trying to pass it off as a true value.
Then they have to pull back manufacturing jobs to US, by changing the tax structures for big business.
Every other road leads to disaster -and slavery.
The big banks are the Fed's major shareholders...of course QE will be given to the banks. And the banks will buy Treasuries as China dumps them... and short paper gold to protect the dollar...as usual.
But your idea is better if they were really wanting to improve the economy.
TLT suggesting QE4?
http://goldenopportunitytrading.blogspot.com
How does it feel living in the corner of Hell?
There is a book called Planet Ponzi by Mitch Feierstein. It explains the financial system and our FIAT money system perfectly. It is a Ponzi scheme, plain and simple. This is due to the component called interest. By the introduction of Interest, more money has to be created. In his own words "YOU CANNOT TAPER A PONZI SCHEME" Given today’s economy and all the central bank intervention, fraud and manipulation, I cannot predict the future, or how the markets will react given economic theory doesn't follow reality anymore, but one of the few things I am 100% certain of and agree with the author, you cannot taper a Ponzi Scheme. So QE to infinity will continue indefinitely until the system implodes.
The real question is what will they call it this time? Cinderfuckingrella gets my vote.
Wonder if they'll put Kaitlyn on the new $100,000 bill?