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They're Gonna Need A Bigger Balance Sheet
Submitted by Jim Quinn via The Burning Platform blog,
Driving home from work on Friday night I found it terribly amusing listening to the “business journalists” on the local news station trying to explain the 531 point plunge in the Dow and the 1,105 point plummet from the Tuesday high. The job of these faux journalist mouthpieces for the status quo is not to report the facts, analyze the true factors underlying the market, or seek the truth. Their job is to calm the masses, keep them sedated, and paint the rosiest picture possible.
The brainless twit who reported the stock market bloodbath immediately went into the mode of counteracting the impact of what was happening. She said the market is overreacting, as the country has strong job growth, low inflation, a strongly recovering housing market, and an improving economy. The fact that everything she said was a complete and utter falsehood was exacerbated by her willful ignorance of the Fed created bubble leading to the most overvalued stock market in history. How can these people pretend to be business journalists when they haven’t got a clue about stock market valuations and just say what they are told to say?
Anyone who listens to a mainstream media pundit, talking head, or spokes bimbo deserves the reaming they are going to receive. They are paid to lie, obfuscate, spin, and propagandize on behalf of their corporate media executives, who are beholden to Wall Street bankers, mega-corporations, and the government for their advertising dollars. The mainstream media is nothing but entertainment for the masses, part of the bread and circuses designed to distract the dumbed down, iGadget addicted, ignorant masses.
The entire stock market bubble has been created and sustained by the Federal Reserve and their QE and ZIRP schemes to prop up insolvent Wall Street banks, enrich corporate executives, and produce the appearance of a recovering economy. The wealth was supposed to trickle down to the masses, but the trickle has been yellow in appearance and substance. The average American is far worse off today than they were in 2007, with the Greater Depression Part 2 underway.
The Fed balance sheet currently stands at $4.5 trillion. Seven years ago this week it stood at $931 billion. Seven years before that it stood at $641 billion. From August 2001 through August 2008 the Fed grew their balance sheet by 45%. This period encompassed a recession, dot.com implosion, and a housing crash. Since 2008 the Fed felt it necessary to increase their balance sheet by 383% even though we have supposedly been in an economic recovery for over six years, with unemployment back to 2007 levels, corporate profits at record highs, and everything back to normal if you listen to the mainstream media.
Someone needs to explain the correlation between the Fed balance sheet and the S&P 500 to the bubble headed spokes models on CNBC, Fox, CNN, and MSNBC. The economic recovery is nothing but a debt saturated fraud, propped up by subprime auto loans, 7 year 0% auto financing schemes, enslaving young people in student loan debt that will never be repaid, pretending unemployed people aren’t unemployed, under-reporting inflation to suppress wages and inflate GDP, and artificially inflating stock, real estate, and bond markets with negative real interest rates.
Anyone who doubts the sole purpose of QE1, QE2, and QE3 was to boost the stock market and create the glorious “wealth affect”, is either blind, dumb or a direct beneficiary of the scheme. When the S&P 500 bottomed at 666 in March 2009, the Fed balance sheet stood at $1.9 trillion. In June of that year, the official end of the recession, the Fed balance sheet stood at $2.1 trillion. If the recession was over in June 2009, why would the Fed possibly need to more than double their balance sheet over the next five years? If the crisis had passed, as we’ve been told by the mainstream media, politicians, and central bank academics, what possible reason would the Fed have for pumping heroine into the veins of the criminal Wall Street cabal?
The reason is quite simple. The Fed is owned and controlled by Wall Street. Do you need any more proof than knowing Helicopter Ben makes more ($300,000) from a sixty minute lunchtime speech at a Bank of America banker bacchanal than he made per year as Federal Reserve Chairman. The chart below provides the remaining proof. From the March low of 666, the S&P 500 went up by 200%, to over 2,000 when the Fed reluctantly ended QE3 on October 29, 2014. Do you think it was just a coincidence the Fed balance sheet also expanded by 200% since QE started in late 2008?
The mouthpieces for the oligarchy have contended this was all just a coincidence. They have been told to spread propaganda about fundamentals, economic recovery, job growth, and rising earnings per share. Is it also a coincidence the S&P 500 is exactly where it was on September 30, 2014 as the Fed stopped pumping heroine into the arms of Wall Street traders? The market went up 200% in five years, in virtual lockstep with the Fed balance sheet. The Fed balance sheet has been virtually flat for the last year and the S&P 500 is virtually flat in the last year. No correlation there. The mainstream media needs to distract you from seeing the truth. Look over there at Caitlyn Jenner. How about that Trump. Black Lives Matter. Time for fantasy football. Whatever you do, don’t look behind the curtain and realize the people running the Federal Reserve are corrupt, captured, and clueless on what to do next.
The Great and Powerful Fed has had the curtain pulled back to reveal a doddering old lady and a gaggle of flying monkey academics attempting to bluster their way out of the box they have created for themselves at the behest of their Wall Street owners. The global economy is in free fall and the Fed talking heads are still speechifying about a lousy .25% increase in the Fed Funds rate, as if it means anything to anyone in the real world of paying bills, going to work, buying groceries, and living life. Do these pompous pricks actually think a minuscule increase in an obscure interest rate will impact the average household whose real income is lower than it was in 1989? The gall of these academic pinheads is breathtaking to behold.
The only thing propping up our stock market over the last year has been the insane lemming like behavior of corporate CEOs across the land, borrowing at record low rates thanks to the Fed, and using the proceeds to buy back $2.3 billion of their own stock in order to “enhance shareholder value” and of course enrich themselves through their stock incentive compensation plans. Our market had also been seen as a safe haven by Chinese billionaires and rich Europeans seeking shelter from the storms sweeping across their continents. Last week’s stock market implosion will scare the CEO lemmings into halting their buybacks as they calculate the amount of value destruction they inflicted on shareholders, while the interest on the debt keeps rising.
You can be sure the discussions among the elite members of the Deep State – Fed central bankers, foreign central bankers, the heads of the biggest Wall Street banks, Treasury Department apparatchiks, Washington politicians, heads of the corporate media outlets, influential corporate CEOs, and powerful billionaires – are happening this weekend in an effort to keep their debt based ponzi scheme going. They know only one solution – print more money (QE4), increase government debt levels, fake the economic data, and utilize their propaganda outlets to calm the masses with more lies.
Can these desperate measures work again? Maybe temporarily, but their impact lessens each time they roll them out. They will never voluntarily abandon the addiction to credit expansion because it is the only thing sustaining the wealth of the Deep State. These sociopath arrogant egotists would rather destroy the world financial system than admit they were wrong. Ludwig von Mises explained what will happen many decades ago.
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises
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sigh.
mises.
what a nincompoop.
the solution is to expand credit *more*.
that way there is never a collapse.
ever.
just expand more.
significantly more.
hugs,
paulkrugman
You want I break some windows?
QE if you want to help the rest of the world, unipower US if you dont.
The suffering level around the world is skyrocketing.
May I join you? I have a wrist rocket and a can full of pachinko balls....
CNBS actually had special live programming tonight to reassure viewers they're on top of this. Last time they did that was 2008, when they thought shouting "stocks closed well off the lows" repeatedly would fix everything.
CNN smears Trump with ‘white power’ allegation
http://tinyurl.com/pssdxpq
What is amazing is how simple the credit expansion trick is and how the boom bust cycle is never taught in universities. 102 years of covering up the truth. Pretty fucking amazing when you think about it.
Then again I have been run out of every university where I have taught the Austrian business cycle to students. Well maybe not so amazing.
Maybe just old fashion fascism.
It's staggering how effective propaganda is. Otherwise semi-intelligent people can buy into just about anything once the programming has metastasized in the prefrontal cortex. The combined effects of K-12 and university indoctrination, "news" and "information" indoctrination, and entertainment indoctrination are awesome to behold. Most of the people I know and care for are utter sucker fools for the corporatocracy. It doesn't help that most of them are college "educated"... indoctrinated beyond all help, apparently.
I was thought this in high school by card carrying socialist who even mentioned that lowering interest rates and ramping up debts is only a short term stopgap and becomes less effective the more open and interconnected the world ecomony gets.
We also learned in history class that how, if you print too much money, you cause a world war.
The special little part that none of the talking heads even want to think about is all the magic paper the shadow banking sector has created. I see derivatives crashing to the ground taking out whole sectors of the economy all at once. All the printing in the world cannot save us if Armageddon comes to the market....
Good get, hadn't heard that yet. Had to come up by somebody in the MSM, Trump is getting too big. Sink the Bismarck.
Funny how black power and Hispanic La Raza ("The Race") are encouraged and allowed but anything that suggests whites ought to have equal civil rights is strictly forbidden, else white people might get all uppity. Al and Barack can't stand uppity white folk.
But everytime there's a 'racial' or 'civil rights' incident it turns out to be a malicious hoax by a progressive hanging a noose on their own door or lesbians burning down their own house for the insurance money.
As said elsewhere on this site today:"you can't print trade!"...
VLCCs of cash ain't gonna keep this ship afloat!
Another $17 Trillion? They just might do it.
It would be madness, but we're there already.
Jim Quinn has come out with the best summation of all lately. This is what I want to see when I read an article.
10pts, Jim, you nailed the ethos of this weekend. I thought the same thing Friday night.
Fuck it...I'm just glad the scary faced kid is gone from my list of ZH advertisements.
Give me moar!...lol.
(Sigh)
Tell ya what my "progressive Keynesian friends"...when your tenure check stops, when your EBT stops and the lights go out, when your three piece suit is in tatters and you meekly show up at my door half naked & starving and begging for forgiveness and food without your family in tow, know this...it will be quick.
Its the very least I can do, bank it.
Ditto! Somebody once told me you can take a progressive Kenyan out of Kenya but you can't take a progressive Keynesian seriously.
Too bad they reversed split my tvix to nothing last month
Coincidence. .. not
Buy the dip
Which Dip? This one or the next one?
$35 oil will be a start
CNBC: "Time to buy? Our next guest thinks so!"
CNN today in the early afternoon: Story "Market downturn last week" Talking head woman " This can be a great buying opportunity. Tomorrow, look for some bargains, and lock them in."
I shit you not! I heard it!
Can't do much worse than the ZH hard assets/commodity portfolio
I am converting all of my mutual funds into cash. To protect yourself from the oncoming economic tsunami, consider using ETFs to short the Dow , NASDAQ and SP.
Using ETF's to go short has been a ticket to zero. You better have your finger on the trigger when this thing snaps back.
It looks cloudy to gloomy outside.
Finally.
Even AAA said gas will fall below $2.00 nationwide by October because of plunging demand.
It's paradoxical, right? How can a collapse in demand lead to lower prices? It's so unfashionable ... it's downright ... unpatriotic!
There's no way I'm driving to the mall or FF places when gas is this cheap!
man I remember the days we used to just go joyriding for the hell of it
The wealth is strapped to the brain dead "greatest generation" and the media simply the obligatory sycophant class. Dumbest tranche of human beings the world has ever produced.
The battle will be between the republican controled house wanting tax cuts as a stimulus and the administration and democrats wanting to spend... the fed will accomodate both and that's what we will get.
What we really need is those wizards on Wall Street to come up with a brilliant new financing vehicle that will enable the crash to be put off for a few more years... or at least until the current elites can cash out.
Maybe they can figure out some new way to get cash now without having to be concerned about paying it back till later...hmmm.
There is very little to worry about. The Tea Party is actively reigning in spending and defunding the wars.
/s
Actually the federal reserve QE and balance continued to rise, but they shifted most of the action to others to hide the facts and pretend, pretend, pretend.
Well, maybe even fools will realize that was pretend now.
Nah, probably not.
Bingo.
No halt in balance sheet expansion. It is simply hidden.
Clue is that National debt is flat for half a year. Not possible without debt pay down. Debt pay down not possible while running a deficit.
SHELL GAME.
Bingo.
No halt in balance sheet expansion. It is simply hidden.
Clue is that National debt is flat for half a year. Not possible without debt pay down. Debt pay down not possible while running a deficit.
SHELL GAME.
Obummer, he who self-proclaimed that he is good at "killing people"; bit the hand that had been feeding his fantasies.
Three weeks ago, the Obummer announced retaliation against China instead of investigating and prosecuting the crony-capitalist corporate welfare idiots who designed, installed and allegedly secured various government IT systems.
http://www.washingtontimes.com/news/2015/aug/1/us-will-retaliate-against...
Big Mistake.
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We need a bigger balance sheet...