David Stockman Offers "More Proof Of Janet Yellen's Idiocy"

Tyler Durden's picture

Authored by David Stockman via The Daily Reckoning,

During the last 129 months, the Fed has held 86 meetings. On 83 of those occasions it either cut rates or left them unchanged.

So you can perhaps understand why Wednesday’s completely expected (for the last three weeks!) 25 bips left the day traders nonplussed. The Dow rallied over 100 points that day.

Traders understandably believe that this monetary farce can continue indefinitely, and that our Keynesian school marm’s post-meeting presser was evidence that the Fed is still their friend.

No it isn’t!

Janet Yellen’s sing-song gibberish was the equivalent of a monetary DEFCON 1, alerting all except the most addicted Kool-Aid drinkers to get out of the casino.

Our monetary politburo has expanded its balance sheet by a lunatic 22X during the last three decades and in the process has systematically falsified financial asset prices and birthed a mutant debt-fueled of simulacrum of prosperity.

But once it begins to withdraw substantial amounts of cash from the canyons of Wall Street as per its newly reaffirmed “normalization” policy, the whole house of cards is destined to collapse.

There will be a stock market implosion soon, and that will in turn generate panic in the C-suites as the value of stock options vanish. Like in the fall of 2008 — except on an even more sweeping and long-lasting scale — corporate America will desperately unload inventories, workers and assets to appease the robo-machines of Wall Street.

But there is nothing left to brake the casino’s fall.

If the money market rate conforms to the Fed’s latest command and settles at 88 basis points, it is still effectively at the zero bound. Our monetary politburo is thus still out of dry powder — except for the nuclear option of QE4, which Yellen herself made quite clear would never happen until after the next recession is already underway.

Yet by then it will be too late — way too late. That’s because the market is priced as if the business cycle has been outlawed and as if the feckless band of Keynesian pretenders who have seized control of financial markets have ushered in the Nirvana of permanent full-employment. World without end.

Needless to say, they haven’t because they haven’t repealed the law of supply and demand. That is, if the Fed plans to keep raising until rates until they reach 3.0% by 2019, it will have to suck massive amounts of cash out of the financial markets.

So doing, it will drive long-term yields substantially higher and thereby obliterate the ultra-low cap rate delusion on which the entire regime of Bubble Finance is based.

In fact, in a blathering response at her presser about the pace by which the Fed intends to shrink its bloated $4.4 trillion balance sheet, Yellen proved she is clueless about the financial firestorm our rogue central bank is about to unleash.

She claimed that the Fed could implement 3-4 money market rate increases a year, while deferring the shrinkage of its balance sheet into the indefinite future.

But that it most assuredly cannot do.

With a staggering overhang of $2.1 trillion of excess reserves in the financial system, even our vaunted monetary politburo cannot command the tides to recede. If it wants the money rate to rise on its appointed path through 2019, it must drain loads of cash from Wall Street.

At the same time, the other event from Wednesday — the freezing in of the Federal debt ceiling at $19.9 trillion — will means that the cash drain will soon intensify.

That’s because the U.S. Treasury has blown a massive wad of cash in order to pay its bills during the last few months, but will soon be back into the market borrowing hand-over-fist. That is, draining cash from the dealer market as it floods Wall Street with new bills, notes and bonds.

At the peak level of its cash hoard on October 24, the U.S. Treasury was sitting on $482 billion of cash.

But as of Wednesday, the Treasury’s cash balance stood at just $77 billion, meaning it burned through $305 billion of cash in just 51 calendar days since the inauguration, and nearly $360 billion since the October 24 peak.

But now that the debt ceiling is again frozen into place, an explosive political crisis is coming soon.

There is simply no pathway to a Congressional majority to raise it until Washington reaches the brink of political crisis and has gone beyond.

The prolonged and turbulent debt ceiling crisis that is coming down the pike is surely not “priced-in.” As I have said, the robo-machines can read headlines, but they can’t read the Washington tea leaves.

The fact is, what is impending is nothing like the 2011 crisis when Obama’s Keynesian advisors scared the wits out of him about a debt rating downgrade, and the GOP backbenches were set-up for a patented betrayal by House Speaker “Lawnchair Johnny” Boehner.

This time there will be no timely compromise.

That’s because the Deep State and its Democratic shills are attempting to re-litigate the election, while the Donald has declared war on them in turn — compounded by his aggressive actions on the immigrant ban, deportation of illegals and the erection of provocative controls and walls at the Mexican border.

The fact is, as a political matter, Hispania is the 51st state, and the channel through which the Democrats hang on to power. They will not support a debt-ceiling increase unless Trump throws in the towel on Obamacare and his anti-immigrant dragnet.

Yet if he folds on those core issues, he will incite a massive revolt in the GOP rank and file, which would make a majority for a debt ceiling increase even more problematic.

Besides, the temporary expedients and accounting gimmicks which the Treasury will now began to roll-out to temporarily defer the day of reckoning actually make no difference where it counts.

Last year during the March through May period, in fact, net debt rose by $96 billion, and there is every reason to believe that this year the shortfall will be even higher.

Accordingly, the current meager cash balance at the Treasury will not even last to Memorial Day.

After that, Uncle Sam will be back on Wall Street borrowing cash hand-over-fist — even as the Fed continues destocking its hoard of government debt through the back door of the repo market.

So what commenced this week and what will remain into the indefinite future is that Washington will be draining massive amounts of cash out of financial markets that have been suckling on the teat of government “stimulus” for most of the past three decades.

Does the school marm running the Wall Street casinos banking window see any of this double whammy coming?

Au contraire.

Again Wednesday she professed to see no bubbles anywhere, while floundering incoherently when asked about the timing of the Fed’s belated normalization campaign. A questioner wondered why the Fed is now raising rates just as the U.S. economy shows signs of gathering weakness and the global economy — centered in China and its supply chain — lurches forward in a slow-motion train wreck.

Anyone buying stock based on confidence that the Fed has their back notwithstanding Wednesday’s action surely deserves the pounding just ahead. What Yellen had to say doesn’t even reach the status of babbling; it was flaming incoherence:

Well, look, our policy is not set in stone. It is data-dependent and we’re — we’re not locked into any particular policy path. Our — you know, as you said, the data have not notably strengthened. I — there’s noise always in the data from quarter to quarter. But we haven’t changed our view of the outlook. We think we’re on the same path, not — we haven’t boosted the outlook, projected faster growth. We think we’re moving along the same course we’ve been on, but it is one that involves gradual tightening in the labor market.

So when faced with actual facts about declining real wages, collapsing Q1 GDP estimates, disappointing retail sales and a wild and woolly fiscal process ahead, the Fed chairman defended the third rate hike in 11 years by saying that the “data is noisy.”

What isn’t noisy is the data on the stock market’s bubble of a lifetime.

When it finally pops Yellen and her posse of Keynesian money printers will be incoherent, speechless and finished.

And that pop could come awfully soon.

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flaminratzazz's picture

what do you expect? it is a woman


(i think?)

JRobby's picture

How much more proof do we need?

She is doing as instructed.  The goal is to stop Trump and advance the golbalist agenda at all costs.

If she actually is intelligent, she would never be allowed to do the correct thing anyway. Therefore, A TOOL.


flaminratzazz's picture

Absolutely. Tribal witch dancing to the masters strings.

J S Bach's picture

Sorry to disagree, Dave, but NOTHING the Fed does is "babbling" or "flaming incoherence".  Everything they do is diabolically planned toward the ultimate goal of raping the stupid goy for as much material wealth as possible before beginning the next post-reset session.

flaminratzazz's picture

Dont forget to include the genocide of the white race entirely.. That seems to be their main goal as far as I can see.

remain calm's picture

The Casino never loses only the poor smucks who play. Remember all you have are worthless chips which you got for your work

flaminratzazz's picture

My chips clock around 3100 fps

Delving Eye's picture

Best takeaway: "mutant debt-fueled simulacrum of prosperity." LOL

flaminratzazz's picture

Life gets hard about the time you stop believing.

Erek's picture

"...alerting all except the most addicted Kool-Aid drinkers to get out of the casino..." Just one more throw of the dice. Just one more spin of the wheel. Everything will be alright. I can feel it!

Douche McGoosh's picture
Douche McGoosh (not verified) Erek Mar 19, 2017 11:58 AM

Yeah you can call Janet Yellen "an idiot". But have you self-investigated your own self finance? Because if you own no Bitcoin, you are the real idiot here. Best performing asset for the past decade, limited supply, accepted by Preppers everywhere!

Oh and btw... I have a constitutional right to douche-out regarding Bitcoin. And if you try to stop me, you are violating the non-aggression principle and also trying to tread on me.

kavlar's picture

The Fed and its never-ending line of Jewish IDIOT chairmen have destroyed the American economy.


lexxus's picture
lexxus (not verified) kavlar Mar 19, 2017 1:10 PM

Yes, they have.

Mano-A-Mano's picture
Mano-A-Mano (not verified) lexxus Mar 19, 2017 1:27 PM

They're NOT idiots. They know very well what they're doing, which is enriching themselves and their fellow Jews, and impoverishing regular AmericanTs.

Erek's picture

You are the reason your life is so fucked-up like it is.

OpenThePodBayDoorHAL's picture

Last debt ceiling rise was under Obama, this time there's a Repub in charge so it won't be a big deal. Party on.

hope_talk's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

eh_geee_gmail's picture

Casino?  Trump is one of the few capable of bankrupting a casino.

Raging Debate's picture

I agree Bach the private federal reserve is a business model like any other private business.

 I also disagree with Stockmans political theory regarding the debt ceiling. The GOP runs the entire show. 

Some Rhinos hate Trump as his nationalism decreases there bezzle a littl3 but they hate not being in office a lot more and if they don't raise it they will be swept from power next year. There election season starts late summer.

The hike is to cool inflation in  food, energy and real estate. There is far fewer safe safe things to invest in. But the population does have its limits and food, energy is approaching double digits. People got to eat and have a roof, drive to work and heat/cool homes. 

Meanwhile very little wage increase, stagflation. Her only sentence that is true and clear is the current attempt by Trump to tighten the labor market. 

 It is a bummer some can't refinance now but with a concentrated, distorted capital market you continue to encourage investors to borrow then dump into energy, food and rent, we finally finish our journey into 3rd world status. Half the people don't even have $500 to spare. 



Truther's picture

The Fed is a Zionist Joo front that has its "tentacles" up everyone's ass, with Goldman's blessings of theft and deceit. Brace for impact and get your nooses ready. These assholes will not go down peacefully. They will make sure the world goes down in flames first.

Logan 5's picture
Logan 5 (not verified) Truther Mar 19, 2017 11:37 AM

Stockman is a jew as well... As always, when it finally comes down to jew vs. jew... all hilarity ensues

Jubal Early's picture

Wiki says he is of German descent.  Are you certain?  

Logan 5's picture
Logan 5 (not verified) Jubal Early Mar 19, 2017 1:51 PM


SeuMadruga's picture

So were most in Auschwitz.

chairman of the bored's picture

damn, you can't look and tell....

aqualech's picture

No, the end game for the bankers is to maximize indebtedness. Raising rates does not help that. They aren't after the interest but instead want the collateral.

aqualech's picture

No, the end game for the bankers is to maximize indebtedness. Raising rates does not help that. They aren't after the interest but instead want the collateral.

Hugh_Jorgan's picture

"what do you expect? it is a woman"

I'm concerned that Yellen's tenure was by design. I'm no feminist, believe me, but we have certainly see a few of these events in the past. Establishment Trogs pose for the cameras in a PC love-fest as they magnanimously help a glass ceiling to be broken, only for everyone to find later that the entity that the woman or minority male has been handed the reins to is 30 seconds from going over a cliff. A cliff that none of those Trogs could figure out how to avoid themselves.

This is why I think Trump was ALLOWED to become POTUS. The timer was started when Yellen was given her term as Fed Chair (to end in 2018) which will be nearly two years into the already volatile Trump presidency. Plenty of time for him to "own" the economy in the eyes of most of the sheeple. The timing just seems too uncanny. At that moment he whole system will be ripe to collapse into the waiting arms of the Globalist nanny state. I hope that Trump survives the event, but I expect that we will could have Pres. Pence at some point as well. The useful idiots of the Soros sNWOflake FSA are already conducting probing attacks as we speak. It won't look like it on the surface, but after the collapse and the ensuing war, the world will be changed in ways we never could have imagined before 9/11.

Laddie's picture

There is something more VITAL rather than that fact...

Stanley Fischer: A Dual U.S./Israeli Citizen and Pro-Israel Activist as Vice-Chair of the Fed January 5, 2014

by Kevin MacDonald PhD emeritus professor of psychology at California State University - Long Beach

Grant Smith, writing at Antiwar.com provides an enlightening account of the nomination of Stanley Fischer as Vice-Chair of the Federal Reserve (“AIPAC’s Fed Candidate Stanley Fischer on a Warpath against Iran: Dual-citizen nominee’s lifetime benefit to Israel comes at a heavy cost to America“). When I first read that Fischer was a possibility, my only thought was something like “Can’t we find anyone who’s not Jewish to fill a post like that?” After all, the Chair of Federal Reserve has been Jewish since 1987, Janet Yellen, the present vice-chair, will likely be the next chair, and Yellen’s predecessor was Donald L. Kohn.

And one would think that appointing an Israeli citizen —and a high-level one at that (former head of the Israeli Central Bank and likely on a first-name basis with everyone who matters in Israel) — would raise all kinds of red flags about old-fashioned issues like dual loyalty.

But there is much more to the story. Fischer, it turns out, will be AIPAC”s man at the Fed. Smith notes that...

Jubal Early's picture

"would raise all kinds of red flags about old-fashioned issues like dual loyalty."

Questioning the loyalty of dual citizen kikes will get one thrown in jail across Europe.

Smedley's picture

Thanks Dave, we didn't need 'proof', we saw it for ourselves....


lester1's picture
Wow.. Even fashion blog Marie Claire is bashing President Trump. Trying to poison the minds of millenial women.  I'm getting so sick of seeing this !! https://youtu.be/M1eChQHWO5k
Erek's picture

Marie Claire blog is about as useful as an ashtray on a motorcycle.

Snípéir_Ag_Obair's picture


ffs - has the author considered that she is doing exactly what benefits her tribe?

by way of analogy, check out this short video of some orthodox jews discussing gentiles:


Erek's picture

Oh, Janet! The village called. They would like their idiot back. You better get going.

TheReplacement's picture

You are just as blind as Stockman.  She is not an idiot at all.  She is going to make her tribe even richer and more powerful with all of this manipulation and deliberate destruction of our national economy.  Why the fuck can't you people understand this?  It is no mistake.  The only mistake is made by you in underestimating the enemy or worse, failing to realize the basic premise that just because you are not at war with them that they are at war with you and you are losing like a big fat blind bitch.


DingleBarryObummer's picture

In fairness I think Stockman is aware of this.  He just has to play the "game" a bit to get the truth out about the end result of it all.  Stupid Yellen, or sinister Yellen, the end result will be the same. 

gregga777's picture

"That’s because the market is priced as if the business cycle has been outlawed and as if the feckless band of Keynesian pretenders who have seized control of financial markets have ushered in the Nirvana of permanent full-employment. World without end."

~96,000,000 unemployed working aged Americans and ~45,000,000 Americans dependent on food stamps to avoid starvation.  That's full-employment?  ROTFLMAO.

JRobby's picture

Yup, she's a tool. Big plan is still being pushed: total slavery.

moorewasthebestbond's picture

But now that the debt ceiling is again frozen into place, an explosive political crisis is coming soon.


I'd say explosive kabuki theatre is coming.

GooseShtepping Moron's picture

Call me when we get to the explosive bukkaki theater.

JRobby's picture

By design. Borrowing must increase. Especially after all the recent borrowing. The habit is terminal, the addict doomed.

knotjammin2's picture

The Globalist may destroy the economy but we need to make sure none of them survive.  It will be easier to rebuild.  Oh!  Just think about putting it all back togeter without the welfare ancho draging us down!!

JRobby's picture

Exactly! They must be completely eradicated.

chunga's picture

The tribe getting kicked out of the temple is my favorite bedtime story.

flaminratzazz's picture

Seems obvious that Trump don't agree.

DingleBarryObummer's picture

Trump is their obediant little Golem actor.

gregga777's picture

Well, the TRUTH is much simpler.  This will be the third pre-planned market crash this century.  The owners of the Goldman Sachs Feral Reserve System have sold high to the suckers, I mean, investing public.  Now they have ordered Janet Yellen to crash the markets.  Then the suckers will sell low and the owners of the Goldman Sachs Feral Reserve System will buy the suckers' assets back at pennies to the dollar.  

The TRUE motto of the Goldman Sachs Feral Reserve System is:

"We steal from those who can least afford it and we give to those who least deserve it."