"It's Global & It's Viral" - DiMartino Booth Exposes The Fed's Biggest Fear

Tyler Durden's picture

Via Greg Hunter's USA Watchdog blog,

Former Federal Reserve insider Danielle DiMartino Booth says the record high stock and bond prices make the Fed nervous because it’s fearful of popping this record high credit bubble. DiMartino Booth says,

“The Fed’s biggest fear is they know darn well this much credit has built up in the background, and the ramifications of the un-wind for what has happened since the great financial crisis is even greater than what happened in 2008 and 2009. 

 

It’s global and pretty viral.  So, the Fed has good reason to be fearful of what’s going to happen when the baby boomer generation and the pension funds in this country take a third body blow since 2000, and that’s why they are so very, very intimidated by the financial markets and so fearful of a correction.”

[ZH:As a reminder, The Fed is normalizing the balance sheet - and as Yellen said last night - "so far so good"...  

So far The Fed (since the end of September) has shrunk the balance sheet by 0.17%... or $7.3 Billion of a $4.5 trillion balance sheet]

 Why will the Fed not allow even a small correction in the markets? DiMartino Booth says,

“Look back to last year when Deutsche Bank took the markets to DEFCON 1.  Maybe you were paying attention and maybe you weren’t, but it certainly got the German government’s attention.  They said the checkbook is open, and we will do whatever we need to do because we can’t quantify what will happen when a major bank gets into a distressed situation. 

 

I think what central banks worldwide fear is that there has been such a magnificent re-blowing of the credit bubble since 2007 and 2008 that they can’t tell you where the contagion is going to be.

 

So, they have this great fear of a 2% or 3% or 10 % (correction) and do not know what the daisy chain is going to look like and where the contagion is going to land.  It could be the Chinese bond market.  It could be Italian insolvent banks or it might be Deutsche Bank, or whether it might be small or midsize U.S. commercial lenders.  They can’t tell you where the systemic risk lies, and that’s where their fear is.  This credit bubble is of their making.”

In short, the Fed does not know what is going to happen, and according to DiMartino Booth, nobody does. DiMartino Booth contends,

“I don’t think any of us know what the implications are for a $50 trillion debt build since the great financial crisis (of 2008).

 

It is impossible to say.  We have never dealt with anything of this magnitude.”

On Bitcoin’s rapid rise in value, DiMartino Booth warns,

“To me, Bitcoin is a reflection of panic. It’s a reflection of people trying to get money into a safe place knowing the major governments of the developed world have got their printing presses running 24/7. 

 

It is a reflection of anxiety in fiat currencies and the fact it’s not practical to go back to a gold standard.  What scares me about Bitcoin is the central bankers are studying it to figure out how the blockchain works...

 

They are going to be controlling our spending with blockchain technology that is being perfected in the crypto currency universe.”

On gold and silver, DiMartino Booth says,

“2017 is the record for quantitative easing (money printing) globally. We have never, not even in the darkest days of the financial crisis, central banks have never injected as much money as they have into the markets...

 

I am not a gold bug, but we do know that in times of corrections that there is no place to hide in traditional asset classes that you can get at your Merrill Lynch brokerage. 

 

Gold and silver in the precious metals complex are the only places to hide and get true diversification and safety.”

Full interview below:

Danielle DiMartino Booth has free information on her website DiMartinoBooth.com. She also offers a subscription service called “Money Strong.”  For a one month free subscription click here.

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YUNOSELL's picture

So what are you even implying with this? That the excess bank reserves will make the too-big-to-fail banks stable during a crisis. All this means is that they will remain "solvent" for four weeks instead of two weeks during the bank run. They're all still leveraged to the tits that once confidence is gone, it's gone.

Five Star's picture

That there are still trillions of dollars in excess reserves that banks can flow into financial assets to take the place of the FED. When the excess reserves are depleted, then it's really show time, until then I doubt it 

GotGalt's picture

and why would the banks want to do that?  They don't want to be the bag holders but the small fish. 

strannick's picture

Feds biggest fear is revealing who it's shareholders are .

Federal Reserve isn't Federal and has no reserves.

Federal Reserve charges America to print its money 

JFK was murdered 4 months after his silver remonitization bill in effect ending  theFederal Reserve.

Robert Kennedy was murdered on the exact anniversary of the drafting of this bill.

Andrew Jackson had multiple assassination attempts as he ended America's first central bank. 

"You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the Eternal God, I will rout you out."

MonetaryApostate's picture

Their biggest fear is....

#EveryoneVsTheMoneyPrinters

Once the serfs all realize money is purely toilet paper with ink on it.

https://plus.google.com/+GaleInnes/posts/CdLuBK4GcMy

 

I mean what could you do with an infinite printing press?

Nomad Trader's picture

I have a question - how come there's never been a terrorist attack against a central bank? I mean there's got to be an awful lot of powerful people who've been screwed over by the last 9 years of market distortion. Or perhaps a gutsy Joe Citizen Antifa who wanted to put an end to the print-for-the-rich scheme and mass widening of income inequality.

VWAndy's picture

  Because that not how honest folks roll unless they have no other choice.

  That stall thing?

Croesus's picture

Three words: Jump, you fuckers!

I honestly and sincerely hope this shit-show collapses, so that mankind can get down to the business of separating the wheat from the chaff. It is the only way. Continuing on as we have been, will only lead to a place where we're all slowly dying off.

Eugenics, while viewed as an "Evil Nazi Ideology", is really the only way forward that serves to benefit the human species as a whole, by slowly eradicating poor genetics from the human race.

VWAndy's picture

 Bartertown would be the place to sort that out. Just saying. Let the market place sort it out peacefully.

Crazy Or Not's picture

After the Black Death plague ravished its way through the world, the bone records show that the survivors and their offspring were shorter in stature. Records also showed lower infant mortality and fewer child deaths suggesting a stronger immune system (probably there was also more fresh fruit to go around). So move to the jungle and marry a pigmy? 

InsaneBane's picture

Sieg Heil! Boobs and bubbles..

hongdo's picture

The human species accepts your noble offer. Although one is only a start.   When do you jump?

Croesus's picture

Study the science, before you dismiss the theory:

Do you honestly believe that a population of "breeding stock" comprised of the welfare class is in humankind's best interests? Do you think breeding diseases, weaknesses, and helplessness, is in the best interest of your biological species?

If so, then I would suggest that you lead by example.

The dumb people of the world do 2 things well; they breed, and they vote. Consider the notion that They are consuming finite resources 'on credit', and racking up a bill that You will be on the hook for - when the bill comes due, you will not have the ability to file Chapter 11, or be granted any other sort of second chance or "do over". You will share in the same collective suffering that will affect everyone, because you stupidly cling to a well-intended, but misguided notion of humanity.

bluskyes's picture

Science died a long time ago.

hongdo's picture

Doesn't matter.  If you believe there are too many people, make a difference and delete yourself.  Otherwise you are a conceited elite and part of the problem.

My solution  - let it all burn.  Got the guts?  Asshole.

daveO's picture

Eugenics will occur as the tax slaves find less reason to work and stop supporting the income redistribution scheme. If/when the government can't carry forward it's debt, things will get ugly, fast.

michelp's picture

"If/when the government can't carry forward it's debt, things will get ugly, fast."

Realistically, the government has not been able to carry forward for a long time now.

m.

Stu Elsample's picture

armed and aware citizens are the fed's biggest fear

JibjeResearch's picture

It only takes one example..., the capable will follow....

They will run for cover...

Kaiser Sousa's picture

keep hammering the phonyh paper prices of the ONLY 2 FORMS OF REAL MONEY please u fucking Khazar MoneyChanger fucks...

debt  coupon dollar reserves growing to be deployed accordingly to shiny....

DEATH TO THE MONEYCHANGERS.

max2205's picture

Who trusts investment ideas from a chick.... 

WhackoWarner's picture

c'mon.  this has to be sarcasm hey?

VWAndy's picture

 Ha as if they gave a rats ass. They got a money printing machine. FFS! Talk about a mental disconnect. How does the viewpoint of they didnt intend to do this even exsist. This is what they wanted to do from the very start.

ThrowAwayYourTV's picture

Where we fucked up is when everyone became an expert but nobody became a worker.

http://3.bp.blogspot.com/_SCZ-WmH6lP0/TL6Y9QY0G5I/AAAAAAAAAFQ/jL_Pe7pOZf...

Arrow4Truth's picture

Nah, where it got all fucked up was when most began to quit working for themselves and became employees. But at some point, they were no longer employees but human resources... not a living, breathing spirit in the flesh but merely an expendable resource.  

Secret Weapon's picture

All done on purpose.  They plan on taking all the chips off of the table.

zzzz88's picture

right now is very similar to the German society under Nazis before ww2. 

the current problem now is most countries are like german under nazis, not just one country. 

go back to look at the history. 

what will happen? I do not know

turkey george palmer's picture

Eh got an idea she likes it airtight

ptolemy_newit's picture

 

500 Years of Stock Panics, Bubbles, Manias, & Meltdowns (In 1 Simple Chart)

by Tyler Durden

Jul 31, 2016 5:30 PM

topspinslicer's picture

In an ideal world they should be afraid for their very lives

WhackoWarner's picture

tick tock tick tock.

Don't know what is coming but these fools have good sense to be afraid.

 

Which means a boom in private security systems and bodyguards.

 

tick tock.

Last of the Middle Class's picture

Kind of like wondering who will set off a spark first in a house full of 100% oxygen. It's going to happen and it's going to be fast. If you can survive the first flash over, you may, may, stand a chance. The Fed has done this to everyone's peril. Can the Fed slow the rate of printing without choosing major winners and losers? That is the question. Will it be fair for everyone? Hard to believe it is possible when their "fairness" quotient over the last decade or so has been pretty shitty. Main Street still looks rough, the ACA act is still on life support with congress doing everything they can to maintain the the giant sucking sound that is health care premiums, and the MSM is looking for anything positive in the Russia collusion story as liberal Dems take hits every day for crotch grabbing.  One little spark and no one knows where it's going to come from. 

WhackoWarner's picture

Fairness? are you insane? Fairness?

this is way beyond any Russiaphobia story.  Way beyond the NK nukes.

Fairness is not part of any equation here.

 

Fairness ?  What koolaid are you drinking?

WhackoWarner's picture

To be "fair" your comments show that you are being distracted from the real problem.

You are drinking the MSM koolaid big time.

 

Fairness?  You also are assuming that the bankrupt, war state has lasting influence short of total war. 

11b40's picture

Fair. You mean as in a weather forecast. Or maybe that thing in Autumn where thy pass blue ribbons for the prettiest pigs, cows, and peach preserves.

Or was it a typo, and you meant fare, as in something you pay? That sounds more like it. A fare is coming to us all.

Cast Iron Skillet's picture

hmmm ... if the house was all brick, not much would happen. A better picture would be a house filled with a stoichiometric ration of oxygen and methane or something.

samsara's picture

Ok, so we Already went over the cliff, we just don't know if it's a 5 foot drop or a 500 foot drop.

Lost in translation's picture

Oh yeah, the Fed is full of “fear,” uh huh. I’m sure.

Right.

WhackoWarner's picture

Actually I think they are.  The conclusion to this is unavoidable. So yeah I think there is fear amongst the PHD's and parasites.

daveO's picture

Just posturing ahead of the crash. "See, we told you!"

Lost in translation's picture

Yep.

How much will they be paid per appearance on Bloomberg?

lester1's picture

If the Fed was ever fully audited we would find out they have been buying stocks for years ! 

 

End the Fed !

michelp's picture

"If the Fed was ever fully audited we would find out they have been buying stocks for years ! "

Let's see. By now we know the fed's are not part of govt. Therefore printing money is a profit to their corporation.

Why are they not paying taxes on income, particularly so if they are also investing in stocks?

m.

ThrowAwayYourTV's picture

I would like to order 1 recession. Please! And can I get that super sized?

We got enough STUFF, man. I mean we got STUFF coming out our ears. Anymore, STUFF and we'll need a gps to get around the house. And not just STUFF! We got enough STUFF running the STUFF. Like electricity, gas and oil,  If we get anymore STUFF we wont have a land fill AKA Dump to hold it all when we throw it away in a month and go buy more STUFF. < thats a period.

 

 

 

vesna's picture

FED is not afraid of anybody. Bernanke is now the prophet for Cryptocurrency, the motherfucker who started printing fiat. He said gold is not money etc. They are too arrogant to be afraid of anything. They know sheep pay everything at the end.

Batman11's picture

The world is turning into a neoliberal omnishambles.

We’ll bring democracy to the Middle East, but forget the problems of democracy we saw in Northern Ireland. Catholics and Protestants don’t change; you always have a disenfranchised Catholic minority and this causes big problems.

What will happen in the Middle East with its Sunni and Shia population?

We removed the dictators, bought in democracy and now the region is on fire. It’s like Northern Ireland was, but much worse. It’s a shambles.

What will happen if the West invests and off-shores its manufacturing to China?

The workshop of the world had traditionally been the super power of the world, first the UK and then the US. The Americans are now worried about the new multi-polar world the Washington Consensus created. It’s a shambles.

They resurrected the really bad 1920s neoclassical economics that led to the Wall Street crash of 1929, because it doesn’t look at private debt and had already been rejected in the 1930s. It still doesn’t look at private debt, and on removing the 1930s regulations, they did another 1929 in real estate instead of stocks. It’s a shambles.

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png

The UK:

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.png

We loaded the economy up with unproductive lending to inflate the value of the nations hosing stock. It’s a shambles.

Of course the gloomy predictions are right, it’s the neoliberal omnishambles.

Batman11's picture

The neoliberal, economic omnishambles is global.

The money supply = public debt + private debt

What is going to happen with financial liberalisation?

Everything is going to go haywire.

Economies start blowing up around the world.

1990s – UK, Canada, Australia, Scandinavia, Japan, the Asian Crisis

2000s – US and through complex financial instruments, Europe and the UK

2010s – Ireland, Spain, Greece

Soon – China, Canada, Australia, Norway, Sweden

Do the central bankers look at the money supply for danger signs?

http://www.whichwayhome.com/skin/frontend/default/wwgcomcatalogarticles/images/articles/whichwayhomes/US-money-supply.jpg

M3 is going exponential before 2008, a credit bubble is underway (debt = money)

No, because no one knows how this system works (not in the mainstream anyway)

Monetary theory has been regressing since 1856, when someone worked out how the system really worked.

Credit creation theory -> fractional reserve theory -> financial intermediation theory

“A lost century in economics: Three theories of banking and the conclusive evidence” Richard A. Werner

http://www.sciencedirect.com/science/article/pii/S1057521915001477

Batman11's picture

How did the Euro-zone turn into a shambles?

Trichet headed up the ECB and he didn’t see the problems developing or implement the right solutions. By the time Mario gets in, a lot of damage has already been done.

Mario’s solution is temporary; have the technocrats come up with a permanent solution so Mario doesn’t have to keep buying bonds at the periphery.

What do you think?

Of course not, it’s a shambles.

The data is available to look back at Trichet’s stewardship of the ECB.

https://www.youtube.com/watch?v=B6vV8_uQmxs&feature=em-subs_digest-vrecs

Batman11's picture

When experts come to believe they are experts and know everything and can't possibly make a mistake, you're fucked.

We're fucked.