And You Thought The Fed Was Bad

Tyler Durden's picture

When one cuts out all the noise, the only true purpose of aggressive (or not) central bank asset expansion, is to be a "buyer" of last resort of sovereign debt funding. Think of it as the source of credit money demand (and hence supply) when every other sector is deleveraging, and when a given Treasury authority needs to pump trillions in debt into the market but when nobody can afford to lever up and buy said incremental debt. Call it monetization, call it funding the deficit, call it whatever: that's what it is. And when people think of monetization, they think, first and foremost of the Chairman, who recently was caught praising the fiat system at a university named for a person who said the following prophetic line: "Paper money has had the effect... it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice." Irony aside, when one cuts to the chase, and ignores even further noise about monetization being direct, indirect, sterilized, shadow, etc, there are just two metrics that are relevant: change in sovereign debt and change in Central Bank Assets. In this regard, of the US' $5.5 trillion in sovereign debt increase, the Fed matched Geithner for $2.0 trillion of the total, or 37%. An admirable number and certainly better than the BoE's 29%. Yet who gets the absolute top prize? Why none other than the ECB, which with $2 trillion in expansion (of which about 60% took place under Goldman apparatchik Mario Draghi in just the past 6 months) represents a whopping 63% of total Eurozone sovereign debt expansion of $3.1 trillion!

And yes, the fact that the EURUSD is not trading sub parity is for one simple reason: the market expects that Bernanke will, quite soon, match Draghi dollar for euro, in this sheer madness.

And just to not lose sight of the big centrally-planned picture...

source: citi

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maxmad's picture

Free Made-off!!!

maxmad's picture

Fiat is a Fonzi scheme!

maxmad's picture

When the dust settles, people will realize that Bernie Made-off was the only honest one out of that whole pack!  LOL.... At the end, he turned himself in-- his conscious finally got to him....

GeneMarchbanks's picture

At least he 'Made-Off' like a bandit b4 his 'conscious' got to him.

mayhem_korner's picture



His conscience might just be a couple of guys named Ben Dover & Elmo Blatch.

Sudden Debt's picture



I print...

You print...



Captain Kink's picture

Read Currency Wars by Jim Rickards.  This is all a race to devalue.  Happened before, but this time, the scale is what will bring down the whole system.


mayhem_korner's picture



But what is the prime driver of the printing - papering over unrepayable debt, or undercutting others' currencies for supposed trade benefit? 

Havana White's picture

Ben visualizes himself driving it hard to effect both goals simultaneously, whenever he's having difficulties coming.

mayhem_korner's picture



Thanks for your "input," Mr. Fwank.

kridkrid's picture

Debt: The First 5000 Years by David Graeber is also a great read.  I reached out to the author... mentioned he should provide a guest post here... said "he would look it up". 

NoClueSneaker's picture

He often a guest by auntie Amy. Check the archive of DN!

GeneMarchbanks's picture

'And yes, the fact that the EURUSD is not trading sub parity is for one simple reason: the market expects that Bernanke will, quite soon, match Draghi dollar for euro, in this sheer madness.'

Poor FX tarders... always with the 'causality' and rationalizations.

cossack55's picture

It is easier for accountants when there is only one buyer.

Fluffybunny's picture

The accountant lobby doesn't like this. More complexity => More work => Higher wages

blindfaith's picture



So all these hot babe and porno Google ads on the top and both sides of Zero Hedge pages...are these the work of Goldman??????  How does this crap advertising end up on Zero Hedge day after day?

css1971's picture

Google serves you personalised adverts based on your own personal Internet searches.

Try any other site using Google adservices, the adverts will follow you.


Vince Clortho's picture


Those adds are most likely keyed to your recent user activity on your computer (Searches and websites that have been visited).

Manthong's picture

Well mercy me..

So THAT'S where all those guns, ammo, sword and knife ads come from.

                   Here I thought ZH had an affiliation with the arms and military supply industries.

XitSam's picture

I thought ZH had connections to the unicorn, Skittles and puppy industries.

Actually the ads on screen right now are for Eller MBA x 2 (don't want it) and arthritis (don't have it).

Captain Kink's picture

I am getting cars and stock trades and gold... I need to get a life!

nowhereman's picture

Thankfully, using firefox with ad block, I don't get that form of entertainment.

virgilcaine's picture

Something tells me this ends really bad, ends badly?

Robslob's picture



Playing catch up is a bitch...but now in lead by a nose we have the ECB!


css1971's picture

Really all this extra credit just means there is a taller cliff to fall off.

youngman's picture

They are the buyer of last countries start dumping as they also see the writing on the wall....and an investor sitting with 8-10% inflation in what he is buying will not buy a 10 year bond at who will....the Central Bankers.....OK...but then what...when they have 100 trillion worth of debt....what next....????  My opinion is that they will print...and they are the politicians and central keep their heads on their shoulders....but it kills the savers...and inflation goes ?????  will it be 15% a year..or 2,000% a the big unknown is what other countries will do...I think they will shy away from western Fiat curriencies..and then we will just be playing with ourselves

virgilcaine's picture

So.. the ECB prints $$ then gives it to the zombie banks, the zombies deposit it at the ECB since neither trust each other and forget about "loaning" it out.. Banks don't do that anymore.  Welcome to the recovery.

Cursive's picture

It is amazing that the Euro is levitating. It's the Lazarus currency. You cannot kill it. All attempts to do so only result in a miraculous recovery.

Captain Kink's picture

I can't stand this whole f-ing planet anymore.

Peter Pan's picture

Have any of these central banks thought of doing an IPO of themselves?

If people think that central banks buying their own vomit is weird, imagine how bad their undisclosed actions must be,

mayhem_korner's picture



LOL.  Initial Public Offering of the first bank of Gomorrah.

DOT's picture

How can this be ?!  A"Central Bank" in name only, with-out the mind boggling power of the Fed, shows up the Bernank!

Get with it, Ben, the real Keynesians are making you look like a piker.

rsnoble's picture

Oh for real.......these clowns will do anything to keep their little global takeover scheme going.

You do realize that they have the moto "If I can't have it all no one can" right? And are sociopath to boot? And have nuclear weapons at their disposal?

alfred b.'s picture


 Not to worry, the bernanke will not play second fiddle to the ECB...he is not known as Copter Ben for nothing:  there will be money, and lots of it!


gaoptimize's picture

And yet, hyper-inflation and SHTF has not happened in Europe.  I am preparing for an economic collapse at a good clip now, scheduled to be largely done by the end of the year, but acknowledging that some preparations may slip into the first half of 2013.

Doesn't this and the Japanese situation argue that the economic wagon can be much more broken than it is in the USA before the wheels come off?  Wouldn't these comparissons suggest we can sustain 3 more years of damage at the current level of irresponsibility before SHTF?

If so, I could show my pace of preparation and improve my relationship with my wife ;) .

El's picture

All it takes is for one card to fall and the whole house comes crashing down. 3 more days, 3 more years...who can say? I HOPE we have at least until the end of the year because I am not ready yet.

walküre's picture

Sorry to tell you. Prepare faster.

Son of Loki's picture

What recession?

U.S. CEOs' take-home pay climbs on stock awards (Reuters)

It's all milk and honey at the top.

LoneCapitalist's picture

I dont believe that the ECB is monetizeing faster than the FED. I think their are alot of "assets" that the FED has bought that dont show up on the balance sheet.