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Biderman And Bianco Bury Bernanke's Bond Bull Market Backbone
Digging into the details of the Fed's balance sheet can sometimes be a thankless task but Charles Biderman and Jim Bianco have some fascinating insights into where the real money is being hidden. The stability of the Fed's balance sheet post-QE2, given we are borrowing-and-spending over $100bn per month is all down to Operation Twist and the Fed's creation of demand at the short-end (via telling banks that rates will be low forever and 'guaranteeing' positive carry returns on rolling overnight repo) and using this 'cash' to almost entirely fund longer-term borrowing. In a simple primer of the Fed's implicit risk-free carry trade, the two chaps note that the only downside is too much growth or inflation which would cause a massive unwind of these positions (leading only to further bailouts). Critically though, they explain the fact that Operation Twist (and its implicit off-balance-sheet funding of this risk-free carry trade) is nothing more than the Fed's version of the ECB's LTRO - as the banks are 'encouraged' to buy short-term government debt with risk-free-carry expectations - implying the Fed's balance sheet could in fact be considerably larger than it appears. Yet more ponzinomics explained in a simple way - that surely eventually will trickle down to the masses who will question the emperor's clothing.
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Bullish!
In other words, QE never stopped for an instance (as expected), it just doesn't show up on the books, YET.
That why a pound of medium ground beef five years ago was .70 a pound and today we pay over 4.50.
The price of beef is an excellent indicator of inflation. Highest turn over of product, nearly JIT supply, complex shipping and the costs associated with it. Beef is a fantastic canary because subsidies get yanked on it fast. In economic hot boxes because popular to contrary belief, Governments wish small and medium sized farmers would just die and go away because honest hard work is their anti-thesis.
Instead of going bust as in past price crashes, most of them were ready because of past experiences with liars in Brooks Brothers Suits. They followed feed costs and use a formula. In my area there are some very sharp accountants that help keep everyone above water. If they follow the formula they get hit with a bad month instead of a bad year which makes a huge difference in how credit is managed.
Look at co-op balance sheets versus banks. Most are cash rich with lots of un-used credit...Really interesting stuff...well to some...agricultural and commodities accounting.
But Ben told us there's no inflation and we're in another goldilocks!
Inflate the pain away - Bernies JPM Remix
Sucking on my ZIRP like you wanted me
calling me, all the time like ponzi
check out the greeks are behind
its fine all of the time
like 100k gold is
what else is in the teaches of bernies? Huh? what?
Sucking on my ZIRP like you wanted me
calling me, all the time like ponzi
check out the greeks are behind
its fine all of the time
what else is in the teaches of bernies?
like 100k gold is Huh? what?
Huh? Right. What? Uhh
Huh? What? Right. Uhh
Huh? What? Right. Uhh
Huh? What? Right. Uhh
CDS IOU, Stay in school cause its the best
IOU CDS, Stay in school cause its the best
IOU CDS, Stay in school cause its the best
IOU CDS, Stay in school cause its the best
Sucking on my ZIRP like you wanted me
calling me, all the time like ponzi
check out the greeks are behind
its fine all of the time
like 100k gold is
what else is in the teaches of bernies? Huh? what?
Inflate the pain away, inflate the pain away
Inflate the pain away, inflate the pain away
Inflate the pain away, inflate the pain away
Inflate the pain away, inflate the pain away
Inflate the pain away, inflate the pain away
Inflate the pain away, inflate the pain away
Inflate the pain away, inflate the pain away
Inflate the pain away, inflate the pain away
Huh? What? Right. Uhh
Huh? What? Right. Uhh
What else in the teaches of bernies?
Like 100k gold is
Huh? What? Right. Uhh
Inflate the pain away, inflate the pain away
Inflate the pain away, inflate the pain away
Inflate the pain away, inflate the pain away
Inflate the pain away, inflate the pain away
More and more people are waking up everyday. Soon enough we will hit the tipping point.
http://ericsprott.blogspot.ca/
OK trick question:
Why did Ben not give a gift on mother's day?
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.
.
.
.
.
.
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Butthole baby?
She dead.
He married his mom, so he is confused on mothers day.
Because Satan has no mother.
Alliteration , a valid literary device . Much more valid than what's going on in the markets these days .
Bodacious beginning byline.
I don't understand the argument that the fed is afraid of intervening before the election. First off there is a good chance O loses the election without massive stimulus to put an artificial floor under everything until November. I also remember the last letter the Repubs sent the fed scorning their actions. It's probably framed and Ben etc. have a good laugh at it every week. Lastly Mitt is too busy apologizing for possibly bullying a kid 40 years ago to be concerned with present day events.
It seems like they have no choice but to act soon.
They just can't do it too soon as the next $xTrillion round of QE will only last a few months... They can't blow they're load too early and really screw up the election... They'll wait until mid to late August for the next ramp up... In the mean time they'll continue to buy everything they can behind the scenes to prop up the market until then...
Of course, 2013 will be an absolute nightmare - QE will have worn off, spending will be cut, and taxes raised... Holy cow is this going to get messy... Oh, and there is also the chance that they can't prop up the markets, they QE in a panic, the markets sense this and run for the exits, and November /December of this year is a total train wreck...
I completely agree. August sounds about right. I think rumors start flying in June and Trillion dollar numbers are thrown around and that keeps the markets from cratering until they announce it in August. It's good for the country. This way the election can be focused on without having to worry about the economy. What a load of shit but I can see it.
But if you can see it, so can the big players and he who acts first wins. This may unravel sooner than they plan/predict.
I keep thinking one morning I am going to wake up and the markets will be closed pending some coordinated government action (the big reset). I don't think it will be something that helps the average Joe!!
It's almost like we're having like economic problems and all...
I'm getting that depressed feeling again, and that mostly means hopium is comming
Here comes that ho-pi-um feeling again.
http://www.youtube.com/watch?v=aO1LbkuPfqo
Do you think the goal of the US gouvernment is to inflate as much as possible the bond bubble before the war with Iran?! Then hyperinflation should happen and everybody would loose is shirt with this massive bubble???!
Do you think the goal of the US gouvernment is to inflate as much as possible
Yes
worst shirt yet Biderman!
If the markets are down for long enough, the FED will prime the pump again.
FREE FIAT for BANKSTERS
I prefer to look at it like this. The bankster gangsters make the market go down to justify more thievery then they make it go up and appear to be working. Rinse. Repeat. There is no market, there is only the bernank.
+1
This never gets old
The Bernak
http://www.youtube.com/watch?v=PTUY16CkS-k
"that surely eventually will trickle down to the masses who will question the emperor's clothing"
Surely.
What a racket!
Jim, Whats a Circle Jerk?
Glad to see we have such clever people in charge!
Hope they can keep this ball in the air until I die of natural.
Excellent interview....thanks ZH for posting this. It is a question that was bothering me (how did they keep selling all that govt debt?). Simple enough when explained by these guys.
The central bankers are really playing with fire though, since all that supports this is relative value of their respective fiat currency. If an alien were to come to Earth he would wonder why anyone continues to believe in the USD, Euro, Yen etc. All a big confidence game (hence the need to crush gold - which is the canary in the coal mine).
So, does this mean I have to wait until the end of 2014 for gold to actually resume its climb?
So, the cake is a lie?
Only if you try to get a piece.
This time it's walls to the ball.
By now even Ben has picked up the pattern: QE and other monetary stim merely re-flates the cost of living and doing business, not business itself. That's the trouble. The only thing trickling down to the consumer is cost. That's why 'consumer spending' figures are misleading: higher prices for essentials means more dollars spent, but not increasing demand. In fact at a certain threshold, higher prices with stagnant incomes depresses demand which sets off a nice little downward spiral
Sure the Fed's balance sheet is huge. It will just keep printing until the market says no-more and inflation is out of control.
The Keynesian Failure Graphically Portrayed
"Printing all that money just to stay even"
<iframe src="https://skydrive.live.com/embed?cid=28D5B46EE3D15AE3&resid=28D5B46EE3D15..." width="98" height="120" frameborder="0" scrolling="no"></iframe>
Biderman!! Light a blunt for mee too!! haha. :-P
I am getting lost here. The Fed prints fresh money and lends them to banksters. This money must show up somewhere on the balance sheet. When Treasury gets their money it is also a loan from the Fed. Hence what is the difference between say JPM borrowing from Fed and the Treasury doing the same? All helicopter money needs to be accounted somewhere - cannot just disappear. Oh wait - this is Bernanki circus..
Does the fed give the moeny to the banks at 0%, the banks buy treasuries then the Fed buys the bonds off the banks?