Crushed Consumption: The Unintended Consequence Of Bernanke's Arrogance

Tyler Durden's picture


With the Fed lowering interest rates and flattening the curve in an effort to squeeze any- and every-one into risk-assets and mal-investment; the sad truth of this action is that it forces a drastic unintended consequence on the growing population of people that actually care about the future. Critically, as Citi points out, lower yields require much higher rates of saving (both corporates and households) and while 10% of salary allocated to 'retirement savings' will meet its goals with a 4% return hurdle, at current low yields, the average-joe in the street will need to 'save' 25% of his income - cutting heavily into his current consumptive and discretionary iPad needs.

This seems apparent in the NSA retail sales data we noted yesterday and this year to date...




Source: Citi

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Wed, 08/15/2012 - 13:44 | 2707307 AdrenalineTrade
AdrenalineTrade's picture

Retirement age now moved to four years after death.

Wed, 08/15/2012 - 13:47 | 2707323 Hippocratic Oaf
Hippocratic Oaf's picture

They'll still find a way to take from you after the 4 worries

Wed, 08/15/2012 - 14:16 | 2707463 vast-dom
vast-dom's picture

the destruction of economies and individuals courtesy of mal-central policy.

Wed, 08/15/2012 - 14:24 | 2707497 Manthong
Manthong's picture

There is no conventional solution.

Wed, 08/15/2012 - 14:35 | 2707536 TruthInSunshine
TruthInSunshine's picture

And on the 4th day, The Bernank did sayeth unto the plebes (those who hadeth actual savings & weren't already subsisting off of credit cards, EBT Swipes and/or other such means):

"Thou shall transfer any fiat savings thou may haveth into GroupOn, Zynga, Facebook, or other nouveau Winners of the New World version 2.0, bitchez."

Wed, 08/15/2012 - 15:01 | 2707669 Precious
Precious's picture

Ben always knows what's best for "democracy".  His mentors tell him so.

Wed, 08/15/2012 - 15:45 | 2707923 The Monkey
The Monkey's picture

"Live for today"



Wed, 08/15/2012 - 15:03 | 2707673 I am more equal...
I am more equal than others's picture

Krugman and Bernake .... 'peace in our time' guys.  Reality is their Hitler.

Wed, 08/15/2012 - 15:12 | 2707729 TruthInSunshine
TruthInSunshine's picture

Whisper rumor that Krugman is buying 270 million shares of Facebook tomorrow.

Wed, 08/15/2012 - 21:03 | 2708879 mickeyman
mickeyman's picture

Why doesn't everyone just borrow at low rates and gamble   invest it in the markets?

Wed, 08/15/2012 - 21:03 | 2708881 mickeyman
mickeyman's picture

Dammit, the strikethrough on gamble doesn't show up!

Wed, 08/15/2012 - 15:42 | 2707908 Stoploss
Stoploss's picture

See Ben?? The blue line is your inflation gauge, that's why it wont move. Up..

So tell us how ZIRP is working out?

Wed, 08/15/2012 - 13:51 | 2707341 Hugh_Jorgan
Hugh_Jorgan's picture

Yeah 25% rate needed right now. Hmm... do I project that the required savings/investment rate will go up or down based on what we've see over the past 15 years? Oh well, any luck and I won't care because hordes of zombies will dine on my brains in a year or two.

Wed, 08/15/2012 - 14:01 | 2707405 chet
chet's picture

That's alright because the savings rate for the average US household is probably right around 25% right?  Right guys?


Wed, 08/15/2012 - 15:22 | 2707787 knukles
knukles's picture

Say, I saw that...

The FDA just released the New Cricket Cookbook.
They're a great source of protein....

Wed, 08/15/2012 - 17:49 | 2708392 poor fella
poor fella's picture

Was that on the website?

Wed, 08/15/2012 - 19:55 | 2708738 knukles
knukles's picture'smore than one/fuckingplague/whatchoutheybite/allergicreactions/socialsecurity/blistersandothermaladies/cockroachprotein.html

Wed, 08/15/2012 - 14:16 | 2707464 donsluck
donsluck's picture

Or trust SS, which in my case will return LESS than I paid in, even without the Republicans "reform" ideas.

Wed, 08/15/2012 - 13:59 | 2707391 francis_sawyer
francis_sawyer's picture

Can I file a claim for 'disability' for being a zombie in the interim?

Wed, 08/15/2012 - 14:03 | 2707418 The Big Ching-aso
The Big Ching-aso's picture



It's hard to consume full time when you work part time.

Wed, 08/15/2012 - 14:17 | 2707468 donsluck
donsluck's picture

That doesn't make sense. The less you work, the MORE time you have to consume.

Wed, 08/15/2012 - 14:31 | 2707520 NEOSERF
NEOSERF's picture


Wed, 08/15/2012 - 15:20 | 2707775 knukles
knukles's picture

So that means I'll live to collect my death benefits, huh?

"lower yields require much higher rates of saving (both corporates and households)"

Duh..... a double dose of deleveraging.
Law of Unintended Consequence again comes home to roots.

Plus, if it's a deleveraging cycle allowed to take it's full course, lower rates don't matter as debt is net being paid down>
And hoping to defer the pain through lower rates just makes matters...

Oh, neverthefuckmind...

Wed, 08/15/2012 - 13:47 | 2707310 vmromk
vmromk's picture

Nothing that a few ass-rapings in jail couldn't do to fix Bernanke's arrogance.

Wed, 08/15/2012 - 13:45 | 2707313 WALLST8MY8BALL
WALLST8MY8BALL's picture


Wed, 08/15/2012 - 13:46 | 2707316 buzzsaw99
buzzsaw99's picture

the only person's retirement the bernank worries about is lloyd blankfein's.

Wed, 08/15/2012 - 13:59 | 2707392 Calvin Jones an...
Calvin Jones and the 13th Apostle's picture

He isn't the only one The Ben Bernank worries about.  There's Jaime Dimon.  The doofus that runs Shittybank.  I'm sure I'm missing 3 or 4 others.

Wed, 08/15/2012 - 14:10 | 2707442 insanelysane
insanelysane's picture

You definitely missed John "you ain't putting me in chains" Corzine.

Wed, 08/15/2012 - 13:46 | 2707318 RunningMan
RunningMan's picture

Is the answer different if we save in gold?

Wed, 08/15/2012 - 14:06 | 2707428 Hugh_Jorgan
Hugh_Jorgan's picture

For awhile.

Then once inflation gets bad enough one of two things: 

Either we will see Gold confiscation like in the 1930's (which will set off a powder keg).

Or, the US Government will relent and allow Gold coins to be used as money again and our $2000 1oz Eagle will be worth $50 face value and it will be illegal to destory them or trade them on the open gold market as raw gold. I could even see them try to use some kind of BS assay tax in case you try to melt your coins into bullion so they can "overcome the rampant gold fraud epidemic" for us.

Wed, 08/15/2012 - 14:20 | 2707479 DoChenRollingBearing
DoChenRollingBearing's picture

Hugh, no I don't think there will be any confiscation.  Not one that will last too long.  We are going to need gold as capital to deploy after the reset.  They may try to to confiscate/tax/or regulate gold, but all that will not work.  FOFOA discusses the low probability of confiscation:


Mickey Fulp (aka "The Mercenary Geologist") recently put up a NICE article on the "rest of the metals" that I post as the last of my series of blog articles (gold, platinum group metals and the rare earths).  They have allowed me to be a syndicator of Mr. Fulp's "Musings", if interested in iron, aluminum, copper, titanium, etc., have a look:

The only one left is SILVER.  Which I do not have expertise in.  Mr Lennon Hendrix, tekhneek or anyone else who knows silver well want to write "The Case for Silver" at my blog?  gmail me at my name if interested.

Wed, 08/15/2012 - 14:37 | 2707548 Shameful
Shameful's picture

Confiscation is not hugely likely, what I do expect is a massive "windfall profit tax".  There would be all of no mainline backlash, people only complain about taxes they pay.  As to not working, it's about financial repression, why wouldn't it?  People wouldn't move gold in, well it's insane for foreigners to move gold into the US now, so what change would there be in that regard?  There isn't much gold in private hands in US, it would be more about being able to use the existing anti tax bureaucrats on gold, and forcing those still trying to save into far worse assets.  Down this road leads to the tragic comedy of buying goods as savings and praying they hold value.

After all gold revaluation or "freegold" would only be in a post dollar collapse.  I'd love to hear a argument that as things get crazier that hte government, which exists to consume resources, will become freedom oriented and promote the free flow of gold and savings.  And the "Other countries will do it" that doesn't seem to be working on old NKorea.

Wed, 08/15/2012 - 14:55 | 2707625 DoChenRollingBearing
DoChenRollingBearing's picture

Shameful, good seeing you around as well as your carefully reasoned responses.

A high windfall profits tax on gold would indeed mean no more imports of gold to the USA.  The opposite would happen, people would find a way to get their gold OUT.

Gold would also be traded fairly freely in the Black/Gray Markets at some point as well.

As to future governments, IF they want their countries to advance (as opposed to a clique maintaining their power being MUCH more important than everyting else, like in N. Korea), then gold will probably be necessary component as capital.

Wed, 08/15/2012 - 15:44 | 2707910 Shameful
Shameful's picture

1.  Correct.  But I argue that importing to the US makes no sense now with it's already sky high gold tax rate, only for us still stuck here in the "Land of the Free".  This has not hurt the US on the global level thus far.  This also does nothing about local mining or the central bank buy/holding it.  The tax would of course only apply to the little guy.  And sure some will try to get their gold out, but by making it illegal/sizable as a tax evasion that will put a damper on that.  Smuggle a roll of American Eagles out past the TSA (Total Sexual Assault)?  Hell at that point wouldn't surprise me if the TSA was running full cavity searches.  Which moves to more professional smugglers, and overland into say Mexico, hardly safe.

2.  By passing legislation about massively taxing gold and barter, while at in the same legislation granting material rewards for whistle blowers would strongly negatively impact black markets, and the attempt to move away from Uncle Ben's Fun Bux.  Sure some people will still do it, but imagine how many more drug dealers would get caught if they had to worry about every buying turning them in for a reward?

3.  Governments looking out for the best interest of the masses?  Where is this land of magical unicorns?  The governing classes exist to enrich themselves.  It that means the people are living in mud huts they live in mud huts.  Now it may come to pass that all the wealth has been consumed and they want another meal which means that yes they would have to let market forces being working once more.  However this would be long after the country had been stripped of all tangible wealth, and even the natural resources fully pillaged.  Probably after a foreign investment phase the likes we have seen in the developing/3rd world, where the political class of course gets their beak wet.

It's in the governing classes best interest to run the financial repression as long as possible and mine out all possible wealth.  It is likely the dollar will give out before all the wealth is 'vaporized' so it would be in their best interest to force the masses to stay on the system while the harvest continues.  Of course this assumes no successful uprisings by the masses.  I have previously written about this and I find the possibility exceedingly remote.

Wed, 08/15/2012 - 16:46 | 2708180 Things that go bump
Things that go bump's picture

There once was a boy in the former Soviet Union, at the time when Stalin was cornering the market on food and butchering the kulaks.  This boy turned in his parents as hoarders.  The government praised him and lauded him a hero for his actions.  But his village, not wishing to harbor a viper in their midst, killed the child.  The government named him a martyr of the revolution and held him up as an example, but I imagine the people took him as an example of what happens if you are a traitor to your own.  

Wed, 08/15/2012 - 14:36 | 2707541 Uchtdorf
Uchtdorf's picture

I'm not so sure that gold confiscation will set off the proverbial powder keg. What percent of Americans own gold coins? Most don't. A little domestic propaganda to quickly label gold owners as "hoarders," and the public is all convinced that our friendly government will be better able to supply them with EBT cards if only they could get that gold out of the clutches of those evil hoarders. Besides, most gold owners also have lots of guns and ammo. They're EVIL.

Wed, 08/15/2012 - 14:38 | 2707553 CommunityStandard
CommunityStandard's picture

Bullish for boating accidents.

Wed, 08/15/2012 - 13:47 | 2707324 francis_sawyer
francis_sawyer's picture

Ben's wishlist:

- If you're old... DIE

- If you're retiring... Get a reverse mortgage on your house... Then DIE

- If you're in the workforce... Keep pedaling

- If you're young... Take out a student loan & buy an I-Pod on credit

- If you're not born yet... Quit loafing around in there and become a tax unit

Wed, 08/15/2012 - 13:48 | 2707326 chistletoe
chistletoe's picture

 Sheesh!  Don't give him so much credit!


The plain fact is that more and more of us were just getting fed up with stuff!

Just overwhelmed with it, tired of getting it, of having it, of taking care of it,

of cleaning it, of hauling it, and of giving it or throwing it away ....

Wed, 08/15/2012 - 13:47 | 2707327 mike904
mike904's picture

It amazes me how such simple things are profundities in America today. Are we all that collectively stupid that we can't graps that low rates destroy equity. Things that would be obvious to a Bengali bus driver are considered brillaince in the US. 

When is a lon not a loan? When you figure out it's never going to be paid back. 


Wed, 08/15/2012 - 13:49 | 2707334 TumblingDice
TumblingDice's picture

Saving for retirement would mean thinking about the future, something that isn't too vogue right now.

Wed, 08/15/2012 - 13:49 | 2707339 SheepDog-One
SheepDog-One's picture

'I need to save HOW much?'

Forget it, dont save at 0% thats just retarded, just trade in worthless Fiatsco's in for some Roscoe's like the Gubment is doing....nice .45 cal pistol 12 guage shotguns .223 rifles the best to have.

Wed, 08/15/2012 - 14:29 | 2707511 PiratePawpaw
PiratePawpaw's picture

When Sam Colt introduced the Peacemaker  in the 1800's, you could buy a new one for a $20 gold piece.

Today that same goldpiece will buy you a .45 a 12ga and a good .223 along with a little ammo if you shop around.

Long Firearms, Bitchez!

Wed, 08/15/2012 - 13:51 | 2707348 Hype Alert
Hype Alert's picture

That's the problem with reality, it's so much more complicated than the economist's models.  Nature has a balance, much like free markets.

Wed, 08/15/2012 - 13:52 | 2707350 YesWeKahn
YesWeKahn's picture

what's really unbelievable is that some thinkless congress people keep praising this idiot.

Wed, 08/15/2012 - 13:52 | 2707352 youngman
youngman's picture

Bernanke does not want you to save...he wants you to spend...spend a new or two......and Obama wants the you come begging to the government for help when you are out of money......then he has your soul......forever

Wed, 08/15/2012 - 14:01 | 2707406 Calvin Jones an...
Calvin Jones and the 13th Apostle's picture

Bernanke does not want you to save ... he wants you to spend ... spend foolishly ...





Don't forget W.'s response to 9/11.  He said to go shopping.

Wed, 08/15/2012 - 13:54 | 2707364 madcows
madcows's picture

Why save when you can pay off your debts first?

If they want to penalize you for saving, Fark them!  You can put all your money at risk in the market.  You can put all your money at risk in the bank.  You can watch your money lose value to inflation while it's parked in bonds or MM accounts.  OR, you can rob the bank of their income stream by paying off your mortgage.  WHY give them 4% interest for 30 years while you play in the market with card sharks and snake oil salesmen?  Pay off your debts and put them out of business.

Wed, 08/15/2012 - 14:20 | 2707478 donsluck
donsluck's picture

Tunnel vision. You obviously have negative net worth.

Wed, 08/15/2012 - 13:58 | 2707376 JohnKozac
JohnKozac's picture

I haven't bought a thing all summer other then food. Don't need any more Geegaws and Thingamajgs. My buddy owns a retial shop. Says sales volume is down over 70% form last year and profits are even worse since the ONLY stuff that sells is discounted 60% at least. He said customers nowadays walk right by things reduced 90%. Amazing! Amazingly bad, he says and will close up shop shortly.


But more importantly, I'm scared and saving every penny. I thought I was well off a few years ago---that's before we lost another 50% of purchasing power the last few years.

Anyone with any sense is saving every penny or at least buying a hard asset like oil, PMs, etc. All the other Crap is depreciating so fast my head spins.


BTW, did Barry break yet another promise; this time about that there $3,000 ?

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