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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AdrenalineTrade's picture

Retirement age now moved to four years after death.

Hippocratic Oaf's picture

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

vast-dom's picture

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

Manthong's picture

There is no conventional solution.

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."

Precious's picture

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

I am more equal than others's picture

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

TruthInSunshine's picture

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

mickeyman's picture

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

mickeyman's picture

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

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?

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.

chet's picture

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


knukles's picture

Say, I saw that...

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

poor fella's picture

Was that on the website?

knukles's picture'smore than one/fuckingplague/whatchoutheybite/allergicreactions/socialsecurity/blistersandothermaladies/cockroachprotein.html

donsluck's picture

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

francis_sawyer's picture

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

The Big Ching-aso's picture



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

donsluck's picture

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

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...

vmromk's picture

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

buzzsaw99's picture

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

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.

insanelysane's picture

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

RunningMan's picture

Is the answer different if we save in gold?

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.

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.

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.

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.

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.

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.  

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.

CommunityStandard's picture

Bullish for boating accidents.

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

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 ....

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. 


TumblingDice's picture

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

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.

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!

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.

YesWeKahn's picture

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

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

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.

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.

donsluck's picture

Tunnel vision. You obviously have negative net worth.

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 ?