Dallas Fed: Why We Must End TBTF Now!

Tyler Durden's picture

"We're on the road to economic stagnation" is how the Dallas fed describes the status quo as Too-Big-To-Fail (TBTF) is forcing the US economy to suffer from the perpetuation of perverse incentives. We want to get back on the path to prosperity and they note that there are some things monetary policy can't fix (well we know that already) but in this case they demand an end to the TBTF paradigm now. In an excellent presentation of the costs and benefits of ending TBTF (defined rather tongue-in-cheekily: The unwillingness of a government entity to abruptly close an insolvent company and force its creditors to sustain sizable losses due to the company’s size, complexity, interconnectedness and general significance within the financial system), the ignorance of the process of creative destruction is critical as they note that a sick (or failed) bank cannot lend: "Undercapitalized banks gum up the working of the interdependent moving parts of the monetary policy engine". Dismissing the Dodd-Frank Act as a distraction that doesn't buttress market discipline, they summarize their guiding principles as: End banking oligopoly power; punish failure quickly; and change the do-or-die (M.A.D.) decision-making paradigm; ending with the threat promise suggestion that Restructuring isn't so radical, firms do it all the time.

How the Dallas Fed sees the world with TBTF...


Why TBTF is impacting everyone adversely...

And why we shoould feel bad for the Fed...(or not)

Full Presentation below

Dallas Fed

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surfsup's picture

They will always need artificial sustention with this system, period



What is "artificial sustention?"

Given that only legitimate credit-worthiness justifies the perpetual lending necessary to maintain a vital circulation subject to interest, and further given that the perpetual re-borrowing of interest and principal as subsequent debt (principal) inherently multiplies the sum of debt in proportion to a vital circulation... a system subject to interest inherently terminates itself by eventually engendering a sum of debt which exceeds the capacity of the circulation to service it.



Because usury can only prey upon a living host, in the late stages of this finite lifespan therefore, the intention to perpetuate usury is compelled to resort to artificial means for temporarily sustaining an interest-bearing monetary system beyond its legitimate capacity to sustain itself against its own, inherent, terminal multiplication of debt. Effectively then, artificial sustention is to break the rules of the system so that sufficient, unaccountable streams of money infuse the system with some capacity to continue servicing private debt, while of course the same unaccountable stream of circulation is only consumed in the continued servicing of private debt, to the sole benefit of the perpetrators of the imposed system. While artificial sustention artificially extends the lifespan of the system beyond the terminal conditions it imposes upon itself, artificial sustention ultimately comprises at the same time, a way both to extend peak volumes of usury and to publish money almost directly into the pockets of perpetrators and servants tied to their purse strings.


According to the designs of usury, the perpetually processed money of usury comes into existence upon virtually costless creation, whereupon it is loaned into circulation at falsely asserted risk, which purportedly justifies the initial and perpetually multiplying costs of interest, manifested in the escalating, eventually terminal indebtedness engendered by maintaining a vital circulation.

While the real risk to the purported central bank is no more than the publishing costs of the currency, and while this is typically recouped at great unearned profit from the first payment, hypocritically nonetheless, a necessary facade of diligence exists, which, to certify the purported risk that an incredibly profitable monetary obligation be fulfilled, establishes the credit-worthiness of the debtor, who is uniformly denied credit should they fail to meet the rising costs of servicing the multiplying sum of debt. While multiplication of debt by interest itself makes it ever more impossible to meet periodic principal and interest obligations engendered by the ever greater sums of debt, denial of credit — or due, vital circulation — upon failure to meet the artificially lofty standards of credit-worthiness, drives the subject sea of debtors to produce ever more, to borrow ever more, to service such sums of debt that they receive ever less of their own production.

As all this multiplies the sum of debt in proportion to a circulation, in the end of the finite lifespan of a monetary system subject to usury, the debtors struggle merely to tread water, as the costs of servicing the multiplying sum of debt come to exceed them. At the threshold of systemic failure under these maximum loads of usury, artificial measures can temporarily extend the lifespan of the failing system — with the notable and substantial motivations being to evoke a facade that there is no culpability, to perpetuate the necessary false impression (in the face of works such as this) that any magnitude of debt is magically sustainable, and not only to sustain usury, but to sustain usury across a period marked predominantly by peak volumes of unearned taking by usury.

Because the terminal stages of usury destroy the credit-worthiness of private subjects to maintain a vital circulation, if some other means of replenishing the circulation were not devised, the system would deflate in its natural manifestation of collapse, as the subjects paid their last revenue out of circulation, incapable of borrowing further. Necessarily then, artificial sustention involves replenishing a circulation by accumulating further debt which the subject system is in fact unfit to service. In other words, in the final stages of usury, usurers are compelled to issue credit which the central banking system cannot truly hope to recoup directly from the debtor. Instead, this stream of unaccountable credit sustains the vaster sum of private debtors to service their exceeding sum of debt, that the system can for the while continue.

Artificial sustention therefore is a pouring of money into the system as necessary to maintain a deception of seeming vitality in the face of an artificially extended period of maximum volumes of usury.


engineertheeconomy's picture

Ask my children if "Usury is payable?" and they will laugh at you deeply and fully, deriving immense pleasure

The question is not how they're going to dismantle the european union, the question is how we're going to dismantle the United States

Which state has the most gold per capita?

Thats the state where I'm going

carbonmutant's picture

You might want a place with a state-owned bank...BND

tomRapheal's picture

Little OT but this is awesome:  Someone telling the Fed whats up.  He calls upon them to "leave the building"


mkkby's picture

Dallas Fed vs NY Fed is precisely Wall Street vs the entire world...  All the people in the world vs all the resources in the world.

The trend is your friend's picture

close your eyes and buy

GeneMarchbanks's picture

Joe Schumpeter, a child's doodle and a chart on the 'complexity' of decisions. That had something for everyone.

What can one really say? I laughed, I cried, I reached for the rope.

vast-dom's picture

the doodle shows a road to prosperity....but before you can turn you need a great econ reset and that isn't in the picture.....or continue along status quo and get an even worse econ reset -- this is the problem with choices and pictures -- it seems the price is never truly factored in, even from those that want the real change.....oh well, pics....

francis_sawyer's picture

Who put the purple micro dot in the Dallas Fed's coffee?

SilverTard's picture

Even pathological liars eventually know when the "gig is up".  Now is time for the thought in their heads "hey, maybe I can still get out of all my lies. Hummm, how can I unwind this and get away with the least amount of personal damage."


SemperFord's picture

Agreed, so in the future(probably for some political reason) they can say "Hey I wanted to end the TBTF policies"

AnAnonymous's picture

Even pathological liars eventually know when the "gig is up".


That is not that. Too inclusive. US citizens would like to sell US citizenism as all inclusive stuff for things like that, but it is.

The gig is up for some segments of the US citizen population.

The gig will keep on for quite some time for the rest.

Those excluded would like the gig to stop for everyone else because it was part of the US citizen group covenant from the start. So they thought.

But the gig will keep going. And US citizens who are no longer welcomed at the party will be invited to see if they can gig up elsewhere.

TheFourthStooge-ing's picture

AnAnonymous said:

That is not that.

Easy for that you to be saying now is.

That is not that, for that is this. And because this is that, this is not this.

Chinese citizenism frog gigging, up to the stars and beyond.


LawsofPhysics's picture

How about simply prosecuting the the fucking fraud and letting bad business models and bad leadership fail for a change.  Of course, once again the issue of energy and the role of oil in the world economy is ignored.  FAIL.

The reason Nature works so well is because bad behavior has consequences, not so much in the human financial ponzi.  In the latter, bad behavior is rewarded.

A Nanny Moose's picture

That would require those government proscutors to get off their fat pension collecting, short timer asses and do their fucking jobs...wouldn't it?

EscapeKey's picture

Before you can address that, you need to address the revolving doors between the Treasury / Federal Reserve / investment banks / enforcers / rating agencies.

But obviously, since their tentacles reach into the White House as well, that's easier said than done.

OldE_Ant's picture

lol.  you have to be kidding, prosecute my best buddy who I learned how to be a multimillionaire with?!  Please,  this is the good old boys club and new members are by INVITATION only. (we arn't invited)

This is the new world of how we are supposed to treat others how 'they' want to be treated.  A new world of 'if it looks and tastes good, IT MUST BE GOOD'.  Where failures must be assisted, risen up until the FOOLS are KINGS.  Where there is a fabulous 'BLUE' pill that will fix everything in a jiffy. (Heck we even have a rainbow of colors to satisfy all your sensory needs)

That same world where mean horrible evil nature is chopped into tiny little bits and processed into soylent green for everyone to put up as art, burn as fuel, or eat as yummy green meat cakes.  And lastly where the only law is "Finder keepers, losers weepers (until the next govt program rewards the losers)".   It doesn't matter that I stood on your head, with a loaded 9mm in your face until I found your wallet, RIGHT?!  Your insured?  RIGHT?  

You have been taking your blue pill intervals RIIIGHT!!!!

lol.  Really.   We have been chewing into our societal reserves so hard and fast now that even the slightest failure is TBTF, which means nothing will change, until it all does.  Printing money does not make an economy, having a war and destroying 1/2 of all buildings etc does not make a good economy.   Right now we really don't have markets, governments don't represent people, our economies suck, leaders don't have a clue what leadership means (nor any balls to stand up for anything) and not a lot is good.   The problem is nothing has gotten bad enough yet (we are still running on the fumes of the past few centuries).  Even a dead car at 70 will roll a good 1/4-1 mile before it stops.

Ooops.  Sorry. It's time for my Blue pill.

ArkansasAngie's picture

You know how we used to put in prison guys who came up with ways of defrauding the customer on the bases of taking the rounding error and pocketing it?


Today it is legal and in many ways encouraged.  The Fed is intentionally allowing banks to make billions so that they can slowly build capital through inflation being directly into them and not the rest of society … aka … a backdoor bailout that increases their ownership in proportion to those not receiving the bailout.  This is good?  How?


Break up the banks ... now is a good day.

Milton Waddams's picture

Mmmm... What we need is an alien invasion, to introduce more credit worthy borrowers. Only then can the sick/failed banks take on prudent risk.

GMadScientist's picture

Would 100M economic refugees from the effects of The Bernank's monetary policy overseas with unsecured lines help?

Bring us your poor huddled masses, bitchez.

Oh,...you meant space. ;)

j0nx's picture

Already done. Every able-bodied Mexican or Central American male is already here in the states. They sold them all houses during the boom but now all of them have lost those homes and are destitute renters living 10 to a house in most blue collared communities along with the section 8 gimmedats. That worked out real well for us as a society didn't it...

GMadScientist's picture

Purge the blackholes or forever succumb to their (depra|gra)vity.

ElvisDog's picture

Fuck you, Dallas Fed. This is merely the same old "bad cop" bullshit that comes out every so often in a pathetic attempt to convince us that the Fed is balanced and looking out for the interests of the common man. How fucking stupid do you think we (the common men) are? That same Dallas Fed will fall into line and vote for more QE, more ZIRP forever when the time comes.

SilverTard's picture

LOL... You think?  ;)


mendigo's picture

You can tell when they are lying...

The issue is not TBTF rather is a government run amok and controlled by the actors that it is supposed to oversee. We should be greatful the we have these bureaucrats to act on our behalf and run these compnies and see that our children are properly educated and then offer them gainful emplyment hunting terrorists.

Rathmullan's picture

A glimmer of hope. Fisher for Fed Chairman. Can bubble boy ben, dudley and evans.

Dr. Engali's picture


"We're on the road to economic stagnation"


Seriously? More like we are on the road to perdition.  Sometimes I think they throw these little tid bits like end the "too big to fail" out there just to make us think there is  semi sane person on the committee.

espirit's picture

History has shown that the "sunk cost fallacy" ends in economic collapse.

You kick the can until it reaches the cliffs' edge.

GCT's picture

The next presentation will be blame the politicians.  All the dicks want to do is pass the monkey around.  Next stop congress.  They are all lairs.  They will do whatever it takes to keep the status quo.  The Dallas Fed is setting the stage for the next frigging lie. 

Debeachesand Jerseyshores's picture

Speaking of "the cliffs edge",we are heading for the "cliffs edge" on Dec 31st 2012 if the dipshits in Congress and the White House don't do something about the Bush Taxcuts sunsetting etc on that date.

Than the SHTF for sure.

SmoothCoolSmoke's picture

Lying...... the new black.

EscapeKey's picture

Yes, let's end the TBTF now!

The Fed itself is surely TBTF, so that must be wound up. And one could make the same argument with regards to currency monopolies as well.

Milton Waddams's picture

On second thought this looks like thinly veiled political propaganda. Note that inthe first image the status quo is slightly left of center while the road to prosperity takes a hard right turn. This is not by accident, IMO.

HyperLazy's picture

When the Dallas FED starts issuing currency without debt interest, then I will believe them. Otherwise, this rings of Red Herring.

Widowmaker's picture

The Dallas Fed? 

Who the fuck cares about the Dallas Fed - they are just for show.  

"Oh look daddy, the Dallas Fed is giving away free ponys to anyone that swallows the NY Fed load."

What's next, the Kansas Fed gonna tell it how it REALLY is!?

The Fed IS institutionalized fraud -- 100% money-monopolist bullshit.

Bay of Pigs's picture

Anyone who listened closely to Richard "Dick" Fisher yesterday knows he is a liar and completely full of shit.

He called Jamie "Legs" Dimon, "a good guy".


j0nx's picture

Good FED bad FED. Scammers, all.

Eric L. Prentis's picture

I love the Dallas Fed for their 2011 Annual Report.


Choosing prosperity over TBTF is a no brainer, but difficult to say when you are part of the status quo.

Widowmaker's picture

They only want to close the barn door now that all the horses have been long gone for 4 years now, and record bonuses paid a few times over.  Robbing widows and orphans is the Fed solution to criminal banking.


Bay of Pigs's picture
"Nobody has any more integrity than Ben Bernanke. He is like my brother" Richard "Dick" Fisher (direct quote today on BNN in Canada) The FED good cop blames Congress for all our problems. No doubt Dick...
MFL8240's picture

Hahahaha!!  End it now after you gave these fucking criminals 5 Trillion tax payer dollars.  Give me a break!

BandGap's picture

They stole all that taxpayer money and now this steaming pile is presented as an "us against them" situation? Really? How many banks in the Dallas Fed district took money? Are they all going to give it back if they "fail"? They threatened banks that they had to take the money. They have set up conditions for a Federal Bank by choking the living shit out of the "too small to give a shit about" banks. the ones left standing are the ones that robbed us. Fancy that.

Help me out, who elects the Fed governors? NO ONE. These idiots treat us like we're too stupid to figure this shit out? Steal from us and then point at others in their group as thieves?

Unwind, yes, unravel even.

semperfi's picture

PROPAGANDA - lip service - scripted devil's advocate bullshit for the unwashed masses who still think the authorities are legitimate.

jayman21's picture

What are the banks in Texas that would benefit from the Dallas Fed shooting its mouth about NYC banks or Charlotte banks?  Trying to follow the money and corruption folks.

OR....It could just be bread and circus for smart people.

Whatever they are up to cannot be good and will not end the fractional reserve system.  That is the only thing to do, the other issues will sort themselves out.

LawsofPhysics's picture

With numerous energy resources and cheap labor already in place, I don't think Texas really gives a shit.  Texas will do its own thing soon enough.  A funny thing happens to federal governments when states/provinces figure out that the Fed is all bark and no bite.

AnAnonymous's picture

A funny thing happens to federal governments when states/provinces figure out that the Fed is all bark and no bite.


Sheeple are everywhere. If only they would open their eyes and see...

US citizens are good people deep inside but they are misled by a heartless, selfish elite etc...

A bit like Peter Schiff's pulling the plug story back in the 2008s.

One day, all people around the world will figure out what scam the USD is and will pull the plug off.

Delay can not be because US citizens, the provinces, states and the rest know well they have the fairer deal possible while being under the umbrella of the federal government.

The Alarmist's picture

Nah, we'll all join you and flock to the RMB and the glories of Chinese Citizenism.

AnAnonymous's picture

Well, as chinese citizenism is just fantasy invented by US citizens as they can not cope with the realities of US citizenism...

TheFourthStooge-ing's picture

Ha, hahaha, ha, made me laugh.

US citizenism is just fantasy invented by Chinese citizenism citizens as they can not cope with the realities of Chinese citizenism...