Ever Less Bang For The Printed Buck

Tyler Durden's picture

As markets crave their next fix of the money-printing elixir, perhaps it is worth noting the ever-decreasing impact that the quantitative easing experiments have had on 'measures' of the real economy. This seems to suggest that either: "we're gonna need a bigger boat" and the ongoing QEs will need to be exponentially larger than the prior in order to enact change in the 'measures' of real economy; or, the Fed has hit its limit as yet another 'multiplier effect' has been proved wrong in the limit and all we get to play with is the unintended consequences of a hidden inflation peering into view. Of course this is typical Keynesian dogma: if at first you don't succeed, do it again but bigger, more global, and with more geopolitical danger.


From QE1 to QE2 to Twist, the real economic impact, as measured by the ECRI weekly growth index, has risen by smaller and smaller amounts. What is also evident is the 'overshoot' that our horde of economists has consistently forecast with each QE as the ECO surprise Index rips higher on the liquidity flood and then reverts rapidly as reality sinks and sustainability becomes fallacy and not fact.

Finally, LTRO managed to juice the ECRI growth rate a little more this year - as is clear from its break out of the red oval - which was looking perilously similar to 2008 - and indeed, given the ECB's cornered nature, may still prove to be the analog to watch.

Charts: Bloomberg

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icanhasbailout's picture

anyone seen a "diminishing marginal utility of debt" chart that's been updated recently?

Colombian Gringo's picture

Don't need one. I just go shopping for food and purchase gas and notice that my dollars buy less.

AlvarezEarnestine7's picture

my best friend's sister makes $63/hr on the computer. She has been out of work for eight months but last month her pay was $18250 just working on the computer for a few hours. Read more on this site...   http://goo.gl/2tEsp

SheepDog-One's picture

QE doesnt impress anyone any longer its not 2008 after all. Come on Ben just let the markets drop your time is up!

ArkansasAngie's picture

You can rest assured that that will not happen until after the election.  Of course ... the Republicans were betting on that too in 2008.  Instead it came before.

I guess we will see if Benny and the boys are Repuiblicans or Democrats by whether they let the market crater before or after the election.


Chuck Walla's picture

You can rest assured that that will not happen until after the election.  Of course ... the Republicans were betting on that too in 2008.  Instead it came before.

I guess we will see if Benny and the boys are Repuiblicans or Democrats by whether they let the market crater before or after the election.


They are the elite. You are arguing Harvard vs Yale here.

kito's picture

when you hear that the housing bottom is "in" because place like phoenix are moving inventory, laugh loudly and point them to this:




yogibear's picture

Municipalities can keep slapping higher and higher property taxes on the warm bodies now owning these.

vmromk's picture

Money printing elixir.....that's fucking brilliant !

Bernanke, FUCK YOU.


EconSammie's picture

Yes and it looks as though that QE is no longer controlling interest-rates. Take a look at this from the UK.

The Bank of England plans to buy some £1.5 billion of UK Gilts (2015-19) today as part of its programme

All those Bank of England Gilt purchases (£300bn+) seem unable to stop rising mortgage rates as the Co-op hikes its SVR to 4.74%


So yet more being spent today and what the UK gets is yet more announcements of rising mortgage rates!



bank guy in Brussels's picture

In Berlin, today's German Finance Ministry building, was originally the headquarters of Nazi Reichsmarshall Hermann Göring and his Luftwaffe, Hitler's air force.

No doubt, 'good office space'.

Jason T's picture

A plant can only handle so much fertilizer.  Too much and you kill it.  

When you make this deal with the devil, the father of lies, to print you money, you get nothing but a road to hell.  

BeerBrewer09's picture


We're trying to get the muppets to sell their gold/silver/homes/land and any other meaningful assets back to us for pennies on the dollar, just so they can afford to eat pink slime and watch The Jersey Shore.

So far it's working brilliantly.


Monedas's picture

Ever try pushing a wet noodle up a Chinaman's ass with your nose ?  I was counting on a few negative replies !  Quantitative easing tolerance is at play here !  It's like bringing a six pack to a party.....one is none, two is one, etc. !  Monedas   2012   Comedy Jihad Spiking The Punch Bowl Tour

Bicycle Repairman's picture

Is QE about saving the real economy or saving the banks?

Woodyg's picture

The Banks Are the economy.... Who needs Main Street - that's just noise outside the gates of the guilded city....

Keynesian was supposed to be like FDR and Harry Hopkins - 97% straight to wages - 30 hours a week at prevailing wages with the majority required to be sent home to either the wifey or the parents......

Now keynesian is handing huge jack to the Banksters to gamble with and drive up Inflation calling it growth.

Banks used to be 7 - 10% of GDP.... Now they are over 40% - that extra 30% is False Profits - so we'll actually living in a country papering over the fact that our GDP is in reality only 10 trillion or so.... Federal debt hiding the reality.

Bring back the silver guillotine.

Quinvarius's picture

Nothing will get any better until gold is priced high enough to credibly back the dollar and the government stops spending.

Mr Lennon Hendrix's picture

The index is showing an inflextion point on the horizon, the next downdrawft.  Tyler surmises that QE has become measured; the conundrum is its impact, or lack thereof.  So we are about to see the next downdraft, to about Dow 12,800.  If nothing is done by the Currency Printers, the Fiat Ponzi will stumble; if the Ponzi stumbles, it could prove costly to policy, as it will show cracks in the Fed's dam.

Policy is all the Fed has.  It has no real tools, dispite how Bernanke's quotes read.  He dreams of "laser like tools", and says he settles for what he has, but his hopes are creations of impossibility, considering the cruz of his system, a ponzi in and of itself, is fiat.

With the indeces goes the system and with the system goes fiat, but when we start at the end we realize how it all began.  The end is the support, the crux of the arguement, and here we have no sound fact.  Fiat is, and litterally means, nothing - the system is supported by nothing.  Bernanke's system holds no basis and has no support.  Therefore, when he does his QE, it is merely a wave of a wand, a poof of smoke, and by the time he is done with his trick bag, the audiencewill be tired and hungry from what has become a rather boring show.

slewie the pi-rat's picture

surpriZing how many surpriZe indices there are

they're all very important tho, and indicators of which analog to watch to see if it is 2008, again, apparently

we are also doing 1929, pearlHarbor, 2011, 1789, and 1913, this week, again, too, i'm sure...
oops! i forgot Noah! and weimar! and babble0n!

meanwhile, back at theRanch...daBoyz are checking to make sure everything is scrrrrewwed down tight [t.y. so much, jnIrving!] with...

0MfukingGoodness! a torque wrench!

Zero Govt's picture

despite a tripling of most central banks balòance sheets since 2008 i don't feel any trickle-down of productive stimulis ...weird!

Nor can we see any green shoots, probably because the largesse was pissed away on zombie banks who've grown even bigger when there should have been a forest fire to clear the canopy of dead wood and let new growth emerge

we have the economy Benny built ...a forest of rot everywhere you look

iamse7en's picture

Haha... what you're saying is... the analogy of monetary heroin is PERFECT?