Fed Folds: Will Do Open-Ended MBS Buying, Extends Operation Twist

Tyler Durden's picture


Bernanke has acquiesced and is now the 4th branch of the status quo- and all is well in the world:


To summarize:

  • The good news: The Fed's NEWER, OPEN-ENDED and NEVERENDING QE is bigger, longer, and has a Retina display (however its battery life is far shorter).
  • The bad news: The Fed has now confirmed it is merely a sad, political, self-frontrunning caricature of what a central bank should be.




S&P 500 Cash    1437.9
S&P 500 Futures    1437
Dow    13345.43
10Y    1.7247
5Y    0.6522
30Y    2.8815
EUR    1.2895
MBS Spread    0.57993
Gold    1724.35
Silver    32.77
WTI Oil    97.23
USD Index    79.70237
Apple    676.91

Full statement link.

Full redline comparison to the August statement below:

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Thu, 09/13/2012 - 12:48 | 2790298 Canadian Dirtlump
Canadian Dirtlump's picture

Bon3rtr0n 2012 for silva.

Thu, 09/13/2012 - 13:05 | 2790454 lasvegaspersona
lasvegaspersona's picture

gold rose 35 points from pre to post announcement. I guess they couldn't hit the sell button fast enough.

maybe 'they' are finally giving up on suppression as a tool and will allow gold to float to its true value. That would of course be the end of the dollar but the Euro would be lookin good....

Thu, 09/13/2012 - 13:18 | 2790504 franzpick
franzpick's picture

At some point there will be the next raid, but for 6 weeks the pm markets have reflected solid buying. BTFD leaving many in the dust may be an idea whose time has past: buying scale up may be the new strategy:


Thu, 09/13/2012 - 13:33 | 2790683 BoNeSxxx
BoNeSxxx's picture

"Nice for those holding bullion before the announcement!"


And even nicer for those holding since $745/oz...  If only it hadn't been lost to the floor of Lake Hopatcong in that terrible wardrobe malfuntion...

Thu, 09/13/2012 - 14:05 | 2790926 seek
seek's picture

Yeah, if what I bought in '99 for $280 hadn't been stolen, I think I'd be showing breakeven around now...

The annual rate of return right now for anyone with purchases in the 2004-2005 time frame is over 16%, about the same as treasuries were providing during the last big inflation around 1980. Funny how times change.

Thu, 09/13/2012 - 12:41 | 2790225 idea_hamster
idea_hamster's picture


Thu, 09/13/2012 - 12:46 | 2790252 CClarity
CClarity's picture

And still the banks won't lend, Mr. Smith won't be employed with a real wage, and consumption will only be in apple products.  Kids will go into debt for college without employement on the other side (especially lawyers - until Congress, filled with them, creates enough new regs for lawyers to get back to full employment).

This all just takes us into more debt, as much as they may want to call sanitization.  Once i rates start to rise, watch out on servicing the debt with 50% GDP. Ugly bugly.  Lower mortgage rates won't move more houses if mortgages aren't leant.  Just saying.

Thu, 09/13/2012 - 12:50 | 2790315 RopeADope
RopeADope's picture

Likely the FED will only purchase MBS that its masters hold in private funds. That crony counterfeited money will be offshored to tax havens and not transmitted back to the US economy. Its all about money flow to the mediocracy.

Thu, 09/13/2012 - 12:54 | 2790351 5880
5880's picture

MV=YP (kind of)

His printing "M" just fills the deflated "M" of the shadow banking. He knows he's pushing a rope

Thu, 09/13/2012 - 13:50 | 2790801 eatthebanksters
eatthebanksters's picture

Will someone explain it to me...wy can Ben print to infinity but if I do it I go to jail?

Thu, 09/13/2012 - 13:04 | 2790434 earleflorida
earleflorida's picture

how does the mortgage market move?

every time housing inventories go down the buyers rush in for fear of missing the bottom...

then, just like magic... the housing inventory is again flooded with 'recycled gargantuan lots', of banked foreclosed properties...

let the dumping continue until the dump is burnt to the ground?

wash, rinse, and repeat... using ad infinitum detergent


Thu, 09/13/2012 - 12:40 | 2790209 LMAOLORI
LMAOLORI's picture



I feel vindicated I've been saying all along he would save obama and the markets middle class be damned!


John Williams - Sell-Off in Dollar Should Evolve into Hyperinflation

Thu, 09/13/2012 - 12:56 | 2790362 CaptainObvious
CaptainObvious's picture

CTRL +P bitchez

Thu, 09/13/2012 - 13:12 | 2790514 Blasé Faire
Blasé Faire's picture

Presses Ctrl+P.  Computer asks for printer preferences.  "Hmmmm how many copies...?" "Hey Steve, how much paper do we have in the basement???"

Long cotton-fiber bonded paper.

Thu, 09/13/2012 - 13:24 | 2790622 Arnold Ziffel
Arnold Ziffel's picture

$200 oz silver is what John Williams at Shadow Stats predicted awhile back in a radio interview.

He gets The Cigar soon.

Thu, 09/13/2012 - 14:02 | 2790884 eatthebanksters
eatthebanksters's picture

Will someone explain this to me:  if Ben can print to infinity, why will I go to jail for doing the same?

Thu, 09/13/2012 - 12:36 | 2790176 Stackers
Stackers's picture

and aaaway we go .........

Thu, 09/13/2012 - 12:34 | 2790150 fuu
fuu's picture


Thu, 09/13/2012 - 12:40 | 2790213 ParkAveFlasher
ParkAveFlasher's picture

My cheeks are flappin'!!!

Thu, 09/13/2012 - 12:42 | 2790242 tocointhephrase
tocointhephrase's picture

Female then?

Thu, 09/13/2012 - 12:45 | 2790269 ParkAveFlasher
ParkAveFlasher's picture

Is that you Willy Wonka?  I can see my house from here!!!

Thu, 09/13/2012 - 12:43 | 2790245 Floordawg
Floordawg's picture

time to cue "not for profit" seller

Thu, 09/13/2012 - 12:46 | 2790271 Zero Debt
Zero Debt's picture

Be warned: this is 40 billion USD per month of UNSTERILIZED QE. This means NEW MONEY will keep entering the system in "exchange" for junk paper.

And the worst of horrors: This is an open ended program. It will keep going on and on because the economy will not improve because of this.

This is a very very sad day and there are dark clouds forming at the horizon. Be prepared for worse things to come.

Thu, 09/13/2012 - 12:49 | 2790307 phalfa5
phalfa5's picture

one just won't do  ...    gotta get me a QE6-pack

Thu, 09/13/2012 - 13:12 | 2790512 odatruf
odatruf's picture

Apple is already on version 5. The Fed are a bunch of pikers.


Thu, 09/13/2012 - 12:52 | 2790334 pods
pods's picture

That was my take.  Operation Twist with a twist.  45 billion per month in Twist, and add in another 40 billion a month in printing.


Thu, 09/13/2012 - 13:03 | 2790424 DavidC
DavidC's picture

This 100% a bubble that's being blown and 100% it will crash - it may not be this week or next month but it will blow, and when it does it will be hard. Very hard.


Thu, 09/13/2012 - 13:15 | 2790542 kralizec
kralizec's picture

Merely the last bit of Kabuki before the collapse is all.  This is a good thing.  ;)

Thu, 09/13/2012 - 13:23 | 2790596 CPL
CPL's picture

No. Wrong.


40 billion times 9.  Every Hard dollar may be loaned out 9 times to credit facilities.

You live in a fractional reserve banking and lending system.  40 billion becomes 360 billion of credit per month to be vested FROM bonds to derivatives to pay 30 year old bonds with 12% payments coming due.


Over the next three years they will release, 12 trillion dollars worth of credit.


Get it straight.

Thu, 09/13/2012 - 13:55 | 2790818 Zero Debt
Zero Debt's picture

Credit money creation is not as certain as raw high powered Federal balance sheet money expansion, but then again, the money multiplier/credit limit from QE1 and QE2 has not been utilized either.

Just a little tipping point to increase the monetary velocity is all that is needed for things to move to a different regime.

Thu, 09/13/2012 - 13:28 | 2790655 LucasATX
LucasATX's picture

I don't understand. Won't most of this "money" end up being held as foreign cash reserves? It will never really enter the US system - well at least until Romney gets annointed by TPTB and starts banging the drum of tax free cash repatriation for corporations.  As long as corporations continue to sit on record amounts of "cash" and all of that "cash" is in the hands of a very tiny group I am not sure how hyperinflation could ever happen. I just think that the evolvement of the country will continue into 2 distinct societies - One that holds the vast, vast, vast amount of the "cash" and the rest of us who are forced to work as wage slaves in order to pay off our "cash" debts or end up spending time in corporate run prisons.

Fri, 09/14/2012 - 00:04 | 2793486 StychoKiller
StychoKiller's picture

The honey I fermented last year (Mead) sits at 13% (by volume)...bottoms up, folks!

Thu, 09/13/2012 - 12:34 | 2790152 Hippocratic Oaf
Hippocratic Oaf's picture

Fuck the fuckin fed fucks

Thu, 09/13/2012 - 12:34 | 2790154 Silver Bug
Silver Bug's picture

QE to infinity is here to stay.



Thu, 09/13/2012 - 12:35 | 2790158 The Wizard of Oz
The Wizard of Oz's picture


Thu, 09/13/2012 - 12:37 | 2790195 AL_SWEARENGEN


Thu, 09/13/2012 - 13:03 | 2790428 ParkAveFlasher
ParkAveFlasher's picture

<<<$1800 today

<<<$1800 tomorrow

Fri, 09/14/2012 - 00:05 | 2793488 StychoKiller
StychoKiller's picture

Better question:  Why in the Hell is the $ and the Euro rising too?

Thu, 09/13/2012 - 14:50 | 2791273 Shitters_Full
Shitters_Full's picture

Atta boy, Al.

Thu, 09/13/2012 - 12:37 | 2790188 FL_Conservative
FL_Conservative's picture

Looks like they won't STOP until we're all standing outside of Marriner Eccles with our pitchforks in hand.  Better go find mine now.

Fri, 09/14/2012 - 00:11 | 2793495 StychoKiller
StychoKiller's picture

Will a rake or a pickaxe do (as a substitute)?

Thu, 09/13/2012 - 12:59 | 2790383 phalfa5
phalfa5's picture

Question:  When these MBS start to come off/expire, where does the "created" money go? 

Thu, 09/13/2012 - 13:41 | 2790716 earleflorida
earleflorida's picture

The "New Deal `Eminent Domain' Program" of the `Great Recession'... via aka. indiscriminetflation ?

Thu, 09/13/2012 - 13:02 | 2790412 Ponzified Plebe
Ponzified Plebe's picture

This just in, a singularity has just developed beneath the Federal Reserve's Washington DC office, and is set to devour the rest of what little value remains in the US dollar. While reports are preliminary it is said that the black hole, certain to siphon off the few productive resources and assets of an already staggering domestic economy, initially occurred when the self collapsing vortex that is comprised of Fed Chairman Bernake's titanic ego, hubris, and intellectual dishonesty imploded from the quantam fluctuations eminating from his irrepresable urge to "Ease".

Thu, 09/13/2012 - 13:17 | 2790556 HANKREARDON

That is 'gross'

Thu, 09/13/2012 - 13:18 | 2790559 Uncle Remus
Uncle Remus's picture

This is Sproiticus.

Thu, 09/13/2012 - 13:50 | 2790778 Jake88
Jake88's picture

"Gross just came." Did Erin Burnett come with him.

Thu, 09/13/2012 - 12:34 | 2790141 tsx500
tsx500's picture


Thu, 09/13/2012 - 12:34 | 2790143 HelluvaEngineer
HelluvaEngineer's picture

Fuck me.  I'm out.  Fucking criminals.

Thu, 09/13/2012 - 12:40 | 2790214 samcontrol
samcontrol's picture

out of what? I'm in reits,gold, silver....had orders to get more toilet paper If he announced..

By the way i got it wrong again, i was sure they would wait.

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