• Sprott Money
    05/05/2016 - 06:02
    Why is a Deutsche Bank mouthpiece suggesting “negative retail deposit rates or perhaps wealth taxes”? The answer is to (supposedly) stimulate our economies.

The Fed May Be Pumped Up

Tyler Durden's picture




 

Via Mark J. Grant, author of Out of the Box,

Not So Fast
 
“For every action there is an equal and opposite reaction,” Isaac Newton tells us. It is within this context that we also account for “unintended consequences;” those nasty things that no one thinks of that tend to jump out of the bushes at you when you thought you had everything figured out. In Bernanke’s rush to increase employment and raise asset prices and lower mortgage rates, if not to help the President with his re-election; I would assert that the Fed did not go far enough in its thinking and that they may get stung by what they have not considered.
 
The issue here is gas at the pump.
 
Far more important to most Americans than the interest rate on their mortgages is how much they have to pay to fill up their cars. This is true, I think, for the group affected by both costs but the amount of people in the United States that have no mortgages and still have to pay for gas to go to work and the grocery store is a far larger amount of people than those that own houses. Further, the amount of time necessary to lower mortgage rates is a much longer proposition than the time it takes to raise prices at the gas stations. With oil hovering around $100.00 and likely to go higher as a consequence of the Fed’s recent actions; trouble may be brewing.
 
Even without Bernanke’s recent move the price of gas has escalated dramatically. Regular gas, since July 1, has risen 54 cents to $3.87 which is a 14% move up in just two and one-half months. It is now highly likely, in my view, that regular gas will reach $4.00/gallon and move higher from there. This will cause a hue and a cry from the streets and the Press will turn its attention to this and the Fed and Mr. Obama may well get blamed for this outcome and hence the “unintended consequence” swings fully into view.
 
European Banking Oversight
 
After this weekend’s meeting of the European Finance Ministers it is crystal clear that no new banking oversight authority is imminent. While it was a grand plan concocted in Brussels and unveiled with virtual threats that it had to be enacted immediately to save Europe; it was a flop at the meeting. The Financial Times says that any of the twenty-seven nations can veto the proposal and the push back from Sweden, Finland, Britain, Germany et al was loud and boisterous. You may recall that this concept was one of the cornerstone’s for Germany to allow the ESM to provide money directly to European Banks but it appears that it may have been more of a political place to hide than what the Germans really wanted and, in any event, the Brussels plan is nowhere close to what the Germans had in mind. The meeting had any numbers of countries intoning, “Not Happening” in a variety of languages and dialects. The two connected issues of loss of sovereignty the lack of desire to be accountable for the banks of other nations poured like a Tsunami on the scheme dreamt up in Brussels. The Germans were quite clear, once again, that any money for the Spanish banks, as one example, would have to go through the Spanish government and they would have to be accountable and also audited by the various EU institutions and by the IMF. The odds are virtually 100% that nothing will be accomplished in 2012 and quite high that nothing will be accomplished ever given the absolute power of a veto on this issue. The roll down would then be no money directly for any banks of any nation and no change to the current structure of the Stabilization Funds.
 
Vive la Difference
 
The recent position of the Fed was spelled out and will be enacted. You may be happy, unhappy or camped in between but they will do exactly what they have said they are going to do. This is a Continent apart for the recent announcement of the ECB and should be noted. The European Central Bank waved the banner of “unlimited” and “without cap” subject to the CONDITION of the EU’s acceptance and audits and the approval of any nation applying for aid. It may not have dawned upon you or most of the world but the ECB may never do anything as a result of the yoke that it placed upon itself; nothing at all may ever happen. If the Austrians and the Dutch are to be taken at their word and no more of their money is going to be used to bailout other nations then all of the fluff raised upon giant banners may be no more than flags waving in the wind. The strategy has worked to date and driven down interest rates but when people figure out that the condition is actually an impediment; the winds may begin blowing in the other direction. If “A” depends on “B” and “B” is not forthcoming then “A” is a worthless proposition.
 
Tell no one that I told you though. It could cause indigestion in Brussels and their food is rich enough now and costly enough for the other nations in Europe. It is a funny thing you know; when a promise made is not a promise kept then Pandora jumps about with her little box of miseries.
 
“Let the key guns be mounted, make a brave show of waging war, and pry off the lid of Pandora's Box once more.”
 
                         -Amy Lowell

0
Your rating: None
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sat, 09/15/2012 - 20:41 | 2799558 goldfish1
goldfish1's picture

Far more important to most Americans than the interest rate on their mortgages is how much they have to pay to fill up their cars.

Price per gallon bitchez.

Sat, 09/15/2012 - 20:44 | 2799563 Lost Wages
Lost Wages's picture

It is becoming even more important, as most Americans will soon be living in their cars.

Sat, 09/15/2012 - 20:52 | 2799576 Yen Cross
Yen Cross's picture

" Americans are living in their cars"    I deeply care about home/less/ness!  I donate, and have been there.

    These people aren't losers. They aren't forgotten!    Part of my " Trading/fiat" company has/will be " actively donated"

   currently/ and " in trust"!

Sun, 09/16/2012 - 03:49 | 2800066 qqqqtrader
Sun, 09/16/2012 - 04:58 | 2800116 TwoShortPlanks
TwoShortPlanks's picture

Amerika has a lot further to fall than most think...they will not be able to turn the PetroDollar into a FractoDollar. So expect to start paying prices which everyone else around the world has been paying, for decades.

Sun, 09/16/2012 - 11:02 | 2800474 LMAOLORI
LMAOLORI's picture

 

 

That is the plan obama want's $8 gas anyway and so do his gloBULL warming followers. The other portion of his voter's won't blame him they believe he is just being blocked at every turn they said so at the convention.  I doubt the majority even understand how his spending and the Fed's monetization of our debt affect's them let alone this new round of QE.  Even if they did they wouldn't vote against him simply because of the welfare payments. They'll find out the hard way when the country goes into a full blown depression and the welfare benefits finally get cut. In the meantime we will all have higher food/energy costs.

Quantitatively Easing America Further Into Inflation

Sun, 09/16/2012 - 21:53 | 2801995 markmotive
markmotive's picture

QE3 (aka QE Infinity) may be the final straw we write about in the history books.

http://seekingalpha.com/article/870071-qe-infinity-the-fire-hose-into-th...

Sun, 09/16/2012 - 08:08 | 2800199 duncecap rack
duncecap rack's picture

Great chart

Sun, 09/16/2012 - 10:33 | 2800412 Mark Wilson
Mark Wilson's picture

Indeed. Looks like the Clinton years were the best as far as gas prices for minimum wage earners go.

Sat, 09/15/2012 - 20:54 | 2799583 goldfish1
goldfish1's picture

The arrogant bastiges don't even consider that the price of gas could be the tipping point.

Sat, 09/15/2012 - 21:00 | 2799589 Michael
Michael's picture


Portuguese and Spanish march as anger over tax hikes grows

http://www.reuters.com/article/2012/09/15/us-portugal-protests-idUSBRE88E0GZ20120915

 

Scorpions - Wind of change

http://www.youtube.com/watch?v=YFh2vpGeoIk

Sun, 09/16/2012 - 00:01 | 2799893 SafelyGraze
SafelyGraze's picture

well here's your problem:

http://www.amazon.com/b?ie=UTF8&node=236150011

Do you accept Food Stamps (EBT cards) as payment for items offered at Amazon Grocery? No, at this time Amazon.com does not accept Food Stamps or EBT cards as payment for items offered in Amazon Grocery.

Sun, 09/16/2012 - 04:54 | 2800114 TwoShortPlanks
TwoShortPlanks's picture

Apple accepts Food Stamps for new iPhone5 purchases. "Let them eat iPad", and now iPhone.

QE-FoodStamp...let's eat our way out of this mess.

Ben's new motto: "An Apple a day keep a Depression at bay"

Sat, 09/15/2012 - 23:25 | 2799847 Slightly Insane
Slightly Insane's picture

Don't forget the "carbon tax" ..... for a "carbon based economy"  .... this is a disaster.   Just remember, it's all part of the "plan".   Blame those responsible.  Make sure we don't let them off the hook. 

When the music stops .... make sure you're in front of an "empty chair".

Sun, 09/16/2012 - 10:37 | 2800417 Ignorance is bliss
Ignorance is bliss's picture

They know...yet they print.

Sat, 09/15/2012 - 22:12 | 2799714 A Lunatic
A Lunatic's picture

Clunkers for homes, bitchez..............

Sat, 09/15/2012 - 22:16 | 2799724 Jack Burton
Jack Burton's picture

Brilliant! + 100

Sun, 09/16/2012 - 05:37 | 2800134 spentCartridge
spentCartridge's picture

You're better off sleeping in a tree than inside a car of an evening.

 

It gets fucking cold inside of a car at night.

Sat, 09/15/2012 - 21:44 | 2799664 ACP
ACP's picture

AND, of course, no one in the media dares to mention that the Baltic Dry is now (possibly) lower than it was during the depths of the crash/recession from 2008-2009. Can Tyler or anyone else confirm this? I can't tell for sure, but it looks like it.

Edit: http://www.bloomberg.com/quote/BDIY:IND/chart

 

Sat, 09/15/2012 - 21:55 | 2799684 Schmuck Raker
Schmuck Raker's picture

Looks like it to me, 662 now vs 663 then.

Close enough either way.

"Fooked" is the technical term, I believe.

Sat, 09/15/2012 - 21:59 | 2799693 ACP
ACP's picture

Much obliged.

Sun, 09/16/2012 - 04:20 | 2800101 trebuchet
trebuchet's picture

John Major  (remember Black Wednesday), ex UK prime minister/ex chancellor live on UK TV just indicated a strong belief that Fed Europe is coming with treaty in next few years. It is his belief that UK is on recovery.

Sun, 09/16/2012 - 04:38 | 2800107 FreedomGuy
FreedomGuy's picture

"Vee are going to pamp you uppp!"

-Hans and Franz, SNL

Sun, 09/16/2012 - 12:47 | 2800670 Cast Iron Skillet
Cast Iron Skillet's picture

So what would be a good excuse as to why the gas price suddenly went up? lessee .... maybe a war would do it ...

Sat, 09/15/2012 - 20:49 | 2799567 Meesohaawnee
Meesohaawnee's picture

the premise is that they care..they obviously dont . or else we would have had the opposite of mega qe. quit thinking in that mode. think like a sociopath .. if ben would have just said no qe you might have had crude in the 60s 70s which would have been "stimulative" or a tax cut .. but no.  Loose the idea that this is about "the people" thats was gone with June Cleaver's meatloaf

Sat, 09/15/2012 - 20:54 | 2799580 LetThemEatRand
LetThemEatRand's picture

The fundamental problem is the corporate owned media that puts all of this nonsense into a flse red/blue narrative that fools 90%+ of the population.  For example, the media narrative assumes that the Fed always has existed and always will exist.  The offical media debate is over whether the Fed is politicized and whether ORomney would fire or retain Ben (like it matters).  Never will you hear any real discussion about ending the Fed.  Therefore, 90%+ of the population doesn't even think about it.

Sat, 09/15/2012 - 21:05 | 2799602 nmewn
nmewn's picture

If the Fed ends, war AND welfare as we know it, ENDS. Time to choose sides now LTER, do choose wisely ;-)

I am John Galt and I approve this message.

Sat, 09/15/2012 - 21:09 | 2799610 Yen Cross
Yen Cross's picture

 What happened to " humanity" ,nmewn?   

Sat, 09/15/2012 - 21:13 | 2799617 nmewn
nmewn's picture

We can handle it without intervention ;-)

Sat, 09/15/2012 - 21:16 | 2799623 Yen Cross
Yen Cross's picture

 You have been exposed to some" ugly times: as well.   Yes we can! :-)

Sat, 09/15/2012 - 21:18 | 2799621 LetThemEatRand
LetThemEatRand's picture

"If the Fed ends, war AND welfare as we know it, ENDS. Time to choose sides now LTER, do choose wisely ;-) I am John Galt and I approve this message. "

John Galt was a fictional character and there is a reason you must rely upon a fictional character to make your point.  Ever think about that?

I choose humanity that elects its own government, and that does not rely upon industrialists to guide us through life.

I am a unicorn and I approve this message.


Sat, 09/15/2012 - 21:50 | 2799674 nmewn
nmewn's picture

A unicorn is also a fictional character LTER.

But of Galt or a unicorn...which is closer to humanity & reality?...I have to double check these things with you, before proceeding ;-)

Sat, 09/15/2012 - 21:56 | 2799683 LetThemEatRand
LetThemEatRand's picture

"A unicorn is also a fictional character LTER"

Exactly.  Did the reference make my point stronger, or weaker [I am setting aside the obvious intentional irony that you did not see]?

Sat, 09/15/2012 - 22:12 | 2799715 nmewn
nmewn's picture

Excellent...lol.

So what can a unicorn have taken from him/her by the state (more than once) to create your rainbow paradise?

Sat, 09/15/2012 - 22:28 | 2799729 LetThemEatRand
LetThemEatRand's picture

If the Unicorn elects his or her (do lady unicorns have horns?) own government of like-minded Unicorns without corporate interference, that decision will be up to said Unicorn.  And if you are concerned with the tyranny of the majority, history proves that they will "elect" [more likely cheer him on in big rallies after the Unicorn-elected leader slaughter] a tyrant to lead them if the Unicorn election is deemed too bothersome.  As shown by American history, great men and women tend to become leaders when the people are allowed to decide without corporate or Royal interference.  P.S.  note how many news stories there are today about the fuckers born to royalty in England.

Sat, 09/15/2012 - 22:34 | 2799764 nmewn
nmewn's picture

Unicorns have no concept of elections...none...zero. They are, not only fictional...but as animals usually kill things with their horns as defensive/offensive weapons.

Your use of the word (if) is lost on me, just like expecting a unicorn to give a portion of his pasture to a sheep who will ruin it by killing the grass...but we were talking about war AND welfare before your distraction weren't we?

Sat, 09/15/2012 - 22:36 | 2799770 LetThemEatRand
LetThemEatRand's picture

I've said this before and I'll say it again.  Welfare is no different than any other infrastructure that encourages commerce.  I do not live in a gated community nor do I want to.  We could talk all night about how to make it more effective.  I agree the system is broken, but that is because corporations want Welfare recipients to buy big screens.

Sat, 09/15/2012 - 23:27 | 2799849 nmewn
nmewn's picture

No, its because unicorn riders stick their noses into every aspect of commerce.

And yes, its broken and the Galts of the world have no desire to fix it again...I'm of the opinion those who won't fix it for themselves can starve to death waiting for ole John to come back and be secrewed again.

Sat, 09/15/2012 - 23:45 | 2799869 LetThemEatRand
LetThemEatRand's picture

I've said it before, I'll say it again.  Galt is a fictional character.  The real-world versions are the guys you hate.

Sun, 09/16/2012 - 03:30 | 2800047 Colonel Klink
Colonel Klink's picture

And I just thought unicorns were around to shit skittles.  So where do skittles come from then.  I know they exist!

Sun, 09/16/2012 - 00:11 | 2799904 Slightly Insane
Slightly Insane's picture

Welfare is different (in my opinion).  The present system allows one to sustain and propagate at the expense of "others", using the government to act as the regulator of behavior.  There is a built in "defect" in that system which never causes the recipient to climb out of the parasitic behavior.  The problem with "welfare" is that it should be treated as a "loan", which requires a "payback".  The second problem is that it is used to "buy votes".  If the system of welfare had a "life time limit" on the amount that could be drawn, wherby it would cease at the "limit", I wonder if such a behavior would continue.  Any other form of commerce requires a "payback".  One could argue that even "prison" has a "payback" .... although that is a very different type of welfare, and one which essentially is never "paid in full".   (Try to get a job after imprisonment, and sustain yourself, as your "debt" is never really paid in "full".... where the stigma attached to a criminal background follows you through life).

Just a thought, but it appears that we didn't have a huge problem with "welfare" until the government system was created.

 

Sun, 09/16/2012 - 03:41 | 2800056 Colonel Klink
Colonel Klink's picture

Sure, originally welfare use to be called charity and was handled by the church and other groups.  If they didn't help, you went hungry or starved!!  Welfare is neither well, nor fair.  It's purely wealth transfer.  Plain and simple.

Subsidize anything and by it's very nature, you'll get more of it.  We need to stop womb to the tomb welfare and make it "WORKFARE".  You want payment, you must report to a work facility for training and work.  See how long people stay on THAT!

Sun, 09/16/2012 - 08:42 | 2800212 Slightly Insane
Slightly Insane's picture

Col. Klink - spot on.  The Government "welfare" is flawed in that my taxes are used to subsidize their behavior, and as such my contribution is neither voluntary or charity.  Somehow I bear some responsibility towards someone who has made a series of bad decisions which has led them to a life of poverty.  I am not clear how I am responsible for either their bad choices, lazyness, or bad luck.  I am not against lending a helping hand, however I want them to climb above the shit, and payback into the system so that I no longer have to.  I also see this as the major fault with the liberal mentality, in that a persons choice to have children that they can neither afford, nor take care of is somehow my responsibility.  This is exactly what the liberal mentality does - it shirks responsibility.  If a person decides to have 10 kids and go on welfare --- I see that as a problem, as the choice to perpetuate is optional and involves choice.   Somehow, I fail to see how I am responsible for their choice, and hence the outcome.

Welfare should be entirely voluntary, and many sins would be solved.  (Perhaps the only exception should be afforded to military families that loose the bread winner in war .... I think that was the basis for welfare originally).

Sun, 09/16/2012 - 10:32 | 2800411 FeralSerf
FeralSerf's picture

"If a person decides to have 10 kids . . ."

Then why do people of your ilk oppose abortion?  It is illogical.   Perhaps if one is not able to afford a child then mandatory abortion is the answer?

Most people, except for the Morons, that have 10 kids don't really choose to have them.  The kids are just a consequence of their recreational sexual adventures.   Is that what they call it "re-creation"?

Sun, 09/16/2012 - 14:43 | 2800849 Overfed
Overfed's picture

I don't oppose abortion. It's a damn sight cheeper than multi-generational welfare.

Sun, 09/16/2012 - 10:41 | 2800427 Ignorance is bliss
Ignorance is bliss's picture

We already have "Welfare" that needs to be paid back. Its called a student loan.

Sat, 09/15/2012 - 22:27 | 2799746 Jack Burton
Jack Burton's picture

Brilliant as always "LetThemEatRand".

MS Rand believed humans had no right to democratic institutions. I have news for MS Rand, though she is gone now, I am of Scandianvian heritage and democracy goes way back with us to before Viking times. We met to decide things at a general meeting and if anyone tried to force their way without a vote they got a battle ax in the head. MS Rand needed a good old Viking Battle Ax between her ears!  Give me a vote or give me death!

Rand was freak, and a dangerous freak at that, Her worship of a so called elite class was just her form of mental illness.  In her world average folks would be slaves, it is our duty as men to stand against anyone who would take us back to the dark ages of serfdom.

Sat, 09/15/2012 - 22:29 | 2799756 LetThemEatRand
LetThemEatRand's picture

"it is our duty as men to stand against anyone who would take us back to the dark ages of serfdom."

Talk about summing it up.

Sun, 09/16/2012 - 00:07 | 2799899 Totentänzerlied
Totentänzerlied's picture

Talk about brutal irony coming from my fellow serfs - who seem keen on further 'en-serfing' themselves, Herrschaft escapes you (mentally), so Knectshaft ensnares you (physically and mentally). Nothing new here, and your Gebietern are very pleased.

Sat, 09/15/2012 - 22:47 | 2799786 Yen Cross
Yen Cross's picture

 Jack , we like you.  Stay away from the " kamikazes" (¥)     Thumbs up!

Do NOT follow this link or you will be banned from the site!