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On The Fed's Failure To Inspire, TrimTabs Shows Where The Real Money Is Going

Tyler Durden's picture




 

As volumes this year in stock markets remain significantly below last year's but high yield bond ETF inflows reach record highs, TrimTabs offers some context for the massive relative flows of real cash into checking and savings accounts versus stock and bond mutual fund and ETFs. Not-Charles-Biderman, otherwise known as David Santschi of the now-infamous Bay Area backdrop, explains the incredible statistic that in the first 11 months of last year investors poured more than eight times more money into checking and savings accounts than into Fed-inspired risk assets in general. Even with rates ultra-low, the Fed's efforts to drive speculative flows is dwarfed by investors' aggregate sense of the reality of our tenuous situation as a massive $889bn was poured carefully into mattresses while a measly $109bn went into risk-worthy assets (including bonds). As Santschi concludes, as long as most investors keep hiding most of their money away, the economy is unlikely to get off to the races anytime soon and while we agree from a consumptive demand perspective, any recovery will only be truly sustainable via savings which are being desperately drawn-down by a need to maintain standards of living that are perhaps too much to expect.

 

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Fri, 01/13/2012 - 01:24 | 2060727 TruthInSunshine
TruthInSunshine's picture

            http://www.zerohedge.com/news/chart-proves-feds-policies-have-been-failure     

Tue, 12/06/2011 - 01:10 | 1949943 TruthInSunshine

The Bernank's greatest quotes (thus far). Be afraid. Be very afraid:

  • (November 15, 2005) "With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly."
  • (July, 2005) "We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though."
  • (October 31, 2007) "It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions."
  • (November 21, 2002) "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost."
  • "The money supply is not changing in any significant way. What we’re doing is lowering interest rates by buying Treasury securities."
  • "One myth that’s out there is that what we’re doing is printing money. We’re not printing money."
  • (When asked directly during a congressional hearing if the Federal Reserve would monetize U.S. government debt) "The Federal Reserve will not monetize the debt."

 

The only banks that fear deflation are those that control governments, which is the case with the relationship between almost all developed nations today and their 'central bank' masters.

 

The central banks can print as much fiat as they wish, to compensate for any and all "losses" that inflation theoretically could do to their holdings.

 

Federal Reserve Notes, aka BernankBux, are prolific and compuslive liars of the worst order, and the same can be said of all fiat worldwide now, as all of it is conjured from thin air, backed by nothing of any inherent value (just empty platitudes such as "full faith & credit" at no cost to the central merry banksters & then loaned at interest, leveraged many dozens of times over, and then either repaid with interest - or better yet - defaulted on, allowing the masters of the Merry Central Bankster Puppets to Harvest the real assets that have actual, inherent wealth, that were pledged to securitize said loans (think homes, land, factories, equipment/machinery, farms, natural resources in the case of alleged sovereign nations, etc.).

 

Even if a huge percentage of unsecuritized loans are defaulted upon, it's no skin of the Money Masters sacks, as the basis of the loan was conjured from thin air, with zero cost of production, and any loans that perform (even a single one) are pure gravy.

 

Bonds are, for the most part, securitized by fiat such as EuroWipes or BernanBux.

 

It's such a brilliant racket that they're running.

 

Banks that have to earn profits via the conventional banking model of borrowing money at a low rate from a central bank, and loaning that money out at a higher interest rate (the interest rate differential is their gross profit, essentially), have everything to fear from inflation, as it completely destroys their conventional and main method of making profits, during normal times in the economic cycle, wherein rising interest rates drown the value of their past loans extended, absent extraordinary subsidization from some external source.

 

Bank loans are bank 'assets,' while deposits are 'liabilities,' and all things being equal, inflation destroys any profit (and could put the bank deep in loss) that the conventional spread between money borrowed and loaned typically offers it.

 

So, aside from central banks, which can compensate for inflationary impact by printing more fiat, and too-big-to-fail entities, which enjoy de facto central bank status (literally; plus, look at all the revolving door nepotism as to hiring between central banks and too-big-to-fail banks) and all sorts of 'extras' in the form of guaranteed and risk free profit making avenues offered exclusively to them by central bank policies, inflation destroys lenders and rewards borrowers.


It's not deflation on home values that wipes out those banks that choose to carry (rather than sell at the time of closing) mortgage backed paper - it's the fact that the loans go bad since a greater % of the people who are indebted on the mortage quit paying on their loans.

 

Could the deflation lead to the non-payment? Sure. But it's far more likely that job losses and wage reductions affecting affordability of repayment will do that trick. To say that the deflation in home values will lead to job losses and wage reductions is a common misnomer, IMO, that many economists are perpetuating these days - the health of the job market governs home values; the value of homes DOES NOT GOVERN THE JOB MARKET.

 

Take a moment to think about the people still working, but who are underwater 20% to literally 75% on their home values, but are still making their mortgage payments because they are still working and still have that ability (although more and more who can do so are CHOOSING not to do so, but I digress).

 

All things being equal, deflation in general, and on home values, means that the bank is getting supercharged returns on the loan it extended to the homebuyer, assuming the loan performs and the bank receives repayment on the underlying note.

 

It's my humble opinion that one of Bernanke's main goals was to flood as many banks with as much excess reserves as possible, while also extending extraordinary access to the discount window (offering de facto 0% loans), in an effort to keep as many of them from crashing as possible (I think about 900 have failed since 2008), during a time in which he knew their conventional means of generating income and making profits - via loaning money at higher rates than their borrowing costs - would completely break down.

 

And here we are, with banks that allegedly survived (so far), stuck with toxic balance sheets, full of shitty ass loans secured by eroding value assets, depending more and more on their excess reserve income and massive amounts of new fees (adding significant revenue to their top line) they are imposing on their customers, praying and hoping that here never comes the day that reverse repo operations really do take place, as that would mean a death sentence for another estimated 2500 banks (maybe more).

 

Anyone who tells me that banks are in anything other than extend and pretend mode, made possible by incredible intervention and excess reserves compliments of Bernanke & Geithner, along with incredibly lax regulation and fantasy-land valuation of assets (thanks to Congress), is really knee or thigh high in the Kool-Aid.

 

Similarly, given the unsettling trends of high inflation (real numbers), pathetic job growth (with the risk of actually printing negative numbers soon again - even by official and highly massaged measurements via the BLS), incredibly weak demand for loans and incredibly weak willingness/ability to make loans (unless its guaranteed/backstopped by the Fed or Treasury or subagencies of government), anemic retail and manufacturing data, etc., anyone who thinks Bernanke and our own beloved government haven't merely kicked the can at the expense of taxpayers and the organic economy and organic growth, for two long years, to the tune of at least 5 trillion in direct and incredibly inefficient spending (Stimulus, TARP, TALF, QE1 and QE2, etc.), and as much as 12 trillion considering what's yet to be paid back or what the government is still on the hook for in terms of guarantees on loans and toxic asset portfolios it contractually made, only complicating his dilemna and the nation's dilemna, should seriously reassess their level of intelligence or sources of information gathering.

 

The more that The Bernank pushes on a string (QE, ZIRP4EVER), the more people white knuckle their fiat. Oh, the irony.

 

It's all the snake eating its own tail.

 

The Bernank is DESTROYING the desire to consume, as he's freaking the world of savers and the presently liquid out with his absolute abomination of policies, while the non-savers and the majority who have difficulty getting credit have difficulty spending, also (given the banking sectors precarious-dead state of health).

 

Here is but one of many examples I can cite:  Mr. Smith, who is 78 years old, worked hard his whole life and retired with enough savings that would have, in an ordinary interest rate environment, have produced an income stream from interest on his savings, that would have prompted him to spend far more freely (he may even have already have replaced his 2001 Mercury Grand Marquis by now if not for the fact he is anxious due to his meager/non-existent interest ZIRP income).

 

So, Mr. Smith buys no new car, hires no one to put a sunroom on his (now radically depreciated home), and gets all of his grandchildren a lump of coal for Christmas this year.

 

All thanks to The Bernank.

 

And the cherry on top is The Bernank is thinking of going all in, doubling down on his failures in the U.S., with a sure fire IMF (i.e. U.S.) and credit swap line liquidity tsunami of USD into the EuroZone Debt Black Hole, which sucks in all capital, never to be seen again.

 

The alleged great academician, expert on The Great Depression, wizard of monetary policy, etc. etc., who is The Bernank, is a total and complete failure IF the goal of his actions was to help the broadest swath of people.

 

If his goal was to debase their purchasing power, concentrate more and more wealth in the hands of fewer and fewer Crony Capitalists (the opposite of true capitalists) who know all the right players in what is unquestionably now our Kleptocracy, he's succeeding magnificently.

 

No one really knows whether deflation or inflation takes firm grasp of the global economy, as things will spiral out of control, inevitably, and social and political unrest will foment great changes that can't be predicted or controlled by even the Money Masters, and no one knows how the current system will implode or what will take its place (it will implode without question, however).

 

And to be honest, it doesn't really matter whether a deflationary death spiral or inflationary destruction of consumption does the economy in - the end result, the destruction of the global economy as we know it, will come about.

 

Some sane theses have been put forth that we'll have a deflationary collapse first, followed by hyperinflation. While that certainly sounds as likely as anything, no one knows, because people like The Bernank and those he runs errands for won't be calling the shots after things break down.

 

http://www.zerohedge.com/news/chart-proves-feds-policies-have-been-failure

Fri, 01/13/2012 - 01:37 | 2060755 flacon
flacon's picture

FUCK LONG POST MAN.... 

 

 

Fri, 01/13/2012 - 01:43 | 2060767 TruthInSunshine
TruthInSunshine's picture

I was going to shorten it a bit, but now that you've responded...

If you choose to, just read from the bolded text down (about 2/3rds of the way down).

I threw the rest in just to rag on The Bernankstain (it's cathartic).

Fri, 01/13/2012 - 01:55 | 2060782 baby_BLYTHE
baby_BLYTHE's picture

ever since the bernank became chairsatan he has chosen his words very carefully. When he was called out as to 'printing money' in the 60 minutes interview 2010 he was very clear WE ARE NOT PRINTING money. I am still waiting for an apology from the chairman as to why the crude oil spot price hasn't fallen in what was supposed to be 'transitory' price inflation. Yet he laughs at Ron Paul when he attempts to educate the chairman on the real definition of inflation as being the increased circulation of the cupon outstanding. 

Fri, 01/13/2012 - 02:20 | 2060811 erg
erg's picture

The Bernank. The chitinous clicking wonder. Notice how his mouth clicks between words because he's so nervous with his lies.

Fri, 01/13/2012 - 02:31 | 2060816 The Monkey
The Monkey's picture

To the Federal Reserve. FUCK YOU.

Fri, 01/13/2012 - 03:28 | 2060852 non_anon
Fri, 01/13/2012 - 03:42 | 2060856 Teamtc321
Teamtc321's picture

The fact that we're here today to debate raising America's debt limit is a sign of leadership failure. Leadership means 'The buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America's debt limit." Senator Obama 06'

Fri, 01/13/2012 - 02:33 | 2060818 The Monkey
The Monkey's picture

Do you really think we want to live the rest of our lives on THE TRUMAN SHOW?

Fri, 01/13/2012 - 02:52 | 2060833 The Monkey
The Monkey's picture

(November 21, 2002) "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost."

"AT NO COST"
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Fri, 01/13/2012 - 11:39 | 2061527 boiltherich
boiltherich's picture

Erg, nice image, Chairsatan as huge bearded Dungeness denizen hauled up from the deep.  Notice his eyes also dart around, sometimes independently as if they were on stalks. 

Sat, 01/14/2012 - 02:44 | 2063088 akak
akak's picture

Notice his eyes also dart around, sometimes independently as if they were on stalks.

Chameleons also have that ability --- as well as being able to camouflage themselves in order to deceive their prey.

(Flash "Benevolent and Responsible Central Banker" color scheme once again, to conceal underlying Parasitic Sociopathic Oligarch.)

Sat, 01/14/2012 - 00:04 | 2064095 erg
erg's picture

Ah yes, the Marty Feldman affect.

Fri, 01/13/2012 - 02:18 | 2060808 honestann
honestann's picture

If it's any consolation, sometimes when I get on a roll, the same thing happens to me.  We'll survive.  It's all good stuff that many people still need to read.

Fri, 01/13/2012 - 02:42 | 2060824 TruthInSunshine
TruthInSunshine's picture

Right. I hear you.

Even though I realize The Bernank is just a bagman, he's the most visible symbol of the whats and whys as to how everything is so broken and unjust regarding statist backing & picking of winners & losers (those who get subsidies and bailouts, and those who don't) in increasingly centrally planned Amerika.

Hence, my blood pressure spikes from time to time when the subject of the The Bernank is brought up, and I tend to get angrily verbose when venting.

I always assumed people would just skim & trim whatever they considered excess, but a long post can be annoying.

 

Fri, 01/13/2012 - 09:06 | 2061036 BoNeSxxx
BoNeSxxx's picture

Nice post TIS.  You've outdone yourself.

 

No way you free-balled that one though... had it on the sidelines? -- must have :-)

Fri, 01/13/2012 - 10:23 | 2061206 TruthInSunshine
TruthInSunshine's picture

Thanks.

You're right. It's a mashup of some of my previous work.

Once in a while, I open up with the eighty-eight on Herr Bernankler.

Fri, 01/13/2012 - 01:15 | 2060728 AC_Doctor
AC_Doctor's picture

Phuck a savings account.  My money in going into heavy green boxes of round coins...

Fri, 01/13/2012 - 02:05 | 2060790 Sokhmate
Sokhmate's picture

yellow boxes are ok too.

Fri, 01/13/2012 - 02:53 | 2060826 Freddie
Freddie's picture

Atlas shrugged after the 2008 election.  The public knows an Islamic mugabe when they see it.  Business owners, doctors and others went it protect and survival mode.   These people are not stupid.  They had a plan in place in case allah was elected.  They cut costs, stopped investing, laid people off, and went in survival mode. This is what smart people do.

I like Trim Tabs, Biederman etc and Sausalito has beautful geography but it has a loon leftist lib populace who voted for this.   The public knows the markets, govt, legal system, media and everything in Amerika is rigged now.  Romney will only be less horrible.

Ron Paul 2012  

Fri, 01/13/2012 - 05:26 | 2060882 zhandax
zhandax's picture

I like Trim Tabs, Biederman etc

Bingo! Trim Tabs is correct in their observations and conclusions but they missed the kill shot; there will be no f'kin recovery until the 3-card monte game that passes for a financial system in the 'developed world' collapses; simply because increasing numbers of people with skin in the game are waking up to the fact that the whole financial system is one big ponzi and, to quote Joshua from War Games, "The only winning move is not to play.".

Fri, 01/13/2012 - 18:46 | 2063474 honestann
honestann's picture

Boy are you exactly correct!

And what a perfect quote (from war games)!

People better wake up and realize the current depression is permanent, and will only get worse.  Nobody in their right mind would start a new business in the USSA today, and new/small business is the long term life-blood of any country (not the too big, corrupt and connected to fail corporations that get bailed out and suck the lifeblood from everyone).

It is amazing how completely fooled by "normalcy bias" humans are... though I hate that term because it implies "normal" == "defend the predators who prey upon us".  That's just SICK.

People - WAKE UP.  I've had 95% to 100% of my assets in physical metal for years.  Not only does that deny the predators-that-be and predator-class my assets, but it prevents them from being able to easily steal or control my assets, from spying on what I'm doing and reporting to the predators-that-be, but... my assets have held value while others have gone nowhere or down.  KILL THE PREDATORS.  How?  The best way to start is, "don't play their games".

Mon, 01/16/2012 - 19:27 | 2069662 XitSam
XitSam's picture

Take no action is an action.

Fri, 01/13/2012 - 01:16 | 2060729 dolph9
dolph9's picture

So, the sheeple get it only half right.

In the present environment, you not only want cash, but also metal.  When they discover this, watch out.

Fri, 01/13/2012 - 02:15 | 2060803 honestann
honestann's picture

Cash?  Beyond a $100 to shop at costco, who wants cash?  I've had near 100% of my assets in physical metal for years, and can't imagine why anyone would do otherwise.  You trust ANYONE else to hold your wealth?  You must be completely INSANE after all the evidence recently that exactly ZERO of them can be trusted.

Fri, 01/13/2012 - 10:04 | 2061143 VisualCSharp
VisualCSharp's picture

Don't be ignorant. Physical metal is illiquid and cash is liquid. Last I checked, the vast majority of folks selling goods and services accept cash as payment, not physical metal. Maybe someday far in the future that changes and physical metal becomes cash, but I think the likelihood of that is very small at this point; dollars are simply too ubiquitous.

Fri, 01/13/2012 - 18:36 | 2063466 honestann
honestann's picture

Wrong.  I'd agree that physical metal was not instantaneously liquid a few years ago --- you'd have to drive to your nearest coin store to convert to cash.  So... what's the big deal about half-an-hour?  That's what you'd need to drive to your bank and remove cash from your savings account too.  Are savings accounts not "liquid"?  Is that really you stance?

But let's look at this a bit further.  Unfortunately you replied to someone (me) who ran a 3 year long experiment to see whether I could trade the gold I was accumulating for goods.  I freely admit that the first month was pretty dismal - I could only trade gold for 16% of my expenses.  However, as the months and years passed, that percentage increased until it reached 95% several months ago (at which point I stopped the experiment because the results were clear... and I just couldn't bare to hand over my real, physical gold when I had any fiat in my wallet).

Yes, it took a while.  And yes, there were quite a few places where I had to ask for a manager two or three times before they were willing to make an arrangement to accept my gold wafers as payment.  But as the past 3~4 years have progressed, the biggest reason for the increase in acceptability has been... more people want gold than ever before.

So yes, we're not at the point where a random person could exchange gold for any random good without exception.  If you tried this with stores you never tried to arrange for gold payment, you'd probably end up with only a 25% to 40% success rate.  But we are a lot closer to gold being acceptable as a form of trade than most people realize.  People KNOW they can hold onto the gold I give them and not lose value, and most people KNOW their fiat, fake, fraud, fiction, fantasy paper debt "money" does lose value, and people increasingly do KNOW that financial institutions spy for government and still their customers when they vanish into bankruptsy (note MFG recently).

Note also that fiat currencies have vanished VERY QUICKLY throughout history.  In fact, in almost every case they vanished in a matter of months once the first whiffs of actual hyperinflation were detectable.  The dollar may last longer due to the "reserve currency" and "banana republic with nukes" phenomenon, but longer isn't forever, or even close.

PS: When a currency becomes ubiquitous... that is hyperinflation.

Fri, 01/13/2012 - 01:16 | 2060730 Mercury
Mercury's picture

Hmmm, time to flush out that mattress money with inflation...

Fri, 01/13/2012 - 01:56 | 2060785 asdasmos
asdasmos's picture

Bingo.

Fri, 01/13/2012 - 02:08 | 2060795 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Or just crush the dollar and fuck everyone not holding manufacturing or PM.

Fri, 01/13/2012 - 01:20 | 2060733 props2009
props2009's picture

ECB Then and Now

http://fnn24.com/?p=37118

Fri, 01/13/2012 - 04:53 | 2060887 snowbaall
snowbaall's picture

The world is de-leveraging.

The emporer has no clotes.

Even young women have forsaken their beloved boob-jobs.

It's a sad story.

Deflation is on the way.

And foreclosures will go through the roof this year.

Fri, 01/13/2012 - 07:11 | 2060931 s2man
s2man's picture

-1 for pimping your blog with a boobs link

Fri, 01/13/2012 - 01:21 | 2060737 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Trim Tabs with their weekly "Nerd on a Hill" broadcast!  I admittedly have not watched one, but I enjoy reading Tyler's summery!

And on that note, the Fed  is licking their chops at further dollar devaluation with all of that cash in bank accounts.  Yet the banks are happy to take the reserves so to fractionally reserve every last penny. 

Ante up, bitchez!

Fri, 01/13/2012 - 01:48 | 2060774 jimmyjames
jimmyjames's picture

Yet the banks are happy to take the reserves so to fractionally reserve every last penny.

**************

I don't think that's the case anymore-

Banks cant find borrowers and deposits are subject to immediate withdrawal-so now banks have to park cash in short term low yield instruments-

Their next move will be to charge depositors for holding it-in fact it already has happened-

*************

Deposits are flooding into the biggest U.S. banks as customers seek shelter from Europe’s debt crisis and falling stock prices. That forces lenders to raise capital for a growing balance sheet and saddles them with the higher deposit insurance payments. With short-term interest rates so low, it’s hard for financial firms to reinvest the new money profitably.

Charging Depositors

At least one firm, Bank of New York Mellon Corp. (BK), tried to recoup some of the costs by charging depositors 13 basis points, or 0.13 percent, for holding unusually high balances.

FDIC insurance fees for large banks typically average more than 0.1 percent, three of the people said. In addition, large banks also may apply an internal capital charge of at least 0.1 percent to such reserves, one bank executive estimated.

http://www.bloomberg.com/news/2011-08-26/u-s-banks-said-to-seek-relief-f...

Fri, 01/13/2012 - 02:16 | 2060806 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You are working from two different frames here.  Fractional reserve lending has nothing to do with charging interest.  Interest can be charged while the money is [cough] rehypothecated [cough].  Yes, the fractional reserve lending scheme is a form of rehypothecation. 

Surprise!

Fri, 01/13/2012 - 02:42 | 2060825 jimmyjames
jimmyjames's picture

You are working from two different frames here.  Fractional reserve lending has nothing to do with charging interest.  Interest can be charged while the money is [cough] rehypothecated [cough].  Yes, the fractional reserve lending scheme is a form of rehypothecation. 

Surprise!

**********

You can't be serious-

FRL has "everything" to do with charging interest-they create money out of thin air and charge you "interest" to borrow it-the biggest scam of all-

The problem is-if you read the link and listened to TT vid- people are not borrowing-they are saving-

borrowing is decreasing and with it goes FRB-

http://research.stlouisfed.org/fred2/series/LOANS

http://bit.ly/wyj3Jm

 

 

Fri, 01/13/2012 - 01:22 | 2060739 erg
erg's picture

I keep my money in a van down by the river.

Fri, 01/13/2012 - 02:14 | 2060804 Sockeye
Sockeye's picture

That seems like a safe place. Better than the family home.

Fri, 01/13/2012 - 01:23 | 2060740 JPM Hater001
JPM Hater001's picture

I'm still wondering when the sheeple realize the cash they are holding is still part of the ponzu scheme...

Fri, 01/13/2012 - 10:08 | 2061154 VisualCSharp
VisualCSharp's picture

Who's to say many "sheep" don't realize it? I do, as do most ZH readers, but what's the alternative? Last time I checked, I can't fill up my gas tank with gold or buy bread with silver. The debt-money known as a Federal Reserve Note is a necessity because merchants require it for payment. Sucks, I know, but again I ask, "What's the alternative?"

Fri, 01/13/2012 - 01:23 | 2060742 Dr. Engali
Dr. Engali's picture

People amaze me that they still trust the banks for safety. What does it take for the American public to give the bankers a big fat middle finger and pull all their money out? It's like they enjoy Ben cramming the Zirp up their ass.

Fri, 01/13/2012 - 01:27 | 2060745 TruthInSunshine
TruthInSunshine's picture

Oh, you'd like to withdraw more than $9,999.99, Mr. Jones?

Sure, this will take a little bit of time. Why don't you take a seat over there while I go to my office and fill out a few requisite forms that we're now instructed to complete for certain transactions.

But we'll get you on your way with your money as soon as we possibly can.

Fri, 01/13/2012 - 02:00 | 2060788 fnord88
fnord88's picture

Except there is a special law for amounts just under $10 000. It's called structuring, and any time somebody pulls close to $10k out, or any other number which the bank deems suspicious, you still get reported. Do it 2 or 3 times, and prepare to get raped by the IRS. Happened to a few of the US poker players I know from on tour. From what they told me, they were not even trying to avoid tax or anything, it's just that casino's generally only give cash for winnings under 10K, above and you can get a check. 

Fri, 01/13/2012 - 01:41 | 2060766 Rincewind
Rincewind's picture

I agree. To have more than what one needs to keep bills ticking over in a bank these days is just plain stupid.

Fri, 01/13/2012 - 03:46 | 2060858 Alpha Monkey
Alpha Monkey's picture

For one, wealthy people don't get shit on as much by the banks, and in fact get better service and benefits to using financial institutions.  For two, everyone else doesn't have any money.  For three, many of the people with enough money to make a difference still believe the MSM is telling them the truth, and that the government is working for our good. (and many people without enough money think those things too)

On the flip side... Take Turd Ferguson of TF Metals report.  The guy apparently lost money in the MF global fiasco, but then goes right back into trading the paper markets after recieving part of his MF funds back.  This guy claims to be in the know, and believes that the governmet and banks are lying, and thinks the entire paper game is rigged, and yet still keeps giving his money back to them.

Addiction?

Fri, 01/13/2012 - 01:35 | 2060754 El Gordo
El Gordo's picture

I wish my bank account was a safe and as private as my matress.

Fri, 01/13/2012 - 01:40 | 2060765 cranky-old-geezer
cranky-old-geezer's picture

 

 

Boatloads of cash going into mattresses ...while Bernanke continues debasing all that cash.

There's no way to protect your wealth in the paper world ...including paper currency.

The paper world is a ponzi world.  Stay out of it as much as possible.

Fri, 01/13/2012 - 01:46 | 2060771 ACP
ACP's picture

If you have memory foam, you won't even feel the coins on one side or the Glock on the other. Check it out. Those damn springs will kill your back.

Fri, 01/13/2012 - 01:48 | 2060776 RobotTrader
RobotTrader's picture

Bunch of pussies.

 

Afraid to take risk.

They will suffer from mediocrity forever, clutching their cash and bonds.

While guys like Mitt Romney and his PigMen buddies get richer and richer investing in companies.

 

Fri, 01/13/2012 - 01:53 | 2060780 erg
erg's picture

You were better off posting knockers.

Fri, 01/13/2012 - 02:07 | 2060793 ACP
ACP's picture

No, actually most people here don't like the fact that the club is a closed circuit. If Bernanke came out and said, "I will ramp the DOW 50 points a day," I'm sure some wouldn't have an issue.

Most don't like the fact that the free market is being hijacked. A free market gives everyone an opportunity, just an opportunity. That's what most people want. Not a guarantee, just an opportunity.

With this planned market, no one knows when to buy & sell. Like I said, it's a closed circuit. I'm not trying to bash you, and frankly I don't think you're really gloating like those obama zombies drunk with power, but how was your timing last year? Did you catch the market at every turn? Most didn't. John Paulson was lashed with a 52% loss, and we all know it was because Bernanke wanted to prove a point. Don't fight the Fed. Well, fuck the Fed.

I've been forced to changed my investing style because of all the bullshit, but it's simply survival of the fittest. I don't like it, and I'd rather see a free market where logic and reason and sound economics makes a good investor.

 

Fri, 01/13/2012 - 02:17 | 2060807 Sockeye
Sockeye's picture

Up arrow for you. (I'm in the same boat).

Fri, 01/13/2012 - 10:17 | 2061187 Chump
Chump's picture

If you're still playing the market at all you are part of the problem.  That goes for every day trader at ZH, as well.  You have no excuse.  You know it's rigged.  You know it's corrupt.  But you still play the game and contribute to its existence.  You are worse than J6P; at least he can plead ignorance.

Fri, 01/13/2012 - 10:12 | 2061174 VisualCSharp
VisualCSharp's picture

I propose that for every RobotTrader thread, the first to respond must respond with "This thread is now about ______." I'll leave it up to each respondent what ______ should stand for. Anyway, I'll get this party started.

This thread is now about Tebow Mania.

Fri, 01/13/2012 - 01:56 | 2060784 pitz
pitz's picture

Is a devaluation event avoidable? 

 

 

Fri, 01/13/2012 - 02:11 | 2060799 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Devaluation is a constant variable.

Fri, 01/13/2012 - 07:17 | 2060933 s2man
s2man's picture

Its the last thing to do on Bernank's 5 Things I would Do list.

Fri, 01/13/2012 - 02:05 | 2060789 Akrunner907
Akrunner907's picture

Extra cash went into G uns, O Ptics, food storage and other base necessities.  Oh and of course A mmo.

Fri, 01/13/2012 - 02:47 | 2060828 Freddie
Freddie's picture

(post flagged by DHS)

Fri, 01/13/2012 - 02:50 | 2060830 GFKjunior
GFKjunior's picture

What's everyones opinon on an SKS?

 

I was offered a good price on a russian model with scope, bayonet, and it can take AK magazines. Worth $300?

Fri, 01/13/2012 - 03:22 | 2060848 Alpha Monkey
Alpha Monkey's picture

When I was a kid growing up I wanted an SKS, being a cheap assault rifle that looked close to the AK.  They were $300 15years ago.  I don't know anything about their functionality or ability to attain ammo these days.  I have my sights set on an AK these days though.

Fri, 01/13/2012 - 02:06 | 2060791 blindman
blindman's picture

reverse rehypothecation is salvation.
remember as a child the lies that taught?
the wider world would spin on and you
would observe and wonder; here we are
again, or dead and gone, bless them who have
come and gone before. they know more than we know
concerning the way beyond ..... ....
.
JOHN CALE - YOU KNOW MORE THAN I KNOW #(Free the World) Make Celebrities History
http://www.youtube.com/watch?v=zXFDafSYGfw
.
But us, like other angry whores
Discuss what threats were made before
You don't need them anymore
You know more than I know
You know more than I know
You know more than I know

Instead, i read the morning news
In bed - what endlessness ahead
And there's no more to be said
You know more than I know
You know more than I know
You know more than I know

The blind may see, but stay behind relief
Of all liability and greed
And there's nothing more you need
You know more than I know
You know more than I know
You know more than I know

No-one listens to it
They don't believe it
But it's the only way for me
You know more than I know
You know more than I know
You know more than I know

What crap, old chap, fills up the gap
We set like traps, like traps for us, the rats
And there's nothing more to catch
You know more than I know
You know more than I know
You know more than I know

Then bury me deep down among the weeds
That creep into the hearts of all the weak
And there's nothing more so weak
You know more than I know
You know more than I know
You know more than I know
....

Fri, 01/13/2012 - 02:50 | 2060831 Freddie
Freddie's picture

John Cale - the interesting and talented guy in The Velvet Underground.   

Lou's parents should have given Lou more shock therapy.  Typical f**king NYC trust fund brat and hipster wannabe.

Fri, 01/13/2012 - 02:08 | 2060794 mrmanmade
mrmanmade's picture

Financial Suppression, that's what it's called.

Fri, 01/13/2012 - 02:49 | 2060829 Missiondweller
Missiondweller's picture

Gee, Its almost asif people have lost confidence or something.

 

I'm sure MF Global wasn't the reason though.....

Fri, 01/13/2012 - 03:57 | 2060866 TruthInSunshine
TruthInSunshine's picture

This will be front page on ZH soon.

Here's a article on FOMC discussions, circa 2006, and wow, these imbeciles take imbecilism to a new level:


 

Inside the Fed in 2006 - A Coming Crisis, and Banter - NYTimes.com

 

By Published: January 12, 2012

 

WASHINGTON — As the housing bubble entered its waning hours in 2006, top Federal Reserve officials marveled at the desperate antics of home builders seeking to lure buyers.

The officials laughed about the cars that builders were offering as signing bonuses, and about efforts to make empty homes look occupied. They joked about one builder who said that inventory was “rising through the roof.”

But the officials, meeting every six weeks to discuss the health of the nation’s economy, gave little credence to the possibility that the faltering housing market would weigh on the broader economy, according to transcripts that the Fed released Thursday. Instead they continued to tell one another throughout 2006 that the greatest danger was inflation — the possibility that the economy would grow too fast.

“We think the fundamentals of the expansion going forward still look good,” Timothy F. Geithner, then president of the Federal Reserve Bank of New York, told his colleagues when they gathered in Washington in December 2006.

Some officials, including Susan Bies, a Fed governor, suggested that a housing downturn actually could bolster the economy by redirecting money to other kinds of investments...

...

***“It’s embarrassing for the Fed,” said Justin Wolfers, an economics professor at the University of Pennsylvania. “You see an awareness that the housing market is starting to crumble, and you see a lack of awareness of the connection between the housing market and financial markets.”

“It’s also embarrassing for economics,” he continued. “My strong guess is that if we had a transcript of any other economist, there would be at least as much fodder.”...***

Fri, 01/13/2012 - 02:59 | 2060836 besnook
besnook's picture

kinda funny in a morbid sense because millions of people will be hurt by the bernank's prescription to print the central banks way out of debt which will just cause savers to hunker down even more as long as there is a disconnect between interest rates and inflation. kinda funny in a literal sense that the depression expert missed the enduring cultural trait that the depression caused in the behavior of the generation that experienced the depression. they were the generation of risk averse savers who distrusted banks and brokers. their savings accounts helped fuel the golden age of the usa post ww2 when banks made their money in loans to buy homes and value added industry that yielded good paying jobs that allowed the purchase of more homes and cars.

this time the savings have no where to go. no one wants to borrow to buy a house or car and there is no financial incentive to build value added industry that might yield good jobs. on top of that, the wealthiest, largest generation ever is retiring  so even if consumer spending does begin again it will be at a much slower pace since the next generation to enter their peak earnings period is smaller and poorer.

 

the bankers have no way out. what will they do? massive capacity destruction, the ultimate reset button.

Fri, 01/13/2012 - 11:42 | 2061550 The Real Fake E...
The Real Fake Economy's picture

great post besnook!  

Fri, 01/13/2012 - 03:06 | 2060839 quacker
quacker's picture

It's rarely framed in terms of human rights. And yet it should be. Amnesty International should be all over it.

The cost of money is everything. The cost of money determines where money flows. Where money flows determines how hundreds of millions of people live their lives.

There is, somewhere, a natural organic demand for money that would exist free of manipulation. There is a supply of money in its several forms.

Somewhere this pull and tug determines a natural interest rate. To have a natural interst rate determined by a free people, freely engaging in economic activity should be as fundamental as free speech.

Your whole life and the life of everyone you know is in some form guided by the cost of money.

Yet we let this human right be taken away. We let the natural activity of countless millions be usurped by one little Jewish man.

Not the millions engaing in supply and demand, but Ben Shalom Bernanke. Whether millions of homes get built or not built, trillions in stocks get bought or not bought. Whether we save or spend. What should be as basic a right to us as the right to assemble and speak freely, we hand over to Ben Shalom

It is not just wrong. It is a crime against humanity.

 

Fri, 01/13/2012 - 08:19 | 2060964 Archduke
Archduke's picture

+1 interesting take.

 

I think this free capital movement should be free as in free speech, not free as in free beer.

that is to say that the 'natural interest rate' reflects the relative efficiency of a market

to allocate productive capital.  when offshore flows corrupt that balance, they should

pay a tax to compensate for the opportunity cost of wasting those resources.  not quite

capital controls, since there's no restriction, but rather more akin to a vat purchase tax.

you tax the investment input, not the output profit.  keep all you can from the revenue.

this would encourage the investment toward real capital production instead of bubble

inflation.

 

Fri, 01/13/2012 - 03:55 | 2060865 joo_p23
joo_p23's picture

2012 will be the year where the $889bn will move back into risk on assets.   We are just seeing the beginnings of this move back into stocks.  

Fri, 01/13/2012 - 04:20 | 2060870 kurzdump
kurzdump's picture

Cant wait to see them moving these 889bn to precious metals and oil.

If it keeps going the same way it was in 2011 central banks can monetize everything right out. It wont matter. Fiat under mattrasses is dead fiat.

Fri, 01/13/2012 - 05:52 | 2060909 Blkhat117
Blkhat117's picture

My mattrass has gold under it and i sleep with a peace of mind every night. 

Fri, 01/13/2012 - 08:30 | 2060980 Old Poor Richard
Old Poor Richard's picture

How much of this "cash" is really in cash?  Do we really have nearly a trillion in circulation hiding out in people's homes?  NO.  It is deposited in the fractional reserve ponzi banks, protected by the full faith and credit of the usgovt.  Ha.  Good luck getting it back out again when you actually need it.

I know I'll get junked for saying this, but you dudes collecting shiny metal in cases of tubes might not be king of the hill--because of the bankster-government-complex's success in breeding generations of people exposed ONLY to fiat paper who don't know why Shoeshine Boy bites that coin.

I predict the success of a non-elite who is stocked up with silver to be the same as the success of any non-elite with any amount of currency of any kind.  Either you are a 0.001%'er and have your social network to back you up or you are toast if TSHTF.

Fri, 01/13/2012 - 09:16 | 2061060 dcb
dcb's picture

Something happens to people's minds when they become economists. I don't understand it, but they honestly think wrong.

the first mistake made is that instead of letting the economy run the market, they think the market runs the economy. at least this is what central bankers think. That may be perhaps because they are surrounded bvy "market" people who make money on the market"

I was in fact thinking of this this morning.

1) by making interest rates so low, people feel the need to save more because they get no return on savings. it is doing exactly the opposite of what economists think, but what I think is natural. they want to ramp up inflation to force you to spend so you have less money eqach day, and have to get rid of it to help the economy. tthat's why I think thye should be shot.

the next thing I have notices is tlt, to me the bond market isn't buying into the rallt so why should I. by making long term interest rates so low, it's telling me the bond market sees much trouble ahead, this does not give me confidence to invest.

 

Fri, 01/13/2012 - 10:24 | 2061210 TheSilverJournal
TheSilverJournal's picture

Lower rates means people save less because the rewards of saving is less. It also tilts the scale more towards borrow because borrowing because borrow is cheaper.

Artificially low rate = less savings to produce and more borrowing to consume.

Fri, 01/13/2012 - 11:14 | 2061359 Archduke
Archduke's picture

yes and no.

 

the interest rate reflects among other things risk and reward.  that savings rate

is predicated on the savings being recirculated in the fractional reserve system.

so the question is the quality of that new credit, ie is to going to capital investment

or to levered speculation?  another way to look at interest rate is as a struggle

between business entrepeneurs versus the institutional banks.  in a cheap rate

low risk market in full economic boom, you have a pretty good chance of returns

when starting a business and taking the odds by yourself.  In a highly levered

and volatile high-rate world, you're better off trusting smart banksters to take

those risks for you as  they do the research and pick out the promising ventures.

that's the way it is supposed to work.  problem is now we have a volatile world

where rates are kept artificially low, but it says nothing useful about the real risks.

 

Fri, 01/13/2012 - 09:30 | 2061089 RiverRoad
RiverRoad's picture

Some folks have apparently moved their bank savings accounts to muni bond funds....judging by the rally there over the past year.

Fri, 01/13/2012 - 10:29 | 2061235 Stuck on Zero
Stuck on Zero's picture

So, if we're putting vast sums of money into savings accounts what will happen when everyone gets spooked and wants that cash comes out at the same time?

Fri, 01/13/2012 - 11:13 | 2061394 crzyhun
crzyhun's picture

Ugly, and mean time all is huny-dory with millions put to work, 38 mill under Obamacare, and less bullets and more butter, and growing HH debt.

Fri, 01/13/2012 - 12:11 | 2061718 boiltherich
boiltherich's picture

When the government says that inflation is running at 1.3% yet we go into the stores or gas stations and we experience prices going up by double if not triple digits it scares people, badly.  Why would they "invest" their disposable monies in debt yielding less than half a percent, or in any fund that will see a loss after fees are paid that with inflation can be in excess of (10%).  Bernanke is printing, electronically anyway, monetizing debt, but not for the consumer , homebuyer, or government, only for financial institutions.  That is why we are in an inflationary depression, and even the dumb cows in the public are not fooled into believing the bogus employment news on the TV every evening.  Aside from house prices still going down after more than four years of this depression, and a VERY temporary dip in gasoline, food and utilities, services and other necessities are still going up.  By the way, gas here dropped to within 70 cents of the spot NYMEX price a few weeks ago from $1.30 above the spot, people are elated that gas went down 50 cents in a matter of a few weeks, but they were down 2 days before the spot jumped and so did retail.  Sunday I went over to the beach in Crescent City and unleaded regular was STILL $3.93 down from $4.13 a few weeks ago.  Yesterday back over $4.  Pure theft, price fixing and not a damned thing you can do about it.

If I am going to "invest" in any scheme I have to have a reasonable chance of a real return of 5% minimum, AFTER risks are priced.  Inflation risk is the biggie out there, if I judge that inflation is running at 10% then the interest rate offered has to be 15% or I am not having any of it.  If you "invest" in risky instruments rather than the so called "risk free" debt of the treasury you also have to add on a default premium.  In this I do not understand why the lack of "investment" is a story at all, of course these funds are going to see outflows if they are not compensating for risk, and when the public sees Corzine walk away with billions in investor money scot-free that has a freezing effect.

Could it be that the public (at least the one percent that has all the liquid assets) is not quite as dumb as we here often portray them as? 

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