A Flashing Warning On The "Unintended Consequences" Of Ultra Easy Monetary Policy From... The Fed?!

Tyler Durden's picture


The case for ultra easy monetary policies has been well enough made to convince the central banks of most Advanced Economies to follow such polices. They have succeeded thus far in avoiding a collapse of both the global economy and the financial system that supports it. Nevertheless, it is argued in this stunningly accurate paper via none other than the Dallas Fed (and BIS economist William White), that the capacity of such policies to stimulate “strong, sustainable and balanced growth” in the global economy is limited. Moreover, ultra easy monetary policies have a wide variety of undesirable medium term effects - the unintended consequences. They create malinvestments in the real economy, threaten the health of financial institutions and the functioning of financial markets, constrain the “independent“ pursuit of price stability by central banks, encourage governments to refrain from confronting sovereign debt problems in a timely way, and redistribute income and wealth in a highly regressive fashion. While each medium term effect on its own might be questioned, considered all together they support strongly the proposition that aggressive monetary easing in economic downturns is not “a free lunch”. Absolute must read!

As we noted earlier:

Hopefully instead of setting up his own irrelevant strawmen, and then knocking them down with a Fed-dictated script, [WSJ's Jon] Hilsenrath, and his profound financial journalist experience, can at least pretend to tackle the questions noted above...

...well he won't. So luckily the Dallas Fed will do it for him...


Dallas Fed QE

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Mon, 08/27/2012 - 18:38 | 2742130 jomama
jomama's picture

just keep trading your paper for metal, bitchez.

Mon, 08/27/2012 - 18:42 | 2742142 SumSUN
SumSUN's picture

Metal.  Soon to be considered Tier 1 asset.

Mon, 08/27/2012 - 18:54 | 2742170 malikai
malikai's picture

I can't read it anymore. It's giving me twitches. When the hell did the FED learn how to observe objectively?

It's too good to be true. There's a rat somewhere.

Mon, 08/27/2012 - 19:43 | 2742260 Chris Jusset
Chris Jusset's picture

Quick!  Someone copy the entire article before every known copy, and every vestige is removed from the Internet.  The Elite cannot possibly allow this truth to be revealed ... as it implicates the entire Ponzi house-of-cards.

Mon, 08/27/2012 - 19:53 | 2742279 zaphod
zaphod's picture

The scary thing is, if you look around the world the FED is relatively stable compared to most other central banks. Just look at what China is doing with their currency, their printing presses have been in overdrive the past 7 years compared to ours. In the strange dark world of central banks Bennie is the most reasonable. This is scary and shows how humanity lets itself be so easily enslaved again and again and again.

Mon, 08/27/2012 - 20:23 | 2742345 AldousHuxley
AldousHuxley's picture

fed is special....world reserve currency....fed's action = inflation around the world not just in US.


also look at history....

US FED vowed not to tighten too much during great depression.

Europeans vowed not to loosen too much during Germany's hyperinflation.



As the great depression generation dies off in US, US is posed for above average inflation....

As WWII generation dies off in Europe, Europe is posed for austerity induced deflation....

Meanwhile in Japan, one generation is experiencing asset hyperinflation and multidecade deflation all within one generation!!


Chinese central banker a are new to this game. Remains to be seen which path they will choose during times of volatility.



Mon, 08/27/2012 - 21:33 | 2742481 Michael
Michael's picture

I'm not worried about the complete and total worldwide economic collapse because there are millions of Paulbots running around the country all over everywhere who know how to fix the problem.

Mon, 08/27/2012 - 21:45 | 2742518 3.7.77
3.7.77's picture

And their tasty also.

Mon, 08/27/2012 - 23:23 | 2742679 New_Meat
New_Meat's picture

Their tasty... what? exactly??

Mon, 08/27/2012 - 23:55 | 2742737 Michael
Michael's picture

Best news I've had all month.

At least this miserable creepy old fuck will soon no longer be roaming my planet.

Arlen Specter Hospitalized With 'Serious' Condition


Tue, 08/28/2012 - 01:07 | 2742798 BlackholeDivestment
BlackholeDivestment's picture

...but he did such great work on the Warren Court. LMAO. Looks like one of Benny and the 911 Jets lost a Wing Nut antichrist freak. Wonder if his grave stone will look like this? http://www.youtube.com/watch?v=Bow1ZJTV4L4 ...or maybe this>>> http://www.cropcircleconnector.com/2012/hackpenhill3/hackpenhill2012c.html 


...and lets not forget his execellent work after they burned the kids alive, that day when the tanks came during 60 mph winds and pumped CS Gas into a building that had no electricity, just candles and gas lamps. 

I wonder if he had some of Admiral Crowe's York Rite BioPort stock too? Talk about checks in the mail.

Tue, 08/28/2012 - 03:33 | 2742895 New_Meat
New_Meat's picture

+ the magic bullet!

Mon, 08/27/2012 - 22:06 | 2742562 fourchan
fourchan's picture

qe is for making the rich on wallstreet richer by selling out the little

people, their children, and grand children.

i thought this was obvious.

who is caring about the value of the dollar or the debt being created?

nobody at the top thats a fact. buy the fuccing dip.


if qe was for "fixing" the economy it would be fixed lol what a completely evil joke the fed is.

Mon, 08/27/2012 - 23:45 | 2742725 old naughty
old naughty's picture

Children, mine, yours, and theirs :"i am mad as hell and i can't take it anymore..."

Tue, 08/28/2012 - 04:29 | 2742914 Muppet of the U...
Tue, 08/28/2012 - 09:35 | 2743265 Revert_Back_to_...
Revert_Back_to_1792_Act's picture

China encourages and allows their people to purchase gold and silver.

Pretty sure that some  banks will even sell small size bars. 




You cannot print value into the system, you have to mint value into the system.


Mon, 08/27/2012 - 20:07 | 2742303 q99x2
q99x2's picture

They don't care that everyone knows. They are prepared to kill us all soon anyhow.

Mon, 08/27/2012 - 20:41 | 2742379 Whoa Dammit
Whoa Dammit's picture

William White is sooooo fired by the Fed.


Mon, 08/27/2012 - 21:23 | 2742460 Tunga
Tunga's picture

Don't you take that tone with me!

Mon, 08/27/2012 - 21:42 | 2742504 TwoShortPlanks
TwoShortPlanks's picture

"Fired"??? LOL, nar-mate, 100% endorsed by the Puppeteers...the next White Paper will be something about the merits of using Gold to bridge the gap between Base Money and Bank Assets... so that we may bolster Banks Reserves and in doing so, allowing the FED TO SAVE THE WORLD!

The Fed, fighting for truth, justice, and the American way!

Can anyone say 'Turn-Coat'?!

The picture becoming a little clearer for everyone?

Mon, 08/27/2012 - 22:00 | 2742552 illyia
illyia's picture

Actually that is rather insightful... and I do enjoy some meat with my stupid television tricks...

Thanks, Tyler(s).

Tue, 08/28/2012 - 00:31 | 2742783 Rubbish
Rubbish's picture

Is this a don't hang me, I'm one of the good guys

Mon, 08/27/2012 - 20:10 | 2742309 slewie the pi-rat
slewie the pi-rat's picture

hey, mali_kai!

hi mom!

Mon, 08/27/2012 - 23:46 | 2742726 HardAssets
HardAssets's picture

You mistake their p.r. released 'purposes' of stable currency, reduction of unemployment, and general economic growth for their real purpose. - - - This is to provide the conditions for their private bankster owners to rob the citizenry and to cover their behinds (by making the citizenry pay) when it periodically crashes. Then using bailouts they get to buy assets on the cheap and eliminate their competition.

They don't give a damned about the American people - - - just their own wallets and power.

The central banks cause the business cycle. To have the gall to say they can't 'fix' the problems they have been causing for decades is un-freakin' believable.

Tue, 08/28/2012 - 00:22 | 2742768 Whoa Dammit
Whoa Dammit's picture

I read the whole paper. It scared the shit out of me, because of things like this :

"Short of a wholesale restructuring of the liabilities of financial institutions (linked to recognizing losses on the asset side of the balance sheet), it is not clear what central banks can do to restore the financial system to health."

I guess I shouldn't be so spooked, but I am not used to the truth coming from such an unlikely source as the Fed. 


Tue, 08/28/2012 - 02:00 | 2742838 All Risk No Reward
All Risk No Reward's picture

You've taken the bait.  The Fed is a criminal cartel and they've only playing the role of intellectual idiots in order to provide cover for their criminal operation.

The banksters own trillions in debt and trillions in cash via their front corporations.

JP Morgan is giving out 3.5% 30 year loans.

Anyone who thinks hyperinflation is imminent simply does not have a clue in regards to self interest, cost benefit and other basics of Econ 101.

They will likely hyperinflate, but not until they've traded their cash and debt ownership into REALITY by taking most of society's chit.

I hope you all have control over the NECESSITIES OF LIFE, because that's what is going to matter.

I'm not there yet and yes, I'm nervous about it.  But I'm working towards it.

It gets real fun when the brown truck of happiness stops running!

Mon, 08/27/2012 - 19:15 | 2742218 vast-dom
vast-dom's picture

this needs to be tattooed on Bernanke's face before Jackson Blackhole! Seriously! WTF kind of ponzi is a ponzi when it's this blatent and transparent! STOP BERNANKE NOW! FUCK THE FED! FUCK CENTRAL PLANNING BANKING!

Mon, 08/27/2012 - 19:48 | 2742271 Tango in the Blight
Tango in the Blight's picture

I'm trading easy credit for metal. Do I need to worry?

Mon, 08/27/2012 - 21:51 | 2742531 A Nanny Moose
A Nanny Moose's picture

Just by a "good" boat in which to store it, and you will be fine.

Mon, 08/27/2012 - 20:22 | 2742341 Silver Bug
Silver Bug's picture

Gold and Silver. The only real money. Seems like they may gradually be waking up.



Mon, 08/27/2012 - 18:39 | 2742133 pleseus
pleseus's picture

Risk Off Phase coming.  Time to sell or go short.

Mon, 08/27/2012 - 18:42 | 2742147 Xibalba
Xibalba's picture

Not until 9-11.  After all.... it is a centrally planned event. 

Mon, 08/27/2012 - 18:53 | 2742168 pleseus
pleseus's picture

Why wait for the rush towards the exits with the no QE3 announcement?  The guy who gets out first can beat the traffic.  You can always sneek back in if the movie is still playing.  If it looks like a duck and walks like a duck than it's probably a duck.  I'm sorry, but QE3 ain't gonna happen in a couple of weeks.

Mon, 08/27/2012 - 20:12 | 2742316 Haole
Haole's picture

"...but QE3 ain't gonna happen in a couple of weeks."


Overtly, perhaps not.  Covertly, you'd better believe it because global QE never stopped despite the Bernank-speak-based reality many are under the delusional spell of.   Either that or this ride circling the bowl we're on hits the pipe.

Mon, 08/27/2012 - 19:17 | 2742219 Dr. Engali
Dr. Engali's picture

Biderman has it wrong. Easing is not about driving interest rates down to help the economy .. It's about free money to the government for huge deficit spending and supporting the banks. Not necessarily in that order.

Mon, 08/27/2012 - 19:48 | 2742272 fonzannoon
fonzannoon's picture

It was really interesting exactly how much Biderman seems to be off in that vid

Mon, 08/27/2012 - 20:14 | 2742320 Haole
Haole's picture

Said it once I'll say it again.  Biderman is a perfect example of what is wrong with the U.S. and the "system" itself.

Mon, 08/27/2012 - 20:13 | 2742319 slewie the pi-rat
slewie the pi-rat's picture

not only that, but the checks are in the mail and 20% of the labor force has jobs!

Mon, 08/27/2012 - 21:27 | 2742465 Tunga
Tunga's picture

Ya! So it could be worse. Um. Right? Somebody through me a friken bone here I've been frozen for a 100 years!


Mon, 08/27/2012 - 21:33 | 2742482 Tunga
Tunga's picture

You will pay me 1 MILLION DOLLARS or I will destroy the entire world wide economy! 

Mon, 08/27/2012 - 21:36 | 2742491 Tunga
Tunga's picture

Oops, I just threw up on myself a little bit. 

Mon, 08/27/2012 - 18:42 | 2742140 Xibalba
Xibalba's picture


Mon, 08/27/2012 - 18:42 | 2742145 Rainman
Rainman's picture

Bernank is wiping his ass with this working paper as we speak

Mon, 08/27/2012 - 18:53 | 2742162 intric8
intric8's picture

Is this the feds idea of a disclaimer? Nobody is twisting their arm, in regards to implementing policy.

Mon, 08/27/2012 - 21:29 | 2742472 Tunga
Tunga's picture

"Two words Mr. President; Plausible deniability." - Independence Day 

Mon, 08/27/2012 - 18:55 | 2742175 Blubaba
Blubaba's picture

"We are now all AUSTRIANS"

Mon, 08/27/2012 - 18:56 | 2742178 LongSoupLine
LongSoupLine's picture



just another fine example of the Fed not knowing what the fuck it's doing.  There's so much conflict within it, I doubt they even know which hand to wipe their ass with after a shit.

Mon, 08/27/2012 - 18:56 | 2742179 Cognitive Dissonance
Cognitive Dissonance's picture

The Fed just wants to be able to say that they warned us about pushing the red button.......just before pushing the red button.


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