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Friday Night Irony: According To The Fed, Just Over One More Year Of ZIRP Will Lead To 38.36% Annual Inflation

Tyler Durden's picture


Everywhere you look these days, it seems that ZIRP, or the Fed's Zero Interest Rate Policy, is the panacea to all the world's problems. In fact, ask any tenured economy Ph.D. what inflation is and you will get a stare down, be told you are a moron, that banks need to print more, more, more and that we are really roiling in deflation, with some latent mumblings about buying their economics textbook for the inflationary price of $124.95. Everywhere, that is except the Fed itself. Because in an extremely ironic twist, it is none other than the San Francisco Fed, which operates the "Be Fed chairman for a day" simulation, where you try to keep both unemployment and inflation within the "price stabeeleetee" barriers, that reveals the reality of ZIRP. The laughter really begins when one recreates precisely what the Fed is doing: namely the policy of Zero Interest Rates, now well in its third year, that things take a turn for the surreal. We challenge any reader to play the Fed simulation game, and to do what Bernanke has done: namely lock the Fed Funds rate at the legal minimum: between 0.00% and 0.25%. In our personal experience, we were dismissed as Fed Chairman after annual inflation literally went off the charts and hit 38.36% following 4 years of ZIRP. And according to the Fed, inflation would now, 2.5 years into ZIRP, realistically be running at about 17%. Which incidentally is exactly where it is, at least for those who have not mutated sufficiently to be able to metabolize iPads and fly to and from work using their own pair of wings. Of course, every hyperinflation has a silver lining: US unemployment will be just 1.5%. Granted everyone will be making pitchforks and rope, but they would be employed.


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Fri, 11/18/2011 - 21:12 | 1893090 bigmikeO
bigmikeO's picture

Dang, I'm first and don't really have anything interesting to say except how much I love ZH. I even check it before The Drudge Report now - that says something.

Thank you, Tyler!

Fri, 11/18/2011 - 21:27 | 1893146 sqz
sqz's picture

Addictive game.

But doesn't show you anything about the money supply, though you could infer something about the velocity. Given you start from an "optimum" condition, you therefore don't know what gaps your policy is trying to fill.

As the expression goes, the only way to win is not play!

Or, you could do everyone a favor, and accept an upper bound of 2% inflation is arbitrary instead focussing on how close you can get to full employment without inflation accelerating! Yeah, I went and said it: why don't we do Employment Targetting instead? :)

Fri, 11/18/2011 - 21:30 | 1893167 The Monkey
The Monkey's picture

What do you trust? A simulator made by some egghead, or 2 decades of ZIRP experience from Japan?

Fri, 11/18/2011 - 21:51 | 1893202 sqz
sqz's picture

If you're at ZIRP, you're already screwed, i.e. there are no good options. There's a reason its called a ZIRP Trap and why even the most monetarist of central bankers avoid it like the plague. At this bound, the full horror of why debt means inflation and inflation means debt is revealed, while the specter of deflation is chasing you further into the trap.

That said, one huge difference compared to the West doing ZIRP and the Japanese ZIRP is we don't wait around until deflation actually hits us in the face before starting to use other monetary tools. Neither do we stop using these tools the second we get back to zero or a tiny bit of inflation. Helicopter Ben, Moody Mervyn and Super Mario are all trying with varying degrees of effort to tick off all the boxes for non-Japanese Lost Decade experience. Of course, this expertise of deferring problems into the future ultimately means we crunch into the brick wall of unsustainable debt that much faster, if nothing else changes.

Fri, 11/18/2011 - 21:56 | 1893215 SHEEPFUKKER

Slow motion train wreck or just train wreck.  

Fri, 11/18/2011 - 22:36 | 1893290 iDealMeat
iDealMeat's picture

This whole thing is simple.

CDO: = Collateralized Debt Obligation

Say what you want. but the "C" in CDO is collateral and
Collateral = assets..  period.

The "C" of CDO = Collateral = Assets, in all forms.

All Assets of "CDOs" are at best Losing value.
At worst = 0 (zero).

So, whatever your game is..  You buy a CDS. (insurance)..

CDS = Credit Default Swap

Now.. if you're a Primary Dealer you leverage your CDOs 50x and
hedge them with a CDS..

But, your CDO is based on fictional value..... You know that..
Your trading partners know that..

So, EVERY, Primary Dealer  bundles CDO's, Hedges with another
Primary Dealer, that backs it with a CDS...

Both are are worthless..

..A complete Cluster Fuck.. or circle jerk..

Sovereign Nation or Individual.

Everything else is just noise..

game over.

Fri, 11/18/2011 - 22:56 | 1893340 Pinto Currency
Pinto Currency's picture


The inflation fire is well and truly started in the wooden trestle that is our economy.  Problem is we are sitting on top.


New meaning for the golden parachute.


Consumer goods price inflation is 12% :


We've been had.

Fri, 11/18/2011 - 23:06 | 1893359 Caviar Emptor
Caviar Emptor's picture

We sure have. Been had. And no sign of any improvement any time soon

Fri, 11/18/2011 - 23:26 | 1893405 Bolweevil
Bolweevil's picture


Fri, 11/18/2011 - 23:33 | 1893415 jeff montanye
jeff montanye's picture

where else but at zero hedge?  bravo.  the last line is very sweet.

Fri, 11/18/2011 - 23:53 | 1893455 AldousHuxley
AldousHuxley's picture

Here is another irony:


NYPD arresting a police captain Ray Lewis of the Philadelphia PD


warning he might be arrested:


he gets arrested as he predicted:

Sat, 11/19/2011 - 00:59 | 1893549's picture

He blows it in the first 15 seconds when he says that in order to make corporations impotent someone (the government I suppose) must "control every transaction." Select corporations are powerful because the government already controls so much of the economy and gives preferential treatment to those select corporations.

The way to get power back into the hands of the 99% is to stop government from interfering in every transaction so that individuals can make their way in the world without being held back and slapped down by the corporatist elite.

Does this guy have even the slightest idea about what he is suggesting when he says that "every transaction" must be controlled? Will that make us freer or richer or anything other than slaves?

Sat, 11/19/2011 - 02:50 | 1893640 Totentänzerlied
Totentänzerlied's picture

You've just described at least half of the 'Occupy' crowd. They're not outraged on principle at "the system" (the government-corporate apparatus) as such (though they make loud noises to that effect). They're mad that their interests aren't getting the nice fat cuts of public largesse that the financial sector (or whoever) is perceived (perhaps rightly) to be getting. The morality of the system is only in question as it applies to someone else.

It's not "Stop, thief!", it's "Stop, thief! I demand a cut of the loot!"

This - society's various groups bickering over from whom to steal next and in what amount -  is democracy in a microcosm.

And don't doubt for one second that this guy is entirely sincere and truly believes more control is the solution. Or that he's not in the minority.

Sat, 11/19/2011 - 03:56 | 1893681 Taku
Taku's picture

Second picture makes my blood boil.

Just a hint. She ain't al-kai-yei-da.

If a protester treated an officer like that, the response would be immediate and harsh (even rightfully).

Yet, if an officer treats a girl like this, it's OK? Hint: this gal is not the worst threat to society.

And just look at how she responds. 

Officers, maybe look into oh, y'know, the actual corrupt in power before you mess up our youth??

Have the balls to do that? I mean, y'know, actually carry out justice against the corrupt, powerful criminals?

Ball's in your court.

You only live once.

You tell the rest of us what justice means to you.

Sat, 11/19/2011 - 09:52 | 1893862 Bendromeda Strain
Bendromeda Strain's picture

You tell the rest of us what justice means to you.

Criminal justice, and more of it to the "1%" and their private army. Social justice? Take a hike with that ill defined and malleable pipe dream. The Community Organizer in Chief has granted indulgence to Corzine and thus set the bar so low as to be a trip hazard. Mathematics must trump wishes, because after "eat the rich" there inevitable follows the period where the sport changes to identification of the "useless eater" participants.

Sat, 11/19/2011 - 14:25 | 1894283 chubbar
chubbar's picture

You are only confused because you are spelling it wrong. Try Just US and then you might get some insight as to the problem.

Fri, 11/18/2011 - 23:47 | 1893442 AldousHuxley
AldousHuxley's picture

After bouncing around from 0% to 19% quarter to quarter I managed to have 1.6% inflation and 3.48% unemployment but I was still dismissed!



Sat, 11/19/2011 - 06:44 | 1893688 Taku
Taku's picture

With numbers like that, you're a threat to the bernank et al. Totally unacceptable..

Fri, 11/18/2011 - 23:31 | 1893414 AldousHuxley
AldousHuxley's picture

It took about 6 months with 19% Fed rate with 10% unemployment to bring down 2% inflation to 0%.


looks like once inflation goes out of control you need opposite of ZIRP....DDIRP (Double Digit Interest Rate Policy)


Fri, 11/18/2011 - 23:35 | 1893419 jeff montanye
jeff montanye's picture

the precedent to which you refer?

Sat, 11/19/2011 - 01:02 | 1893552's picture

Volker circa 1981?

Fri, 11/18/2011 - 23:46 | 1893433 TruthInSunshine
TruthInSunshine's picture

Long live Zero Hedge; one of the very few places in the world that allows those who are awake or wish to awaken to truth & reality, to bypass the bullshit spewed by the 6 corporations that own all U.S. Mainstream Media sources (and most of those in Europe as well), and that have all sold their 'journalism as a vocation and institution of society' souls to the devil, and that merely now serve as proxy mouthpieces for the governmental lies du jour, perpetually, exceedingly rarely challenging any statement, allegation, proclamation or other propaganda put forth by government sources or departments, and NEVER actually doing any real work, including but not limited to dissecting and analyzing the already constructed and conveniently packaged data on things such as 'official inflation,' 'official unemployment,' 'official debt,' etc. etc., that they are all too happy to receive from the Ministry of Truth and then repeat, verbatim, to the sheeple on cable news stations, network television, radio and in newspapers across the land.

Is it any wonder that the U.S. and so many 'developed' nations are crumbling, with dumbed down students, a public fed a diet of complete lies and tortured statistics (in an attempt to control the water temperature, to ensure the frogs don't leap from the pot before being slowly boiled, and to ultimately try and retain as much CONfidence from as many sheeple as possible to keep the Ponzi going for as long as possible, kick the can style).

But we should all be OPTIMISTIC, because for the first time in a long time, if ever, many of us are seeing more and more former sheeple truly waking up to the Main Stream Media incompetence/corruption, criminality of CONgress, excesses and deceit of what is now a unitarian/empire-like Executive Branch (complete with executive orders and signing statements that have either de facto or de jure force of acts of legislation, which is allegedly something reserved exclusively for CONgress), and especially, the deceit and schemes of the Federal Reserve 'Bank,' in as transparent a view as I can ever recall, thanks to smart and honest people scrutinizing the Ponzi and the media parroting of the lies and disinformation, and then taking the time, energy and initiative to prove how the lies are constructed and how the data is tortured, and who finally break it all down and explain it for the absolute scam and ruse that it all is.

We get the government (and media) that we deserve. For the first time in my life, I'm awakening each day to find a greater number of people realizing how badly they're being lied to, at every level, from nearly every 'respected' source, about nearly everything that affects their families, their children, their friends and their neighborhoods.

Velocity is on our side. For the skeptics amongst us, I ask them to think of what the public stream of consciousness looked like a mere decade ago compared to what shape it has taken today, and to try and deny the basic truth that far more people are awakening to what can be accurately called the Matrix of Delusion that has been actively foisted upon them.

The Main Stream Media is dying a little bit more with each passing day and on a consistent and irreversible process, and fewer people trust anything the government or its multitudes of agencies have to proclaim (whether directly or indirectly, through proxy puppets in the media), and the people are deserving of far better than the outright lies, distortions and deceit that they're getting.

Sat, 11/19/2011 - 01:45 | 1893593 Popo
Popo's picture

Did anyone at the Fed even bother to play this game and plug in historic Fed policy?

This is hilarious.   Actual historic policy results in a dismissal.  LOLOLOL.


Sat, 11/19/2011 - 01:54 | 1893602 LeBalance
LeBalance's picture

David Rockefeller - Baden Baden, Germany 1991 (meeting of the Bilderberg Group:

"We are grateful to the Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years."

"It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is now more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries."

Sat, 11/19/2011 - 08:03 | 1893794 DarkWanderer01
DarkWanderer01's picture


I would like to know the source of this quote.


Sat, 11/19/2011 - 07:50 | 1893788 Dabale arroz a ...
Dabale arroz a la zorra el abad's picture

It is true that there are beginning to be many people who, thanks to the Internet, manage to access some more immediate sources of nearer-the-truth information. The question is: how representative are we?

Tomorrow there are general elections here in Spain, where I live, and I am pretty sure the conservative party (PP) will win, with absolute majority. Here we also have a strong two-party system (not as strong as in USA, however). Anyway, that the PP manages to win (or its "alternative" PSOE) means that most of the people really have not awaken. That still most of the people do not decide to vote for really alternative parties, which do exist, means that they are still blinded by the still quite effective mainstream media. I don't mean by that that just voting really alternative parties will solve our problems. I'd say that is a necessary but not sufficient step.

What would be sufficent, I don't know, because I'm pretty sure also that if a really alternative party, not coopted by The Powers That Be, bankers, etc, managed to come to power, suddenly there would be one of these coloured revolutions or youth movement so convenient for the elites that would enable them to regain power. But maybe there is hope: Iceland still hasn't been invaded or bombed, and apparently they are following a really different path than ours.

Sat, 11/19/2011 - 07:53 | 1893789 XitSam
XitSam's picture

Does anyone remember how they found Zero Hedge? I don't, but I can say it has been one of my alarm clocks.

Sat, 11/19/2011 - 10:20 | 1893880 Think for yourself
Think for yourself's picture

A bit more than 2 years ago I'd think (took me a while to register myself), was already woken up to the political/MSM side of the matrix but I had no idea how deep the rabbit hole went on the economical side and in the merger of these as a cohesive whole used to steer and shape their hegelian dialectic.
I think it was a link on - my favorite alt news website along with ZH.

Sat, 11/19/2011 - 12:11 | 1894016 Melin
Melin's picture

It's like having a front row seat to watch the conflagration. 


Sat, 11/19/2011 - 14:50 | 1894338 AldousHuxley
AldousHuxley's picture

zerohedge is the consciousness of the global braintrust.


While rest of the populace took the blue pill and living the illusion by watching "reality" shows on TV and taking drugs to escape reality (alcohol, drugs, religion, hollywood, etc.) ....just at the matrix has been programmed.


We are the few who took the red pill to follow the rabbit hole to see how far it goes. We chose to be here despite the societal systems design whereby 99.9% of the test subject chose denial. We are the anomally the system must now exterminate for we have found out how the world works.


But truth hurts, but we keep coming back for more. There is a slight hope in all of us in thinking that world can be different. Hope, it is the quintessential human delusion, simultaneously the source of your greatest strength, and your greatest weakness."

Sat, 11/19/2011 - 17:39 | 1894552 Diet Coke and F...
Diet Coke and Floozies's picture

Know thy self. Nothing will change because of human nature. If you try to fight your nature, you will lose. Even in a systemic collapse, the system will be reborn, just renamed and in a different form. Make peace with it. The names change, but not the system, tis' the nature of humans. Utopian dreams will fail due to human nature and free will. (Venus project == No crime. LOL never going to happen unless their are NO LAWS. Justice and morality are subjective)

Oh, and you don't have to be exterminated just because you see the way the world works; only if you choose to act against it will the system defend itself. Sometimes, you don't have to like it, you just have to do it... Perpetual joy in life is not an entitlement. Where else in the universe can you have this much fun!

Sun, 11/20/2011 - 02:37 | 1895343 AldousHuxley
AldousHuxley's picture

To know thy self, one must desire to know.


Elites will be in power as long as they can play keep the desire stashed away with enough carrots.


In the long run, world will be a better place if you look at last 2000 years of human history...elites used to believe earth was flat and constitution writers didn't think black slaves were even men....but no pain no gain.....we shall overcome.

Sun, 11/20/2011 - 14:27 | 1895970 Diet Coke and F...
Diet Coke and Floozies's picture

What if the elites run out of carrots? The elite will sacrifice anyone else before themselves; again it is in their human nature. We can not litigate resource constraints away any better than we can litigate human nature away. Once that affects basic human needs, human nature will take over and we will fight like cats in a sack. We already do it trying to get easy oil right now. Technology has raised the stakes as well. Greed may be the destruction of the spieces, due to WMD technologies. We may not overcome if we kill overselves trying to make the gain. Hope for the best, plan for the worst?

Sat, 11/19/2011 - 12:09 | 1894014 Melin
Melin's picture

My friend asked, "Are we going to be the generation that lets freedom die?"  I said, "Our great grand-parents tossed freedom with both hands.  We've never tasted it. We just might be the generation to bring it back tho." 

Government is force.  That force is supposed to only be used against one who has initated force or fraud against another individual, and to protect the nation as a whole.  Our government rulers believe their job is to "manage" the economy.  That is not their job and everyone who clamors for more regulation is either misinformed or hoping to use government force to loot you. 

Free men succeed or fail based on their ability and their honor.  Trade with those you trust.  There are far more honorable people than dishonorable, imo.  Inserting the government between every transaction is inserting the potentional for corruption into every transaction.

We've got a lot of government whittlin' to do to before we can claim to be free. 

Separate Economy and State

Fri, 11/18/2011 - 23:46 | 1893439 AgShaman
AgShaman's picture

Perhaps we should work on a name change substitution....scratch the "Primary" and insert "Death"....for a more realistic definition of what these ponzi enablers are all about.

That way we can have only 4 or 5 years of ZIRP....instead of 7 or 8....and just cut to the chase and get on with it.

Maybe some sheep will even get triggered awake by your name change and see what's waiting for them in the near future.

"Death Dealers".....ahh...catchy 'Underworld' belly of the beast ring to it.

Heck it could be fun...Start a game of Domino Death guessing March Madness winners. Have Tyler bracket up the remaining 21 and bet on which ones make it to the Final Four. Set up a prize for those that guess correctly (A Caddyshack hat....can of of bullets...ya know, sumpin' useful)

Sat, 11/19/2011 - 07:31 | 1893777 James T. Kirk
James T. Kirk's picture

If collateral is valued at "mark to market," its value is still measured by Monopoly money. If collateral is valued at mark to model, the fantasy value is still expressed by Monopoly money. What a choice. Insanity or insanity squared. I like my morning Starbucks with room for cream and acid, thank you.

Sat, 11/19/2011 - 13:36 | 1894182 Threeggg
Threeggg's picture


I did this write up to understand the CDS market. What do you think......pretty close description for us dummies to understand ?

Here is the CDS problem in basic-basic: Using a house as an example and this is a conversation to understand the problems that we are facing.

(we will nickname you joe sixpack = J6)

J6 wants to buy a 100K house, so J6 goes to Joe banker and says hey Joe can you lend me a 100K to buy this house. Joe says sure J6 here is your 100K you can pay me back over time with interest.

Then Joe gets back from the closing and says to himself, Hey "what if J6 doesn't pay me back, I will be out a 100K. So, Joe calls Allstate and talks to Al the broker and says, "Hey Al, I want to buy a 100K insurance policy incase J6 doesn't pay me back. Al says sure Joe here is your 100K default insurance policy (CDS). Then after Al gets off the phone with Joe, Al says to himself "wait a minute" "what if Joe doesn't pay me back" and Al quickly calls jerry at AIG and says hey jerry I need an insurance policy for 100K incase  Joe doesn't pay me back. Jerry says sure Al here is you CDS for 100K incase Joe the banker doesn't pay you. Then Jerry gets off the phone with Al and says "wait a minute" "What if Al doesn't pay me back and then he quickly calls Zurich and talks to Chad and says "hey Chad" "I need to purchase a 100K policy against Al not paying incase J6 defaults on his mortgage. Chad says here you go Jerry a 100K CDS for you and then Chad says to himself "hey wait a see where this is going.

So, let’s say this goes 20 CDS contracts deep. So what we have is 2,000,000 dollars worth of credit default swaps written on a 100K depreciating asset that is now only worth 60K. Now the leverage went from 20 to 33 because of the deflation in the housing prices. (That’s why there is no mark-to-market)

Now J6's employer just called and is laying J6 off "permanently".

The problem is now that the financial institutions that wrote all these CDS's (a ton of American banks) were only required to have a 6% reserve on this 100K worth of exposure (each). So, you see the money does not even exist-yet (our anti deflationary kryptonite backstop and tribute to JS for the saying "QE to infinity") to pay these claims and all these entities must be bailed out to stop the contagion before wiping out everybody.

I used a house as an example and it actually "is" a "physical" asset. Most of the CDS's are written against debt (paper, but classified as an asset on balance sheets with "no" underlying physical nothing) Here is where the problems lay. It's the reserve of 6% that is the problem. Let’s take our old friend JPM that has a leveraged balance sheet of 44 to 1. If they are in the wrong chain position on the CDS loop and let's say that they have to pay out 5x of that leverage but only receive 2x of the leverage back. ???????????????????

Where does the money come from to pay that net 3x's exposure? (it does not exist...yet, remember the 44 to 1 leverage) hence the bailouts to keep this thing from going full balls out.

There it is, and it's called "Contagion"


Sat, 11/19/2011 - 15:25 | 1894386 iDealMeat
iDealMeat's picture

One PD's "Asset" is another PD's debt. CDS's hedging synthetic CDO's.

Sun, 11/20/2011 - 13:45 | 1895876 Darth..Putter
Darth..Putter's picture

I know how to make rope.

Fri, 11/18/2011 - 22:02 | 1893232 The Monkey
The Monkey's picture

It took a few years post-bust for wholesale CPI deflation to manifest in Japan. It will here too.

Fri, 11/18/2011 - 22:05 | 1893243 kaiserhoff
kaiserhoff's picture

Agreed, but we should be specific.  The other side is vague and stupid.

ZIRP makes it almost impossible for the banks to make legal, ethical profits, but they are expected to grow their way out of their bad debt problems.

ZIRP is a debt trap because it forces banks, pension funds, hedge funds etc. to borrow short and finance long, at very low rates, exactly what killed the S & Ls.

ZIRP kills pensions, savers, widows and orphans, and makes projections for small business, real estate, etc. all but impossible.


Sat, 11/19/2011 - 01:07 | 1893560's picture

End the Fed and proceed to ignore the bald guy at your leisure.

Sat, 11/19/2011 - 01:21 | 1893577 azusgm
azusgm's picture

Twice in the past few days, the term "debt revulsion" has popped up. The first time was in the Hugh Hendry interview at the London School of Economics. Hendry made the assertion that the Great Depression was a period of debt revulsion that began in 1929 and lasted 40 years. Then we had a cycle of credit expansion. Now we appear to be entering another cycle of debt revulsion.

He makes his remark starting a bit after the 3:00 mark and ending around 4:00.

Yesterday, Edward Harrison at Credit Writedowns used the term in his article on deleveraging and sovereign debt crises.

Professor Elliot Rosen, the author of "Roosevelt, the Great Depression, and the Economics of Recovery" asserted that it was the massive increase in industrial productivity, not our involvement in the war, that pulled this nation out of the Great Depression.  (for those who enjoy book talks by authors).

I'm waiting for Bernanke to manage to print his way to $200/bbl oil. The Chinese slave wage arbitrage will break down as the cost of bunker fuel makes shipping cheaply produced goods from China to the US unworkable. There would be pain all around, but we might regain a functioning economy as the productivity returns.

Fri, 11/18/2011 - 22:34 | 1893303 Zero Debt
Zero Debt's picture

Trust "The Monetary Policy Balloon" from the Bank of England:

It's much more fun than the fed game but I only scored 58% because the balloon crashed all the time


Sat, 11/19/2011 - 01:02 | 1893553 James-Morrison
James-Morrison's picture

My college Macro Economics book cost $36.95.

My son's version of same book cost $164.99. 


Nah, it's worth more now that economics is a "proven" science due to the stellar work of da Bernake.  

Sat, 11/19/2011 - 01:10 | 1893562's picture

Can hedonic pricing be applied to the dismal science?

Sat, 11/19/2011 - 02:16 | 1893626 Missiondweller
Missiondweller's picture

Fucking outrageous!

Sat, 11/19/2011 - 02:47 | 1893634 Taku
Taku's picture

Maybe someone could introduce this game to the bernank.

Fri, 11/18/2011 - 22:04 | 1893172 devo
devo's picture

That's what I was thinking, too. The inflation that China et al absorb isn't modeled. That's not to say I believe CPI. It's probably somewhere in between (i.e. ~10%).

Sat, 11/19/2011 - 00:01 | 1893471 AldousHuxley
AldousHuxley's picture

Where is the world bank, IMF, BIS version?


US Fed can't influence unemployment when Japan, EU, China, Britain are all copying ZIRP despite G20

Fri, 11/18/2011 - 21:55 | 1893212 DaveyJones
DaveyJones's picture

it truly is a War Game. Too bad Goldman has the software


Sat, 11/19/2011 - 01:11 | 1893564's picture

Help us Matthew Broderick, you're our only hope.

Sat, 11/19/2011 - 08:20 | 1893806 XitSam
XitSam's picture

"Would you like to play a game?"

"Yes, play Global Econo-nuclear War."

Fri, 11/18/2011 - 22:14 | 1893267 dark pools of soros
dark pools of soros's picture

where was the Start Wars button that they also have?

Fri, 11/18/2011 - 21:36 | 1893177 ImNotExposed
ImNotExposed's picture


Sat, 11/19/2011 - 00:18 | 1893500 Akrunner907
Akrunner907's picture

Anyone wonder if this is the go-to app for Bernake to plan his monetary policy?  LOL!!

Sun, 11/20/2011 - 02:20 | 1895332 BorisTheBlade
BorisTheBlade's picture

Can I has a Fed t-shirt? I reached 38% inflation rate by the end of my first and only term.

Fri, 11/18/2011 - 21:04 | 1893091 Carlyle Groupie
Carlyle Groupie's picture

Perfecto! Then the all that toxic paper from the late aughts will be worth something.

Fri, 11/18/2011 - 21:03 | 1893095 knukles
knukles's picture

Ummm uh  ahhh mmm well, we had policy yh  addressing the ah relative softness in the gree shoots nacent recovery on a no-transitory nature and uh  mmm  we ah  mm did what we considered to be the ah best posssibel oucome for the poeple of America and ah....

Quit getting on my ass.  I studied fiscal policy you fucksticks.  How am I supposed to ahve all the answers,  I  ahh  hing
(voice cracking)


Nobody could do this   its not fair to pick on me and criticize
(sound of weeping)

Find those fuckers from San Fran and ship their asses one by one to fucking Gitmo, the fucking traitors
(spitting all over deck)

Fri, 11/18/2011 - 23:14 | 1893376 Spastica Rex
Spastica Rex's picture

Best EVAR vocal impression in text. BRAVO!

Fri, 11/18/2011 - 21:06 | 1893100 yabyum
yabyum's picture

My mom (91yo) is the one who gets killed w/zirp. She will spend that money she makes forward, jobs,et al. Lets kill the old ones!  Fuck Zirp.

Fri, 11/18/2011 - 22:19 | 1893272 dark pools of soros
dark pools of soros's picture

fuck it, let ZIRP ride 25 more years and then spike interest rates to 20 so us GenXers can get back to being slackers

Sat, 11/19/2011 - 08:26 | 1893808 XitSam
XitSam's picture

You'll be driving a wagon to take your hay to market long before 25 years of ZIRP is complete. If you're lucky.

Fri, 11/18/2011 - 21:06 | 1893101 dwdollar
dwdollar's picture

Ahhh... Did they make this for the kiddies in high school government class? I'm sure the kiddies are so well informed now...

Fri, 11/18/2011 - 21:06 | 1893103 SHEEPFUKKER

38% just barely misses the 2% target. oops

Fri, 11/18/2011 - 21:08 | 1893108 Tyler Durden
Tyler Durden's picture

Or, as Dick Bove would say, 38% blows away consensus estimates of 2%. Upgrade to Strong Buy.

Fri, 11/18/2011 - 21:22 | 1893140 ACP
ACP's picture


-Dick Bove, April Fool's Day, 2008

Fri, 11/18/2011 - 21:56 | 1893218 end da fed
end da fed's picture

OOPS! the San Fran Fed didn't get the memo to change ALL calcs to disguise reality!

Fri, 11/18/2011 - 22:01 | 1893228 Whatta
Whatta's picture

If you cross out FED Chairman and write in "Krugman" instead, then play the game....YOU WIN EVERY TIME!!!!!


No inflation, no unemployment and chocolate pudding with every meal!!

Fri, 11/18/2011 - 22:46 | 1893326 CompassionateFascist
CompassionateFascist's picture

Best avatar in cyberspace. Summarizes the entire human experience.

Sat, 11/19/2011 - 00:09 | 1893488 Floordawg
Floordawg's picture

No, I think that avatar would be a boot stomping on a face... FOREVER.

Sat, 11/19/2011 - 01:14 | 1893568's picture


Sat, 11/19/2011 - 02:02 | 1893611 LeBalance
LeBalance's picture

getting hammered? /how droll/

Sat, 11/19/2011 - 09:28 | 1893844 Everyman
Everyman's picture

mmmmmmm, TITS!

Fri, 11/18/2011 - 22:05 | 1893244 max2205
max2205's picture

Can we get a total of interest lost for those 65 and over beginning in 2009?

Fri, 11/18/2011 - 22:23 | 1893277 dark pools of soros
dark pools of soros's picture

go tend to your tomato patch

Fri, 11/18/2011 - 22:25 | 1893284 The Monkey
The Monkey's picture

Not much if they have done what the Fed wants (invest in junk bonds, 6x levered mortgage REITs and high beta stocks). Hope Grandma has a strong heart.

Fri, 11/18/2011 - 21:08 | 1893107 SHEEPFUKKER

Common Stuper Mario, you gonna let Bennie Boy beat you? 

Fri, 11/18/2011 - 21:10 | 1893113 dwdollar
dwdollar's picture

How long will it take them to rewrite the algorithm for the game now that its on zerohedge? Bets anyone?

Fri, 11/18/2011 - 22:06 | 1893247 Zero Debt
Zero Debt's picture

It would be nice to include the gold price in the game. Running ZIRP should create a nice parabolic effect.

Here's a chart over real rates vs gold prices 1970-2010:

Fri, 11/18/2011 - 22:24 | 1893283 dark pools of soros
dark pools of soros's picture

you would need to chart the manipulation too then 

Sat, 11/19/2011 - 01:16 | 1893572's picture

Manipulation is like gossamer. You don't dissect it.

Sat, 11/19/2011 - 09:38 | 1893854 flattrader
flattrader's picture

If he had adjusted the nominal POG for inflation, the chart might be useful.

Fri, 11/18/2011 - 21:10 | 1893114 Atomizer
Atomizer's picture

It only takes fifteen minutes for Uncle Ben to make his cameo TV appearance to change the rules of the game.


Mass Hypnosis  <<- Watch this and tell me what happened to you. This is just an experiment on ZH readers. My curiosity overwhelms me.


Fri, 11/18/2011 - 21:23 | 1893145 daveedollar
daveedollar's picture

Got a headache.

Fri, 11/18/2011 - 21:47 | 1893198 Sedaeng
Sedaeng's picture

I heard English being spoken while both French & English words would take turns popping onto the screen.  some nude kid bending over with a snorkel towards the end... nothing happened otherwise...

Fri, 11/18/2011 - 22:22 | 1893276 Zero Debt
Zero Debt's picture

I thought about this joke

Essentially the whole population has been hypnotized into lending money from themselves. Now if you can hypnotize someone into that, it's a pretty good achievement.


Fri, 11/18/2011 - 23:16 | 1893386 Spastica Rex
Spastica Rex's picture


Post everywhere.

Sat, 11/19/2011 - 00:22 | 1893473 Atomizer
Atomizer's picture

Zero Debt. The exercise was to demonstrate propaganda. If you chose not to watch but listened, the message was quite different. If you watched and turned off the sound, another message was sent to viewer. This is the low standards of US News Media today. Goebbels is alive and well by continuing to divide peeps and retain control thru the use of HDTV.

My only response gathered after watching/listening, a remotely strange noise I heard long before. After 10 minutes, memory recall kicked in. Sound is first 13 seconds of link.


I shake my head and shiver
They smile
And then stab my back as they shake my hand
Send out an SOS plea
Come quickly
I'm marooned in monkeyland.
Is there anyone there
Who understands me
Anyone at all

I'm idly staring at the sky
Did anybody hear me sigh
A million stars are a moving sight
To all you out there
Reading this tonight
It's just a trick of the light

I have to know what is real
And what is illusion
Tell me how does it feel
Beyond this confusion
Is there anyone there

Do I dismiss this with a sigh
Suppose I must from time to time
And let the answers pass me by
To questions set to bend the mind
Is my creator a God or a man
Does someone somewhere
Care or understand
It's just a trick of the light

I have to know what is real
And what is illusion
Tell me how does it feel
Beyond this confusion
Is there anyone there

Life's an optical illusion
Like other optical illusions
If there's anyone there

Fri, 11/18/2011 - 21:11 | 1893116 Vlad Tepid
Vlad Tepid's picture

Does that mean the gold bears will finally eat crow?

Fri, 11/18/2011 - 23:05 | 1893358 UP Forester
UP Forester's picture

Nope.  iPads.

Fri, 11/18/2011 - 21:14 | 1893120 Bull_Colapse
Bull_Colapse's picture

Ok so my mum has a small mortagage left on her house about 10% she is going to be forced to move next year when she retirers. She has some savings equating to half of the outstanding payments on the mortage. She cant afford the payments for more that 3 years if she stays with out selling. So if the market crashes shes screwed. But if she sells, realistically this is what she needs to do, and keeps the money in the bank her purchasing power will be evaporated. If she buys gold that is all her eggs in one basket also storage and transation costs are an issue. Ideally She wants to put the money that she worked all her life to save into an asset that will provide her with an income stream and not loss purchaseing power when she need to sell. Rentals??? 

Please can you clever followers of ZH offer me some options that I can look into for her. Ps she living in the uk and its not an option to keep the house and inlate away the mortgage as she wount be working.

Fri, 11/18/2011 - 22:01 | 1893230 delacroix
delacroix's picture

paas  pays a dividend

Fri, 11/18/2011 - 22:06 | 1893246 end da fed
end da fed's picture

hi. im not sure if this will help. sorry if it doesnt... can she rent it out right now or rent part of it out?i know most people dont want to be landlords but she could make some extra cash to cover the cost of her mortgage and maybe not have to use her savings for it. im not sure how it works over there, but can she refinance the portion she still owes to lower her payment even more?


Fri, 11/18/2011 - 22:43 | 1893317 goldsaver
goldsaver's picture

This may not necessarily work in the UK, but what about renting her place for the mortgage payments and renting a smaller place?

A better solution would be gold. I don't know how much the house is worth but 200-300 oz are not that bulky (they fit in a shoe box). She can then sell them piece meal as she needs funds.

Fri, 11/18/2011 - 23:10 | 1893368 Caviar Emptor
Caviar Emptor's picture

Rent the property is a reasonable option. 

Sat, 11/19/2011 - 00:24 | 1893507 Manthong
Manthong's picture

No sooner will you (anyone) figure a workaround for the mortgage, but you will be nailed with skyrocketing electricity, other utilities, fees and property taxes.

Best to ditch the property ASAP and break the bondage to the system..

Get mobile, get flexible.. lighten up.

The old nesting model is broken for those who do not have a substantial cushion.

Go rural if possible..  get into food production or essential services, child care etc or similar.

Read up on what happened in 4th centruy Rome..  the barbarians in the outlands offered a more secure, less costly alternative to the oppresive Roman government.

Sun, 11/20/2011 - 03:06 | 1895360 dark pools of soros
dark pools of soros's picture

sell the home and put it into a small store and get a SNAP license... just sell SNAP items so never worry about getting robbed

Sun, 11/20/2011 - 06:49 | 1895435 prole
prole's picture

Hmm, she is insolvent. Does not own her house outright and is "retiring?" If she sells the house and retires lol, she is still going to need to live somewhere, and unless that is under a bridge that will cost money too.

A she doesn't retire. She will have to keep working at least until the house is paid off, preferably longer

B she takes on roomates now, paying roomates to share the house and the bills. Look in a mirror for a perfect roomate for this situation. Then decide if you want to move in with her now, or she can move in with you later.

You don't have to worry about gold if you don't have a roof over your head, that is just my opinion.

Fri, 11/18/2011 - 21:14 | 1893121 navy62802
navy62802's picture

How is the inflation rate hidden? While I am no economist, I believe the only way that these ZIRP policies can possibly not impact inflation is if a handful of major financial institutions are hoarding the freshly "printed" electrons. If the newly created money never hits the open market, then it will not affect the real inflation rate. Thus, the electrons remain in the dark recesses of bank balance sheets (or spreadsheets as it were). Why do you think it's impossibly difficult for people to refinance a home mortgage? Why do you think that unsecured debt runs 12+% even for people with good credit? The bank balance sheets were so bad prior to the 2007/2008 crisis that even with multiple years of ZIRP and quantitative easing, they are still soaking up excessive capital. In my mind, I picture a plant that has been allowed to wither to the point of near death. You begin to water that plant and it just soaks up water. In our case, the banks are that withered plant, and the water is the money that the Fed is creating. Eventually, the balance sheets will return to health, and that water/money will overflow. And at that precise point in time, our inflation will go from what it is now to double digits in a relative instant.

Fri, 11/18/2011 - 21:20 | 1893136 navy62802
navy62802's picture

On a slightly different, but related, note, I think the question of inflation (namely, where is it) is the question of the day. People should be asking where is the inflation. It should be much higher than it is now. And I think the answer to that question would lead us down a rabbit hole of unprecedented proportions. The most probable answer to this question is that these banks had numerous off-balance sheet problems. They were likely far less capitalized than anyone ever acknowledged. There was probably complicity at the various regulatory agencies. And in order to address this lack of capital, the Fed instituted the policies we see today (namely QE and ZIRP). I think that if anyone were able to dig deeply into the numbers and the actual balance sheets, that person would find that the ground truth regarding these banks is much more stark than has been previously acknowledged. Why have we seen no inflation? Because the money is disappearing into the unacknowledged 100:1 levered balance sheets.

Fri, 11/18/2011 - 23:10 | 1893369 UP Forester
UP Forester's picture

Compare a gallon of milk now, a gallon of milk a year ago, two years ago, etc.


Sat, 11/19/2011 - 01:19 | 1893574 vomitparty
vomitparty's picture

i bought triscuits last night, 2/$5, earlier this year it was 2/$4

Fri, 11/18/2011 - 23:27 | 1893410 Tyler Durden
Tyler Durden's picture

One of the best comments to appear on Zero Hedge

Sun, 11/20/2011 - 03:11 | 1895363 dark pools of soros
dark pools of soros's picture

Sums up what one learns from Dying of Money and puts it into the current context

Fri, 11/18/2011 - 23:55 | 1893457 centerline
centerline's picture

It is the huge black hole of shadow banking.  The instant the flow of bank subsidies ends or the real balance sheets are forced into the daylight it is game over.  And it does not have to happen all at once everywhere.  Just a large enough failure in one place to cause a cascading series of defaults through the system as obligations on the short side are unable to be honored.  Cash flow (liquidity) is probably the greatest systemic risk right now in this regard.  Ironic how the banks are really the greatest debtors in the world when viewed from this perspective.  

Sat, 11/19/2011 - 00:17 | 1893497 tarsubil
tarsubil's picture

I really think of this as a wave. They say a tidal wave is coming but the ocean is receding. Do not look in fascination. Run!

Fri, 11/18/2011 - 21:19 | 1893129 Bill D. Cat
Bill D. Cat's picture

I enjoy this Tyler's posts . The sarcasm is like acid .



It burns .

Fri, 11/18/2011 - 22:35 | 1893308 Aguadulce
Aguadulce's picture

I almost think this post sounds like a female tyler. There's gotta be one right?

Fri, 11/18/2011 - 21:19 | 1893134 dwdollar
dwdollar's picture

I only got 28% inflation. :(

Fri, 11/18/2011 - 21:45 | 1893193 Mine Is Bigger
Mine Is Bigger's picture

I got 40%-plus inflation.

For fun, I kept the funds rate unchanged at 19% from start to finish.  It yielded -3% inflation and 19.22% unemployment rate.  This thing is clearly not very good.

Fri, 11/18/2011 - 22:02 | 1893234 Central Bankster
Central Bankster's picture

So, sounds better than what we got right now, which is 8% + inflation plus 20% unemployment?

Fri, 11/18/2011 - 23:58 | 1893465 Mine Is Bigger
Mine Is Bigger's picture

Yes..I thought the same.  It's so sad, isn't it?

Fri, 11/18/2011 - 22:05 | 1893239 cowdiddly
cowdiddly's picture

I left rates at zero and got 30% real inflation, and 22% real unemployment. Then I woke up and realized I was not  playing a game. 

Fri, 11/18/2011 - 22:07 | 1893249 max2205
max2205's picture

Can/will my house go up 30%.... Please

Sat, 11/19/2011 - 00:19 | 1893503 tarsubil
tarsubil's picture

Sorry, no. But it will stop dropping in price once milk hits $99 a gallon. A tidal wave lifts and destroys all ships!

Fri, 11/18/2011 - 22:11 | 1893258 cowdiddly
cowdiddly's picture

Then I ran to the mirror to see if I had a bald head and a shitty looking beard.

Fri, 11/18/2011 - 22:30 | 1893292 Zero Debt
Zero Debt's picture

I raised rates to 19% immediately and ended up with 19.22% unemployment.

Fri, 11/18/2011 - 21:19 | 1893135 TheJokingJollyRoger
TheJokingJollyRoger's picture

Does this mean that I will still be able to afford a hamburger combo with fries after all of this takes effect?

Fri, 11/18/2011 - 21:23 | 1893139 dwdollar
dwdollar's picture

It means you'll work 12 hours at McDonalds and get paid one cheeseburger for the day.

Fri, 11/18/2011 - 21:56 | 1893216 JPM Hater001
JPM Hater001's picture

Allright.  I'll put that one in the win column.

Fri, 11/18/2011 - 22:01 | 1893231 steve from virginia
steve from virginia's picture

Hmmm ... 19% might be a little on the high side, doncha think?

Pretty funny, though.

Fri, 11/18/2011 - 21:23 | 1893144 SHEEPFUKKER

Happy meals for all

Sat, 11/19/2011 - 08:54 | 1893830 my puppy for prez
my puppy for prez's picture

McRibs for the truly elite!

Since it has been discovered that Pepsi is using aborted fetal cells as "taste receptors" for their diet drinks (I kid you not!), you have to wonder what is REALLY in those "rib" sammies!

Sun, 11/20/2011 - 06:56 | 1895436 prole
prole's picture

Would it be wrong to solve the immigration problem and drastically cut costs at the same time? (and the crime problem?)

Fri, 11/18/2011 - 21:21 | 1893137 ACP
ACP's picture

Yes, best article all day I think. Of course, being correct (via the FACTS) will only make ZH a "right wing crank"organization.

Fri, 11/18/2011 - 21:21 | 1893138 SHEEPFUKKER


Zimbabwe Indiscriminate Rape Policy

Fri, 11/18/2011 - 22:43 | 1893321 Zero Debt
Zero Debt's picture

Gideon Gono FTW

Fri, 11/18/2011 - 21:23 | 1893142 nmewn
nmewn's picture

Now I need a shower, I feel dirty.

Ended with 5.5% Fed rate...9.19% inflation rate. On the bright side unemployment was 1.5%...lots of Krugman broken windows I suppose from people stealing what they could no longer

Fri, 11/18/2011 - 22:02 | 1893233 DaveyJones
DaveyJones's picture

Krugman's house?

Fri, 11/18/2011 - 22:19 | 1893273 nmewn
nmewn's picture

LOL!!!...yes, the mother ship!

Sat, 11/19/2011 - 01:27 | 1893582's picture

Mother something.

Sat, 11/19/2011 - 09:52 | 1893861 nmewn
nmewn's picture

Its MF'ing Global ;-)

Fri, 11/18/2011 - 21:25 | 1893152 Manthong
Manthong's picture

Raise the Fed funds rate to 19% through the whole game and you get -3% inflation.

A little problem comes with the resultant unemployment at 19% ..  oh, and a defaulted, bankrupted goverment (that they don't display).

A happy ending after all?

Fri, 11/18/2011 - 21:28 | 1893154 eaglefalcon
eaglefalcon's picture

The Bernank openly proclaims that he wants inflation and he is never shy about it.  In every FOMC statement, he's bitching about inflation expectation being too "somewhat transitory", too "somewhat moderate", too "somewhat subdued", translation: we want lasting, explosive, skyrocketing inflation!


Too many people try to follow the guesswork of MSM and become confused as a result.  Read the damn stupid freaking FOMC minutes!  Anyone with an SAT reading score of 15 would understand that benny wants to print.


Also Obama has promised he's gonna double the export in his first term.  The only way to do that is to devalue the dollar by 50% so that the same export is worth twice the volume in dollar term.  They only have 12 months left and the Bernank won't disappoint

Fri, 11/18/2011 - 21:27 | 1893157 quacker
quacker's picture


Small can, store brand, was 50 cents in early Summer. Then it sat as 55 cents for a while. Today 68 cents.

36% inflation on mushrooms in under 6 months. I'm going to stock up on physical mushrooms to barter. Mushrooms outperforming gold.

Mushrooms bitchez!

Fri, 11/18/2011 - 21:31 | 1893168 SHEEPFUKKER

Psychedelics and you might be onto something quacky. 

Fri, 11/18/2011 - 21:47 | 1893199 Flocking swans
Flocking swans's picture

long long trips.

Sat, 11/19/2011 - 01:29 | 1893583's picture

Sometimes your dime's not worth a dime if you don't lay it down.

Fri, 11/18/2011 - 22:49 | 1893332 Zero Debt
Zero Debt's picture

Any substitute for mushroom we can throw into the inflation basket?

Fri, 11/18/2011 - 21:29 | 1893164 Georgesblog
Georgesblog's picture

Sure, we are. The only thing deflating is the purchasing power of the USD. Right now, it's somewhere between wallpaper and toilet tissue. The USD has lost 98% of the purchasing power it had, then. Of course, we had gold and silver coinage in circulation, then.

Fri, 11/18/2011 - 22:07 | 1893248 PulauHantu29
PulauHantu29's picture

Where is the Maestro these days?

Sat, 11/19/2011 - 01:31 | 1893584's picture

Tuscany. But don't try to rent a house there, none are available.

Fri, 11/18/2011 - 21:47 | 1893166 slewie the pi-rat
slewie the pi-rat's picture

i started @ zirp, raised rates immediately and constantly, but too slowly, apparently

i ended up with the FED funds rate = 10.75 % and an inflation rate of 26%

but i licked unemployment! (1.5%)

and i feel really dirty, too!

Fri, 11/18/2011 - 22:05 | 1893241 nmewn
nmewn's picture

I stood pat @ 4.5% FF during the "transitory" oil

When Benny dropped it straight to nothing back then I knew he was room to maneuver.

But what do I know...I don't have a Princeton plaque on my wall ;-)

Fri, 11/18/2011 - 21:41 | 1893185 Stumpy
Stumpy's picture

Well that was easy. Sticked at 6.75% for most of the time. Finished with 4.94 % unemployment and 3.27% inflation. Was reappointed after solid policies.

Also, I crashed the US Government. Sorry 'bout that.

Fri, 11/18/2011 - 22:09 | 1893256 nmewn
nmewn's picture

You're hired...with plane ticket swap options ;-)

Fri, 11/18/2011 - 21:42 | 1893186 tim73
tim73's picture

Gruppe A!  We Germans got some arrowin that...!

Fri, 11/18/2011 - 21:44 | 1893190 MonkeySmoke
MonkeySmoke's picture

After 16 quarters of ZIRP in the Be the Fed game, I managed to create 27.06% inflation and 1.5% unemployment. Not sure how TD came up with 38+%, but either one is unexceptable. Especially, if everyone is digging holes during the day and filling them at night.

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