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Goldman's Take: "Fed Returns To Monetary Easing"

Tyler Durden's picture


Goldman demanded it, Goldman ordered it, Goldman got it.

Fed Returns to Monetary Easing

BOTTOM LINE: Despite three dissents--the largest number since 1992--the committee adopted an even easier policy stance than expected: first, the committee now anticipates that rates will stay on hold "at least through mid-2013." Second, the committee effectively signaled an easing bias saying that it is prepared to employ additional easing steps as appropriate.


1. As expected, the statement included a significant downgrade of the economic outlook. The committee views growth as having been "considerably slower" than expected, highlighting "deterioration in overall labor market conditions," "flattened out" household spending and that the supply chain disruptions can "account for only some of the recent weakness in economic activity."The committee furthermore stresses that "downside risks to the economic outlook have increased."

2. The committee adopted an even easier policy stance than expected. First, the committee now anticipates that economic conditions are likely to warrant exceptionally low levels for the federal funds rate "at least through mid-2013" instead of "for an extended period." Although some form of strengthening of the guidance language was expected and the new guidance remains conditional on the economic outlook, we see this step as a dovish surprise. Three members--Fisher, Kocherlakota and Plosser--dissented from this decision, the largest number of dissents since November 1992.

3. Moreover, the committee effectively signaled an easing bias saying that it discussed "the range of policy tools necessary to promote a stronger economic recovery" and that it "is prepared to employ these tools as appropriate." In our view, this leaves open the possibility of further asset purchases ("QE3") should the economic outlook deteriorate further from here.


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Tue, 08/09/2011 - 15:26 | 1543511 JuicedGamma
JuicedGamma's picture

I think I'm turning Japanese, I really think so....

Tue, 08/09/2011 - 15:46 | 1543591 Popo
Popo's picture

I'm not sure I agree with the analysis that "Goldman ordered it.  Goldman got it".

There was no new round of QE announced today.  Just some words about "standing at the ready".

What we just saw was what a lot of people expected we'd see:   Jawboning and nothing else.

The Fed is out of bullets.  Their last round of QE utterly failed in every possible way **and** wrecked the dollar to the tune of 20% of its value.    

The Fed was faced with a crashing market and no bullets, so instead of shooting they pointed their gun and threatened to shoot.

So far, the market believes the skit that was just acted out on global television.  But soon enough they'll figure out that it was only a skit.

Sure, it could still happen.  But I sure didn't see Goldman getting QE3 just now...


Tue, 08/09/2011 - 15:53 | 1543620 Robot Traders Mom
Robot Traders Mom's picture

Very well said Popo. Gut reaction that will come back in the morning in a big way...

Tue, 08/09/2011 - 16:00 | 1543648 kaiserhoff
kaiserhoff's picture

Yes, Popo, but failure is so familiar and comforting.  Let's by all means have more heaping gobs of it.

I'm waiting for the five year to go negative 5%, then I'll back up the truck.  What can these idiots be thinking?

Tue, 08/09/2011 - 16:10 | 1543696 NumNutt
NumNutt's picture

Wow, sure glad the market closed up (dow 420+) for no good reason. Hmmm couldn't be any market manipulation going on could it? Lets see just after midnight dow futures go from approx 10,500 to 11,000. Hmm then all day they are headed down just to go from negative up 420 points to finish above the all important 11,000 mark. What a fucking joke, oh well, common everyone get your free cash while the US gov is handing it out. Maybe I should buy some BAC shares since I am sure they will be bailed out by the fed in 3, 2, 1, .....

Tue, 08/09/2011 - 15:27 | 1543512 nope-1004
nope-1004's picture

Need more debt to pay our debts.

What a wonderful world.

Tue, 08/09/2011 - 15:27 | 1543514 Iriestx
Iriestx's picture

I feel like I'm taking crazy pills.

Tue, 08/09/2011 - 15:31 | 1543516 SheepDog-One
SheepDog-One's picture

LOL go ahead FED, 'ease' away, as the dollar tanks and gold flies to the sky.

'FED can take steps for more Queezing from here should conditions significantly worsen' we're looking at Armageddon shortly then?

Tue, 08/09/2011 - 15:28 | 1543519 HelluvaEngineer
HelluvaEngineer's picture

In other words "We're going to sell to you, morons."

Tue, 08/09/2011 - 15:42 | 1543578 tickertapeguide
tickertapeguide's picture


Tue, 08/09/2011 - 15:28 | 1543520 Clorox Cowboy
Clorox Cowboy's picture

And the market rallies...what a bunch of spineless cowards out there.  Don't fight the Squid...I mean Fed.

Tue, 08/09/2011 - 15:29 | 1543522 Iriestx
Iriestx's picture

"The reason we can't pay off our credit card debt is because they won't loan us any more money, so we're going to shop for some additional credit cards from other companies to borrow more to pay off that credit card."


Sound financial decision making from the world's supposed best and brightest leaders.

Tue, 08/09/2011 - 15:31 | 1543523 Stax Edwards
Stax Edwards's picture

No QE3.  They got a statement that ZIRP lasts till 2013.  I disagree that Goldman got what they wanted no matter how you try and spin it.  As of today, No QE3 is the takeaway.

Even you (TD) claimed QE3 was coming yesterday. 

About F'N time IMO.

Tue, 08/09/2011 - 15:32 | 1543531 Tyler Durden
Tyler Durden's picture

Considering that it is Goldman itself saying they got more than it wanted, we fail to see the spin... And taking out 2 year of duration risk is effectively the same thing as Operation Twist 2. In case you missed it, the 2 Year is trading inside both IOER and Libor.

But yes, no LSAP.

That will come in due course.

Tue, 08/09/2011 - 15:41 | 1543572 LawsofPhysics
LawsofPhysics's picture

yep, the Fed and the banks are indeed getting what they want for now.  People piling into treasury paper that is returning less and less.  At all costs, the debt must remain payable.  Jews and banks care about only two things, gold and usury.

Wed, 08/10/2011 - 02:32 | 1545334 Socrates
Socrates's picture

"Jews"?- what a good little Nazi you are. I thought your stinking carcass died at Stalingrad screaming, "But the Fuehrer said he was sending winter clothing"....I hope you die slowly.

Wed, 08/10/2011 - 07:24 | 1545530 Watauga
Watauga's picture

I abhor the anti-Semitic remark, as well, but seriously, why would you say, "I hope you die slowly."  That seems awfully un-Socratic to me, Socrates.  I would prefer to read your brilliant analysis that makes the anti-Semite look like a fool.

Tue, 08/09/2011 - 15:42 | 1543579 Snidley Whipsnae
Snidley Whipsnae's picture

Question TD... Do you believe that the Fed is afraid to QE aggresively due to another credit down grade hanging over the US? I'm curious how much, if any, a possible downgrade influenced their decision? Thanks, you guys/gals do a terrific job!

Tue, 08/09/2011 - 16:05 | 1543672 Greater Fool
Greater Fool's picture

Yeah, guess I hadn't seen the benefit in the two-year promise right away, but last quarter 2Y Fed Funds swaps went as high as 75bp, for a little while anyway. Same instrument traded at 17bp yesterday and will probably be lower still tomorrow.

Not that this helps you unless you happen to fund at OIS....

Tue, 08/09/2011 - 16:42 | 1543867 slaughterer
slaughterer's picture

Tyler and Goldman are right (I leave it up to you to decide who is more right).  The HFTs are obviously going in Goldman's direction.  For tape followers like me, that is all that matters.   The duration risk has been reduced substantially for the big boys.  Add to that, the LSAP, which will come at JH "in due course," this is explosive.  You really need a staff member schooled in Fed hermeneutics to understand how bullish this Fed release is.  The whole rest of the year of trading is laid out for us today.  Thank you Tyler, thank you Ben, thank you printing press.  

Tue, 08/09/2011 - 15:33 | 1543536 XenoFrog
XenoFrog's picture

So no QE3, just continued easing as necessary. Did you think they would come right out and call it QE3?

Tue, 08/09/2011 - 15:36 | 1543548 Ned Zeppelin
Ned Zeppelin's picture

Agree that the next move may not have an obvious label on it - I did not expect a big QE announcement and this FOMC statement is decidedly nuetral, but if GS wants t read into it, I guess we can't stop them.

Is the dollar down/equities up correlation in full swing this afternoon post FOMC? Why would stocks be rising as the 10 yr rate is falling? Mysteries wrapped inside enigmas.

Tue, 08/09/2011 - 15:40 | 1543568 Stax Edwards
Stax Edwards's picture

No I don't expect that saying ZIRP will last until at least 2013 would be called QE3 because it is not QE3.  As for rolling maturing issues back in, this was already known.

Tue, 08/09/2011 - 16:33 | 1543730 YHC-FTSE
YHC-FTSE's picture

"Just continued easing as necessary". Well that is QE, so saying no QE3 is a tad bit misleading, no? Since we don't know when or even how much easing there will be, I guess we'll just have to wait until they feel like it, and a few billion is sneaked into the markets. Will we then declare to all and sundry that's what we thought all along? Or will we play with semantics to justify the fluff and bluff. 


I hate this convoluted clap trap. "The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings". Well if we knew how much they got coming, we'll know how much will be reinvested. 


The economic outlook is bleak. I think we're all on the same page about that, even the msm. But the potential here of "More of the same", looks very much like good news for short term equities, particularly software, insurance, and luxuries (As per Credit Suisse recommendations on debt ceiling extension). It feels wrong, but that never stopped people from making money off it. What do you think?

Tue, 08/09/2011 - 23:36 | 1545141 TheAlchemist
TheAlchemist's picture

It's not what I think, it's what I'm doing:


Selling depreciating assets, spending less money, and saving more in a fashion I see fit.

Tue, 08/09/2011 - 15:47 | 1543537 SheepDog-One
SheepDog-One's picture

This is just shit stew statement, 'Yea things will be extended, more 'measures' can be taken blah blah blah'.....certainly this is no expected C-130 drop of pallets of free trillions to Wall St.

As markets now do 2% apeshit swings based on nothing like a manic depressive.

Tue, 08/09/2011 - 15:31 | 1543527 Greater Fool
Greater Fool's picture

Man, those guys pack a mean bowl of hopium.

Tue, 08/09/2011 - 15:38 | 1543560 schoolsout
schoolsout's picture

with extra kief sprinkled on top for good measure?

Tue, 08/09/2011 - 15:32 | 1543528 TruthInSunshine
TruthInSunshine's picture

Nice spin, Goldman.

In the meantime, the algos are going wild trading LULU back and forth, while no one wants to write anything about any 'trend' as VIX has taken a moonshot.

Go long the precious and VIX, bitchez.

Tue, 08/09/2011 - 15:31 | 1543530 SeverinSlade
SeverinSlade's picture

Anyone care to venture a guess as to how long this BS rally lasts?

T-minus 2 weeks and 3 days until Jackson Hole.

Tue, 08/09/2011 - 15:51 | 1543614 TradingJoe
TradingJoe's picture

My "Guess": S&P @ 1100 before JH!

Tue, 08/09/2011 - 15:32 | 1543534 Ned Zeppelin
Ned Zeppelin's picture

Pretty thin reed to be basing a strategy of buying US equities right now.

Tue, 08/09/2011 - 15:33 | 1543538 irishlink
irishlink's picture

All the countries who need a weak Euro are now sidelined. They have nothing but strikes against them. Austerity . strong Euro, high debth ,plunging GDP. Sounds like a great  recovery plan.

Tue, 08/09/2011 - 15:34 | 1543541 chet
chet's picture

" As expected, the statement included a significant downgrade of the economic outlook. The committee views growth as having been "considerably slower" than expected, highlighting "deterioration in overall labor market conditions," "flattened out" household spending "

In bizzaro world, all of this means we should buy stocks.

Tue, 08/09/2011 - 15:35 | 1543542 fonestar
fonestar's picture

global hyperinflation before 2013?

Tue, 08/09/2011 - 15:48 | 1543603 Hacked Economy
Hacked Economy's picture

The target timeframe to expect the final roll-off of the slippery slope is about late 2012 to mid-2013. We're setting the final pieces on the stage now...get your popcorn and find your seats in time for the show.

Tue, 08/09/2011 - 15:49 | 1543608 Youri Carma
Youri Carma's picture

My best guesstimation would be that the year 2013 will be D-Year the final hyperinflation fase.


But who knows? Could come a lot quicker now in this hyperbolic fase of gold.

Tue, 08/09/2011 - 15:36 | 1543549 buzzsaw99
buzzsaw99's picture

LMAO Like we didn't already know it was gonna be zirp 4evah bitchez!


It's a man baby!


Tue, 08/09/2011 - 15:54 | 1543624 Youri Carma
Tue, 08/09/2011 - 15:36 | 1543551 monopoly
monopoly's picture

Looks like we may be in the right investment for the next two years. lol

Tue, 08/09/2011 - 15:44 | 1543552 gangland
gangland's picture


ot, manchester riots video supposedly 30 minutes old

certainly no florence and normandy...

Tue, 08/09/2011 - 15:37 | 1543553 Scalaris
Scalaris's picture

So the American + Eurozone economies are fixed now, no?

Tue, 08/09/2011 - 15:41 | 1543569 gangland
gangland's picture

yep, pretty much.

Tue, 08/09/2011 - 15:53 | 1543618 Scalaris
Scalaris's picture

My mistake, Bloomberg just said that DOW = +300 points so world economies have just now been fixed. I guess.

Tue, 08/09/2011 - 15:56 | 1543635 gangland
gangland's picture


Victory gin on the house!

Tue, 08/09/2011 - 16:09 | 1543681 -Michelle-
-Michelle-'s picture

Isn't it wonderful? I'm going to just go sell all my PMs and start loading up on Apple products. Life is grand.

Tue, 08/09/2011 - 15:39 | 1543561 irishlink
irishlink's picture

And next month Obama will start his bid for another term and he will refute the entire FOMC report. This will be the SPIN of SPINS

Tue, 08/09/2011 - 15:39 | 1543563 alien-IQ
alien-IQ's picture

USD plummeting = Mission Accomplished.

Tue, 08/09/2011 - 15:40 | 1543565 unionbroker
unionbroker's picture

there is only one buyer of stocks and they will always pay higher so don't fight it

Tue, 08/09/2011 - 15:40 | 1543566 etrader
etrader's picture

Speaking of Goldman...

Great uncle warren is now under water on his stock postion

Tue, 08/09/2011 - 15:40 | 1543567 jbc77
jbc77's picture

i don't get it. No QE3 but the market goes apeshit northward??? Or are they just not calling it QE3?

At any rate, whats wrong with the ZH website? Keeps crashing every other minute.

Tue, 08/09/2011 - 15:43 | 1543583 Moe Howard
Moe Howard's picture

TPTB have traced discontent with them to this website. 

Tue, 08/09/2011 - 15:48 | 1543605 Snidley Whipsnae
Snidley Whipsnae's picture

"i don't get it. No QE3 but the market goes apeshit northward??? Or are they just not calling it QE3?"

They still have the PPT and lots of minions to do their bidding... hehe, bidding...get it?

I miss Bevis and Butt Head...

Tue, 08/09/2011 - 15:41 | 1543573 ReactionToClose...
ReactionToClosedMinds's picture

no disrespect to anyone here ..... but despite our financial magnitude (and serious issues) .... we are a sideshow for now (we are the next act on the hit card ...with maybe PRChina to follw us)..... Europe is where it is at and where the next round of the Spanish Civil War (see UK, Spanish & Greek riots - UK rioter quote:  "I'm doing this to tell the 'rich' I can do whatever I want ....") may be about to start .... all because of the delusion over the Euro and to supposedly 'lock Germany to the West which understandably they use to then fix 'value' to export "German engineering' (what is that anyways?).

The Swiss Franc up 5.5%+ in one day ... that tells the story ... a liitle lifeboat that did everything right and was prudent/prepared getting swamped by the frantically swimming crowd of drowning Titanic passengers as they discover there are not enough lifeboats on the ship as the Titanic was never supposed to sink ....

Tue, 08/09/2011 - 15:49 | 1543607 alien-IQ
alien-IQ's picture

I agree with you...and it's one of the reasons why I find this Euro surging against the dollar so utterly comical.

Tue, 08/09/2011 - 15:41 | 1543576 Moe Howard
Moe Howard's picture

Gold. Priceless.

Tue, 08/09/2011 - 15:41 | 1543577 somethingelse
somethingelse's picture

this market is so fuct up.     must close above the "psychologically important" DOW 11K  so that can be what the brainless MSM talking heads go on about.     (sigh)

Tue, 08/09/2011 - 15:48 | 1543597 dwdollar
dwdollar's picture

Anyone who thinks this economy can survive in it's completely and utterly broken form without massive easing deserves to lose a lot of money by buying into this sucker rally.

Tue, 08/09/2011 - 15:50 | 1543610 SheepDog-One
SheepDog-One's picture

I hear that...I hope idiots are piling in and get ass raped on tomorrows open.

Tue, 08/09/2011 - 15:57 | 1543640 ElvisDog
ElvisDog's picture

But you what the result of all this manipulation is? Sane people who have money want nothing to do with the market. Liquidity dries up. Volume dries up. They can prop the market up to a certain level, but there is no support underneath. And that is how epic crashes take place.

Tue, 08/09/2011 - 15:42 | 1543581 JuicedGamma
JuicedGamma's picture

To all those that just got whipsawed by the bond market, tough shit sucka!

Tue, 08/09/2011 - 15:42 | 1543582 reader2010
reader2010's picture

Inflate and Die!

Tue, 08/09/2011 - 15:43 | 1543584 VisualCSharp
VisualCSharp's picture

Let's just eeeeeeeeeeeeeease our way into chaos. Ahhh, that felt good, like taking a nice big dump.

Tue, 08/09/2011 - 15:44 | 1543585 adr
adr's picture

Is the S&P going to make it to 1150, yep there it goes 1151...!!!! Dow up 260points and climbing to the close!!!

What a frickin joke. Unbelievable...

Tue, 08/09/2011 - 15:44 | 1543586 SheepDog-One
SheepDog-One's picture

'FED returns to QE'? When did they ever stop? Amazing how these kind of days can produce no news at all yet it produces market swings of 2% and more in minutes? Just insanity.

Tue, 08/09/2011 - 15:46 | 1543592 bsdetector
bsdetector's picture

They believe we are still going to be slogging through this for the next 3 years. Wow, that is an admission. 

Tue, 08/09/2011 - 15:46 | 1543593 Cursive
Cursive's picture

Very desperate spin fro GS, but it looks to be working. They're just gonna drive this puppy right over a cliff from which there will be no return.

Tue, 08/09/2011 - 15:48 | 1543604 SheepDog-One
SheepDog-One's picture

Yep thats the plan, mash the accelerator to the floor until we plunge off the cliff.

Tue, 08/09/2011 - 15:46 | 1543595 Smiddywesson
Smiddywesson's picture

No QE3 now, or ever.  We will call it RBE (Really Big Easement)

Tue, 08/09/2011 - 15:48 | 1543599 JuicedGamma
JuicedGamma's picture

Why not call it what it really is, a huge steaming pile of dog shit.  Watch your step.

Tue, 08/09/2011 - 15:48 | 1543602 ReactionToClose...
ReactionToClosedMinds's picture

like it ! ..."RBE"

Tue, 08/09/2011 - 15:47 | 1543598 MoneyWise
MoneyWise's picture

Booyah, Bitchez, Sell Gold buy AAPL!!!
And take Prozac, Depression BS story is over.

Tue, 08/09/2011 - 15:48 | 1543601 spondoolix
spondoolix's picture

They are whacking gold going into the close

Tue, 08/09/2011 - 15:53 | 1543623 Snidley Whipsnae
Snidley Whipsnae's picture

"They are whacking gold going into the close"

Gold was $1723 at 11 am, now its $1765...

So, where is the whack... show me on this chart please...

Tue, 08/09/2011 - 15:50 | 1543609 ElvisDog
ElvisDog's picture

Bull fucking shit, Goldman. The Fed did not return to monetary easing. They explicitly said that they will do nothing at the present. There was no announcement of QE3. They threw the tiny little bone of saying they would keep interest rates at 0% for the next two years. Big fucking deal. Oh, and there were also un-named "additional policy tools" whatever the hell that means. The market's reaction tells you all you need to know about whether the Fed returned to easing.

Tue, 08/09/2011 - 15:53 | 1543621 SheepDog-One
SheepDog-One's picture

Goldman desperate for spin, now theyre 'interpreting' Bernank and shaving hairs claiming the Fed is RETURNING to easing? When did they ever leave ZIRP? So we'll have had 0% for 10 years, yet economy is terrible and none of it works, so HOORAY lets rally stawks! What a bunch of crap.

There was no QE3 announcement. This market action is just pure schizophrenia.

Tue, 08/09/2011 - 15:56 | 1543636 Snidley Whipsnae
Snidley Whipsnae's picture

ElvisD... GS looks at shit and calls it Shinola... Nothing new here.

Tue, 08/09/2011 - 15:52 | 1543616 Gloeschi
Gloeschi's picture

You could also read the Fed statement as follows: "Yeah, more ZIRP until 2013, but S&P 500 is not yet low enough to unleash QE3". With 3 dissenters even on the ZIRP language, the Fed seems again utterly behind the curve. Maybe it's time for Cramer to do another "They are NUTS" mental break-down. 

Tue, 08/09/2011 - 15:53 | 1543622 Stax Edwards
Stax Edwards's picture

And the markets rise on major dollar weakness

Tue, 08/09/2011 - 15:57 | 1543638 SheepDog-One
SheepDog-One's picture

And its really just a wash. Dollar plunging, equities up a bit, thats a wash but now we're in chaos land where 5% market swings daily will be the norm.

Tue, 08/09/2011 - 15:55 | 1543629 SheepDog-One
SheepDog-One's picture

Dollar is crushed, mission accomplished for today. 

Tue, 08/09/2011 - 15:56 | 1543632 TradingJoe
TradingJoe's picture

A "relief rally", a "dead cat bounce" was in order after the last/this week's rout! Tomorrow is another day! Financials no really "rallying" according to my options watchlist! QQQ getting hammered higher, today! :)))

Tue, 08/09/2011 - 15:56 | 1543633 ZippyDooDah
ZippyDooDah's picture

Great big market reaction to tiny little Fed statement.  They don't need QE if they can get such a bit move from tiny words.

Tue, 08/09/2011 - 15:59 | 1543645 Snidley Whipsnae
Snidley Whipsnae's picture

Dow now up over 300 pts on 'no more easing'... No, these mkts are not rigged... What a hoot!

Asian open will be interesting...

Tue, 08/09/2011 - 16:09 | 1543682 SheepDog-One
SheepDog-One's picture

I think they dont know what to do, they want a little of each...some market panic, met with non-statements, which banks then claim are CLEAR now whipsaw insanely 5% daily...and all is well? I dont think so, something big is coming very soon. With this level of blatant in-your-face manipulation and sanity they just dont give a crap anymore. Bad sign.

Tue, 08/09/2011 - 16:00 | 1543650 SheepDog-One
SheepDog-One's picture

Notice now every day theres always a 'statement' coming which everything totaly hinges on. Just pure nonsense. Bring back the days where markets traded on news of earnings and P/E's, not PHD idiots and their speeches from on-high about how much more free money will be printed. 

Tue, 08/09/2011 - 15:59 | 1543647 sbenard
sbenard's picture

Imagine what commodities are going to do with this.

Inflation? You ain't seen nothin' yet!

Tue, 08/09/2011 - 16:04 | 1543658 SheepDog-One
SheepDog-One's picture

Theyre setting up for riots to start here next, when people can no longer afford basic groceries due to these retarded policies. This is all designed to make people snap, there can be no other logical conclusion.

Tue, 08/09/2011 - 16:02 | 1543653 JR
JR's picture

It’s only sleight-of-hand, of course, the notion that there are divisions on the Open Market committee.  Only the cartel, as always, will make the policy… it’s up to the committee to make it look as if there’s been reasoned discussion where varying opinions count.

The Fed power structure has been analyzed by John F. McManus, one of the most important observers of the Federal Reserve’s fraudulent organization in 1913 and its ongoing operations.  Unfortunately, McManus has never gotten his just recognition because of his association with the John Birch Society, a group that has suffered damage from its own self-inflicted limitations – such as removing all economic references that would be harmful to any Jews from its publications.

According to McManus, the main goal motivating those who created the Federal Reserve has always been power, not necessarily profit… power to control governments, power to compel individuals to abide by their dictates, eventual power through the creation of a world Federal Reserve to do to the entire population of the world exactly what has been and is being done to Americans. The ultimate goal, of course, is world governance.

Says McManus: “When the Federal Reserve was established, great care was taken to hide its drive for power.  As part of the deception, its chief architects – who were known to be representatives of the big banking interests - publicly spoke out against its creation.

“The system was then deliberately designed with 12 regional banks established across the nation, giving the impression of decentralized control.  Privately owned commercial banks were allowed to become shareholders in the Fed and earn dividends for which they paid federal taxes.  And the Fed periodically returns the bulk of the profits on its operation to the federal treasury.

“Further, each of the Fed’s seven-member Board of Governors is appointed by the President and confirmed by the Senate for a 14-year term.  Yet, the Fed is still run independent of the nation’s government and has never been publicly audited.”

In its Primer on Money, issued in 1964, the House Banking Committee states:

“Although a creature of Congress, the Federal Reserve is in practice, independent of that body in its policy making… The Federal Reserve neither requires nor seeks the approval of any branch of government for its policies.  The system itself decides at what ends its policies are aimed and then takes whatever action it sees fit to reach those ends.”

Karl Marx would have loved the Fed: “Socialism as dreamed of by Karl Marx (achieved via a graduated income tax and a central bank),” wrote President Woodrow Wilson’s chief adviser Edward Mandall House in his novel Philip Dru: Administrator (1912), would provide “a flexible (inflatable non-metallic) currency.”

In short, the Fed is a fatal parasite on the American body politic -- established by deception – whose aim is to make slaves of free men.  America’s free market, which is to say free people, is on the ropes because of the Fed’s deliberate soul-destroying Keynesian policies that are putting a stop to the efficient workings of supply and demand as the American miracle intended.  Printing the world’s reserve currency by the trillionloads, the Fed has created a situation whereby the world is skating around the possibility of complete global economic collapse. But this time around, IMO, it may take the big banks with their-fingers-in-every-pie down with it.

Tue, 08/09/2011 - 16:02 | 1543656 monopoly
monopoly's picture

Truly absurd. Growth will be nil for 2 years, profits will decline, more workers will be let go, the dollar will continue lower since America will keep interest rates at 0. Gold at all time high which shows the disgust with this nation, and the DOW is up 400 pts.

I probably will never trade this market again. Just gonna keep my gold, silver, miners and some confetti. It is so broken. We had a good day today.

Tue, 08/09/2011 - 16:03 | 1543657 sbenard
sbenard's picture

ES up nearly 60 points today!

Tue, 08/09/2011 - 16:03 | 1543661 SheepDog-One
SheepDog-One's picture

Absolutely no need for any QE then.

Tue, 08/09/2011 - 16:04 | 1543664 Man Bear Pig
Man Bear Pig's picture

NPR just did a bit on gold investment. It's the first I've ever heard NPR discuss gold. Obviously the take-away was not positive for gold. Basically, based on the comments from the guest and the callers, gold:

  • is not rational
  • is inconvinient (taxes, fees, storage, etc.)
  • has no real value, only imaginary fear-based value...
  • ...however, if you do chose to buy gold, GLD is the best way to do it (even though its worthless)
  • is definetly in a bubble
  • can only be sold at a fraction of the spot price (caller said he could only sell it at 1/3 spot)

Ironically, a futures trader said that when rationality returns to the markets, those holding gold will be left without a chair to sit on when the music stops (i.e. no one will want to buy it from you).

They even quoted Bernanke's "gold is a tradition" to prove their point.

How could this BUY signal be any clearer to people?


PS: what happened to spell check?...

Anyone interested can listen to the playback at The recording is available after 6 EST. It's their first topic. Absolutely hilarious!

Tue, 08/09/2011 - 16:06 | 1543673 SheepDog-One
SheepDog-One's picture

Yea buying some gold coins is SO inconvenient, and so difficult to store and all. What?

Tue, 08/09/2011 - 16:14 | 1543717 SheepDog-One
SheepDog-One's picture

Figures such an ass hat statement would come from NPR clown, assuming that rationality will just suddenly return one day and total insanity will just leave? How? Such people are idiots, not able to see we're on a runaway train to Implosionville. 


Tue, 08/09/2011 - 16:19 | 1543736 SeverinSlade
SeverinSlade's picture

Their planet money team actually did a piece on it about two months ago which "PROVED" that gold is a bubble.  Guess how they went about proving it?

They did a study in some college classroom and issued everyone the same amount of play money.  Their was only one asset that the class could purchase with their money.  The class was told exactly how much the asset was worth.  After the study begun, the class eventually bid the price well above the instrinsic value.  The higher the price went, the more the students wanted to buy it.  Eventually the price collapsed.

The whole time I was thinking to myself..." your example is actually more indicative of what's going on in equities than what's going on in gold...yet that proves your claim that gold is a bubble?" 

Then they went on to further demonize gold as the hosts of the show purchased a 1toz gold coin for around $1450 and then sold it around $1500.  After taxes and everything they pretty much broke even.  So don't you invest in gold because the taxes will get you!

Makes sense though.  NPR is funded by the federal government so obviously the propaganda is going to be rather thick.

Tue, 08/09/2011 - 16:35 | 1543813 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

Over the last few months, I've come to believe that there will probably never be a large scale movement among retail investors into personal ownership of physical precious metals (unless the CBs can keep the plates spinning for another decade with 10% inflation).


People don't "disagree" with gold, they genuinaly have no knowledge of its role in monetary history.  You can see it in the faces of people who "know paper money is worth something, now prove how an object could have value".


I think Rickards shows the way forward. He recently said the first country that returns to the gold standard will be the only country that issues money that anyone wants.  This will all be done on the level of governments and central banks.  Any gold buyer who runs down the street yelling "I told you so", will be answered, "you told us what?"


People know even less about money than they did in the past.  When FDR confiscated and then revalued gold, how did half the government not get murdered in retaliation right away?  People just don't "get" whats happening to them. 

Tue, 08/09/2011 - 17:05 | 1543952 SeverinSlade
SeverinSlade's picture

100 percent agree.  Heck, my own parents who were born in the 50s were clueless about gold and silver's place in history.

I asked my mom the other day if she remembered gold or silver certificates when she was younger.  She said yes.  I then asked her if she had any idea how those dollars were different from today's.  She had no idea.

The younger generations are living in la la land.  They genuinely believe that paper is money and that gold and silver are just some stupid things old people and crazy people collect.

Any of you ever see the video of Mark Dice trying to sell 1toz of gold for $20?  Hilarious.  Not a single taker.

Tue, 08/09/2011 - 17:15 | 1544019 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

That Mark Dice video is exactly what I had in mind.


Anyone who tried to talk about the Real Estate bubble with people back in early 2007 was met with surprise and derision.  Whats even more interesting is that I have yet to hear of a single person who missed the bubble experiencing any sort of an "awakening" the leads them to question what they are told in the press or any of their basic beliefs. 

I have no doubt there are some, but I think we underestimate how many of our fellow citizens are going through the motions in life without really questioning anything.   If we end up on a gold standard at $20,000 an ounce almost no one will bat an eye.  If they announce a 99% windfall profit tax on gold holders almost no one will understand why that might be unfair in principle. 

Its just the way of things...

Tue, 08/09/2011 - 21:12 | 1544838 gwar5
gwar5's picture

Bingo....that's my fear.

Conversion to a global currency using fiat USD perhaps will be 50% (best case?)  based on USA debt, but those "evil gold hoarders" might be looted for a draconian 90% conversion rate just because they were instinctively anti-bank and prudent.

But as long as the Chinese consider gold money, then so do I. And I actually do love Szechuan chicken, which is good, because we're all Chinese now.

Tue, 08/09/2011 - 23:16 | 1545104 TruthInSunshine
TruthInSunshine's picture

    Trying to Buy a 99¢ taco with 1 ounce gold coin
  • Mark Dice can't get the Taco Bell drive through window cashier to take a Gold Eagle for his order.
Tue, 08/09/2011 - 21:01 | 1544813 gwar5
gwar5's picture

Excellent, couldn't have said it better.

Tue, 08/09/2011 - 23:10 | 1545100 TruthInSunshine
TruthInSunshine's picture

National Public Radio & Public TV are just as much shills for the 'financial services' and 'equity market' industries (scams) as CNBC is.

Listen to Market Place any week night, and you'll be amazed at the shear douchery and transparency of it all.

Tue, 08/09/2011 - 16:33 | 1543814 divide_by_zero
divide_by_zero's picture

Wouldn't waste my time listening, NPR is so completely captured that's at present just one of the many Soros front groups.

Thu, 09/15/2011 - 18:27 | 1543684 Astute Investor
Astute Investor's picture

So the Fed comes out an admits the economy sucks so ZIRP continues until mid-2013.

Treasury yields plummet in reaction which seems to make sense, while the equity markets drop, but then soar into the close.

Hmmmm, seems like there is some kind of a disconnect....

Tue, 08/09/2011 - 16:09 | 1543689 treemagnet
treemagnet's picture

And now back to our regularly scheduled meltdown in Europe....

Tue, 08/09/2011 - 16:38 | 1543839 tom
tom's picture

This is more of the same, really. Creating incentives for people to move money away from where they would be putting it if they were left alone, into other things, and imagining somehow this is going to spur faster growth.

The biggest impact isn't on the two-years, it's on duration risk. It's basically saying you can take on as much duration risk as you want, we've got you covered till at least mid-2013. So expect banks to keep on piling on excessive duration risk, even more than they already have.

It's also a boost for stocks vs other assets. Hardly as important as the likelihood of recession, But the market was looing for an excuse to relief rally and it got one.


Tue, 08/09/2011 - 16:39 | 1543850 Grand Supercycle
Grand Supercycle's picture

Equity counter trend short covering rally begins from very oversold levels.

Tue, 08/09/2011 - 23:04 | 1545082 choorles
choorles's picture

we all know that they will print... but when?

my guess is shit is going to hit the fan after this little rally... the euro will get hit the hardest first.. then the dollar..

so they will announce QE3 at jackson hole? zerohedge has said it and i agree

expect to see silver go to the moon!! crash jp morgan, end the fed, buy silver

Wed, 08/10/2011 - 00:31 | 1545220 Die Weiße Rose
Die Weiße Rose's picture


Everyone expected QE3 but there is None !

and the S&P downgrade will make Debt-Auctions

for the Fed and US just a bit more expensive now ;)


Wed, 08/10/2011 - 02:28 | 1545320 Socrates
Socrates's picture

"Jews" - what a good little Nazi you are. I thought your stinking carcass died at Stalingrad screaming, "But the Fuehrer said he was sending winter clothing"....I hope you die slowly.

Wed, 08/10/2011 - 05:05 | 1545422 saraicriado@hot...'s picture


Wed, 08/10/2011 - 07:21 | 1545521 Watauga
Watauga's picture

The Fed "out of bullets"?  Seriously, the Fed has as many bullets as the Fed wants to print.  And it will print as many as are necessary to inflate the market in the hope that, ultimately, confidence will be restored, stability assured, and the recovery sound and long-term.  What it seems not to understand is that everything it does actually undermines the long-term goals.  What a bizarro-world mentality!

QEIII is here.  Yesterday was the first salvo.  More money-printing to come.  QEIV, V, VI. . . are assured. 


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