Goodbye Operation Twist, Hello QE X+1

Tyler Durden's picture

Remember when the Chairman did a quick drive by with the much price in Operation Twist, and the market came, saw, and plunged? That was a week ago? Two? Well, as we have been predicting since December 2010, that was merely the appetizer, or as we phrased it the same as last year's July QE Lite to last year's August QE 2. Confirming both our speculation, and the realization that Bernanke knows only how to print more money and nothing else, were his first public remarks since the launch of Op. Twist, at a Cleveland Fed forum last night in which he said that "the central bank might need to ease monetary policy further if inflation or inflation expectations fall significantly... Bernanke indicated a willingness to push deeper into the realm of unconventional policy if economic growth remains anemic. ""If inflation falls too low or inflation expectations fall too low, that would be something we have to respond to because we do not want deflation," Bernanke said. The comment was made in response to a question about a recent decline in market-based inflation expectations, which policymakers see as a good gauge of future inflation trends." And since the key "deflationary" metric that he looks at, as wrong as it may be, is the stock market, looks for stocks to resume trading with schizophrenic abandon, surging ever higher on increasingly bad economic data. Of which we will have a lot.

More from Reuters:

It is something that we're going to be watching very carefully,"
Bernanke said in response to questions from the audience at a forum
sponsored by the Cleveland Fed.


In an effort to stanch the deepest recession in generations and help the recovery, the Fed not only slashed benchmark interest rates to effectively zero, but also more than tripled its balance sheet to around $2.9 trillion.


Despite these measures, growth has remained quite soft, averaging less than 1 percent on an annual basis in the first half of the year. Bernanke signaled he remains concerned about risks to the economy, which the Fed described as "significant" in its September policy statement.


"We have a lot of problems both in terms of recovery and in terms of longer-term growth," he said.

Essentially the Chairman has just acknowledged that a few short days after Op Twist was launched it has already been a failure, just as Zero Hedge predicted well in advance of its formal launch, as consumers are now merely awaiting even lower interest rates before they refinance. After all if Bernanke is dead set on demonstrating he is insane (in an Einsteinian sense), mortgage borrowers will be more than happy to wait him out on his latest move to make the 30 Year mortgage negative.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
jomama's picture

capitulation, bitchez.

Michael's picture

We don't make children's toys in this country.


I said this in a previous thread and got some perrty interesting comments;


Ben Bernanke better get that fucking QE3 going soon.

I need to see the destruction of the world economy maximized for my amusement.

Thu, 09/29/2011 - 02:55 | bid the soldier...

Did you want that in 2D, 3D or IMax? Thu, 09/29/2011 - 03:08 | toto

For the first time ever it is going to be in 4D.

Better than expected...........

............or worse?

Thu, 09/29/2011 - 03:28 | bid the soldier...


Gimme a hint.

Is the 4th D a time thingy or a space thingy?

GetZeeGold's picture


QE to's the only way.


How much do you need?


DormRoom's picture

more printing will only push the world into global stagflation. It won't solve unemployment, and likely cause price instability.  The USD reserve currency will be undermined.  USD-YEN implosiong will cause Japan to go into a serious recession.  CDS wolfpack will attack her.  Then we will talk about Japan, like we did the Eurozone, this year.


  Only direct job fiscal stimulus can save the US.

Weisbrot's picture




Calvin Coolidge had it right - cut Government spending by 40%

get the Government out of the way and

within 1 many be 2 years and things will be moving in the right direction



eazyas's picture

what do i short ?

GetZeeGold's picture


Short anything but gold.


zhandax's picture

VIX  (personally, I would wait until next Friday.  Good chances of some rockin news since this pronouncement arrived a week early)

Mike2756's picture

Bull flag in the vix, market is still going to sell off, maybe won't go very far. 1000 spx?

spdrdr's picture

This has gotta be bullish for stocks! 

QE3 guaranteed, plus a bonus bail-out of failing (flailing) European banks.

Waiter!  More pop-corn all around!


DaBernank's picture

Whoo-hooo! and a side order of CRM out-of-the-money calls, please.

yabs's picture

oh god i want to see this stock market tank, not currencie4s

st5ill good for gold and silver

Hman's picture


QE X+1 (X to infinity)

swissaustrian's picture

It should be QE(x+1) as the amount of money printed has to rise exponentially

RemiG2010's picture


GetZeeGold's picture



QE(x+1) .......there outta be a derivative for that.

Andy_Jackson_Jihad's picture

OK Mr. "I know calculus and how to use the rich text editor" now apply some continuously compounding leverage to that  and make a discontinuity below zero to factor in bail-outs.

wee-weed up's picture

So, the BerMonkey is going to start flinging his feces yet again!

lunaticfringe's picture

The market cratered because Ben had alluded to something more significant than Operation Twist. When that extra something didn't materialize, markets went... Mr. Softy.

The deflation is here. China has all but screwed the pooch, and when the Chinese balloon officially pops, I think Ben goes apeshit. The fucker is like a junkyard dog on a bum's ass. He just doesn't quit.

Mr_Wonderful's picture

Well, last Monday the number of October Put Option Contracts against the S&P 500 was over 7 million. It´s probably up to ten million by now.

Usually the monthly number is 10-20,000.

Motley Fool's picture

When everyone is on that side of the boat....Bernanke fires up the printers. :P

Mr_Wonderful's picture

The ducks are being lined up.

Apparently it´ll be Tank Tuesday the eighteenth unless the terriers blow up a U.S. or European city before that.

Racer's picture

Oh great, the rich get richer and the poor get to starve

and then the ChairSatan will fall

Vive la Revolution

Outlaw Of The Wasteland's picture

zimbabwe ben may go down as they greatest traitor in the history of our failed country.

BlackholeDivestment's picture

...OK, I have the personal credablility (As the (a) victim of the moral hazard) to arrest Chairsatan and the 911 Jets, but... The Truth is ( no defense) overcome by the new world order social ''democracy''. The Republic of the United States is dead! ...I'm dead!

BlackholeDivestment's picture

Mutton, lol, you ask ''whut''. Yeah bud, I can bare witness and win that case, can't you?

Mr_Wonderful's picture

The Bernank can´t do jack####.

The FED is already leveraged 60-1 against its capital.

A relatively small rise in interest rates, resulting in a fall of the value of its portfolio, would quickly render it technically insolvent - forcing it to sell bonds, that is contract the money supply.

GetZeeGold's picture


Paper to gold is 100:1

The FED is slacking off.........print baby print.


Snidley Whipsnae's picture

" forcing it to sell bonds, that is contract the money supply."

Perhaps some other soverign will decide to sell bonds? ... Stranger things have happend, and the first out the door will avoid being trampled by the herd.

Mr_Wonderful's picture

I doubt it.

All hell would break loose and the world financial system is precarious enough as it is.

Bicycle Repairman's picture

"the first out the door will avoid being trampled by the herd"

Anyone who tried to be first out the door got "shock and awe".  Try "the door" at your peril.

BigJim's picture

The FED is already leveraged 60-1 against its capital.

A relatively small rise in interest rates, resulting in a fall of the value of its portfolio, would quickly render it technically insolvent

You think the Fed is bound by normal accounting rules? LOL. I keep hearing this: the Fed can go bankrupt here, the Fed can go bankrupt there.

Ask yourself this: Under what circumstances can a counterfeiter ever go bankrupt? Seems to me: only when you take away his printer. Has that happened to the Fed yet?

Mr_Wonderful's picture

Yeah, you´re right.

I forgot the accounting change the FED snuck in last January.

The change allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury (that would be you the taxpayer) rather than a hit to its capital. It would then simply direct future profits from Fed operations toward that liability.

Clever isn´t it.

Of course the Tylers covered it at the time:


BrocilyBeef's picture

60-1. I had no idea it was that bad. What that hell is that "1" though? Paper dinosaurs?

maxcody's picture

Bring the market down to S&P 1008 then gold down to 1325 correction so I can

load up on gold.  Thank You uncle Ben.  My mother's brother was a waco double

Doctorate at Prinction. 

BrocilyBeef's picture

slap that silver to gold ratio so that I can get silver to get gold...

JPL's picture

Remember me where is heading inflation in the US ?

I think I need to buy a gun's picture

How can this small group of fuckin people dictate everything in this country......the people still haven't woken up....we all have to bow down to what bernanke is going to say every month.......

Bicycle Repairman's picture

I said they'd "back door" the Germans. 


SLAM DUNK RIGHT IN YO' GRILL!!!!!!!!!!!!!!!!!!


Mr.Sono's picture

come on guys have even thought that he might be out of ink and need to put in a new cartridge? With Obama in the office and no qe3. yeah like thats going to happen.

BrocilyBeef's picture

You don't think he has a store room of ink cartridges? This is the Bernank's hoard, son.

TradingJoe's picture

Benjie can't do shit without a political "approval" and that ain't coming anytime soon!