Guest Post: The Big Print Is Coming

Tyler Durden's picture

Submitted by Mike Krieger of Libertyblitzkrieg

The Big Print Is Coming

We are discreet sheep; we wait to see how the drove is going, and then go with the drove. We have two opinions: one private, which we are afraid to express; and another one – the one we use – which we force ourselves to wear to please Mrs. Grundy, until habit makes us comfortable in it, and the custom of defending it presently makes us love it, adore it, and forget how pitifully we came by it. Look at it in politics.
- Mark Twain

Humanity’s most valuable assets have been the non-conformists.  Were it not for the non-conformists, he who refuses to be satisfied to go along with the continuance of things as they are, and insists upon attempting to find new ways of bettering things, the world would have known little progress, indeed.
- Josiah William Gitt

The media I’ve had a lot to do with is lazy.  We fed them and they ate it every day.
- Michael Deaver (Former top aide to President Reagan)


Has The Fed Waited Too Long?

Those that know me understand clear as crystal that I don’t approve of massive money printing.  I think it is theft, plain and simple, and represents an egregiously deceptive manner of transferring wealth from the poor to the wealthy and from the productive to parasitic financial oligarchs.  That being said, the world we live in is being led by a bunch of crooked banksters and the Central Planners that do their bidding.  At the top of the Central Planning global ponzi pyramid, is our very own Federal Reserve, headed by master Keynesian magician, the Wizard of Eccles, Ben Bernanke.  For the vast majority of 2012, the Federal Reserve has been playing a very, very dangerous game.  This game has been to pretend that they will not be printing any more money in an attempt to get commodity prices down as low as possible before they proceed with the inevitable.  While they have done this on a smaller scale many times in the past, this particular game of chicken has in my opinion gone dangerously wrong.  You see, ever since the 2008 debacle the Fed has been quite aggressive and more or less “ahead of the curve” when it has come to feeding new liquidity into the system…until now.

All of the prior programs were ready to go at the first hint of economic weakness.  Even if they weren’t launched right away, the intention to print was made clear and this stabilized the system in the short-term.  Not this time.  This time the Fed realized that their models weren’t working.  Employment continued to be weak as inflation picked up.  Everyone was starting to complain about gasoline and the public was increasingly making the connection between Central Banking/fiat money and the rise in their cost of living.  Occupy Wall Street emerged on the scene.  All of these things put Bernanke and all his other vampire brethren on the defensive, and indeed in a box.  They increasingly had to rely on less effective, more opaque means of providing liquidity.  The Fed swaps to Europe was one example.  The European LTRO was another.  All of this has been done and all of it has now proven to be a failure.  The periphery of Europe is in mired in an all out Depression and many of the BRIC countries are much closer to being in a collapse than many want to admit.  That said, there is still this consensus that the U.S. is experiencing decent growth that will continue and perhaps accelerate into 2H12.  Not only do I not agree with this, I think there is a good chance the U.S. is now experiencing negative growth.  I think May represents the first month of real domestic weakness.

Stocks are Collapsing on Bad News                        

What I have noticed this quarter more than in any other in recent memory is that names are vaporizing on even the hint of bad news.  Let me show you some frightening examples.

Fossil  

 

Dell

 

Cisco Systems

 

JC Penney

 

If the market was confident that this was just a blip I do not think these stocks would have responded this way and then barely rebounded.  Similarly, there are many names that have put up strong results, only to have sold off on the news.  HD, COH and RL come to mind.  To me this is evidence of the market sniffing out economic weakness ahead, and more importantly a Fed that is behind the curve for the first time since 2008.

The BIG Print is Coming

Momentum is a strange thing in general, and social experiments as large and complex as massive economic systems are not immune to its mysterious ways.  Once momentum gets going it is extremely difficult if not impossible to reverse in the near-term.  This is why I have been pounding the table on China not doing anything as things unravel over there.  In waiting so long to try to respond to their major slowdown, they have now seriously risked a hard landing, unless they have a plan (this is not clear as of yet) as I outlined in last week’s piece China Better Have a Plan.

Here in the U.S., I think that The Bernank’s plan was to pretend they didn’t need to print more money, get commodity prices down and then hope that the economy would respond favorably to that development.  This wouldn’t have negated the need for more printing; however, it would have bought time and allowed for a potentially lesser degree of action.  Instead, what has happened is that the global ponzi is completely and totally incapable of holding itself together without consistent and increasingly large infusions of Central Bank money.  The debt burden is too large, the mal-investments too pervasive, the corruption too systemic.  The whole house of cards that is the global economy will vanish into dust rather quickly without more and more printing.  So what do you think they are going to do?

If I am correct, and the U.S. economy itself is now in the early stages of what will probably turn into a serious economic slowdown, then it will not be easily stopped with incremental Central Bank policies.  The fact that they have waited this long and the fact that the global economy is in the midst of a serious slowdown tells me one thing.  They are way behind the curve and by the time they realize this it will be too late to stem the momentum.  That said, I do expect them to respond and the fact that things will have gotten much worse than they expected will mean a major response.  I’m not talking operation twist part deux.  I mean a serious print.  Potentially the BIG ONE.

In this sort of scenario, the inflation hedges will sniff it out first.  So I would expect the precious metals to bottom well before everything else does.  In fact, we could be looking at a situation where the metals and their shares rebound sharply while the U.S. equity markets continue to decline.  This could last many months.  I want to point out that the GDX bottomed in October 2008 and was up 100% before the S&P 500 bottomed in March 2009.  So over a five month period the GDX doubled while the SPX declined 25%.  Don’t think that can happen again?

Peace and wisdom,

Mike

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penexpers's picture

Fuck you, Bernanke!

monkeys.pick.bottoms's picture

"We are all here to do, what we are all here to do" (the Oracle, Matrix)

He's going to make a lot of us well off;)

Mr Lennon Hendrix's picture

Krieger, tell your buddy Max Keiser to consider using the Buy Silver - Crash JPM idea, will ya?  Thx

-LH

Bicycle Repairman's picture

Krieger repeats my current meme.  Bernanke had better get printing soon.  Deflation is getting a grip on this economy.  If Bernanke thinks he print any old time, he is wrong.  He has one foot on the "deflation banana peel" right now.  Once you pass the point of no return the size of the necessary print will mean immediate hyper-inflation.  Annual inflation of 5% to 10% is necessary to save the status quo.  So let's get on with it. What's that?  Printing will cost Obama his job?  Well let's just see now:  bye bye Obama or deflationary collapse.  I guess we'll just have to tough it out without the Mocha Messiah.

FEDbuster's picture

As Marc Faber has said many times, "Mr. Bernake will print, it's the only thing he knows how to do."

Bernake has said, "there will not be a deflationary depression on my watch as FED chairman".

Printing and devaluation benefits debtors, the largest debtor nation in the world is?  Yes, Bernake will continue to print.  They will rename it, do much of it in secret, twists and shell games, but they will print.  Zimbabwenomics

Bicycle Repairman's picture

It is not just a print or not print decision.  Timing matters a great deal.  If I'm the Bernanke, I'm going to be pro-active about avoiding deflation and the subsequent hyper-inflation when I try to print my way out.  Start.Printing.Now.

adr's picture

Is it me or does the redhead look a hell of a lot like Clinton. Maybe that is why he was there posing with them. Visiting one of the couple hundred children he fathered while circling the globe. 

Marginal Call's picture

Would have been a better pic if he had a cigar.

The Big Ching-aso's picture

 

 

"To print, or not to print,  that is the insane question:...."

-Bernankespeare

Michael's picture

If you desired complete and total destruction of the entire financial structure and all major banking institutions on the entire planet, you would know why I must have the Federal Reserve print QE to infinity, but then again the plan is far enough along that it may only take less than another trillion.

Just do it Bernank, make my day.

NotApplicable's picture

Oops... that's gonna leave a stain.

Rubbish's picture

I have a BIG FAT ONE...

Disenchanted's picture

 

 

"Clinton Porn"

 

Must have been a good day for the local cigar shop...

Colombian Gringo's picture

The big  Ben Shalom Bernanke dick is to be stuck into an asshole near you.

LeBalance's picture

please discuss when it was removed.

Silver Bug's picture

It is QE to infinity, fasten your seat belts.

 

http://ericsprott.blogspot.ca/

Ratscam's picture

the big print is coming AFTER the Bilderberg meeting.
are you guys paying any attention at all to the big boys?

CPL's picture

That's what the centrals want, to get you pissed, give them an excuse to roll out body wagons.  Choose to not work for them, not lift a single finger, if they want it all.  Then they can do their own work.

 

Let the man that talks about building something swing the hammer as well.

LongSoupLine's picture

 

 

 

but, but the FDIC just today said the banks are kicking ass.  record profits, huge capital reserves.  It's all great here in Oz!

SheepDog-One's picture

Right....WHAT 'crisis'? Everyone is saying things are good to great, yet we need the mother of all prints in world record shattering amounts? Let the FED stop being such pussies if thats what they want and let the S&P fall to 900, then they can talk.

SimpleSimon's picture

I hope you get raped by a herd of bull elephants, Bernanke!  Repeatedly!

And then a herd of cow elephants dump all over you.  Repeatedly.

garypaul's picture

This article is mostly jazz. The markets closed up today. How can there be a big print when there is really no big downward pressure? BTW non-conformists are also those who take something that's working great and proceed to ruin it. Just an example of the quality of logic in this article.

Crisismode's picture

You clearly lack the brains God gave to a brick.

 

Go peddle your useless drivel elsewhere.

 

 

GlobalCtzn's picture

"something that's working great"

 

Just what in hell might that be?

 

Your first sentence sounds eerily like Bill O'Reilly...............

Dingleberry's picture

QE to infinitee, bitchez!

TWSceptic's picture

Shut up and let him do his job! QE = good for you.

TalibKweli's picture

23 and just bought 2 ounces of gold

The percentage who don't understand is higher than the percentage who do
Check yourself, what percentage is you?

vast-dom's picture

the key word: momentum. if they QE in mid-slide it could expose their gambit.....and that could exacerbate the spiral.....

RiverRoad's picture

The plan was to let Big Oil get their money up front so they could have it down for Obama's reelection. 

Sequitur's picture

The time has come. Execute order 66.

- John Corzine

sessinpo's picture

I would refer to another 66 to execute but 66 isn't large enough to cover all the politicians that need some attention.

Madcow's picture

RUMORS of the big print are coming. and will keep coming.  

but it will never happen.  hyperinflation = game over for the status quo. 

instead, we'll have Global Japan - where assets and economic activity fall for decades - and the banks can slowly foreclose on RE, companies, farms, etc across the globe.

when push comes to shove, governemnts will evicerate spending on social programs, miltary, whatever it takes. 

so long as you have no debt, and have a couple $ million in cash - and youre not in a big city with a large urban population and no food production skills, you'll be okay.

SheepDog-One's picture

Hell, who DOESN'T have no debt and a few million in cash lyin around?

ljag's picture

Me. I only have 1.6 but I got that crib in the woods where even my neighbors were unaware of its existance until the previous owner had to have an auction ( I shudda just bot it all thereby keeping the secret from getting out........but like I said.........I only got 1.6)

Crisismode's picture

You are a complete jerk.

 

But, you know that already.

 

 

TideFighter's picture

However much they print, they will revise the prior month's totals higher and say that this month they printed less and things seem to be stabilizing if we are printing less, blah, blah, blah. You will never know how much has been printed, or will be printed, for fucking ever, bithez. 

jus_lite_reading's picture

>>"RUMORS of the big print are coming. and will keep coming.  

but it will never happen."<<

Do you really have madcow disease? The BIG print MUST occur because the MATH DICTATES it MUST OCCUR. This is not some game of chicken or guess who. Do you understand the implications of NOT adding more fiat to the system at this point? Do you grasp the meaning of "passing the point of no return" when they began the first round of QE? It was already the beginning of the end then when they mad that choice. There is no stopping it now. The best they can hope for now is to buy a little time...

>>"hyperinflation = game over for the status quo."<<

True, that is why they are implementing incremental monetization of debt, as slowly as possible... like holding back the three Gorges Dam with your pinky finger...

>>"instead, we'll have Global Japan - where assets and economic activity fall for decades - and the banks can slowly foreclose on RE, companies, farms, etc across the globe."<<

No. The pain will be so severe even the fat man in the Lazy-boy will grab his pitch fork...

>>"when push comes to shove, governemnts will evicerate spending on social programs, miltary, whatever it takes."<<

They are doing this now in the US. As you can see, at this point in the game of the ponzi, austerity cause more problems than more spending. Spending at this juncture is the lesser of two evils. 

>>"so long as you have no debt, and have a couple $ million in cash - and youre not in a big city with a large urban population and no food production skills, you'll be okay."<<

LMAO!! Consumer debt won't matter really. Both ways, nobody is paying anyone back. And have "a couple $ million" (ROTFLMAO!!) won't buy you jack shit when the decay really spreads. Your only chance is gold, silver, guns and some useful survival tools and living off the grid as much as possible. In the end, the survival rate for everyone drops to zero... 

GAME OVER


WatchingIgnorance's picture

Thank you JLR. People just don't seem to grasp the concept that you can not grow infinitely in a finite universe.

Welcome to the world of everyone owing everyone and no one has any good capital left to leverage.

Debt saturation bitchez!

Xkwisetly Paneful's picture

The most likely outcome is between the two and if that is obvious to a complete moron like myself it should be obvious to everyone else as well.

THX 1178's picture

Yes-- either deflate and monstrous crash or print/inflate and monstrous calamity. There is not one hedge against this. Or something like that.

tmosley's picture

When did the printing stop?

The big print is already here.  It's just they aren't saying anything about it.  This is the functional equivalent to Wile E Coyote not looking down through the dust cloud.

But he never turns around and walks back to solid ground, does he?  Always, he slowly looks down, makes a nice little sign for the audience, maybe sticks a hand down to feel that there is no ground there, then falls, falls, falls until he goes *poof* at the bottom.

Dr. No's picture

I agree with you.  The FED is not controlled by the government.  The goverment's tab is not payable.  Currently the FED is paying the tab through money printing.  Once inflation takes off, will they continue to pay the government?  My guess is no.  They will stop the presses and the government will need to decide who gets paid and who doesnt.

Since the FED is controlled by the TBTF, they will protect their own interests.  The gov will need to fend for themselves.

MachoMan's picture

If the FED will not print for the government, then the government will be forced to reveal who runs bartertown and will print for itself (dismantling or usurping the FED).  [while also probably demonizing the previous figureheads of the FED].

Dr. No's picture

The tennicles of the FED run deep.  Lets say the government revokes the FEDs monopoly (that in its self is far-fetched since the people who allow the monoply are paid off by the FED) and start printing their own money ("greenbacks").  They will quickly print a bunch to pay off their debts.  Meanwhile as the greenback looses power, people will turn to alternative currency to store wealth.  Lets say Chase issues a special "bearer bond" for Chase account holders.  This "bearer bond" stores value since Chase is careful about the reckless printing.  meanwile Greenbacks are laughed at.  Cant happen?  Just check out US currency history circa 1800's.

MachoMan's picture

Everyone is jockeying to find alternative stores of wealth as well as mediums of exchange, despite the "independent" FED still being in the picture.  I'm not sure "who" does the printing is any relevant concern to anyone facing dilution and decreases in purchasing power.

Marginal Call's picture

The parasite cannot live without a host.

 

The gov. can live without the fed.  They have an army and stuff, and own the printing presses anyways.  The fed?  They want to take their ball and go home?  The gov can arrest/kill/bomb/tell the public the truth about them.