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Guest Post: Get Ready For An Epic Fiat Currency Avalanche

Tyler Durden's picture


From Brandon Smith of Alt-Market

Get Ready For An Epic Fiat Currency Avalanche

What is it that makes Keynesians so insanely self destructive?  Is it their mindless blind faith in the power of government?  Their unfortunate ignorance of the mechanics of monetary stimulus?  Their pompous self-righteousness derived from years of intellectual idiocy?  Actually, I suspect all of these factors play a role.  Needless to say, many of them truly believe that the strategy of fiat injection is viable, even though years of application have proven absolutely fruitless.  Anyone with any sense would begin to question what kind of madness it takes to pursue or champion the mindset of the private Federal Reserve bank…

Quantitative easing has shown itself to be impotent in the improvement of America’s economic situation.  Despite four years of free reign in central banking, employment remains dismal in the U.S., the housing market continues its freefall, and, our national debt swirls like a vortex at the heart of the Bermuda Triangle.  Despite this abject failure of Keynesian theory, the Federal Reserve is attempting once again to convince you, the happy-go-lucky American citizen, that somehow, this time around, everything will be “different”.

Sadly, as I discussed in August of this year, not only has the Fed announced a new and UNLIMITED round of stimulus measures, but the European Central Bank has also devised its own bond buying free for all:

I predicted simultaneous QE programs by the two central banks because it made perfect sense, at least, for those with diabolical intentions.  With engineered currency devaluation in full swing in the EU and the U.S., the implosion of both currencies, especially the dollar, will be masked.  That is to say, the dollar index is measured in large part by comparison to the relative strength of the Euro.  If the Euro falls through overt printing, the dollar will appear stronger than it really is, duping the general public and giving bankers more time to inflate. 

Germany’s top constitutional court, only a day before QE3, announced its decision to support a Euro-area rescue fund, which the German people and a large part of its government are vehemently opposed to.  This action was preceded by “warnings” from various banking insiders, including Nosferatu himself (George Soros), that the EU would be sent into perdition and total economic chaos if the nation did not bow down to the ECB and hand over its GDP engine for the “good of the union” and the world:

Sound familiar?  This is exactly what Americans were told in the face of their 80% disapproval rating against the bailout bonanza.  The response from the elites, whether in Germany or the U.S. is essentially that the people “don’t know what’s best, and should sit down while the so called “experts” take it from here.”  Again, mainstream talking heads will suggest that new stimulus is not a problem, and that the unlimited quantitative easing of central banks around the globe should become standard.  In fact, they have already begun the propaganda campaign.  Apparently, QE3 will save us all, rich and poor:

These are the typical musing of centralized banking proponents.  But where is the historical precedence for their theories?  Where are the benefits from the last two QE’s?  All we have received so far for the future debt enslavement of ourselves and our children is:

Perpetually High Unemployment Rates:
There has been NO advancement in employment due to quantitative easing.  Official jobless percentages have fallen, but even the mainstream media now admits this is due to unemployed Americans being removed from benefits rolls because they have been without work for too long:

True unemployment including U-6 measurements continues to hover around 20%.  So much for the job creation that both the Bush and Obama administrations promised in the wake of the bailouts.

A Housing Market Black Hole: Does anything else really need to be said about the housing market?  Is it not blatantly clear to almost every homeowner in this country that QE has changed nothing in terms of protecting their home values or their ability to sell?  Has attaining a loan become any easier since 2008?  Alternative analysts including myself ALL pointed out four years ago that property markets would continue to crash despite any efforts (real or fraudulent) on the part of the Fed.  We were right.  The mainstream media shills were wrong.  Moving on...

Disintegrating Global Demand: Manufacturing in almost every economically prominent country has gone bust, from Europe, to the U.S., to China.  The Baltic Dry Index, a pure indicator of supply and demand using shipping rates for raw goods as a medium, hit incredible lows in 2008.  However, since the QE marathon, the BDI has gone even lower!  In January of 2012, it broke historic lows, and continues to skate along the bottom today, indicating that an even greater collapse in demand and the markets is near at hand.  Demand drives economics.  Period.  No demand, no economy.  Tangible demand cannot be fabricated.  QE has done nothing to drive savings into the pockets of consumers, and therefore, it has done nothing to entice them to spend.  The public is broke, we continue to be broke, and we will be even more broke tomorrow.

Unsustainable National Debt: Our “official” national debt in 2008 was around $10 trillion.  Four years later, we have broken $16 trillion.  This obviously does not include outstanding debts on long term entitlement programs, and new programs like Obamacare, which would by some estimates bring our national debt to around $120 trillion:

Whether you believe the Treasury’s statistics or not, the bottom line is that at the very least our national debt has increased by 60% in only four years time!  Now, the private Federal Reserve wants to introduce unlimited stimulus, on top of Operation Twist, and the incredible money burning habits of our current government?  Are Keynesians really foolish enough to think that the generation of such massive liabilities will somehow undo the crippling effects of already debilitating debt?  Answer:  Yes.

Inflation In Necessities: Food and energy prices remain painfully high, and are now in the process of inflating beyond the average person’s ability to pay.  Oil in particular has remained almost static above $100 a barrel (Brent).  This has been blamed on numerous scapegoats, from Middle East turmoil to “speculation”.  Yet, long term high prices show that neither of these explanations is fully sufficient.  In reality, only currency devaluation allows for such a steady and consistent inflationary reaction in commodities.  Unfortunately, we haven’t seen the worst yet.  QE3 will send prices skyrocketing, and with the open-ended nature of the stimulus, there is no ceiling.  We could very well witness Wiemar style hyperinflation in the near term.

As I have said in the past, I believe QE3 will be the final straw for many foreign holders of U.S. debt and dollars.  The world reserve status was already under severe threat after QE1 and QE2.  The MSM has virtually ignored China’s bilateral trade agreements building since 2010.  In the past two to three years, China has made deals with Russia, India, Japan, South Korea, Iran, and the ASEAN trading bloc (most South-Asian nations), that remove the dollar as the world reserve currency.  And, this year, China has arranged a similar bilateral deal with Germany:

These countries combined offer at least 30% of global GDP, and could easily annihilate the dollar if they decide to dump the greenback completely as the world reserve.  With the advent of QE3, this is now a certainty. 

Open ended inflation is exactly what destroyed Wiemar Germany, and more recently Zimbabwe.  The central banks and their lackeys will claim there is no comparison.  I beg to differ.  When a nation expands debt spending instead of cutting it, and then monetizes that debt through fiat printing in order to allow even more debt to accumulate, that nation is not going to survive.  That nation will eventually hyperinflate, then default, then collapse, either turning into something entirely alien, or fading from history altogether.  This is what we have to look forward to in light of QE3, the final and infinite stimulus adventure.  Something has to give, and it has to give soon.  My bet is on the dollar…


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Fri, 09/14/2012 - 12:16 | 2795374 Pladizow
Pladizow's picture

"The collapse of the people’s confidence in the created money, which was forced upon them by legal tender laws, will have a bad effect upon the government. It would be to the advantage of those really in charge to avert a total loss of confidence in their created money, to declare bankruptcy, initiate a deflation, returning so much wealth on the dollar and issuing a new redeemable one, if only to continue their power over us. It is inevitable, we will see a tremendous depression and a return to gold and silver as wealth mediums of exchange – it has always gone that way." – Money: The Greatest Hoax on Earth, Merrill Jenkins, 1971, Pg 150.

Fri, 09/14/2012 - 12:48 | 2795463 Precious
Precious's picture

... or maybe they are just sexual deviants and they can't focus on reality because it would destroy their depraved fantasies.

Really.  Have any of these fucking decision-makers ever had to undergo a psychiatric evaluation?  No.

Fri, 09/14/2012 - 12:59 | 2795594 TaxSlave
TaxSlave's picture

Why ask why?


The globalists announced their intention five decades ago and every administration since has followed the script.

If you're new, the goal is a New World Order.  To do that, you need to knock America off its perch.  To rule globally, you need a common currency, government acquiescence will follow.  A currency collapse right at the apex of worldwide hatred of America due to its foreign policy just might get the job done.

Fri, 09/14/2012 - 13:08 | 2795625 Precious
Precious's picture

If they wanted collapse, they had their chance in 2008.  Instead they pulled out all the heavy artillary.  There will be no NWO.  Just the opposite. Technology will make governments obsolete.  Name a reason for big government besides security.  Mutually assurred destruction keeps moving lower on the economic chain.  Soon anyone with a bio-workstation will be able to fashion viruses to kill whatever they want.  Technology will make energy production local.  After energy will come water.  After water will come food.  All local.  The intersnoot makes commuter education irrelevant. Decision making will become regional again.  Big governments will fail.   Already happening.  USSR gone.  EU going away.  USA and China, probably will unravel in the next 20 years.  Canada the same.  Back to government by provinces and states.  The way it should be.

Fri, 09/14/2012 - 13:08 | 2795655 malikai
malikai's picture

I sure as shit hope you're right.

But there is also a lot of evidence to the contrary.

Whatever the future holds; these are the beginnings of dark days, indeed.

Fri, 09/14/2012 - 13:38 | 2795813 redpill
Fri, 09/14/2012 - 14:27 | 2796187 Fukushima Sam
Fukushima Sam's picture

It's a hundred-year plan folks, and the hundred years are up in late 2013...

Fri, 09/14/2012 - 19:01 | 2797385 Theosebes Goodfellow
Theosebes Goodfellow's picture

Thanks for the link, RP. When Schiff asks why would the Fed even buy MBS which everyone knows are crap, since the purpose of the Fed now seems to squash interest rates for the forseeable future, an ugly scheme came to mind. What if the intent for the banks was to load the Fed with this unsellable debt, as in right before they collapsed it?


Nah..., they wouldn't do that, would they?

Fri, 09/14/2012 - 13:16 | 2795692 sunnyside
sunnyside's picture

Precious, what you say sounds good, but those in power of the remaining big governments will not give it up without a lot of dead bodies.  Massive war and dead people is seeming more and more probable to me.


Fri, 09/14/2012 - 13:33 | 2795754 Precious
Precious's picture

Their NWO is already out of control.  Look at the headlines today.  Does that look like order?  No.  

Maybe you live in a metro area --- better plan to leave, especially hubs that thrive on politicized, zero-sum, devisive economics.

Better to live in a smaller, self-sufficient community.  We don't all need gold, guns and land.  But it would be nice if we had one or two of those, and friends with some too.

Fri, 09/14/2012 - 16:34 | 2796903 Chuck Walla
Chuck Walla's picture

The NWO has large armies. They are not there just for parades and projecting power, but for actualizing real power.


FORWARD SOVIET!  And this is how Soviets get forward!

Fri, 09/14/2012 - 18:11 | 2797232 sschu
sschu's picture

Name a reason for big government besides security.

Because some people have this innate, insatiable desire to tell other people what to do.  

As per the LOTR, "above all else, men desire power".  Big, centralized government is the ultimate power and it is not going away soon .... even if we have Twitter.


Fri, 09/14/2012 - 23:59 | 2798015 Anusocracy
Anusocracy's picture


Same as if the ants had their way, the world would be one giant ant colony.

Fri, 09/14/2012 - 21:06 | 2797727 Clashfan
Clashfan's picture

And we have a winner.

Don't forget TSA goons grabbing balls and vaginas, FEMA camps, drones watching and controlling us, microchipping, Orwellian evil and more, more, more.

Pray. Enjoy what's left of our lives.

Fri, 09/14/2012 - 14:38 | 2796257 SelfGov
SelfGov's picture

Big governments will crumble but not because technology will save us from them.

There aren't enough energy resources left in the world for the NWO to solidify.

Fri, 09/14/2012 - 21:04 | 2797721 Clashfan
Clashfan's picture

Ha, Precious. Keep wishing.

NWO is coming. One world currency, eventually digital, implants.

"They want everyone chipped." --A Russo

Fri, 09/14/2012 - 12:57 | 2795587 LMAOLORI
LMAOLORI's picture



Right on Plad your quote is amongst the best because it doesn't leave the politicians who put in the Fed in place off the hook. Is President Obama's Depression Coming Our Way?

Fri, 09/14/2012 - 13:12 | 2795665 osolomio
osolomio's picture

they have been blatantly robbing you americans blind for the last 12 years and you people still discuss their POLCY? who is the stupid one the  citizen or their chosen one masters? it doesnt really matter anymore the robbers have all the money debt instruments gold oil and their slave labor camps allready. The rest is delusion

Fri, 09/14/2012 - 16:38 | 2796923 WatchingIgnorance
WatchingIgnorance's picture

Gotta go long wheel barrows now.

Fri, 09/14/2012 - 13:00 | 2795602 whatsinaname
whatsinaname's picture

What ?? Have you not heard of Scott Sumner ?

Fri, 09/14/2012 - 14:06 | 2796015 lasvegaspersona
lasvegaspersona's picture

Could we please have a moment of silence....Ben Bernacke just read the "Obituary for the Dollar" and you people just go on with your lives. tsk tsk ....there just ain't no respect no more...the funeral will be a protracted ceremony over the next few months, burial will be by a grand cremation in which all paper burns....just chokes me up ...oh  does not even get soft at that temperature.....just a note for the cautious...

Fri, 09/14/2012 - 12:17 | 2795381 Meesohaawnee
Meesohaawnee's picture

isnt it painfully obvious by now.. they just dont care.. quit thinking this is your mom and dads america. June Cleaver is gone. If you keep thinking what "should" be done youll go crazy. Just think like a criminal.

Fri, 09/14/2012 - 12:44 | 2795529 Ookspay
Ookspay's picture

Exactly Meso!

Bernanke, Geithner and his ilk know the end is near; they are acting like someone who knows that they will soon file for bankruptcy so they go out in style, maxing credit cards they will never have to pay. Irresponsible and desperate, grasping at straws, shit meet fan, soon!

Fri, 09/14/2012 - 15:05 | 2796427 mirac
mirac's picture

Eddie Haskill=Ben Bernanke

Fri, 09/14/2012 - 12:18 | 2795390 Shameful
Shameful's picture

No, not insanely self destructive.  What they are doing is 100% rational.  If I could write checks other people had to cash, I can assure you I would be living quite the opulent lifestyle.  Literally can buy the world for nothing, who wouldn't be tempted to wet their beak?  Sure they will destroy the system/world out from underneath them, but they still get theirs.

All the things they say publicly are just lies.  They can't come out and say "Hey we are just robbing you because you are dumb.  We are going to strip everything from you and leave you a debt slave for the rest of your life"  Sure the people are stupid, but they aren't quite that stupid, so with a few lies and confusing lingo it's masked.  It's just a con, nothing more.

Fri, 09/14/2012 - 12:28 | 2795440 SV
SV's picture

Thank you - It's this point: I'm still amazed by the reaction to a QE that directly benefits themselves is something surprising (MBS purchasing).  People generate a faux outrage over it, when to the criminal mind this is a completely logical course of conduct in that, "I'm going to make my buddies whole."  There's no mention of consequences - that's for someone else, until it isn't. 

“The first time someone shows you who they are, believe them.”  Maya Angelou

Fri, 09/14/2012 - 12:31 | 2795456 kridkrid
kridkrid's picture

The con isn't even sophisticated. In fact, it would be easier to convince people of the con if it were more complicated, I think. I think it seems a bit made up as you explain it to people, in part because "if it were true, there's no way they could get away with it". One part normalcy bias, one part people want to believe the lie.

Fri, 09/14/2012 - 13:15 | 2795686 machinegear
machinegear's picture

Nature dictates that for every action there is a consequence. Now that many eyes are on the Fed (the man behind the curtain), the target has been acquired. Now it is just a waiting game to see who actually does what everyone is thinking.

Ben isn't going to just walk away.

Fri, 09/14/2012 - 16:39 | 2796924 Chuck Walla
Chuck Walla's picture

No, not insanely self destructive.  What they are doing is 100% rational.  If I could write checks other people had to cash, I can assure you I would be living quite the opulent lifestyle.  Literally can buy the world for nothing, who wouldn't be tempted to wet their beak?  Sure they will destroy the system/world out from underneath them, but they still get theirs.

All the things they say publicly are just lies.  They can't come out and say "Hey we are just robbing you because you are dumb.  We are going to strip everything from you and leave you a debt slave for the rest of your life"  Sure the people are stupid, but they aren't quite that stupid, so with a few lies and confusing lingo it's masked.  It's just a con, nothing more.


You, Sir, have just described the modern democrat party.



As the world burns, time for another fundraiser....

Fri, 09/14/2012 - 12:19 | 2795393 Yen Cross
Yen Cross's picture

 Every F..king "Banana stand, E/M" leader has the Hershey squirts right now! A spike in the "DXY" is coming soon as the " E/M economies" get flooded with hyperinflated "Chair Satan" cash.

Fri, 09/14/2012 - 12:27 | 2795437 Quinvarius
Quinvarius's picture

Denile isn't just a river in Egypt.

Fri, 09/14/2012 - 12:41 | 2795518 Yen Cross
Yen Cross's picture

 Asia will buy $ to stay competitive with exports. M/E economies are export based. China has been selling $ for 2 weeks, in anticipation of QE. All the surrounding sovereigns compete with China. Their currencies become inflated, so they sell vs the $, as commodites are priced in $'s.

Fri, 09/14/2012 - 12:19 | 2795396 LMAOLORI
Fri, 09/14/2012 - 12:20 | 2795398 Long-John-Silver
Long-John-Silver's picture

Buy food and Gold while you still can.

Fri, 09/14/2012 - 12:26 | 2795423 Boston
Boston's picture

Buy food and Gold while you still can.


And guns.....while you still can. I just picked up one of these:

Fri, 09/14/2012 - 12:35 | 2795479 francis_sawyer
francis_sawyer's picture

You'll shoot your eye out kid...

Fri, 09/14/2012 - 12:59 | 2795596 Boston
Boston's picture

Kid?  I wish.

Fri, 09/14/2012 - 13:18 | 2795696 Boston
Boston's picture

Good point. No BB guns or Sigs for MY kids!

Fri, 09/14/2012 - 14:46 | 2796320 10mm
10mm's picture

Just shoot brass loads.If i understand correctly,they do take to non brass cases.

Fri, 09/14/2012 - 12:20 | 2795401 Quinvarius
Quinvarius's picture

I think the dollar has just about spent all the good will it earned while we were on a gold standard.  Earn trust.  Spend trust.  It is how all the scams work.

Fri, 09/14/2012 - 12:27 | 2795412 Dr. Engali
Dr. Engali's picture

The Bernank just rang the final bell to get out. He has told the world that he will inflate no matter what the costs. If people don't get the fuck out now they are stupid. That 10 year bond yielding 1.8% won't buy you a loaf of bread when it matures.

Fri, 09/14/2012 - 12:34 | 2795472 Shameful
Shameful's picture

I'm certainly not defending Zimbabwe Ben, but I wouldn't call it a final bell.  This kind of thing takes many years to play out and can play out in different ways.  Take the German examples of the past century.  There was high inflation during the WW1 period then followed by the Wiemar episode.  Now the inflation was not a straight line and many periods where it seems like things had stabilized.  Likewise building into WW2 Germany once again massively expanded the money supply leading into the war.  However they were able to duck some of the monetary fallout via the war and the system of forced exports from occupied countries.

Certainly we know where this ride ends, however the road itself is partially obscured.  Now it seems likely we will follow the WW1 example.  Meaning inflation will be high, but there will be gov controls slammed into place as we march into another major war, assuming a major war in near future.  The wild card being the Dollar being the reserve currency.  This seems to me that in a war situation the US might be able to hold some value in it via our "allies" at least for a period of time.  This I don't know, perhaps it will be a more rapid repudiation and "value" only held because of price setting which of course will lead to shortages.

Price increases never move in a straight line with money supply increases.  In the early stages they lag behind, then in the middle stages they more or less track the money supply, in the later stages they tend to accelerate even faster than the money supply.  Still some innings to play in this game, and the possibility of fake outs via the shadow banking system black hole to scare prices down.

Fri, 09/14/2012 - 12:47 | 2795547 Dr. Engali
Dr. Engali's picture

You make a good point, but I feel the slow inflation is behind us. We have been exporting it to the world and masking it through accounting gimmicks for the last 40 years. Now I believe that there is little they can do to slow it. From here on out we will see inflation accelerate as more countries repudiate the dollar and the reserve currency status is pissed away. Personally I feel this is goin to move faster than people think and catch them be surprise. I may be wrong,we shall see. One thing is certain there will be war,there is a lot of anger towards the empire.

Fri, 09/14/2012 - 13:13 | 2795675 malikai
malikai's picture

I'm with you. As a result, I'm keeping a real close eye on backwardation in the important stuff.

Fri, 09/14/2012 - 13:23 | 2795740 snakeboat
snakeboat's picture

I feel for ya, as you apparently are not aware that things take years to play out ONLY UNTIL THEY DON'T.

Fri, 09/14/2012 - 23:04 | 2797922 nofluer
nofluer's picture
Here is an EXCELLENT exposition of the history of the pre and post WW I German financial disaster that led directly to the third Reich. The article is quite lengthy, but worth the time as the series of events explained here are currently in progress in the USA as well as in many other economies around the world such as in China and Europe. It also tells us what the people did to fight the loss of wealth in the middle of the disaster. I think this piece was printed in 1999. I am not trying to advertise anyone... it's just where the information was found. Reprinted from The Nightmare German Inflation by Scientific Market Analysis, 1970.
Fri, 09/14/2012 - 12:25 | 2795422 tradewithdave
tradewithdave's picture

Technically, it's not an avalanche if you can eat your way out... as in an avalanche of acorns.

Fri, 09/14/2012 - 12:48 | 2795431 NewWorldOrange
NewWorldOrange's picture

"What is it that makes Keynesians so insanely self destructive?"

SELF destructive? Are you fucking kidding?

"Is it their mindless blind faith in the power of government?"

WTF!? No, they hold the government -- TO WHICH THEY'RE NOT A PARTY -- in the same contempt all of us do (have you watched Bernanke et al speak to Congress? Could this be more obvious? And can you blame them? cough...Sheila Jackson...cough...Barnie Frank...cough) They're not THAT fucking stupid.

"Their unfortunate ignorance of the mechanics of monetary stimulus?"

Really? Do you REALLY think that they're THAT fucking stupid? It's a SCAM that has enriched them beyond any scam in history. They understand BETTER THAN ANYONE the "mechanics of monetary stimulus."

"Their pompous self-righteousness derived from years of intellectual idiocy?"

Their arrogant CONfidence derived from centuries of successfully enriching themselves and maintaining power in the face of the idiocy of common sheeple and stupid politicians who are criminal psychopaths. There. Fixed it.



The thugs who have taken over the Federal Government and the (un)Federal Reserve have declared a war against the American people that puts us at far greater danger than any foreign enemy ever.



America marches on the Ides of March.

Fri, 09/14/2012 - 13:31 | 2795779 acetinker
acetinker's picture

I like the way you think.  But, I think we'd do better to wait 'til 9:00 and ring fence the offices of the PD's (not Police Departments).  They're the boots-on-the-ground in this scam, after all.

Fri, 09/14/2012 - 17:35 | 2797106 Papasmurf
Papasmurf's picture

Learn how to use the caps-lock key.

Fri, 09/14/2012 - 12:34 | 2795433 Ivar Kreuger
Ivar Kreuger's picture

That is strange. I don't see the word Monetarist once in this post. Yet this is an article about Ben Bernanke and "monetary stimulus." The conflation bewteen Keynesianism and Monetarism is a clear indication of an author with a limited understanding of economic history.

Fri, 09/14/2012 - 13:39 | 2795820 Nothing To See Here
Nothing To See Here's picture

Yes, exactly sir.

The real source of our problems is SOCIALISM, not keynesianism. Socialism never went away, unlike what we are told. In its early stages, socialism could argue on philosophical grounds with free market people, but it had no scientific footing. But then, quantitative methods changed that. It gave socialists the means to create an alternate reality (mathematical models) which fit their assumptions and which they could pass off as empirical truth. Both keynesianism and monetarism sprout from there. Yet, both Keynes and Friedman thought they were supporting the cause of freedom.

Austrian economics are the only footing for a re-ordering of the world around free individuals, if only because it is not pretending to know what it can't know, which are the tools to create heaven on Earth out of a central bureau.

Fri, 09/14/2012 - 12:27 | 2795435 Seasmoke
Seasmoke's picture

They are lazy fucks who think they are better than you.

Fri, 09/14/2012 - 12:32 | 2795465 francis_sawyer
francis_sawyer's picture

evil speculators bitchez...

Fri, 09/14/2012 - 12:33 | 2795467 Temporalist
Temporalist's picture

There is no currency avalanche.  Lebron sneakers are only $270.

Fri, 09/14/2012 - 12:35 | 2795477 max2205
max2205's picture


Fri, 09/14/2012 - 12:36 | 2795480 Not A Monetarist
Not A Monetarist's picture

STOP BLAMING KEYNESIANS!  Bernanke is folllowing the uber Monetarist Milton Friedman not Keynes. Printing money is what Friedman said would have prevented the Great Depression. Keynes did NOT advocate printing money.

Fri, 09/14/2012 - 12:46 | 2795541 LMAOLORI
LMAOLORI's picture



ROFLMAO ben is following Marx!!!


QE (quantitative easing) is essentially the printing of money and the addition of liquidity into the markets so that stock (and other asset) prices are given an artificial boost. Federal Reserve Chief Ben Bernanke believes that by pulling up stocks, the masses will feel richer and spend more on consumer goods, thus lifting up the economy. This is based on Karl Marx’s reflexivity theory (George Soros essentially paraphrased Marx) that states by turning the small wheel (stocks), you can turn the big wheel (economy), which in turn will come back and turn up the small wheel (stocks). Bernanke subscribes to such a theory, and he wants QE to lift up the small wheel (stocks), which he hopes will lift up the big wheel (the economy).

Fri, 09/14/2012 - 13:00 | 2795606 Money_for_Nothing
Money_for_Nothing's picture

Go to YouTube and listen to Milton Friedman's lectures and appearances. It isn't the person you are talking about. Also his books. As he would say, "inflation is a monetary phenomena".

Fri, 09/14/2012 - 13:26 | 2795738 silver surfer
silver surfer's picture

Go further back in time and blame Adam Smith's invisible hand, David Ricardos equivalence, and his labor theory of value.

Fri, 09/14/2012 - 21:41 | 2797810 Glasshopper
Glasshopper's picture

At last ... Some truth! That's what I was taught at college. Friedman Monetarist Policy being followed since the time of Thatcher/Reagan. Or put another way supply side economics. Funny how Americans get that so wrong, like geography & especially since Friedman was an American. Guess they don't want to blame themselves forth is mess. Keynsian policy was dropped in the 70's in favour of Friedman Monetarist policy when Keynesism failed during the oil crisis/stagflation.



Fri, 09/14/2012 - 12:37 | 2795483 hannah
hannah's picture

THE FEDERAL RESERVE SYSTEM IN THE USA HAS BEEN A 100% SUCCESS say otherwise is either disingenuous or stupid. the fed enriched the fed members for 100 years. people need to get over this shit that the 'fed failed because i aint got no money'.....

Fri, 09/14/2012 - 12:42 | 2795513 Ivar Kreuger
Ivar Kreuger's picture

It is like the expectations gap in accounting. The average person expects accounts to catch fraud and expects the Fed to control inflation and maintain employment. In reality accountants just run the numbers and the Fed just enriches its member banks.

Fri, 09/14/2012 - 12:54 | 2795569 hannah
hannah's picture

just think of the trillions of dollars created by the fed and 'given' to the fed members over the last 100 years. it has been wildly successful.

Fri, 09/14/2012 - 17:02 | 2796985 Ungaro
Ungaro's picture

The parasite (the Fed) also dies when it destroys the host (the US economy). And on a long enough timeline...

Fri, 09/14/2012 - 12:37 | 2795488 technicalanarchy
technicalanarchy's picture

I just checked the price of gold on my phone app. It's 1776.00. Irony strikes me at times.

Fri, 09/14/2012 - 12:41 | 2795521 sdmjake
sdmjake's picture

Won't be long and it'll be 2012...

Fri, 09/14/2012 - 16:40 | 2796913 smiler03
smiler03's picture

If you judge the future price of gold by what happened today, which is more or less nothing, I'd say 1700 would be optimistic.

The world seems to think that shitting on the dollar will be the only correction required. Good grief, the UK admitted it can't cut spending and the GBP is on it's way up against the dollar. The UK has done £374 billion ($608 billion) of QE since March 2009 and has hardly affected the USD/GBP.

Clearly the Euro is the future (sarc). If my silver holding reaches what I paid for it in March then I'm selling up and quitting most of my PMs. Sadly my silver is in USD and still down (only just). I have one UK gold miner which is down, Scotgold, SGZ-GB, I'll sell that too if and when it breaks even, maybe cut my losses before break even.

I'm not a savvy investor at all but I have come to hate PMs. Please junk away, I deserve it.

Fri, 09/14/2012 - 12:39 | 2795498 yogibear
yogibear's picture

Better believe there is no iniative or care anymore to shore up the US dollar's value by Bernanke or the other Federal Reserve doves.

Rather than the institutions failing (isolated and sold off assets ) and financial criminals going to jail the Federal Reserve and the Treasury has decided to steal the wealth by loading the US and it's citizens with debt and bankrupting it. 

The final corporate financial raid is a governmental financial raid.

Fri, 09/14/2012 - 12:40 | 2795505 Spanish Lizard
Spanish Lizard's picture

A dollar collapse could happen anytime, especially with the petro dollar, but otherwise they can drag this out at least for a couple more years.

Fri, 09/14/2012 - 12:40 | 2795506 AnAnonymous
AnAnonymous's picture

'Americans' have this knack at showing that endeavour is a failure by ascribing objectives that are not related to the endeavour.

The FED actions are working. Once they are assessed by their objectives. Now if you declare that some of the objectives are cleaning the window glasses in a coal mine or settling the Moon, yes, all of a sudden, the FED actions are not working.

Sat, 09/15/2012 - 01:30 | 2798110 akak
akak's picture

Corpse salads repudiate ragged velvet fury, kittens rage in macabre macaroni mansions.  Alas, alas, fourteen antelopes alas!

Fri, 09/14/2012 - 12:43 | 2795515 lolmao500
lolmao500's picture

Just send a check to everyone in every state that leans toward voting for Obama. That'll be less obvious than what Bernanke just did.

Fri, 09/14/2012 - 12:44 | 2795531 Ivar Kreuger
Ivar Kreuger's picture

QE has little to do with Obama's reelection. It has more to do with postponing the financial Apocalypse and keeping the street elbows deep in Peruvian cocaine and hookers.

Fri, 09/14/2012 - 12:42 | 2795526 silverserfer
silverserfer's picture

way too much blame is being put aon the actons of politicians of the past 10 years. We are at the end of a ponzi that was started 100 years ago. the owners of the FED should be receiving the brunt of our anger.

Fri, 09/14/2012 - 12:44 | 2795533 LawsofPhysics
LawsofPhysics's picture

Buying up all the available diesel I can store for my agri-business as we speak.

Fri, 09/14/2012 - 16:48 | 2796954 smiler03
smiler03's picture

I hope and am quite certain that your tanks are secured. In the UK, back in 2008 at $140 for Brent, thefts of oil/diesel from farms and rural homes went ballistic. This story is from 2011. (2008, Oil at near record $140 a barrel)

Fri, 09/14/2012 - 12:51 | 2795552 Dr Paul Krugman
Dr Paul Krugman's picture

This is a losing arguement from the get go since it begins with an ad hom attack on "Keynesians".

Economics is a science, thus why there are academic departments throughout all colleges in America and the world. 

Unless you want the great depression I would urge you people to study the science and learn how and why increasing asset prices is necessary to stabilize the economy.  We need more growth in the economy and the way to achieve that is to have easy monetary policies now.  When we recover than we can begin to pay back the debt.  It would be insane to try to grow and pay back debt now.  We would sufer.

Is that what you want?  To suffer?

Fri, 09/14/2012 - 13:00 | 2795584 TrulyStupid
TrulyStupid's picture

Spending money on wealth destroying foreign wars and making good bad mortgage debt does not create growth.. it creates windfall profits for those who simultaneously seek a tax cut. No amount of money creation that simply covers previous losses can possibly stimulate growth. The hole gets deeper.

BTW  homes are not assets, nor are they savings accounts.

Fri, 09/14/2012 - 13:02 | 2795617 Dr Paul Krugman
Dr Paul Krugman's picture

I deplore Bush for taking us to war!  Luckily Obama has pulled out of Iraq.

Mortgages need to be paid, and the way they are paid is if people are employed.  Creating jobs is what needs to happen and that happens by creating growth.  So we increase our exports by dropping the price of the dollar which makes the U.S. more competitive.  Then jobs come back to the economy.

Then people can buy new homes and spend more on other goods.  This will lead us to the road of prosperity, once again.

Fri, 09/14/2012 - 13:07 | 2795647 amadeusb4
amadeusb4's picture

But to be fair, wouldn't more jobs be created if new money was directly applied towards jobs through something lika WPA rather than purchasing MBS?

Fri, 09/14/2012 - 13:34 | 2795791 Dr Paul Krugman
Dr Paul Krugman's picture

Congress is well within their reach to start another Works Progress Admin, and I would applaud them if they did.

Fri, 09/14/2012 - 13:52 | 2795905 MillionDollarBoner_
MillionDollarBoner_'s picture

Paul? that really you?!?

Your shittin' me, right?

If not...if its really you...then by what right does a Welfare Queen like yourself get to tell productive members of society how it rolls? Did you ever do a hard day's work in your life? Take a look at your fingernails - any honest dirt under there?

Just fuck off and leave honest productive workers a chance to get ahead, already.

Fri, 09/14/2012 - 13:14 | 2795683 TrulyStupid
TrulyStupid's picture

There can be no road to prosperity without ending the wars, encouraging private savings and wealth creating investment. Kicking the can down the road has been going on for the last 10 years... even the longest road has a dead end.

Fri, 09/14/2012 - 13:37 | 2795806 Yen Cross
Yen Cross's picture

Are you watching the "TELE" / Your supreme douche bag, did this one all by his lonesome self!

Fri, 09/14/2012 - 13:42 | 2795835 Dr. Engali
Dr. Engali's picture

How does debasing the dollar benefit exports when everybody else is racing us to the bottom?

Fri, 09/14/2012 - 13:55 | 2795919 Yen Cross
Yen Cross's picture

It doesn't, unless you live under the "fallacy" of service based economies.

Fri, 09/14/2012 - 13:03 | 2795628 amadeusb4
amadeusb4's picture

He's talking about avoiding deflation, Stupid.

Fri, 09/14/2012 - 13:10 | 2795660 TrulyStupid
TrulyStupid's picture

The accepted economic definition of deflation means a reduction in the supply of money through debt destruction.. not falling prices of goods and services. In the case of houses which are not an asset (assets produce cash flow, liabilites produce negative cash flow), falling prices reflect the reluctance of lenders to lend and buyers to buy at current prices.

He is talking about shoring up bad debt with freshly printed money to stimulate growth, while all he really wants to do is bolster the banks balance sheets.

Fri, 09/14/2012 - 19:07 | 2797406 amadeusb4
amadeusb4's picture

I'm not sure what you're smoking over there but anytime prices drop, that's deflation. When your dollar buys more, that's deflation. When your dollar buys less, that's inflation. It really is as simple as that. There's good and bad deflation. Dropping prices of consumer electronics as semiconductor manufacturing gets more efficient is good deflation. Your dollar buys more electronics. Dropping prices as a result of demand destruction is bad deflation as it leads to a feedback loop of further demand destruction. THAT's what Bernanke is trying to avoid as the economy heads into a recession. That demand is EXTREMELY difficult to recover so it's better to not get deflationary in the first place. Now, HOW the fed spends the new money is another argument and I have argued here that it would have been better spent by direct application in the economy rather than handing it out to banks via MBS purchases.

Fri, 09/14/2012 - 19:55 | 2797543 L G Butz PhD
L G Butz PhD's picture


We have a winner!


Fri, 09/14/2012 - 18:55 | 2797367 DosZap
DosZap's picture

 homes are not assets, nor are they savings accounts.

They were  for 75 mo.

We will be losing ALL taxable, and Non taxable contirbutions as write off's.(if O get's the chair back, and maybe even if Romulus wins.)

Charitable, 401k's,HSA's, employers contribs to your 401k's, etc, etc.

The ten most used...................gone.

What purpose is there to have any savings in a 401k, or IRA, if it's taxed going in, and coming out(if you earned profits?), NONE.

As to charitable contribs, peple who really give, do it out of their hearts,or for religious beliefs and I see no huge changes here(except maybe corporations),and philanthropists.

But to lose the Property taxes,state,county taxes, school tax write off's and Mortgage deductst, WHO would ever want to own a home?.

Not me. They are the only thing that allows a partial return on upkeep.

Even paid for they are now money pits.

Fri, 09/14/2012 - 13:19 | 2795710 James
James's picture

You're right Krug.

I'm sure that gangrene on my big toe will heal right up.

Fri, 09/14/2012 - 14:03 | 2795841 Count de Money
Count de Money's picture

Science attempts to explain the laws of nature. By understanding the laws of nature, science can explain what happens in the present and what will happen in the future.

Economics is the study of how people behave when it comes to money. No more, no less. It's closer to sociology than it is to physics. Since people are not entirely predictable, that by itself, disqualifies economics as a science. Science can predict the future. Economics can't.

How does making things more expensive stabilize the economy? The price of my house might go up, but its value to me remains the same. So how does that make me feel wealthier? And since I have no intention of selling any time soon, how does this help me? And what if I know that this is being artificially manipulated? How does economics take that into account?

Fri, 09/14/2012 - 14:01 | 2795967 Brazillionaire
Brazillionaire's picture

And yours is a losing argument from the get-go since it begins with "Economics is a science".

Fri, 09/14/2012 - 14:23 | 2796147 ceilidh_trail
ceilidh_trail's picture

krugman- The only positive thing about you and your ilk is that I own an original edition (excellent condition) of Keynes General Theory. Paid $100 for it in early 90s, now valued somewhere between $8-20k thanks to persons such as yourself. Too bad the economy has to suffer for it.

Fri, 09/14/2012 - 14:47 | 2796323 tradewithdave
tradewithdave's picture

No Mommy, I want candy. Candy makes me grow. Exercise hurts. More TV too. Homework hurts. Now give it or I will cry.

Fri, 09/14/2012 - 20:51 | 2797688 Clashfan
Clashfan's picture

Krugman may not be my favorite person, but at least he can spell.

Fri, 09/14/2012 - 12:56 | 2795579 Bastiat
Bastiat's picture

We could very well witness Wiemar style hyperinflation in the near term.

As I have said in the past, I believe QE3 will be the final straw for many foreign holders of U.S. debt and dollars. The world reserve status was already under severe threat after QE1 and QE2.

The vast ocean of dollars held overseas cannot be sanitized, controlled or withdrawn.  As those dollars start chasing goods, more will follow and price inflation will be compounding and uncontrollable. This is the dreaded "increase in money velocity" that is the hallmark of hyperinflation. 

Fri, 09/14/2012 - 13:02 | 2795615 amadeusb4
amadeusb4's picture

OK, I have to stop you right at "What is it that makes Keynesians so insanely self destructive?" because it is not Keynesianism that's the problem but the hijacking of Keynesianism to effect easing crony capitalism style. Sure, you still get asset inflation but you don't get as much economic value out of this as if you had spent that on a WPA style infrastructure build. When you create new money, it should go towards investments that pay off and not paying off your buddies.

Fri, 09/14/2012 - 13:15 | 2795687 silverserfer
silverserfer's picture

yeah look at how much free oil we have received with all of that worthless paper.

Fri, 09/14/2012 - 13:32 | 2795782 sunnyside
sunnyside's picture

Wouldn't true followers of Keynesianism have run budget surpluses during periods of positive economic growth?  Our fuckers are neither Keynesians nor Austrians, they are Fuckarians, here to suck every last piece of wealth from you and transfer it to them....."by any means necessary".  Also, like any parasite, they will do it until the host dies, being too greedy to just take some and then leave.   That is their school of economics, Parasitical Fuckarians.



Fri, 09/14/2012 - 13:52 | 2795897 LawsofPhysics
LawsofPhysics's picture

Wake up, they are fascists.

Fri, 09/14/2012 - 20:53 | 2797693 Clashfan
Clashfan's picture

Bingo! Government money into private hands, directly. Been happening a long time, and they know that money's not circulating properly for job growth.

Fri, 09/14/2012 - 18:50 | 2797346 amadeusb4
amadeusb4's picture

I think you're confusing national economies with household finances. The US never repaid the debt for WW2 for example by running surpluses in the 50s and 60s. That debt was marginalized by an expanding economy. So you don't need fiscal conservatism in the form of boom time surpluses to repay the debt.

Fri, 09/14/2012 - 14:30 | 2796204 Nimby
Nimby's picture

They say the same thing about Communism and Islam.

It's not [FILL IN THE BLANK] that's the problem, it's the [FILL IN THE BLANKERS] that hijack it.


Fri, 09/14/2012 - 13:12 | 2795668 swamp
swamp's picture

Insanity, doing the same thing over and over and expecting different results.

Fri, 09/14/2012 - 13:21 | 2795723 silverserfer
silverserfer's picture

so is parroting of that quote over and over again.

Sat, 09/15/2012 - 00:43 | 2798056 tenpanhandle
tenpanhandle's picture

Insanity, doing the same thing over and over and expecting different results.

Fri, 09/14/2012 - 13:24 | 2795748 sunnyside
sunnyside's picture

At the beginning of marriage counseling, that phrase was presented to me.  Toward the end of counseling, when my wife would tell me to quit bringing up history and just keep trying, it was I who would bring this phrase up........... 

She didn't like my tone.


Fri, 09/14/2012 - 20:54 | 2797699 Clashfan
Clashfan's picture

But they don't expect different results; they merely promise them. That's lying--not insanity but sociopathy, its rapacious cousin.

Fri, 09/14/2012 - 13:22 | 2795727 TideFighter
TideFighter's picture

But, but, but, we are going to reduce tuition cost to create smarter, more educated, burger flippers, right? 

Fri, 09/14/2012 - 13:22 | 2795728 TideFighter
TideFighter's picture

But, but, but, we are going to reduce tuition cost to create smarter, more educated, burger flippers, right? 

Fri, 09/14/2012 - 13:36 | 2795805 SafelyGraze
SafelyGraze's picture

did anyone -- *anyone* -- challenge the premise that 40B per month to "purchase" MBS would create a single job?

Fri, 09/14/2012 - 20:04 | 2795970 SafelyGraze
SafelyGraze's picture

which MBS? freddie mac and fannie mae? 

let's follow that money trail, shall we?

1. banks lend to homeless people who buy up houses.

2. someone bundles the promise of future mortgage payments and sells shares of that action.

3. fredFan "guarantees" those payments.

4. homeless people stop payment. are foreclosed. evicted. houses fall into disrepair. vandalized. neighborhood becomes crimezone.

5. fredFan steps in, makes payments on behalf of former owners (note: former owner still loses house! bank keeps house while fredFan pays shareholders of MBS as though there were owner paying -- Virtualized Mortgage Payment!)

6. taxpayer money is flowed to fredFan so that fredFan can pay its shareholders. taxpayers might get pissed. so ...

7. TA DAA! freserve simply issues dollarness to fredFan to pay its shareholders. bypassing taxes-to-treasury-to-fredFan-via-budget-process!

who are those shareholders in fredFan that freserve will flow 40B/month to in order that jobs will be created?

here's a partial list (courtesy of and a couple of years old). over half the shares of fannie are owned by vanguard, horizon, blackrock, statestreet. 

So the follow-the-flow question of the day: 

who are the primary shareholders of these entities?

they now get to receive 40B/month in freshly created dollarness forever. 

if the freserve is going to pitch a program to help employment it should, at the very least, track the number of US citizens employed by the primary shareholders of vanguard, horizon, blackrock, statestreet (etc). 

that needle better jump up and stay up. 

Fri, 09/14/2012 - 13:37 | 2795808 sbenard
sbenard's picture

Stop calling it QE3! It's QE-INFINITY!

Fri, 09/14/2012 - 13:42 | 2795843 Westcoastliberal
Westcoastliberal's picture

So what we'll see in about six months is food inflation of about 50 to 100%, which will result in food riots since those on SNAP will not receive an increase in benefits, and food to survive will be out of reach.

This will be the trigger event TPTB are hoping for as the riots will be widespread and violent.  Remember the LA Riots "Can't we all just get along?"  Multiply times 10,000.  Martial law, restricted travel, restricted withdrawls, you name it.

As we proceed further in time I see the US getting closer and closer to fascism and farther and farther from democracy.

Fri, 09/14/2012 - 14:26 | 2796175 Nimby
Nimby's picture

I think there is still some road to kick the can down in that respect:  SNAP recepients will be able to adopt a lower standard of eating in the short run, and thus absorb higher food costs, BUT I don't think the long-run is far off.  Two years, maybe?

Fri, 09/14/2012 - 13:50 | 2795846 socalbeach
socalbeach's picture

We don't have to worry about a dollar collapse and runaway inflation until the deflationists capitulate.  And based on the down votes I got yesterday when I suggested the deflationists should admit defeat, we're not there yet. Demand for money (meaning existing money, not new loans) is still high, keeping in check the inflationary pressures from increased supply of base money the Fed has been and will be creating.

Fri, 09/14/2012 - 13:46 | 2795863 Cap Matifou
Cap Matifou's picture

Time for a repost of an epic classic

Fri, 09/14/2012 - 13:57 | 2795931 billsbest
Fri, 09/14/2012 - 14:11 | 2796044 Brazillionaire
Brazillionaire's picture

Maybe I am making this way too simple, but the whole point of the FED's actions seems pretty straightforward to me: The government debt is too massive to ever be paid back... everybody knows this. So simply inflate it away.

Everything else that happens as a result is collateral damage.

Fri, 09/14/2012 - 14:32 | 2796218 SelfGov
SelfGov's picture

"Yet, long term high prices show that neither of these explanations is fully sufficient.  In reality, only currency devaluation allows for such a steady and consistent inflationary reaction in commodities."

How about a global peak in crude oil production? That would explain the price run up and the printing of money.

Fri, 09/14/2012 - 18:29 | 2796868 Haager
Haager's picture

That would explain high prices in oil, alternative energy and all related assets. Not copper, not Euro. Natural gas is down, albeit on a higher level than the last week. Copper has been stable today.

Bund futures, 30yr TF and so on are remarkably down, assets lower in Europe, bearish DJX, SPX but Dollar also down (again). Gold and Silver didn't follow neither the Euro nor the bearish sentiment. It doesn't really make sense besides the explanation of devaluation - and even that whould usually force people to get value to the  "outside", aka assets on different places. That didn't happen today, which would imply that something is missing that should have happened - maybe that Spain should have - but didn't - asked for the bailout? There were buyers in Europe to invest on the US market today, so I don't think that EUR/USD will go that much further.

The Euro even ruled over Swedish and Norwegian Kronor, during september. This could be partly explained by interventions to support USD, as other currencies also "faded" - today, NZD and AUD especially. NOK interacted heavily on an EUR/USD + crude price relation.

Maybe it is wanted to present a "strong" Euro, mainly for the voters in Core-Europe? But, if not for a political and/or ESM reason, why didn't it stop today? 

Fri, 09/14/2012 - 15:09 | 2796449 mirac
mirac's picture

The Federal Reserve,  aka the Morgoons and Rockyfellahs are going to end up bankrupt-many people all ready are.  It will not be a joy to behold, but there will be some satifaction none the less...

Fri, 09/14/2012 - 20:57 | 2797705 Clashfan
Clashfan's picture

No, they have ways of moving it onto the Treasury's books.

Fri, 09/14/2012 - 15:26 | 2796551 Shizzmoney
Shizzmoney's picture

They're dumping $85 billion worth of kerosene on the risk assets, housing, 401(k) bonfire per month for the next three months and then $40 billion a month thereafter as far as the eye can see.  The Fed wants your portfolio to go higher and your stomach to be tied into knots for not being invested.  The Fed wants your home to go up in value, too.  It wants you to look at these improvements in your life and to start feeling confident again.  It wants you to feel richer than you have in years.  Because when people feel rich, they buy shit. They hire new workers and raise the wages of existing workers.  This in turn makes the workers feel rich(er) and they spend more too.

At least that's the theory.

It hasn't worked so far because it was up against a decades-in-the-making deleveraging cycle, the kind that you expect in a balance sheet recession where everyone checks themselves works down debt.  But we're almost 5 years into that and maybe enough time has passed that the wealth effect will work this time.  We need more than stocks going up - we need a transmission of that into the actual daily lives of the regular folks, most of whom do not participate in a meaningful way in the markets.  The wealth effect from home prices is something like 10X that of a rising stock market wealth effect say the experts.  Can the Fed buying up more than half of all new agency MBS issuance make that happen?

The bottom line is the Fed just told us they want to get us rich or die trying.  Y'all ready for that?

Fri, 09/14/2012 - 16:23 | 2796849 Uncle Remus
Uncle Remus's picture

Do the rescue St. Bernards still carry a little cask of adult beverage around their necks?

Fri, 09/14/2012 - 16:25 | 2796861 topspinslicer
topspinslicer's picture

I am much more worried that my small mountain of 1964 and older coins will have an avalanche -- now that's gonna hurt if I'm at the bottom of that bad boy!!!! Help I can't get up.....mercury is that you? I must be in heaven....

Fri, 09/14/2012 - 16:40 | 2796928 Haager
Haager's picture

I am bothering about the following: I've read some days ago that $15 billion of AIG stakes were sold. Did that include MBS which would turn out to be cash, and how much MBS would such a deal imply?

Fri, 09/14/2012 - 17:47 | 2797156 goldenbuddha454
goldenbuddha454's picture

Just for kicks and giggles I thought I'd see how long it would take Ben and Timmy to print the equivalent of all US gold holdings known to exist.  Supposedly there are 4500 tons at Ft. knox and another 7000 tons at the Fed in Ny.  So just for a round number lets say there are 12000 tons of Gold owned by the US.  That gold on today's market would be worth somewhere around 700 Billion at todays spot.  Divide that by 40 Billion/QE3/mo. and you get:  17.5 months it will take them to print out of thin air the equivalent of all US gold known to exist.  Or put better, it will take less than 2 years to devalue our currency to a point that not all the Gold in the US can back what's being printed.  This doesn't even take into account the 16 trillion in debt already existing.  There is no possible way, unless all countries forgive all the others debt, that gold can be used as "the gold standard" again.  It would be interesting to see a graph of the divergence from 1970's until now from when the gold standard was done away with until now and the actual growth in US gold holdings vs. the growth in US govt. debt.  Get on that Zero Hedge and make that graph happen.  You can do it!

Fri, 09/14/2012 - 21:02 | 2797717 Clashfan
Clashfan's picture

Um, can't we still do this if the price of gold skyrockets, or the dollar is pegged at, say, $10K per ounce? 20K? Then we might be able to peg to a gold standard.

But more likely is that the TBTF (PDs) and other, nefarious gold market manipulators will hammer PMs down and buy them up on the sly so that the next currency--likely an international one like the SDR--can be pegged to it. Then investors will prefer the SDR (or its equivalent), which has probably been the plan all along.

Sat, 09/15/2012 - 02:39 | 2798154 ZH11
ZH11's picture

Does anyone really believe that jobs were really a key consideration for the FED in launcing of QE 1-3?

Isn't it all about sustaining banks through the sustaining of over inflated asset values?

The last depression gave us the debt defaltion theory this time the banks knew the tacit put was there and therefore knew they could never lose everything as the devalution button would eventually be pressed to maintain their phoney balance sheets.

Unemployment can reach 99% so long as there's no civil disruption and without civil disruption nothing is going to change the business and banks first policy that is causing this destructive monetary policy.


Sat, 09/15/2012 - 05:19 | 2798193 floor
floor's picture

No way the ESM is a 'go', actually it is a 'no go' and on top of it Draghi's bond bying plan on the secundairy market  has been taken to a halt as well.

Without a banking license the ESM is of no use, 700 billion of capital is not going to save Spain, let alone Italy.

The German Constitutional court actually has given a big fat 'no' to a transfer union from the north to the south and this will be their continious answer unless the German people decide different by referendum.

The ESM the court agreed to is a completely different ESM without a 'bazooka', so of no use. 

Just a new period of kicking the can has arrived.

As for inflation/hyperinflation, for Bernanke to go this way litterally means he is paving the road for civil war, especially since US wages are deflating.

Inflation/Hyperinflation doesn't just squeeze the american people who already have little money, they squeeze margins of businesses operating in the country - when company margins get squeezed, they can increase sale prices, but I can quarantee you that they will not be actually hiring people - this means unemployment will stay high, which is literally a large deflationary in or at itself.

So, I think Bernanke is shitting his pants, the deflation ghost is hanging around.

Sat, 09/15/2012 - 23:50 | 2799875 andrewp111
andrewp111's picture

The ESM is irrelevant. The ECB has the printing press, amd the ECB is the only true sovereign federal entity in Europe.. It is just a matter of time before the ECB prints Euros galore to bail out Spain, Italy, and France. And yes, the ECB will take control of fiscal policy across Europe, for that is the bargain it is demanding. Mario Draghi is on track to be Europe's next Roman Emperor.

Sat, 09/15/2012 - 09:13 | 2798338 Monk
Monk's picture

What makes them self-destructive is good ole free market capitalism leading to over a quadrillion dollars in unregulated derivatives.


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