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Guest Post: Print It And They Will Come
From Peter Tchir of TF Market Advisors
Print It And They Will Come
I have to admit, I never understood Field of Dreams. I "get" why it was popular - a quasi-mythical figure who just "knows" things. Some good looking guys with enough sentimental moments to make women happy, and just enough baseball to make guys not cringe. But honestly, I never understood the movie.
So, what does that have to do with printing money? I guess I just don't understand the fascination with it. Why is printing money the best solution? Why isn't trying to pick up the pieces after some defaults, a better solution than printing. With stock futures down again already, and Jackson Hole coming up, you know we will hear Wall Street (and anyone caught long) clamoring for the Fed and ECB to PRINT more money. It seems to be the only "solution" to the debt burden too many countries are facing. I agree that it is the only way to avoid some defaults and some pain.
But is the cure worse than the problem? There will be problems if we let Greece default. It would drag down some banks, which would not be good - short term. But I remain convinced that in 10 years, economists will praise FDR's patience. They will talk about how waiting for the system to recalibrate was a difficult but important decision. Only once the system had "reset" would the policies work to create a great rebound. We will learn that throwing money out of a helicopter only gets the money caught in the blades, destroying most of it, and possibly damaging the helicopter. Those who felt Countrywide needed to be saved, or Bear Stearns had to be saved, will be vilified. Those that let Lehman go, will be questioned on why they didn't do a couple of things (guarantee swap lines, for example) but in the end, will be respected for their willingness to let excesses collapse, and let those that were prepared to prosper.
Every time we come up with a new "solution" to our problems, we gravitate towards "unknown" unknowns. Maybe we should just take our medicine and try and deal with "known" unknowns. I don't know much about Rumsfeld, but that phrase resonates with me. We continue to put out new policies, attempt to solve problems, but only seem to create new ones, that are even bigger and more complex. The Fed can misuse words like transitory or unintended consequences as much as they want. But many of the "unintended" problems could have been (and were) foreseen. And even Dorothy couldn't just click her heels and wish bad things away as easily as Ben thinks he can make them disappear by uttering the word transitory.
I had a boss once who explained the difference between a structurer and a structured trader. The structured trader would try and come up with a solution that left more risk, but the risk was quantifiable, and hedge-able. They were nervous and analyzed their positions daily and tried to constantly adjust to a changing world. The structurer would create a solution that solved most things that were likely to occur, but was left a few disaster scenarios in place. And the solution was unhedge-able. All you could do was own the risk, and hope for the best. The "structurers" were arrogant and were dismissive of anyone who questioned their idea, and somehow any rational argument about the potential downside was twisted, with a wave of the hand, a raising of the eyebrows, and a lightly uttered "hrmph" made it look as though you were arguing that leprechauns existed. All of the Central Bankers, IMF, and World Bank, "Chairman", "Managing Directors", "or Supreme Commanders" are structurers.
So, we will get money printing. That to me, is dangerous, since we don't know what printing so much more money will do. It doesn't in any way, shape, or form address the root cause of the problem. It is hard to hedge (buy more gold?) and it potentially unleashes problems we haven't even contemplated. Hyper-inflation causes riots in countries where China bought land to produce food and gives them an excuse to enforce their rights by sending in troops? Maybe that is crazy, but in my defense, I am wearing my IG200 hat, not a tin foil hat. I am not sure what can or can't happen in a world where we decide that printing money is the best way out of our problems. So many bizarre things have come out of our alternative solutions, and few of them good, that we should spend more time thinking about accepting the default of the weak, and seeing what we can do with that.
If Greece defaults and there is a run on weak sovereigns, stocks will go down. Things like gold will go up, though they may be held back by profit taking since so much else will get hurt. Basic soft-goods probably hold in, as people still need to eat. Steel and energy will go down, but maybe that isn't bad for most of the 6 billion in the world.
We spend so much time worrying about the stock market (well, those of us not glued to American Idol, Jersey Shore, or Housewives of some city), but if QE2 showed us anything, it is that the wealth effect is exaggerated. The wealth effect impacts a small portion of society, and the companies they buy stuff at - tiffany's. The majority of people have very little invested in the market. Maybe their 401k's are invested in the market, but few people are so stupid to get excited that their measly 401k is up 20% when everything else points to reduced pensions, reduced health-care, and higher taxes in the future.
I am short the market. I felt that we were not going to get any new support announced over the weekend and I believe Europe will struggle tomorrow. But at some point it will be time to cover. The voices of important, smart, powerful, and rich people, will drown out any objections the fringe may have and government will embark on a program of printing. In the short term, that will be positive for risk assets. In the long term, I suspect it will be disastrous. I continue to hope that some leaders have the conviction to try and stop the "pretend and extend" program now. It will be painful, but I think we could still pick up the pieces. The longer this goes on, the harder it will be to fix it.
As an aside, if the dot-com bubble and Enron brought intense scrutiny on to Wall Street and to fortune 500 CEO's, shouldn't this crisis bring the same level of scrutiny on government? Shouldn't Sarbanes-Oxley be adapted to fit government? Maybe we should have access to their e-mails where they tell a colleague that there is no way we default, but that he (or she) is going to tell the press that the government might because it will scare the bejeezus out of their constituents and ensure that their next fundraiser is full of high paying donors. Or that next time someone writes in a private e-mail that they agree with a bill but think if they hold out a bit longer, they can get a little earmark in the next bill, the public should know.
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Banks will get more fiat, but how long will the world accept it?
I like your picture Newsboy!
Daibutsu of Kamakura.
I used to live there.
Is your Buddha from Thailand?
I remember gazing up in awe as a six-year-old. Many years ago.
that seems to be the key...china and everyone else is getting sick of paper money
No QE3.
The parameters for QE2 were a high USD, and low inflation. Now we have a very low USD, and above 2% inflation in Europe. Even worse, for the emerging markets, especially China
QE3 would cause more instability (yen spike->yen carry trade unwind->systemic risk)
Also, current data indicates stagflation, not deflation. More monetary stimulus is not the proper course of action. see Volcker case study
Bernanke will be like Noda.. He'll try to talk down the markets.
Since when do they follow their own rules? If the 2% mandate get's in their way, they will change it (either officially or through bastardization of it's meaning) or simply ignore it.
externalities. The Fed may weigh in externalities. QE2 aided the Arab Spring. QE3 aids European Riots? But no quesiton Japan would break. Enter bond wolfpack to tear @ Japan.
Now you have 2 failing fronts: Europe & Japan
In order for there to be global price stability you need a stable reserve currency. QE undermines this assumption.
I think you are assuming that the rulers at the Fed want global stability where I would argue they certainly do not and prove it daily.
You're not going to get an argument from me.
What we are seeing is the strengthening of the American Banks by the Fed, before Peak Oil turns the world upside down.
And also assuming that the actions of those in power affect us al in a similar way. Cui bono?
MUST...SAVE...GLOBAL...BANKING...
And that is the Federal Reserve's one and only true mandate. It always has been.
It has been clear for the last year to most everybody that the Fed will print into the next Presidential term.
PaaaaaRinttttt and hand out more fiatskis to the Wall Street/Banking elite, Bernanke, just like you really, deeply, urgently want to - do it again, Bernank!!!
Fiatski in the form of a massive Taxpayer Teet, milking that host dry - do it Bernank! Do it!
Wall Street Aristocracy Got $1.2 Trillion in Fed's Secret Loans
Bloomberg
Wall Street Aristocracy Got $1.2T in Secret Loans
I really like your posts so no offense. But you should really re-watch the movie.
I'm sure you mean Fight Club, not Field of Dreams... ;)
Lazlo Toth PO Box 245 Fairfax, California 94930
c'mon, this movie probably inspired the whole ethanol theory - if corn fields are only good for attracting ghosts, they might as well use food to make expensive gas? beats outright subsidies, no?
id be shorting AU above 1400 tonight
Let us know how that works out.
Why?
i'm wearing my IG-88 hat
Oblique Star Wars reference...you may not be able to get the Feeb's attention with that one.
Ben Dandy Bernanke is leaking his next move, via the WSJ, that he will buy foreign bonds to "help" Europe.
"according to people familiar with the matter."
"said the people familiar with the matter say"
"said a senior executive at a major European bank who has participated in the talks"
"a senior bank executive said"
http://online.wsj.com/article/SB1000...LEFTTopStories
From the article:
"Until recently, that hasn't been a problem. Thanks partly to the Federal Reserve's so-called quantitative-easing program, huge amounts of dollars have been sloshing around the financial system, and much of it has landed at international banks, according to weekly Fed reports on bank balance sheets.
This spring, foreign banks were able to build up ample cash cushions, thanks largely to quantitative easing
The latest Fed data "could be telltale signs that foreign banks are in need of dollars again"
So the foreign banks just "park" those worthless Italian and Greek bonds with the Fed, and Ben loans them money at face value.
It doesn't need congressional approval since Ben doesn't mark to market.
The stock market will rally and treasuries and gold will fall due to the fear premium diminishing.
But the Dollar will also fall causing food and gas prices to SOAR.
Too bad that it only helps the top 10% since they own 80% of stocks and spend on average 2% of their income on food and energy.
We the bottom 90%, will see our food and energy cost as a percentage of income go from 15% to 25%
I think Bernanke will have to wait for Europe to implode and the stock markets to go down further before we the sheeple allow him to buy Italian bonds "to save the economy" just like we allowed the first bailout.
"Bond"age.
i am scared you are right :( but now that wsj is tied to squawk box all is good...full journalistic integrity
It sucks to be bottom 70 percent.
The top third does ok. Not just top ten percent.
If you need to know it graphically:
http://www.ritholtz.com/blog/2011/02/how-u-s-income-groups-get-squeezed-by-food-prices/
http://www.businessinsider.com/made-in-usa-wealth-inequality-2011-7
They don't print because it is the best solution. They print because it is the easiest solution.
I keep hoping, but it just won't change!
actually the Sun Tzu/Taoist saying is: "To know before knowing."
the Ben Bernanke's on the world are stuck in an academic and arrogant minded feedback loop. They're probably slowly going insane. And they know nothing.
As for the markets, yeah relief rally coming pre: Bernanke's QE3 announcement on Friday...But, volatility will still rule the game, might be tighter in the spreads, but I can't see HFT's adjusting that well to a investment bank bull run. Sell on rallies galore
+ the global economy is a c-hair away from a total collpase
my instinct: no qe3. i think things have to get worse... the deflationistas need to be getting bloomberg airtime before qe3 can be announced.. but i was wrong last year on this, no where near the pain that i imagined would be necessary.
"But is the cure worse than the problem?" of course it is, but from whose perspective. "tin foil hat" logic demands that you consider the possibility that the disastrous consequences of quantitative easing are the desired outcome, not the unintended one. "ordo ab chao".
aaron russo does a good job here of setting the right perspective: http://video.google.com/videoplay?docid=-1656880303867390173
Of course they are the desired outcome. Everyone knows what the outcome of printing money is so there must be a concerted effort to create that outcome.
As I view it the winners are those that take complete power once the system completely collapses and a new system rises from the ashes. They are the same people who are going to print us to oblivion and cause the collapse.
They're banking on the stupidity and wails fromt he starving masses to herd us into cages but they still have some very large problems to overcome - namely the new conectivity of the masses and of course the prevalence of weapons in private hands.
did the BOJ just print as they had warned??? Asian market just jumped and JPY took a straight step down
perpare to feel some pain peter
feels like some cooridnated international government magic is in the works to buy more time for the politicans to scramble for solutions
lybia is already falling. there will be constant chatter of stimulus and currency manipulation to deflect from merkel's pushback of the eurobond. obama will push a jobs bill and an infrastructure bank. and if all else fails, The U.S. will kill Satan on 9/11 to show we are winning the war on terror
They will dump Satan's body at sea because of his religious beliefs.
They will have DNA evidence this time because Michele asked to have the penis so she could stuff and mount it. The NSA likes it because it will keep her occupied.
Yes, that was awful of me to say and I intended all of the puns in there.
i hope she likes em circumcised.
the Synagogue of Satan
Ben can print money but but he cannot print WEALTH. Wealth has to be created and earned. We will have reached a point shortly where I think a declining dollar will not help the stock market and it will hurt the bond market. The Fed cannot afford to f+*k with the bond market. It has the potential to destroy all the credibility of the borrower. Our lenders are acutely aware of this and I hope Bernanke is.
Fuck it bro. Get a bunch of credit, buy everything you'd ever need or want, including mad gold, make your minimums and wait for debt liquidation and evaporation. If it never happens then what's changed? In the current system you're born with debt and mostly die with debt. I haven't trademarked it yet but I'm the new breed of American born in the 80s. I read some old science books. Some bullshit about turning other elements into gold. So I applied it to the confines of our fucked up American life. I got some plastic and turned it into gold. The life of a Plastic Alchemist
I can't tell you how many times I've thought about doing just that.
It just makes less and less sense to be an honest player in this economy.
There is the answer ofr the little people. Borrow as much as you can and get real things and "pay back" those lenders with worthless scrips of paper. No need to even default and ruin your credit rating! In fact you'll be AAA!
Trying to do a cash out refi right now. They say I have equity. LOL
Is Germany's Commerzbank in Need of Another Bailout?
http://globaleconomicanalysis.blogspot.com/
It seems that Commerzbank bailout is a good laugh http://fiveup.com.au/request/arrange-bailout-funding-for-commerzbank
good for Korea.
Deutsche Bank Says Four Employees, Securities Unit Indicted in South Korea
http://www.bloomberg.com/news/2011-08-21/deutsche-bank-says-four-employe...
thanks but shhh....
over the weekend i was out with some friends that don't follow the financial markets and i told them how fooked up europe was
they were shocked. and said "but aren't europeans so much smarter than us? they will be fine"
the general populace does not really want to believe there's a problem because its not on u.s. soil. they think the sell off is because of the u.s. downgrade
So, we will get money printing.
Nope.
Ben Bernanke's bitch at the Fed---Jon Hilsenrath---has just pretty much guaranteed that Ben will NOT announce more QE:
Hilsenrath has been spot on, for years now, with respect to Bernanke's intentions. THIS is a tell.
I wouldn't be surprised if the markets are disappointed on Friday at Jackson Hole....
http://online.wsj.com/article/SB10001424053111904070604576518861203898904.html?mod=WSJ_hps_RIGHTTopCarousel_1
joking aside peter, good post
structurers are bankers.
bankers create the world's problems. and traders have to deal with them.
Peter Tchir is short. He is not the only one. I find it difficult to cut through the noise as one day we are down 5% another we are up 5%. Looking at the Israeli Stock Exchange that is open on Saturdays http://www.tase.co.il/TASEEng/ they were down 4-5% over the weekend.
Marcus Rose created an interesting software that suggests the market turn dates, continuing the research by Donald Bradley: www.rosecast.com
He feels the stock market (S&P 500) will make a closing price low on August 25, 2011. See the chart attached and visit Marcus' website for explanations: http://inkom.com.au/sites/default/files/market%20turns.jpg
Three days to go?
Yup - The volativity created by the insane amounts of "stimulus" sloshing around in the markets must already have caused a lot of financial alchemy to blow up - imagine f.ex. writing a LEAP option in January and hedging it, assuming that volativity would be 2% based on historic data + fudge. OUCH.
Deutche Bank lining up again?? I am not suprised about Dexia, btw. Snot-rollers and navel-defluffers the lot of them!!!
It was never about public service - from the men who would manage our nation’s finances. It was from the beginning - the secrecy, the Fabians, the London School of Economics, the Communists, the Montagu Normans, the Keynesians, Rothschilds, Warburgs, Morgans and all the rest.
It never was ineptness, policy failures or economic accident. It was design: debt as a weapon, debt as power, debt as the ladder to tyranny, debt to control congresses and parliaments, kings and presidents. From slippery souls like Bob Rubin, to the water carriers like Professor Benjamin Bernanke, they chose to finally control us or ruin us.
This is a managed crisis - built on debt and threats of bankruptcy. It’s not socialism; it’s Stalinism; it’s oligarchism; it’s simply bankers pocketing and controlling the money… and the power.
In the Rise of the House of Rothschild, Count Egan Caesar Corti details how “some of history’s more sinister characters have steered nations into bloody conflicts as a way of forcing them to borrow.”
Says John McManus: Not only does heavy borrowing reap large interest benefits for lenders, it can lead to a loss of a nation’s ability to act in its own self-interest. Heavy indebtedness can, in fact, cost a nation its sovereignty and its people their freedom. No one should delude himself into thinking that our leaders are unaware of these consequences of horrendous debt…
“The Federal Reserve and the government produce nothing and, by their actions, are prosperity inhibitors. Prosperity (wealth) is productivity. Any nation whose people are free to take the raw materials of the earth and produce goods from them is prosperous. Whatever actions hinder wealth production…will reduce prosperity…
If the money destroyers aren’t stopped, says McManus, those who have brought on debt and deficits will readily “propose that our nation accept world currency,” and "give up her independence” to a centrally managed economic control system.
The power to issue unbacked money, QEI, QEII, QEIII, QEIIIIIIIII, is the power to destroy the existing basis of American society. It destroys the value of the medium of exchange. It destroys thrift and savings. It encourages speculation instead of real production. It produces tyranny.
+ Great thoughts embodied in what you wrote.
I agree.
This is all coordinated and from a long-held plan.
Some people will call us conspiracy types, but I am merely a realist and objective observer.
So buy gold and take away the value of their paper. Problem solved.
Nice 2nd anniversary post, JR.
Why print money? Prices are sticky downwards.
People resist taking a lower paying job and resist selling their houses and businesses resist selling widgets at lower prices. Markets freeze up and a downward rebalancing, when necessary, is needlessly prolonged and worsened without some inflation. This is the lesson Ben claims he learned from the great depression and why the rest of the world got out of the depression faster than the usa.
People are fooled by nominal prices, so when downward adjustments are necessary due to previous malinvestment and excessive credit, all markets clear better if nominal prices are the same or higher, even though real prices are lower.
The trick is not letting it get out of control, but we probably have too many distortions built in to the economy and excessive debt for this strategy to work smoothly this time.
Inflation? It's just less fabric...
NEW YORK (AP) -- Stores are trying everything they can think of to disguise the fact that you're going to pay more for clothes this fall.
Some are using less fabric and calling it the new look. Others are adding cheap stitching and trumpeting it as a redesign. And the buttons on that blouse? Chances are you're not going to think it's worth paying several dollars more for the shirt just to have them.
Retailers are raising prices on merchandise an average of 10 percent across-the-board this fall in an effort to offset their rising costs for materials and labor. But merchants are worried that cash-strapped customers who are weighed down by economic woes will balk at price hikes. So, retailers are trying to raise prices without tipping off unsuspecting customers.
"Let the consumer trickery begin," said Brian Sozzi, Wall Street Strategies retail analyst
Retailers have long tried to mask price hikes -- for instance, jacking them up more than needed so that they can offer a "sale" on the higher price. But the new strategies come as merchants' production and labor costs are expected to rise 10 percent to 20 percent in the second half of the year after having remained low during most of the past two decades. Costs can quickly add up: Raw materials account for 25 percent to 50 percent of the cost of producing a garment, while labor ranges from 20 percent to 40 percent, analysts estimate.
Some merchants are making inexpensive tweaks ---- additional stitching, fake button holes, fancy tags ---- to justify price increases. Those embellishments can add pennies to $1 to the cost of a garment, but retailers can charge $10 more for them, said Marshal Cohen, chief industry analyst with market research firm The NPD Group…
Spencer Elmen, owner of Cupid's Lingerie, which operates five stores in Arkansas, said he is seeing more items in his store that are even skimpier than usual, from underwear to mini dresses. He says that's because designers are finding clever ways to conceal the fact that they're clothes have less fabric…
"They're just being more creative with less fabric," Elmen said...
http://finance.yahoo.com/news/Higher-prices-the-big-trend-apf-2391795776.html?x=0&sec=topStories&pos=7&asset=&ccode=
Solution!!!
Don't buy ANY clothes!
How many clothes do people need anyways, I still wear stuff I've had since I was a teenager (I'm 28). Decent qulity stuff should last at least 10 years. Fuck fasion - I never even folled it in prosperous times. Take a look at the people in clothes shops paying $40 for a t-shirt they don't need - worse still look at women (not even rich ones - nurses, teachers, secutarys) paying $800 for a handbag or pair of shoes!
As so many people on this site say: bullets, beans, , guns, PMs, medicines, tradable items like lighters, seeds, maybe some mining stocks...and that's it - don't buy anything else! - ie fancy meal in restaurants, clothes you don't need, expennsive nights out with collegues you don't even like, cinema tickets to see crappy films...forget about all that...and try to take only 3 minute showers too, and don't leave the hot plate on the oven on!
No. The solution is don't WEAR any clothes. Soon we'll be full on "naked news" and everyone will be happy again! Remember "make love not work!"
This week You, the US Taxpayer are playing Let's Make A Deal and here's your host Ben Bernanke!!
-Now for the Big Deal of the Day do want what's behind Door #1, Door #2 or Door #3?
-Door #3 it is! Tell us what's behind there, Timmah.....
-It's a brand new Fiscal Stimulus! Loaded with shovel ready jobs and infrastructure projects it's sure to impress. With provisions for further bank assistance, inventory building and new auto swapping the total value of your deal is: 1 trillion 565 billion and 79 cents!
Why is it so hard for most people to understand that because we did nothing to deal with TBTF and the dark CDS market
that there is no choice at this point in time but to throw money at every problem that could trigger a CDS event. The consequences
of any country or any major bank defaulting would trigger a CDS event that would cause a total world financial collapse.
By the time a solution could be decided on and put into effect, the crisis would get out of hand. Discussing solutions to the
current crisis such as allowing haircuts on bonds of PIIGS without considering the consequences of triggering CDS's is just
foolish prate. The world must first find a solution to the $600 trillion CDS problem before any solution to the financial crisis
can even begin to be discussed seriously. Until then, only bail-outs of all major banks and all debtor nations will prevent
the house of cards collapsing. Therefore, you can expect all central banks to intervene, no matter what public headwinds
they may encounter. If the flack from the public gets too strong, the central banks will simply continue the bail-outs in
secret, behind closed doors. This is not a new revelation, I have been telling my friends this for years. QE has to continue
and the only protection against it is owning PM's.
Can it go on forever though? And if the answer is no, then they might as well just let those CDS unwind. Yes, it will rip the world apart, but it is going to anyway. No one is saying "Oh boy, I got a break, let me unwind some of this mess while I can." Instead, they double down when they see nothing bad happening. The "doubling downs" exponentially "flash mobbing" across the face of the globe is merely winding the spring even tighter. Waiting makes this worse, they should know better.
Almost makes me believe it was done on purpose. I can see it and I am no one special. OF COURSE THEY CAN SEE IT TOO.
Yes, $617 Trillion is a very deep hole. The status quo is to continue as we are and make it a Quadrillion in short order.
The banks played, they lost, they lose. They take the haircut. The more the ponzi goes on the worse it will end. Nationalize the banks, strip out the toxic assets, and re-IPO them. End the Fed, go on gold standard again, and start over. Dramatic, but that's the way out. Throw off the parasitic monetary system, which has many constitutional flaws and irregularities, anyway.
The alternative is financial repression for years, or sudden devaluation of the fiats and people suffer for years -- all just to the pay the banks back and make them whole, at the expense of everyone else. The US and Euro are gold superpowers. Russia, China, Brazil, not so much. We'll be fine.
Iceland, bitches.
Do I give a shit about "global financial collapse". No!
I don't own any of that "finance"-business anyway, on the contrary: People like I, who can think and adapt, will gain from the opportunities arising from the present "elite" and their government enforcers and enablers going bust - and I even dont care about suffering because "they" will suffer more! The ride down is much, much harder than the way up.
Just void all CDS; if they are proper derivatives they should sum up to zero anyway.
The reason that money printing is the "best" solution (from the perspective of our overlords) is simply that it distributes pain as widely as possible. Newton's Third Law is in play:
An enormous amount of credit was extended in a concentrated manner, leading to highly targeted inflation of select assets (real estate). Just as credit can be extended out of thin air, it collapses into thin air through deleverage. The snap return to reality of a popped bubble means heavy concentrated losses as defaults occur and assets are marked to zero. The Grand Game is simply to take those highly concentrated losses (born by the financial sector) and distribute them as widely as possible, to make the broader population pay for it.
We all know it. Although a lot of angry words fly about the ether regarding whether we have deflation or inflation, the truth is, no/in/de flation is irrelevant. Doesn't matter how *flation plays out, the guarantee is that there will be PAIN and that pain will not be felt by those who created the pain. The Grand Game is to offload that pain to the wider population in any way possible. Everything is therefore on the table: snap deflation, then inflation, constant stagflation, sudden default, any could happen.
In keeping with Newton's Third Law, people will push back with a force equivalent to what they are pushed with. Our overlords will therefore use all their "skills" to ensure that pain is metered out in doses that are small enough to push a man as close as possible to his limits without pushing him over. So far, the overlords have been pulling it off in the USA (just a few suicides here and there), but they're badly fucking it up in Europe (austerity induced street riots) and they REALLY fucked it up in the MENA. They live in fear of MENA happening at home. It needs to.
They played it out over hundereds of years in the roman empire. They at least got to let off some steam with some fighting over that period of time. I think the flash mobs are a sign that things are starting to get a damned sight more interesting than I am psychologically ready for. You should see the news casters reporting this stuff. Scares the shit out of them.
Carry em' if you got em.
In their minds the bankers rationalize it that way, spreading the pain was wide as possible, except to them.
But since the banks played and lost, and are a criminal enterprise, they need to be nationalized, broken up, and resold after the toxic debt is taken out, then return to a gold standard. The Fed needs to go away and excorcised with the pertinent clause (30?) of the Federal Reserve Act.
Otherwise the average citizens are going to suffer for years and years, no end in sight. Either a few of the richest of the rich suffer to get this over with quickly, or 300 million of us suffer. Same with Europe. Pottery Barn rules are in play here.
G. Edward Griffin on Debt & Inflation (the author of The Creature from Jekyll Island)
http://www.activistpost.com/2011/08/g-edward-griffin-mandrake-mechanism-and.html
The Mandrake Mechanism. Named after 'Mandrake the Magician' because banks are making money out of thin air.
Which is why Banks, who are 'capitalist', love socialism and the big fat, endless, government social welfare statist spending. War spending, all spending, all deficit spending. Little wonder Wall Street pushes political agents of the banks, like Schumer and Weiner, for more government spending and the Wall Street debt-money train.
"Why is printing money the best solution? Why isn't trying to pick up the pieces after some defaults, a better solution than printing."....ummmm, let's see now....because the debts are really 2 to 3 times the size that's currently being thrown around?!
Shadow Banking Bitchez!
1896 usdollies and climbing , looks like 1900 before the end of the year was a pretty safe call ..... wheres johnny naaaaaadler???
Seems Kind of assinine that people are flocking to treasuries thinking it is a safe haven (hate that term)
dollars crashing and they think it is safe to own more dollars.
Did I get up to early,too much coffee?
Nattering and annoying isn't it? Like a severe itch you can't quite reach.
They, media as well as those licensed financial professionals who know better, keep referring to treasuries as "risk free" when the only risk they are free of is outright default risk on the face value. Of course the treasury/fed will make good on the debt and pay every single cent of that debt with interest, but such default risk is the least of our worries, there is more than one risk involved. The risk that when you redeem your bills, notes, and bonds that they will buy you much less to near nothing when they mature is a far bigger risk, and to be honest risk is not even the right word since it implies at least some fractional aspect of mystery about what the future holds, the loss of wealth via inflation by holding treasuries, even the inflation adjusted TIPs, has no such mystery. There is no question you will lose wealth, the only question is how much wealth you lose.
So, why are so many buying into treasuries? So irrational when they have got to know there will be a huge loss down the road. Herd behavior maybe, but that can only partly explain it, and the more money that piles in the less of a workable answer herding is. I am thinking that the real answer is that it is not a herd buying in at all, it is all the Fed (and ECB and BOJ, PBOC, etc.) and to an extent a few primary dealer banks that would not be doing it without an apocalyptic carrot and stick. There is not even one bank that is clean and healthy, thus being so sick they either play the game they are told to or they are dead.
But, this also all implies that if average people or even hedge funds are buying treasuries it can only be because there are no better alternatives in the investing realm. Think about what that means, that you go to a horse race and intentionally place a losing bet, or should I say place your bet in spite of the fact that you know no horse will win, how bad do things have to be that you would invest in something you know you must lose a portion of your investment upon?
Because any potential gains in equities (or any other investment) will suffer the same loss of future buying power as bonds but also have the real risk of capital loss. Anyway, modern accounting practices make any logical determination of risk/reward futile. Commodities? PM's? You might be able to store some wealth there, but history shows time after time people getting burned doing this, unless you are an insider or have a supernatural understanding of timing, and again, any capital gains will suffer loss of buying power in future. Just add insult to injury if you do have any real gains from that PM trade you will be taxed out of them because you will be the only ones with anything to tax.
People are not as blind as many believe, they see the crumbling infrastructure, they see the people in line at the grocery on food stamps, they see the businesses folding up and ever longer unemployment lines. Figuratively anyway, in fact those things have mostly been made invisible, you can hardly tell food stamps from a debit card now, unemployment is done in private over the phone, but empty shop windows at the mall are real, unmaintained houses in foreclosure are real. Desperation politics (on both sides) are real. And for way too many of us it is not what we see but what we are going through ourselves. Fifty plus million on fixed incomes and at least 12 million with no incomes. Homeowners hostage to underwater mortgages, vast lost equity for those that still have any at all. And prices for everything you can carry feeling more parabolic by the day.
Humanity is more at risk right now than it ever was in the past. The best we can hope for is a medium-term stabilization here or just a little lower in living standards, but long-term the prospects are really dim, and I am an optimist about most things, man is screwing himself badly by allowing this to happen, but then man could fix every possible problem you can think of and still die under the sheer crushing weight of overpopulation which I assure you he will not correct.
What's too big to fail? WASHINGTON DC YOU MORONS. This has never had anything to do with banks "per se." If money is to be printed it's to finance something. Hmmmmm. I wonder what that could be? Oh look! An oil rich country has just collapsed. Move along.
Hearing that Fed will openly allow for the US Dollar to devalue as long as it gets the economy growing and re-target inflation at 4 %. When a depression is staring you in face shock and awe measures need to take place. The real solution out of the Great Depression was that prices were inflated 1000% from 1935 to 1955.
I admit that Field of Dreams was a little out there...but thinking about the movie doesn't get me to "print it and they will come." Where do dead ball players come out to play? Zero Hedge. Once you believe, you will find yourself here. We've wondered in from all over the place. I think I've always believed in goodness. What is new to me is my belief in evil. I see it playing out every day. I am haunted by it (too).
“I see great things in baseball. It's our game - the American game.” Walt WhitmanLet's get one thing straight. The US does not PRINT money. They print debt. The difference being......INTEREST and the inablitly to ever pay it. We continually role it over and just keep paying the interest. If we just PRINTED MONEY, our debt level would be about 1/3 of where it stands......and inflation would be a continual in your face challenge for the insolvent American worker.
So lets, stop kidding our selves when we say the Government prints MONEY.
The Federal Reserve does print/monetize debt when the US Treasury issues bonds. A simple keystroke on the FED computer credits the Treasury's account at the FED creating demand deposits that can then be circulated in the economy. The same practice is done by Foreign Central banks via liquidity swaps it preforms in cahoots with the FED.
So you are right to say our money is debt based mechanism related to the Treasury's ability to issue bonds (New debt), but make no mistake the US can and does print money via the Federal Reserve in their various Open Market Operations.
I agree with your notion that the government prints debt and there is a difference between between printing money and printing debt.
But isn't this ameliorated by the fact that we are printing debt service as well?
Dear Tyler:
Thiese two questions are far, far too intelligent for the USA.
Perhaps a little off the overall topic, but I figured this is probably the best avenue to ask.
"I have to admit, I never understood Field of Dreams. I "get" why it was popular"
Technically due to the literary formula "Field of Dreams" follows, the movie is technically a Hero's Epic even though the timeframe is technically shorter. It's much shorter than other films that follow the formula like 4-6 of the Star Wars trilogy. Similarly, Star Wars 1-3 follows the literary formula of a Hero's Tragedy, which I forget which ancient story this more or less follows between the "Illiad" or Homer's "Odyssey"
Since it's often difficult to understand a films popularity without knowing the formula used, I'm curious; whether, you knew "Field of Dreams" largely follows the literary formula of a Hero's Epic?
First TD and others still using the six billion number... "Steel and energy will go down, but maybe that isn't bad for most of the 6 billion in the world."
If you deal daily in numbers and hope to retain credibility you can stop using the 6 billion number any year now, for several years we have been closer to 7 than 6, but for those that refuse to round even you are out of date as we officially gained our seven billionth human about a month ago. Just a mini rant to get my week started.
As for "PRINT IT AND THEY COME" I have to ask what do you think they have been doing since Nixon was in office and in earnest since Raygun was bending us over and slipping us the stiff end of corporate government? It culminated in the BushCo II years with global debt so huge and so intractable that there is no arithmetic way it can ever be settled, you cannot even arrest it's growth at this point. The investor class no longer needs markets with it's pesky decision making and annoying risks, markets are now nothing more than theater sets painted with absurd accounting to look like the real world. All through the article you post I read what looks to me to be authentic astonishment that our owners would do this to us, and I wonder what planet you have been on the last 30 years.
Did you fail to notice a few weeks ago when as a prerequisite for any budget deal both parties stopped bickering for 2 hours and voted to all but end end any meaningful future COLA's for SS and disabled/retired people? Was there no clue in that for you? And why do they do it? How many were arrested or killed in the riots following that vote? Oh, that's right, there were no riots, in fact I am the only one who seems even to have noticed it, even though it will in our lives be a final dismal end to our already shredded social safety nets.
I suspect that some posts at ZH are tongue-in-cheek, or written to intentionally gather as much reaction as possible. Or, were you seriously credulous when policy makers and the 1,000 or so top corporate execs changed accounting rules so that they could insert any numbers they chose to any place they wanted? Who among us has failed to notice that money is free speech and once that ruling was handed down it became obvious that money was the ONLY speech that would ever be heard again. So to speak. We the people, meaning the non investor class, and by the way if you are reading this you might have some small amount of money "invested" in something, but you are not of the investor class, we the people are in a desert left to wander and fend for ourselves and there will be no manna from heaven, only crumbs from the tables of our owners.
Here is a link to an opinion column at CNBC this morning that opines what the Fed should and might well do at Jackson Hole and in the next few months, it clearly outlines the printing to come, coupled with another article that outlines tax cuts for the wealthy, you do not need to be a genius to figure out what is coming, and all you need to do to be happy even is a suspension of disbelief and a good dose of amnesia regarding past living standards. http://www.cnbc.com/id/44223463 Bernanke May Go For 'Shock & Awe': Pro and also Spending Cuts, Not Tax Hikes, Best for Deficit: NABE
The wealthy have, are, and always will act to protect their status, even at the expense of global destruction. Why do you think underground shelters is such a "booming" business? Complete with faux sunlight and parking spaces for 8 of your most expensive cars? Anyway, other than print, print, print, or else defaults that can only hit the wealthy who own all that paper that suddenly becomes worthless, what other solutions have ever been offered? Debt cannot now be paid down, it cannot now be grown out of, Ron Paul, Dumbledore, and Jesus H himself put together will not fix the financial and economic mess we are in, there will be a reset but till there is there will be welfare for the super rich, and it will be real wealth that is transferred, dynastic wealth that the plebs cannot touch. Want to see where we are going? Head to Tijuana for a few days, but keep in mind the wealthy that own 99.9% of all wealth there do not live in the shit and the mire with the unwashed. Want a cheaper way to see it? Rent Fritz Lang's 1927 silent classic Metropolis, I like the version with the Queen soundtrack.
Many of these rabid free-market advocates constantly chirp about government involvement and spending, yet if it helps their portfolios they're all for it. They also seem to be for bank bailouts since I didn't see any of them clamoring to let the TBTF deal with their losses the good old fashioned free market way. There is more socialism going on in the 'free markets' then there are for .. uh .. actual social issues.
As long as the Whiz Kids here at ZH can't see the connection between the Fed's astonishing and continual printing of money and Peak Oil, no one here will know what's really happening until it's too late to duck.
But there's absolutely nothing anyone can do about Peak Oil. Except accept its reality and drift further and further into the morass that Peak Oil will become. The earth living every year with less and less petroleum.
A career in the Military is the only way to go.