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Guest Post: Psychoanalyzing The Fed

Tyler Durden's picture





 

Submitted by Charles Hugh Smith from Of Two Minds

Psychoanalyzing The Fed

Few of the many analyses on Federal Reserve policy consider the psychology of diminishing political and financial returns of Fed promises.

Rather than regurgitate the usual economic analysis of the Fed's policies, let's hazard a psychoanalysis of the Fed. Given the primacy of psychological factors in human behavior, it is astonishing how little attention is paid to the psychology of the Fed's statements and policies.

Zero Hedge offered just such a psychological insight (with a deliciously Freudian twist) with this question: Does the Fed need to re-instill some discipline in order to regain its omnipotence? Why (For The Fed) It Is All In The Foreplay

Exactly. Subservience is a slippery slope, and if the Fed "caves in" to market demands for a massive QE campaign, then where is the Fed's vaunted autonomy? It's gone. So what happens in a few months when the market is once again in danger of rolling over? Will the Fed cave in again and issue more QE? If it doesn't, the market reaction will be violently negative, and the Fed will get blamed for the catastrophic decline.

You see the positive feedback loop of Fed subservience: the longer the Fed puts off regaining autonomy, the more disruptive their refusal to obey the market will be.

The more they appear to meekly comply to the demands of the market, the greater the pressure will be on them to continue giving the market what it now needs to continue rising: QE.

The only psychologically wise choice is to nip Fed subservience to the market in the bud before it becomes even more destabilizing.

ZH's reference to Fed omnipotence raises a critical question: what happens to the Fed's power to manage market behavior with mere words if they launch QE3 and it fails to move the market? Jawboning, promises and threats are the primary tools of "perception management," and Bernanke has masterfully manipulated perceptions with promises of future QE "should the need arise" for the past 15 months.

If he unleashes a tsunami of "free money" (QE3) and the market spikes up and promptly rolls over into a decline, then his power will be destroyed in three ways:

1. The promise/threat of more QE has been eviscerated; jawboning has lost its power and will only make the Fed chairman look silly and irrelevant.

2. QE itself will be revealed as the victim of diminishing returns: everyone will understand that QE4 will be a failure.

3. The Fed's omnipotence will be revealed as illusory.

Imagine the addictive rush of being globally relevant. Now imagine losing that power. The Fed only remains relevant, domestically and globally, as long as QE and its other "unconventional" (and now utterly conventional) policies exert a powerful magic on the market and economy. If these policies are perceived as failures, the Fed's relevance vanishes--along with the addictive rush experienced by its leaders.

The Fed has foolishly backed itself into a corner. In essence, what Chairman Bernanke and the other easy-money "doves" on the Board have said is this: "We have the power to move the market and economy. We will use this immense power when we feel the need to."

Now the stock market is calling their bluff: "Oh, so you have this great power, huh? Well, you better use it right now, or I'm going to throw a fit and collapse!"

By constantly talking up the success and power of his policies, Bernanke has backed the Fed into a corner: either it proves its power is as potent as it has constantly promised, or the power of the promises will fade.

Bernanke has also backed the Fed into a corner by essentially promising that the Fed can bail out the market and the economy while gridlocked Washington burns trillions. What Bernanke has said: "Our policies have worked, and will continue to work magic."

What he should have said: "We have done all we can. The Fed cannot solve fiscal problems or structural problems in the economy. That is up to the President and Congress, the elected leaders of the nation."

Having foolishly made grandiose claims of supernatural powers, Bernanke now has to deliver on those grandiose claims or be stripped of power.

Some have suggested that Bernanke is frustrated by Washington's gridlock and inaction on the "fiscal cliff," but he himself has played the enabler of Washington's denial and addiction to borrowed trillions.

If Bernanke shoots his QE wad here with the stock market at multi-year highs, what will he do for an encore when the market falters? Once again Bernanke has created a positive feedback loop: the more QE he pushes into the market at its highs, the more vulnerable the market is to steep declines when the QE runs out.

If he promises a steady drip of QE cocaine, what happens when the market declines anyway? Announcing any QE at market tops leaves fewer "surprises" available at market bottoms. Bernanke will have expended his high-power ammo and be facing the rampaging Bear with a dull Swiss Army knife he picked up in Davos.

Is Bernanke a stud or a wimp? Most of us never get close to the sort of power Bernanke wields, and so we must explore the psychology of those who revel in power, regardless of their public persona of calm modesty.

People with power want to retain their power. Having backed himself into the corner in two ways, Bernanke is extremely vulnerable politically. If he launches a massive, sustained QE, he will rightly be perceived as acting solely to get President Obama re-elected. (Wouldn't the Democrats accuse him of that were the sitting president Republican? Of course they would, loudly and vehemently.)

If he launches QE and the market declines because QE has already been priced in, he will be perceived as a failed Fed chair and will eventually be asked to step down, i.e. fired. That's not the legacy he desires, but he has backed himself into a corner: having over-promised, he can only under-deliver.

Does Ben Bernanke want to be perceived as a wimp who caves into the market's every demand? Once again, he has backed himself into a corner by touting the stock market's rise as evidence that his policies have succeeded. Having tied his policies to the market, he now faces the possibility that a market decline will be rightly viewed as a failure of his policies and leadership.

Having taken credit for the market's spectacular rise, he will now be held responsible for its decline. Bernanke has made all the classic errors of the grandiose ego: over-claiming credit and over-promising on the effectiveness of his "magic."

Admitting the Fed is not all-powerful would have diminished his perceived power, but it would have increased his real power because he would be viewed as a truth-teller. But in claiming a magic and power he does not have, he has set up the classic pitfall of promising what cannot be delivered.

Diminishing returns and unrealistic expectations make a volatile pairing. Having raised expectations to the stratosphere even as the real-world returns on his policies have been diminishing, Bernanke now faces an explosive gap between what he has promised and what can actually be delivered.

There is one last irony in Bernanke's constant promotion of his powers to unleash QE. Having talked up the market for years with his promises/threats of QE, the market has priced in ever higher doses of QE, in effect bidding expectations of QE's effectiveness to the sky.

Bernanke has lost the power to surprise the market. Having raised expectations to the sky, he must deliver something beyond the stratosphere to surprise the market. But he doesn't have anything capable of matching the absurd expectations he's inflated, never mind exceed them.

The only surprise left is a negative one. Chairman Bernanke and his fellow doves will soon realize the consequences of over-promising and under-delivering. It works better the other way around, but now it's too late.

 


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Thu, 09/13/2012 - 15:04 | Link to Comment HelluvaEngineer
HelluvaEngineer's picture

Right.  Please short now.  Drive the market up even higher as you cover.

Thu, 09/13/2012 - 15:06 | Link to Comment camaro68ss
camaro68ss's picture

Bernake, what a ass clown

Thu, 09/13/2012 - 15:24 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

Bernanke's a Fabian Socialist but I digress same thing I guess as an ass clown.  Santelli already exposed the ass clowns psychology.   You are right Charles Hugh Smith it's too late.

Santelli Exposes The Political Fed Behind The Curtain As Romney Makes Bernanke A Target

Rising Market Means Obama Wins

 

Thu, 09/13/2012 - 15:53 | Link to Comment optimator
optimator's picture

They'll sell the market before the election, make a bunch of bucks, and put Natan Yahoo's buddy Mitt in office.  Good planning so far.

Thu, 09/13/2012 - 15:19 | Link to Comment Assetman
Assetman's picture

Engineer... your comment actually got a nice chuckle out of me.... thanks!

Thu, 09/13/2012 - 15:04 | Link to Comment fonzannoon
fonzannoon's picture

Enough with the psychoanalysis. It's over. Showed his hand today. It's inflate or bust.

Thu, 09/13/2012 - 15:08 | Link to Comment HelluvaEngineer
HelluvaEngineer's picture

Correct.  Get what you and your family need.  Now.

Thu, 09/13/2012 - 15:27 | Link to Comment crusty curmudgeon
crusty curmudgeon's picture

To all those who keep saying, "I ought to buy gold/silver" but haven't got around to it (and I know there are LOTS of you out there), I suggest you consider HEs advice.  Oh, I know, you're waiting for the price to drop one last time, or for you to pay off your car, or for your wife's sister's brother to show you his collection of silver dollars....blah, blah, blah. 

When buying and selling are controlled by legislation, the first things to be bought and sold are legislators. —P.J. O'Rourke

Thu, 09/13/2012 - 15:31 | Link to Comment Colonel Klink
Colonel Klink's picture

+1 for the quote alone

Thu, 09/13/2012 - 15:50 | Link to Comment IndicaTive
IndicaTive's picture

Guilty...sort of. I'm in the "haven't bought enough" crowd. I can only afford a couple hundred bucks at a time.

Thu, 09/13/2012 - 16:02 | Link to Comment crusty curmudgeon
crusty curmudgeon's picture

You are definitely not guilty of being in the group I was aiming at.  I never feel I've bought enough.  You remind me of a quote...

“The fundamental cause of trouble in the world today is that the stupid are cocksure while the intelligent are full of doubt.”  Bertrand Russell

Thu, 09/13/2012 - 16:26 | Link to Comment IndicaTive
IndicaTive's picture

Thanks Crusty, and excellent quote.

Thu, 09/13/2012 - 17:46 | Link to Comment mbarido
mbarido's picture

+10

Where are all those doubtful worldly people?

Thu, 09/13/2012 - 18:58 | Link to Comment 20-20 Hindsight
20-20 Hindsight's picture

I confess that I'm one of those worry warts, Crusty.  I fear that I may have missed the gravy train.  Gold has skyrocketed in the past ten years and reached unpredecented heights.  For a neophyte such as myself, this is scary, as it is counter-intuitive to the maxim "Buy low, sell high."  

Why is gold different in this case?  Is there not a high risk that gold could come crashing down, as it did in 1980, when an ounce of gold reached $850 at its apex, only to spiral down and stay low for the next twenty years.  If I'm not mistaten, gold was only selling at about $270 approx. ten year ago.  

If we apply the same potential negative scenario, this could mean that the current value of gold at approx. $1770 today could potentially hit a wall and tumble down quickly, like it did in 1980.  I just have difficulty trusting all those rich "one percenters", who might decide to pull the rug from under our feet overnight and leave small investors such as myself left holding the bag... again.  I'd be interested in getting your views (or anyone else's for that matter)...  

Thu, 09/13/2012 - 19:34 | Link to Comment crusty curmudgeon
crusty curmudgeon's picture

First, pay no attention to where gold was.  You can't figure out where gold will be based on where it was.  That's true with gold and it's true with stocks.  To all you technical chart analysts:  you're frauds, whether you realize it or not.  You can make all kinds of fancy names (head and shoulders, giant dildo, I don't care...) and you can draw all kinds of silly lines and convergence/divergence patterns, but in the end, my friggin' astrologist, who can't seem to pick lottery ticket numbers to save her life but I'm sure is otherwise extremely brilliant and prescient, can pick stocks better.  I wish I had a nickel for every poor soul who was convinced gold was in a bubble because it was $650...or $800...or $1000...  I am not joking--I've had conversations with people at these price points...all of whom wanted to buy gold but decided it had gone up too much.  IT DOESN'T MATTER WHERE IT'S BEEN!  Stop crying over spilled milk--it detracts from one's ability to think rationally.

What does matter is whether gold is in a bubble.  What do bubbles look like, historically?  What evidence is there of gold being in a bubble?  You have to decide these things for yourself.

Second, what premises do you believe in?  Why do you think gold might be a good value right now?  Why would it drop?  If it drops, how far is it likely to drop and for how long?  If non-market interferences are suppressing or supporting the price of gold, are they temporary or permanent?

Finally, why do you want to invest in gold?  How long will you hold it? 

As I said a few days ago (after a spike in the price of silver), there are three truths today:  (1) it is a good day to buy silver & gold.  (2) it would've been better to buy yesterday.  (3) it's a great day to buy silver and gold.

If you decide gold is a good investment, do not worry if the price goes down--look at it as a buying opportunity.  When you see the price crash, resist being bummed and instead get excited and take action--buy!!  Don't say, "this would be a good time to buy."  Buy!!

Oh, and I strongly recommend the "Alpha Strategy" (http://pix.cs.olemiss.edu/econ/alphaStrategy.pdf).

Sorry for the long post.  Cheers!

“Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so.” — Douglas Adams

 

Thu, 09/13/2012 - 20:25 | Link to Comment 20-20 Hindsight
20-20 Hindsight's picture

Thanks, Crusty, your logic is impeccable.  One thing is certain right now: my investments have been doing crap for the past five years, so I'm looking at a potential golden opportunity right now.  Time to take a leap of faith, I think...

Thu, 09/13/2012 - 20:26 | Link to Comment 20-20 Hindsight
20-20 Hindsight's picture

Thanks, Crusty, your logic is impeccable.  One thing is certain right now: my investments have been doing crap for the past five years, so I'm looking at a potential golden opportunity right now.  Time to take a leap of faith, I think...

Thu, 09/13/2012 - 21:26 | Link to Comment crusty curmudgeon
crusty curmudgeon's picture

Thanks for the kind words.  I re-read my post and it sounds a bit preachy.  Sorry.

Good luck!

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. . . .  This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.”  Alan Greenspan

Thu, 09/13/2012 - 19:42 | Link to Comment grid-b-gone
grid-b-gone's picture

This will still take a couple years to play out, given that other major world fiat currencies are in even worse shape.

Today's Fed move sends the unfortunate signal, "Yes, I am a one-trick pony."

This guy makes a good case for PMs, but is obviously talking his book after betting big on silver seven years ago. The later segments get repetitive, but segment nine, a history of when things have gotten bad, is telling.

Like the S&P that historically bottoms at P/E = 4, it is a reasonable argument that precious metals will revisit their historical relative value during a reset.

Sadly, Bernanke could avoid much economic pain by moderating deleveraging instead of trying to avoid it. Today's move is evidence that will not happen.

Bernanke's pseudo-Keynesian mantra is, "Two steps forward, one step forward."

Thu, 09/13/2012 - 15:10 | Link to Comment Hype Alert
Hype Alert's picture

I guess now that we are on open ended QE it will be up to Draghi to jerk the markets around.

Thu, 09/13/2012 - 17:15 | Link to Comment grid-b-gone
grid-b-gone's picture

I think it's even simpler than that. His current boss has indicated he'll keep him on. The contender favors a somewhat stronger dollar  to maintain it as the world's reserve currency. He's also signalled a possible Fed head change.

Bernanke is in the strange position of being able to use OPM to help ensure he keeps his job. 

Until today, the Fed would always defer significant changes until after an election. We used to get the blandest Fed statements during the months leading up to an election. Now we get a significant policy announcement. 

The Fed just went the way of the Supreme Court today - not really caring if its bias is apparent.

Thu, 09/13/2012 - 15:05 | Link to Comment Snakeeyes
Snakeeyes's picture

It is easy. Bernanke is the Cookie Monster and loves to dispense sugar cookies to investors in stocks. No nutritional value to the economy, but this is an election year.

http://confoundedinterest.wordpress.com/2012/09/13/fed-pulls-the-trigger...

Thu, 09/13/2012 - 15:05 | Link to Comment mewenz
mewenz's picture

feel lucky you have lived in the period where economics truly became a science.  All it took was the removal of market based pricing and of the silly notion that time has value.

In it's place we have finally learned, that prices are best set by a well educated man with a beard and a former investment banker

Thu, 09/13/2012 - 15:24 | Link to Comment odatruf
odatruf's picture

mewenz - you are missing the subtle nuance. Time does indeed have value; too bad for those who are used to the old normal that its value is negative.

 

Thu, 09/13/2012 - 15:05 | Link to Comment Robot Traders Mom
Robot Traders Mom's picture

I don't think you can "psychoanalyze" a psychopath...

Thu, 09/13/2012 - 15:24 | Link to Comment Colonel Klink
Colonel Klink's picture

Very close RTM, the correct term is sociopath.

Thu, 09/13/2012 - 15:06 | Link to Comment lolmao500
lolmao500's picture

Or you know, he could shot himself.

Thu, 09/13/2012 - 15:47 | Link to Comment optimator
optimator's picture

He'd miss.

Thu, 09/13/2012 - 16:01 | Link to Comment NotApplicable
NotApplicable's picture

I'm sure all of those puppet strings would get in his way.

Thu, 09/13/2012 - 15:06 | Link to Comment Timmay
Timmay's picture

There is no need to "surprise" the markets any more, he just bought them. "There are no markets anymore, only interventions".

Thu, 09/13/2012 - 15:08 | Link to Comment LongSoupLine
LongSoupLine's picture

Here's the simple analysis...

Absolute power.
Corrupt
Mandate to serve big banks.
Congressional backing.

The only solution is his forceful removal by those not in power.

Thu, 09/13/2012 - 15:09 | Link to Comment roadsnbridges
roadsnbridges's picture

I'm going all in at VXX at 2.  Fuk it.

Thu, 09/13/2012 - 15:11 | Link to Comment Ineverslice
Ineverslice's picture

W h a t e v e r .

Thu, 09/13/2012 - 15:11 | Link to Comment Milton Waddams
Milton Waddams's picture

If you accept that QE is essentially a program to push asset prices higher and if one takes Bernanke at his word that the Fed will only cease QE when the labor market improves; it seems the interests of the rentier class are best served by holding back hiring as much as possible.

Thu, 09/13/2012 - 15:12 | Link to Comment AvenoSativo
AvenoSativo's picture

If Bernanke shoots his QE wad here with the stock market at multi-year highs, what will he do for an encore when the market falters?

 

There is a phenomenon called "post orgasmic depression (POD)". Don't know, though, when the after-glow ends and the POD starts.

Thu, 09/13/2012 - 15:25 | Link to Comment odatruf
odatruf's picture

We are all POD people, now.

Thu, 09/13/2012 - 16:01 | Link to Comment optimator
optimator's picture

Use his other passport to get away!

Thu, 09/13/2012 - 15:14 | Link to Comment Everybodys All ...
Everybodys All American's picture

There is only one answer. End the Fed.

Thu, 09/13/2012 - 18:38 | Link to Comment falak pema
falak pema's picture

there is only one question : who will bell that cat?

Thu, 09/13/2012 - 15:15 | Link to Comment roadsnbridges
roadsnbridges's picture

Go HL!  Holy Moley!

Thu, 09/13/2012 - 15:21 | Link to Comment hannah
hannah's picture

first off, the fed is the market and second ,if the fed stops qe then the whole stinking pile collapses to zero...so what choice does the fed have...none. what is the point of this story...? the fed cant regain control of something it never had control of.....

Thu, 09/13/2012 - 15:18 | Link to Comment HaroldWang
HaroldWang's picture

I disagree. They're in this with MBS purchases. There are plenty of other tools/bullets for them to use if/when needed. Not that I agree with it but they can do many other things.

Thu, 09/13/2012 - 15:22 | Link to Comment hannah
hannah's picture

name a tool other than printing....that is all they can do. period.

Thu, 09/13/2012 - 15:18 | Link to Comment DaveyJones
DaveyJones's picture

psychoanalyzing the Fed requires a mental health professional with significant experience in the criminal justice system 

Thu, 09/13/2012 - 15:21 | Link to Comment max2205
max2205's picture

I just love the reason he gave for keeping our grandparents from getting any interest....this guy needs prison time

Thu, 09/13/2012 - 15:26 | Link to Comment Colonel Klink
Colonel Klink's picture

It's extremely difficult to psychoanalyze sociopaths!

Since many are PM holders, they say not to look a gift horse in the mouth, however it's difficult not to when you wonder why he breath smells like shit.

Thu, 09/13/2012 - 15:23 | Link to Comment Traianus Augustus
Traianus Augustus's picture

The Fed has proven that it never has to give a negative surprise.  The gift to all central bankers is to continue to let them provide fiat currency regardless of the depreciating value.  They continue to hold all the cards and will never voluntarily give up that power.  No further analysis needed.

Thu, 09/13/2012 - 15:24 | Link to Comment nick howdy
nick howdy's picture

I wonder what those bank$ters will invest in with all that fresh fiat.....

Thank God food and energy isn't counted as inflationary or else we'd all be in trouble..

I cant wait to pay for my first $9.00 gallon of gas..

 

 

 

Thu, 09/13/2012 - 15:29 | Link to Comment Colonel Klink
Thu, 09/13/2012 - 15:38 | Link to Comment dark pools of soros
dark pools of soros's picture

by law they can only change the price once in 24 hours.... so i bet they will be the cheapest by end of Benny's coming out party today

Thu, 09/13/2012 - 15:40 | Link to Comment nick howdy
nick howdy's picture

No I escaped 6 years ago..I ain't ever goin back....

Thu, 09/13/2012 - 15:57 | Link to Comment Colonel Klink
Colonel Klink's picture

Smart man, I escaped the District of Crime about 10 years ago.

Thu, 09/13/2012 - 15:42 | Link to Comment nick howdy
nick howdy's picture

Oh the Lukeoil protest...Yea I heard about it..

Thu, 09/13/2012 - 15:29 | Link to Comment El
El's picture

You won't have to wait long. When I woke up this morning, the gas station closest to my home was at $4.099.

Thu, 09/13/2012 - 15:25 | Link to Comment lsbumblebee
lsbumblebee's picture

Acute paranoid schizophrenia with narcissistic personality disorder and transvestic fetishism?

Thu, 09/13/2012 - 15:30 | Link to Comment Colonel Klink
Colonel Klink's picture

You forgot the dwarf fetish part and the SEC, supporting the little people!

Thu, 09/13/2012 - 15:26 | Link to Comment Sutton
Sutton's picture

This is it,folks.  He pressed the Red button marked LAUNCH.  He can't back off, ever.  It will now go to and end  in catastrophe for us.  If/when markets falter he will order more and more QE until he is removed from his office like our man in Libya.

Thu, 09/13/2012 - 15:31 | Link to Comment dark pools of soros
dark pools of soros's picture

It's simple, Ben print the first pile for himself and front runs everything then hands the rest out 

Thu, 09/13/2012 - 15:31 | Link to Comment AR
AR's picture

Throughout history, when men of either earned, or perceived power lose their creditability it is sad, if not pathetic.  Anyone who just watched Bernanke's news conference just witnessed a "beaten down man" who was nervous, short of breadth at times, and whose answers were often irrelevant or incoherent.

On a macro basis, the imbalances continue to grow.  If one listened carefully, the most powerful Central Bank in the world paraded their King out in front of the world to essentially say this:  …that we will do whatever it takes, for however long it takes, under any circumstance, for any and all extended time frames… 

Bernanke's Message & Interpretation:  We are impotent, and the only solution we now have for all of you after 4 years is to spew you more bullshit.

This charade will go on.  The pertinent question is for how long?  Will it end badly?  YES, absolutely.  Why?  Because the world has "no real leaders" anymore, and the insane now run the asylum.  It is always very dangerous when people like Bernanke and the politicians we have today wholeheartedly actually begin believing in their own bullshit.  Good luck everyone.

PS:  CD, we hope you are well...

Thu, 09/13/2012 - 15:38 | Link to Comment wezen
wezen's picture

I have a basic question about all these bearish comments on the stock market.  I agree that the US dollar is going to weaken substantially over the next few years.  So, why would the nominal value of the stock market fall?  In real terms, it should fall.  But, if the US dollar devaluation is substantial then the stock market could actually rise a lot in nominal value (i.e. Zimbabwe).

Many people on this site insist the stock market is being manipulated upwards and will eventually fall.  Why bother making bets when it seems like the nominal value can go either way? 

Thu, 09/13/2012 - 15:42 | Link to Comment optimator
optimator's picture

Bank(sters) get wired money they don't even have the time to Heidelberg, Banks wire to market, banks make money, Banksters get bonus.  When us little people are broke all we'll be able to do is sit back and watch all the armed drones protecting us..

Thu, 09/13/2012 - 18:36 | Link to Comment itstippy
itstippy's picture

Stock prices are ultimately tied to the underlying corporations' profitability.  If the corporations aren't profitable their stocks plummet.  Think General Motors, Sears, Facebook.

To be profitable the corporations must take raw materials (commodities), transform them into finished products (goods or services), and sell them to consumers who want and can afford them (aggragate demand).

If the stimulous bucks don't hit the real economy, but instead go into commodity speculation or other areas, the consumer demand isn't goosed.  No one buys the corporations' products.  Profits tumble.  Stock values go down. It turns into a vicious cycle.

There is no transfer mechanism to get the Benny Bucks into the real economy.  Buying more Mortgage Backed Securities ain't gonna do it.  It won't create jobs or increase working-class incomes.  The new QE3 dough will help the financial sector delever (C, BAC, etc.).  It won't help manufacturing or retail; in fact if commodities skyrocket the input costs will decimate corporate profits and stock prices.

 

Thu, 09/13/2012 - 15:42 | Link to Comment robertocarlos
robertocarlos's picture

What the hell do you know about printing, Bernanke? You're from godamned New Jersey! 

Thu, 09/13/2012 - 15:44 | Link to Comment Racer
Racer's picture

One word..

Psychopaths

Thu, 09/13/2012 - 15:52 | Link to Comment falak pema
falak pema's picture

lol, an image comes to mind on this theme :

Tarzan Ben and Cheetah shrink! 

Thu, 09/13/2012 - 15:53 | Link to Comment WhiteNight123129
WhiteNight123129's picture

 

 

  1. Bernanke is doing a currency devaluation which affects currency price versus hard assets. (This is not inflation).
  2. There is a bit of increase in circulation, not much (nominal increase in GDP, this where one should measure inflation). There is a tiny bit of wage inflation in nominal terms, and decrease in real terms. The increase in circulation is not the mirror inverse image of the currency devaluation.
  3. Bernanke is scaring the shit out of Corporations to waste their cash by lowering their thresold of internal rate of return and waste it and that way increase a bit the circulation (wages). That is transfer to consumers back from corporations by employing people for meager IRR.
  4. Bernanke is conning the equity and bond holders in making them believe that he is their friend. In medium to long term, they get fucked by poor IRR projects, while in 5 years they will have massive stagflation. The consumer will repay his mortgage scott free. 
  5. We are all going to save Bernanke´s ass when the time will get tough, because when prices of Gold and Silver go parabolic because the masses will wake up, we are going to go full force dishoarding our PMs. This will prevent a total collapse of the system.
  6. We will wink at Bernanke and tell him, see you next time old friend.
  7. Bernanke and politicians are the friends of the speculator, this is a bizarre love hate symbiotic relationship. If we had a Gold standard how could we speculate? We would have to find a real job.

 

 

 

 

 

Thu, 09/13/2012 - 15:56 | Link to Comment saycheeeese
saycheeeese's picture

i'am curious to read about Bernanke's record in... 10-20 years. What are your thoughts?  positive or negative?

Thu, 09/13/2012 - 16:06 | Link to Comment Racer
Racer's picture

ROFL.....

Thu, 09/13/2012 - 16:10 | Link to Comment Bartanist
Bartanist's picture

Normally I can relate well to CHS posts. This one, not so much. I am not sure it I have changed or, if for some reason, CHS has made an "out of character" post. Generally the implications behind a CHS post are much greater than the post itself. Here it seems the opposite. It seems trivial.

And now, the esoteric part: 320,000ish years ago they came here, long before that having conquered physical death. 130,000ish years ago they created man in their image mostly because everything else living was useless to them. Since man was created, they have endured 5 cycles of just over 25000 years. Roughly 3 cycles ago man created the pyramids. The pyramisd, among other things, were monuments intended to stand forever and transcend the cycles.

Based on the shadows upon the wall, they are still here ...ever vigilent to not repeat the mistake that lead to the tower of Babel incident... and most likely many more mistakes before... do gods make mistakes?

Thu, 09/13/2012 - 16:13 | Link to Comment yogibear
yogibear's picture

Bernanke already revealed his cards. Prinnting. He even said so. His solution was to counteract the natural forces with massive inflationary printing. 

His plan is to in-step with Europe and other countries just print. He will keep printing until there is a positive reaction.

With all the debt he can never pull back the debt buying/printing. Otherwise rates go up and it would kill the US with all it's debt. 

Keep on buying debt and hope nobody realizes the US dollar is really being trashed and other countries deciding  not to accept it anymore.

Thu, 09/13/2012 - 17:51 | Link to Comment mantrid
mantrid's picture

looks like Bernanke has worn off

time to get a new pair of shoes

Thu, 09/13/2012 - 18:37 | Link to Comment Bunga Bunga
Bunga Bunga's picture

Get over it, Wall St needs Obummer. Romney/Ryan want cut government deficit (deflationary) and even flirt with a gold standard (barbaric). Absolute NOGO for Wall St. Obummer is it!

Thu, 09/13/2012 - 20:42 | Link to Comment orangegeek
orangegeek's picture

I've seen these markets before through indepth analysis of a Seinfeld episode.  In short, I think we are in the midst of a bizarro stockmarket.

 

ELAINE

Yeah! An' he is a friend, Jerry. He is reliable. He is considerate. He's like your, exact opposite.

JERRY

So he's Bizarro Jerry!

ELAINE

[pause] Bizarro Jerry?

JERRY

Yeah. Like Bizarro Superman. Superman's exact opposite, who lives in the backwards bizarro world. Up is Down. Down is

Up. He says "Hello" when he leaves, "Good bye" when he arrives.

 

 

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