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Hilsenrath Speaks: "Fed Prepares To Act"

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Wed, 09/07/2011 - 21:09 | 1644306 navy62802
navy62802's picture

Gold!! The ultimate hedge against the Federal Reserve.

Wed, 09/07/2011 - 21:56 | 1644493 Ahmeexnal
Ahmeexnal's picture

Option 4:  "Operation Viagra".  Pump the stock markets so they end up with huge erections at the close.

Thu, 09/08/2011 - 00:55 | 1644968 spiral_eyes
spiral_eyes's picture

@Tyler:

Why do you say eliminating interest on excess reserves would wreak havoc in money markets? It's not a long-term norm. It was only introduced in 2008, and then we went through two (or debatably three) programs of QE and all that extra cash — instead of getting loaned to businesses — is sitting there, and the Fed pays interest on it, fuelling the liquidity trap. 

I'm not saying that suspending interest on reserves will solve all of America's problems, but if it's preventing lenders from lending to businesses because it's easier for them to sit on the cash, isn't paying interest on it kind of rigging the market to just sit there and hold cash? Shouldn't the Fed stop it?

Plus, I'd say it was a transfer of wealth from the taxpayer (profit returned to the treasury at the end of the year) to banks...  

Wed, 09/07/2011 - 23:25 | 1644742 Dingleberry
Dingleberry's picture

"The Fed will act"

To which I reply, "Gold will act, too"

Wed, 09/07/2011 - 21:12 | 1644317 Careless Whisper
Wed, 09/07/2011 - 21:58 | 1644498 navy62802
navy62802's picture

The people are angry. That's the 1000 pound guerilla in the room of which no one dares speak his name. People are angry, and the more economic injustice they are made to endure, the more that anger will grow. There's a tipping point, we just haven't found it yet.

Wed, 09/07/2011 - 23:01 | 1644678 StormShadow
StormShadow's picture

+308

Wed, 09/07/2011 - 21:15 | 1644325 urbanelf
urbanelf's picture

QE3 will come in one of the pre-chosen forms. During the Rectification of the Vuldronaii, QE came as a large moving Torb! Then, during the Third Reconciliation of the Last of the Meketrex Supplicants, they chose a new? form for QE: that of a giant Sloar! Many Shubs and Zulls knew what it was to be roasted in the depths of the Sloar that day, I can tell you!

Wed, 09/07/2011 - 21:24 | 1644358 Ned Zeppelin
Ned Zeppelin's picture

Now, that's funny. 

Wed, 09/07/2011 - 21:39 | 1644439 Cash-NonCash
Cash-NonCash's picture

WAAAHAHAHAHA!!!

Thank you so much UrbanElf, that was the best post I've seen all week!

Wed, 09/07/2011 - 22:23 | 1644575 Id fight Gandhi
Id fight Gandhi's picture

I choose the stay puff marshmallow man. Idk it just popped in there.

Thu, 09/08/2011 - 00:03 | 1644820 akak
akak's picture

QE3 will come in one of the pre-chosen forms. During the Rectification of the Vuldronaii, QE came as a large moving Torb! Then, during the Third Reconciliation of the Last of the Meketrex Supplicants, they chose a new? form for QE: that of a giant Sloar! Many Shubs and Zulls knew what it was to be roasted in the depths of the Sloar that day, I can tell you!

Having solved our economic woes, our glorious leader will then lead us into war against the blasphemous Engtalian enemy under the banner "The Gostak Distims the Doshes!"

All hail the Gostak!

Wed, 09/07/2011 - 21:15 | 1644328 TradingJoe
TradingJoe's picture

Aka for now NO NEW CASH/MONEY etc as in all of the above won't do shit for jobs OR Wall Street ergo.....QEx Not Just Now! maybe later :)))

Wed, 09/07/2011 - 21:27 | 1644380 sun tzu
sun tzu's picture

It won't do shit for main street, but it will prop up wall street and the megabanks.

Thu, 09/08/2011 - 00:05 | 1644859 SheepDog-One
SheepDog-One's picture

TradingJoe, Im fed up with this crap now that some bond rate hand holding program passes for 'QE3', this is straight up bullshit, 'QE3' has been a couple $trillion priced into every bad piece of news since January.  Operation Carrot and Stick is all theyve got and this is not QE they fall a couple trillion short. 

Wed, 09/07/2011 - 21:20 | 1644346 johngaltfla
johngaltfla's picture

Option 1 will result in an inverted yield curve and collapse of about 30% of the nation's regional banks with questionable reserves and weak real estate holdings.

Option 2 only works if the Swedish model is implemented in full with the nationalization of the insolvent institutions and forced consolidation which the Dodd-Frank legislation allows the Fed to pursue.

Option 3 is just more bullcrap.

Thus 3 will probably be the decision as the Bernank ain't got the balls to commit to #1 or #2.

Wed, 09/07/2011 - 21:33 | 1644414 sun tzu
sun tzu's picture

They might monetize and twist at the same time in a coordinated effort with the ECB. The masses will be taxed to save the banks. The tax will be in the form of inflation

Wed, 09/07/2011 - 21:52 | 1644452 DormRoom
DormRoom's picture

your half right about inflation.  There will be a short term rise in inflation expectation, not inflation, but long-run inflation will be mute, if the velocity of money is controlled.

 

The Fed is doing what the BOJ didn't do in the 90s: keep interest rates low, so households can continue to deleverage.  However for the policy to be effective, it requires fiscal stimulus, to help household rebuild assets. Both sides of the ledger must be acted on, which is why the brinkmanship in Congress, is so destructive for the middle class.

Most of the money the government spends on fiscal stimulus, assuming a moderate multiplier effect, would be recouped from VAT (value added taxes), and income taxes, from increased economic activitiy (think of a multiplier effect as a viral effect--going viral) through-out the nation.  So the NET cost of the fiscal stimulus would be far far less than the initial cost. Moreover, households on the precipice would be able accelerate the pace in which they  can repair their balance sheets.

 

 

Wed, 09/07/2011 - 22:22 | 1644573 Bicycle Repairman
Bicycle Repairman's picture

"would be recouped from VAT (value added taxes)"

LOL.

Wed, 09/07/2011 - 22:24 | 1644578 Id fight Gandhi
Id fight Gandhi's picture

Value added tax is an oxymoron

Thu, 09/08/2011 - 10:38 | 1646019 Bicycle Repairman
Bicycle Repairman's picture

Orwellian double-speak at it's finest.

Wed, 09/07/2011 - 22:32 | 1644603 whstlblwr
whstlblwr's picture

How has it worked so far? Look at gas prices right now. Interest rates low so households can deleverage? WTF you smoking? Many households aren't paying mortagage and get food stamps and benefits. Stop reading your papers and go out in real world to open eyes.

Thu, 09/08/2011 - 04:07 | 1645271 narnia
narnia's picture

if fiscal deficits resulted in greater economic activitiy over time, then it would be impossible to have a 100%+ debt to GDP ratio.  actually, it would be impossible to have anything but a surplus over time.  it's more than just a little obvious this whole multiplyer effect is a myth or a selective presentation of data.

fiscal stimulus can provide contract employment for some politically determined output for some period of time.  that output may eventually lead to some productivity in the private sector.  the job experience may benefit those working on the ouput & may be more beneficial to all of us than the same people hanging out on a street corner or melting away in front of a tv.  in the end, though, this spending does not result in a long term sustainable job.  it can have a negative effect on resource (including commodities) markets with artificial demand.  it also has to be paid for by taxation of the private sector, which erodes everyones' quality of life. 

Thu, 09/08/2011 - 01:50 | 1645083 johngaltfla
johngaltfla's picture

Monetizaton only works when the funds escape Wall Street and make it to Main Street. As long as insolvent institutions are allowed to park capital at the Fed, collect interest then use those funds to fill black holes on their balance sheets, the process is akin to peeing in the ocean to fill it up with more water.

The insolvent institutions must be shut down and consolidation forced upon the industry. Until this happens none of the programs will work as the money will simple evaporate to reduce losses and maintain bonus structures for high level investors and company officers.

Wed, 09/07/2011 - 21:22 | 1644354 Ned Zeppelin
Ned Zeppelin's picture

Really nutty stuff, you gotta admit.  Of course, when you only have a hammer, every problem becomes a nail. 

So I assume the Fed sells its inventory of short duration treasury debt into the market (rates rise as supply increases) - presumably at a loss as the effort gains speed - and use the proceeds to buy from the friendly PDs their freshly acquired, newly minted longer term debt issued by the Treasury (again at a sweet markup). Would this not also have the effect of slightly changing the composition of the national debt towards longer term? 

Wed, 09/07/2011 - 21:26 | 1644374 oogs66
oogs66's picture

operation twist will be a non event...without flooding the system with money, they won't get the same impact on stocks as qe2

Wed, 09/07/2011 - 22:35 | 1644610 whstlblwr
whstlblwr's picture

Except gas, look at gas future today.

This is class warfare. They throw hardworking saver and people need to eat and fill car under a bus to save rich bankers.

Wed, 09/07/2011 - 21:32 | 1644382 no life
no life's picture
  1. One other small hint was the 5 or 7 Fed governors who gave speeches in the last week practically pounding the table for QE3...
Wed, 09/07/2011 - 21:29 | 1644392 oogs66
oogs66's picture

on the 7th day, MS said let there be globally co-ordinated easing and QE and stimulus, and it was done

Wed, 09/07/2011 - 21:29 | 1644393 chump666
chump666's picture

" its bag of genocidal tricks"

hahaha, yep they are genius's at destabilising markets.  No one buys their sh*t anymore, cause it's bad sh*t now

Wed, 09/07/2011 - 21:30 | 1644396 Sequitur
Sequitur's picture

For fuck's sake, can the Fed, for once, NOT act?

Wed, 09/07/2011 - 21:30 | 1644397 zorba THE GREEK
zorba THE GREEK's picture

Let's twist again like we did last summer,

Let's twist again like we did last fall,

Do you remember when things were really humming,

Let's twist again til we hit the wall.

Wed, 09/07/2011 - 21:30 | 1644398 Mactheknife
Mactheknife's picture

The Federal Reserve is owned by its member banks.  If that's what they want then that's what they'll get.  Anyone who thinks otherwise doesn't know the facts. There are only five countrys on the planet that don't have a cartel owned central bank.

Wed, 09/07/2011 - 22:32 | 1644599 Trimmed Hedge
Trimmed Hedge's picture

Could somebody list these 5?

TIA

Thu, 09/08/2011 - 10:29 | 1645976 whartman
whartman's picture

I understand that one of them is Libya.  Expect that to change now.

 

Makes you think, hum?

Wed, 09/07/2011 - 23:09 | 1644406 traderjoe
traderjoe's picture

Did anyone seriously doubt that the criminal private banking cabal would do what ever it takes to continue the theft and grift for just a little bit longer? Hyper-inflation is the ultimate end-game.

Wed, 09/07/2011 - 21:33 | 1644411 miker
miker's picture

QE3 will come before March 2012.  The economy is accelerating to the downside.  I see local evidence all around of slowdown and people are running scared.  The Feds will continue their propaganda campaign but it is becoming less and less effective.  People are starting to see through the BS.  I think by the end of 2011, the game will be up.  Perhaps around the holidays; not sure. 

Wed, 09/07/2011 - 23:31 | 1644765 Alpha Monkey
Alpha Monkey's picture

It will be interesting to see the sales data from the holiday season.  Everyone I know is talking about the sour economy, and how it has impacted them.

Wed, 09/07/2011 - 21:35 | 1644417 plocequ1
plocequ1's picture

Thanks ZH. This is the third time i died. Sept. 21 will make it the forth. Even the the ever loving flesh eating maggots are confused

Wed, 09/07/2011 - 21:34 | 1644424 disabledvet
disabledvet's picture

At the rate we're going "there won't be any banks to act in concert with" soon. What if the Fed had a bailout party and nobody came? Obviously the joint "panic" session tommorow is all about "bailout 2.0" of state and local governments so that Obama won't have to be dealing with "Greece: USA style" come election day...or sooner. Sounds like a non-starter already. According to my sources "announces moon colonies/introduces colonists" has piqued some interest however.

Wed, 09/07/2011 - 21:35 | 1644428 adr
adr's picture

One man has while the other has not. 

How can you love what it is you have got.

When you've taken it from the weak hands of the poor.

Liars and thieves you don't know what is in store.

There will come a time when I'll look you in the eye.

You'll pray to the god you've always denied.

Then I'll go out back and get my gun.

I'll say you've never met me but I'm the only son.

 

Great song by Mumford and Sons...

Wed, 09/07/2011 - 21:40 | 1644444 ShoeShineBoy
ShoeShineBoy's picture

1840 down, 160 to go pre-QE3, beyond that, we all know where we are headed

Wed, 09/07/2011 - 21:43 | 1644454 Masquerade
Masquerade's picture

And Gold just went vertical!

Wed, 09/07/2011 - 22:58 | 1644628 X.inf.capt
X.inf.capt's picture

and i saw people panicing over a $100 move yesterday, 'i should sell' they said. man, if that scared them, wait till WSHTF.

the situation hasnt changed, QE3,4,5 coming, bullish for PM's

BUY,BUY,BUY...

PRE65 dimes

and stay cool, boys, SHTF already, its just getting started.

Wed, 09/07/2011 - 21:53 | 1644483 max2205
max2205's picture

News Flash: the patient has passed away a few years ago. Time to bury the carcass

Wed, 09/07/2011 - 21:56 | 1644492 buzzsaw99
buzzsaw99's picture

whatever they do it will only help the wall street bank maggots and hurt main street. book it.

Wed, 09/07/2011 - 22:06 | 1644513 Pike Bishop
Pike Bishop's picture

The burden of propping up markets and the economy for the next few months thus falls on central banks.

Propping as a concept is fucked.

The negative feedback loop between weak growth and soggy asset markets makes a coordinated monetary policy easing move more likely.

It's not a loop, it's stasis. There is no real growth and the assets are marked-to-Tinkerbell. "Likely" still doesn't mean effective. No matter how many times you wish it to be true.

Such strategic complementarity also exists for EM central banks

Two times stupid, still equals stupid.

However, the interaction between DM and EM centralbanks is one of ‘strategic substitutability’ –

In most courts it's called co-conspiracy. If it's international, it's called a global brain-fart.

Wed, 09/07/2011 - 22:06 | 1644519 LookingWithAmazement
LookingWithAmazement's picture

Finally, something might happen. I was already bored about gold and silver not so much exploding, even "correcting", and further looking forward to Christmas, even more so now the euro has been saved for a while. So maybe, maybe, some action. Gold $2000+ shortly? No, not too hastily. In a year or so; the big bankers will keep gold low for a long time more. No spectacle. Boring world we live in.

Wed, 09/07/2011 - 22:31 | 1644600 taraxias
taraxias's picture

Stop wasting our time and just post "boring world we live in", we'll assume the rest of your troll post.

Wed, 09/07/2011 - 22:50 | 1644654 LookingWithAmazement
LookingWithAmazement's picture

Boring world we live in.

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