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In Its Latest Nonfarm Payroll Mea Culpa, Goldman Stumbles On THE Answer... And Changes The Rules Of The Game

Tyler Durden's picture


One has to read very carefully and all the way through the latest Jan Hatzius NFP post-mortem, to catch what may be the most important piece of information Goldman has ever telegraphed to clients, and thus, to the Fed. But first, why the note? As a reminder, after predicting correctly just what the impact of the record warm weather would be on today's NFP print (recall "Is A Bad NFP Print Days Away - Goldman Says Warm Weather Added 70,000-100,000 Jobs; Now It's Payback Time", something Zero Hedge warned first 2 months prior in "Is It The Weather, Stupid? David Rosenberg On What "April In January" Means For Seasonal Adjustments", but that's beside the point) yesterday Goldman was kind enough to tell us precisely what to expect when it hiked its NFP forecast from 175,000 to 200,000 ("If Goldman's recent predictive track record is any indication, tomorrow's NFP will be a disaster.") Of course, betting against Goldman's clients continues to be the winningest trade of the year, if not the millennium.

But that's not the point. Neither is Goldman's attempt to mollify what little muppets are left following its latest faux pas ("we believe that the underlying trend in payroll employment growth is around 175,000 as of the March report"), or to once again shift its focus to a bearish one having flip flopped worse than Dennis Gartman in recent weeks (see The Muppets Are Confused How Goldman Is Both Bullish And Bearish On Stocks At The Same Time) after saying that "we would expect the headline number for April to fall short of this figure, partly because the weather payback is likely to be substantially larger in April than in March and partly because the underlying trend may be decelerating slightly." Nor is the point that Goldman once again attempts to handicap the next latest and greatest New iPad, pardon, New QE. What's the point - QE is inevitable, and it will happen. But at a time that Obama deems appropriate - the one overriding consideration this year is to boost Obama's popularity into the election by any means possible, with structural inflation and employment taking a back seat.

No, all of these are secondary items. Here is what is of absolutely critical importance in the just released Goldman letter, nested deep in Hatzius' final paragraph, where it would otherwise be missed by most:

...we have found some evidence that at the very long end of the yield curve, where Operation Twist is concentrated, it may be not just the stock of securities held by the Fed but also the ongoing flow of purchases that matters for yields...

For those who are aware of the Fed's sentiment vis-a-vis the debate of stock vs flow of money effect, this will be a stunning revelation. Especially since it vindicates what we have been saying since day one, namely that when it comes to securities price formation in a centrally-planned regime, it is flow not stock that matters. And as those who follow the Fed's thinking know too well, the Fed is convinced it is stock, not flow that serves as a consistent catalyst for subjective risk valuation. The above quote is just the first crack in the Fed's thinking, because if Goldman now believes this, so will Bill Dudley, following his next meeting with Jan Hatzius at the Pound and Pence, and shortly thereafter, it will become canon at the Fed.

One way of visualizing what this means is to think of a shark which has to be constantly in motion in order to survive. Well, the allegory of Jaws can be applied to liquidity addicted capital markets. Translated simply, it means that it is irrelevant if the Fed's balance sheet is $1 million, $1 trillion or $1,000 quadrillion. A primacy of flow over stock means that UNLESS THE FED IS ACTIVELY ENGAGING IN MONETIZATION AT EVERY GIVEN MOMENT, THE IMPACT FROM EASING DIMINISHES PROGRESSIVELY, ULTIMATELY APPROACHING ZERO AND SUBSEQUENTLY BECOMING NEGATIVE!

We don't have sufficient time to go into the nuances of what this revolutionary run-on sentence means on this good Friday, suffice to say that it makes virtually all the literature on modern monetary theory (in practice of course, the theoretical part is such gibberish that only fans of MMT and Neo-Keynesianism care about it - something nobody actually in the market gives a rat's ass about) obsolete. It also means that absent "flow" or instantaneous Fed monetization engagement at any given moment, risk will collapse, regardless of the actual size of the Fed's balance sheet (which of course has other structural limitations). What is most critical is that this one statement from Hatzius sows the seeds of doubt, and provides a decoupling between prevalent risk prices, and explicit levels of historical Fed monetization. Because what the ascendancy of the flow model means is that unless the Fed is willing to telegraph that it will monetize devaluing assets in perpetuity, thus providing the "flow", the Fed is assured at failing at its only real mandate: keeping the Russell 2000 pumped up.

And while the Fed may be happy to sacrifice its balance sheet at the altar of Dow 36,000 just to preserve the Wealth Effect fallacy, the other counterliability, the US Treasury stock, which by implication will have to rise as it will be the security monetized the most to keep the deficit funded, may not be quite as pliable, and eager to rise parabolically, especially in a time when more and more question the reserve status of the USD, when faced with the ascendancy of the CNY.

Finally, the market still having a trace of discounting left in it, will become quite aware of all these considerations and deliberations, and will promptly demand a practical application of the "flow" model. Which also means that absent constant, ongoing monetization, either sterilized or not (although as we pointed out earlier this week, the opportunity for ongoing sterilization by the Fed is now almost finished as it will have just 3 months of short-end bonds left to sell past June), stocks will crash.

Unwittingly, Goldman may have just resorted to the nuclear option to force the Fed to engage in monetization much faster than it would have otherwise done so, by diametrically changing how Goldman, the Fed, and thus the market perceives Fed intervention.

Or maybe it was all too "wittingly"...

Full Jan Hatzius note:

US Views : Payback (Hatzius)


1. The March employment report was a disappointment. Although the unemployment rate fell, this was due to a drop in the labor force as household employment gave back some of its prior big increases. More importantly, the job gain in the establishment survey of just 120,000 fell well short of anyone's estimate. The big question is how much of the slowdown from February’s 240,000 gain was due to special factors, including “payback” for the unseasonably warm winter, and how much reflects weakness in the underlying trend.


2. We do think the warm weather has been an important driver of stronger payroll numbers over the past few months. As we have shown, all of the acceleration in nonfarm payrolls since the fall has occurred in the (normally) cold states, and our state-by-state panel analysis suggests that weather has boosted February’s level of payrolls by 100k or a bit more (see “Payroll Payback?” US Economics Analyst, 12/14, April 5, 2012). This state-level model suggests that none of the inevitable payback for this boost should have occurred yet, since March was just as warm relative to the seasonal norm as February. That said, weather-sensitive sectors such as mining and building construction did show some weakness, so we would pencil in 10k-20k for weather “payback” in March.


3. In addition, the 37,000 drop in retail employment was partly related to one-off job reductions in the department store industry, and should probably not be included in an estimate of the underlying employment trend. Taken together, we believe that the underlying trend in payroll employment growth is around 175,000 as of the March report. At this point, we would expect the headline number for April to fall short of this figure, partly because the weather payback is likely to be substantially larger in April than in March and partly because the underlying trend may be decelerating slightly (as suggested, e.g., by the drop in temporary help services employment in March).


4. Largely because of the weakness in the employment report, our standard metrics for evaluating the US data flow have also started to send a less upbeat message. Our current activity indicator (CAI), which summarizes all of the key monthly and weekly activity data, is showing a preliminary 2.5% for March, down from 3.5% in February. Likewise, our US-MAP, which compares the data with the Bloomberg consensus, has averaged negative readings since late February, after six months of positive surprises. All this reinforces our view that the discrepancies in the US economic data will be resolved mainly via deceleration in the job market indicators rather than acceleration in GDP.


5. We admit to being puzzled by the twists and turns in Fed communications over the past few months. On January 25, Chairman Bernanke said that under the FOMC’s projections, he saw a “very strong case” for finding “additional tools” to support economic expansion. But in the March 13 minutes, only “a couple” (i.e., two) of the committee’s ten voting members—a number so small that it probably does not include the chairman, whose position makes it unlikely that he would be in such a small minority—thought that additional stimulus could become necessary, and even that only “if the economy lost momentum” or inflation looked likely to undershoot. All this would make perfect sense if there had been a sharp upgrade of the committee’s central forecast over the past few months. But the minutes also said that “…the economic outlook, while a bit stronger overall, was broadly similar to that at the time of their January meeting.” And Chairman Bernanke, in particular, last week went out of his way to cast doubt on the not on that the stronger jobs data through February were indicative of a sharp pickup in growth. Our conclusion is that there has been a shift in the Fed's reaction function back to the hawkish side, and there may be a bit more complacency about the risks to the outlook than suggested by the committee’s decision to retain the assessment of “significant downside risks” in the March 13 statement.


6. So what can we expect from the Fed? Easing at the April 24-25 meeting looks highly unlikely, although the tone of the statement and the Chairman’s press conference may take a fresh turn toward the dovish side. Easing at the June 19-20 meeting, in contrast, still looks more likely than not, at least under our forecast of weaker activity and benign inflation. Our baseline remains a renewed asset purchase program which involves Treasuries and MBS and whose impact on the monetary base is sterilized via reverse repos or term deposits, but it is also possible that the committee would extend Operation Twist; there is approximately another $200 billion available, and it would only take a small reduction in the flow of purchases to make this number last until yearend.


7. Stepping back from the tactics, we still see a strong fundamental case for following up Operation Twist with a successor program. First, even under its own forecast, the committee expects to be far from fulfilling the employment side of its mandate by 2013-2014, so it is easy to sympathize with Chicago Fed President Evans’s call for more action. Second, growth could well disappoint the committee’s forecasts, given all the usual uncertainties around the weather impact, the inventory cycle, energy prices, and the “fiscal cliff” at the end of 2012. Third, a failure to do more might imply a tightening of conditions, assuming financial markets are still discounting some probability of easing. In addition, we have found some evidence that at the very long end of the yield curve, where Operation Twist is concentrated, it may be not just the stock of securities held by the Fed but also the ongoing flow of purchases that matters for yields. And fourth, the risk of a material inflation overshoot seems low given the still-large amount of spare capacity, not to mention the Fed’s ability to reverse course and tighten financial conditions substantially via forward guidance, rate hikes, or even asset sales should the need arise.


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Fri, 04/06/2012 - 18:17 | 2323467 Seditious Blasphemer
Seditious Blasphemer's picture

QE... To infinity, and BEYOND!

Fri, 04/06/2012 - 18:36 | 2323512 Straying from t...
Straying from the flock's picture

The game is at it's end.  A dime a day will END the charade.  We cannot fix what is broken by doing the same thing over and over.  It has not worked yet, why do we think it will work the next time?  I have stopped looking for someone to print us out of this mess.  Take the matter into your own hands.

Fri, 04/06/2012 - 18:40 | 2323522 iDealMeat
iDealMeat's picture

Better yet, cut your consumption in half and convert any and all FRN's you have to actual coinage change.



Fri, 04/06/2012 - 18:44 | 2323535 Max Fischer
Max Fischer's picture



What is the point of taking all your FRNs and converting them into coins? 

Max Fischer, Civis Mundi

Fri, 04/06/2012 - 18:58 | 2323565 tmosley
tmosley's picture

Really, you don't know the reasoning for that?

And you've been here how long, exactly?

It's like asking "what use are whale guts" after spending two years discussing Moby Dick at a daily book club.

Fri, 04/06/2012 - 19:18 | 2323602 UP Forester
UP Forester's picture

He might be confused, with the very end of the last point, about material inflation overshoot.

Like GM's channel stuffing, and such.

Sat, 04/07/2012 - 11:21 | 2324410 GetZeeGold
GetZeeGold's picture



We're calling Mulligans Muppets!!!!


Sir Muppet'd better stick to bars and ingots. Coins are round and harder to control....and you may confuse them for real money.


Fri, 04/06/2012 - 19:26 | 2323616 Max Fischer
Max Fischer's picture



No.  I really don't understand why I should take all my FRNs in my wallet and exchange them for nickels, quarters and dimes this afternoon. 

What's going on?  What does this solve? 

Max Fischer, Civis Mundi

Fri, 04/06/2012 - 20:17 | 2323736 stocktivity
stocktivity's picture

They mean silver and gold coins

Fri, 04/06/2012 - 20:27 | 2323762 Richard Chesler
Richard Chesler's picture

Goldman kleptoparasites no longer bother to pretend.

Fri, 04/06/2012 - 22:12 | 2323938 Marginal Call
Marginal Call's picture

All coinage is "metally".  It will always have value in the end. 


I run a "keep the change" program just like BofA in my house.  Everyday the left over change goes in a bucket, to be forgotten about.

Fri, 04/06/2012 - 22:50 | 2323987 streetcrawler
streetcrawler's picture

I picked through about 30 pennies I had in my desk at work and about 20 were pre 1982. Doubled my investment!

Sat, 04/07/2012 - 14:36 | 2324807 rocker
rocker's picture

There was a time that a U.S. penny was the same size as a half dollar.  A half-cent was about the size of a quarter. Now pre-1982 cents are all copper and worth 2 cents melted. Nickels are 75% copper and worth over 6 cents.

And hey, what does Canada know about increasing zinc prices. They are discontinuing the penny altogether.  Just Sayin'.

Keep on printing Big Ben. Those who leverage to real stuff, physical metals will survive your devaluation of the dollar as planned by your central "Banking Cartel" of the NWO.

Fri, 04/06/2012 - 20:23 | 2323754 Hedgetard55
Hedgetard55's picture

Cocaine is a hell of a drug Max, and syphillis is a hell of a disease.

Fri, 04/06/2012 - 20:44 | 2323800 narapoiddyslexia
narapoiddyslexia's picture

Max Fischer

Silver and/or gold is part of the DNA around here. Everyone who reads the comment assumes he/she means silver/gold coins. Probably junk silver. Two junk silver dimes buy you a gallon of gas these days. They're from the 50's or early 60's when the price of gas was about $0.20, so it has come full circle.

Maybe you don't own any PMs.


Sat, 04/07/2012 - 09:22 | 2324335 sessinpo
sessinpo's picture

narapoiddyslexia                  2323800 =

Silver and/or gold is part of the DNA around here. Everyone who reads the comment assumes he/she means silver/gold coins. Probably junk silver. Two junk silver dimes buy you a gallon of gas these days. They're from the 50's or early 60's when the price of gas was about $0.20, so it has come full circle.

Maybe you don't own any PMs.



Maxfisher has been member for over 41 weeks. But that doesn't mean he reads material here regularly. I can only suggest that Maxfisher take some more time to read articles and posting. If Maxfisher has some sense, he may get an understanding and not ask such questions that seem so rediculous to the rest of us.



Fri, 04/06/2012 - 21:24 | 2323876 mr. mirbach
mr. mirbach's picture

Pennies, nickels, dimes, quarters, half-dollar dollar coins are Debt Free money, minted by the Treaury, NOT borrowed into existance. Might be a grand idea to have bulk coins and stop carrying FRN's. Treasury has 2 billion (?) dollar coins sitting in their vaults, trade FRNs for dollar coins - at least coins have value in the base metal whereas paper retains some value for ass-crack hygienics. The Treasury could easily mint $10, $20, $50 and $100 coins if 1) they had any idea about Constitutional money and 2) the head of the Treasury wasn't a Goldmanite and 3) Congress wasn't completely corrupt.

Fri, 04/06/2012 - 22:57 | 2323993 Prometheus418
Prometheus418's picture

I've been writing one a month or so to my state representatives asking them to consider minting nickel (metal, not denomination) state commemorative coins without dollar denominations for just that reason.  I suggest that everyone do the same.

Not only would it help fund state and local projects, it could act as a stand-in currency in the future.  Forget congress, they're bought and paid for.

And for you, Fisher- I'm in one of the higher tiers for hot-money flow (if not income) and I know several people that are converting 10-20% of their holdings into coin.  Any by that, I do not mean silver and gold, I mean regular circulating US coin.  We argue about pennies vs nickels a couple of times a week, at least, because the value of the metal exceeds face value- making it an instant gain for zero risk.  As commodities continue to inflate, this will become true of more and more of the coin stock, until either coins are no longer minted, or they are no longer metal of any type.  When that day arrives, today's nickels are going to be tomorrow's mercury dimes- and even if you don't like silver and gold, only a fool would spend a merc at face value, when a $5 roll is worth over $125.

I kind of like regular old half-dollars as well.  I often buy a box of them and check them over for 40% silver that may have been missed, and use them for small purchases.  The principle is really simple- nobody uses them, but they are freely available.  When you use them as payment, it makes the person accepting them reconsider coinage in general, if only for a moment.  It lays the foundation for silver coin as functional currency, and is likely to hold value better than paper as time goes one.  If you don't believe that, ask yourself when the last time you heard of counterfeiting coinage was... it's not likely to be diluted the way notes are.  If we do have hyperinflation, gold and silver are likely to disappear entirely for a while, but nickel and copper might really shine- every system, no matter how ad-hoc, needs placeholders that do not rot to function.

@mr. mirbach- the Treasure does mint high-value coins.  I buy ASEs twice a month, and anyone else can do the same- even most po' folk can afford an ounce of silver now and then at these prices.

Fri, 04/06/2012 - 19:04 | 2323577 iDealMeat
iDealMeat's picture

many reasons..  and  "I just like nickles."

Fri, 04/06/2012 - 19:16 | 2323596 noob
Fri, 04/06/2012 - 20:04 | 2323710 Ned Zeppelin
Ned Zeppelin's picture

It is flow not stock that matters

I've ordered the T-shirts and bumper stickers.

It is a fascinatingly crisp statement of a core truth. But I have to say, I thought (and I am sure many here thought) that was the game all along.  The "stock" (i.e., quantity of "sidelined, sequestered, beyond the event horizon" assets"), is irrelevant if all the Fed has to do is to print (at no cost!) to acquire it - once the ponzi begins to slide, the real game is to keep on printing, monetize the impossible to repay debt, and maintain at all costs the illusion that nothing is wrong with this.  Look at the constant flow of rumors, phony LTRO money printing operations, and lies that supports Europe (which will be the first to collapse). How could it be otherwise? We here at Zero Hedge have been on this journey since 2008, maligned and criticized, unfairly, but watching and warning while the CBs continue to print, print, print for the simple reason of buoying the values of assets that are crippled if not dead.  The same assets that support an ungainly and structurally unsound colossus edifice of derivatives.  And why is that done? Ask Jamie Dimon, Hank Paulson, and the other criminal Masters of the Universe. How this does not end badly I do not know, but I predict that the final act will be martial law wherein  the primacy of fiat and this system will be enforced at gunpoint - remember, At All Costs.  As Cheney said, the American way of life is non-negotiable,  He just never said which Americans he was talking about.

YOU WILL BELIEVE.  Or else. But there is hope, we had one Revolution . . . many years ago. . .

Fri, 04/06/2012 - 23:51 | 2324042 Clockwork Orange
Clockwork Orange's picture

The writing is on the wall. 

Proverbs over.

Show Time.


Wed, 05/02/2012 - 00:11 | 2390267 Lord Koos
Lord Koos's picture

Global dependence on digital communication and modern survellience makes it much more difficult for any kind of modern revolution to be successful. The revolution, if there is one, will have to be organized offline.  Maybe snail-mail will make a comeback.

Fri, 04/06/2012 - 23:41 | 2324033 El Oregonian
El Oregonian's picture

"I just like nickles."

"I just like nickels".

There, corrected for you.

Sat, 04/07/2012 - 11:01 | 2324409 Jake88
Jake88's picture

Well, look at you.

Sat, 04/07/2012 - 09:54 | 2324347 Widowmaker
Widowmaker's picture

You cant print metal, only lies and fraud to literally steal it from the unwilling.

The entire dillusional world thinks the latter makes it go around. They will be the first to die for that bullshit logic. Iraq and afganistan are two small examples. Starving children are starved on purpose, so is it the faggot in pinstripes or the kids fucking own parents that starve them? The answer is both in the name of the same fraud racket.

Kill a banker, save his family.

Kill his bank, save his city.

Kill his money, save his nation and him.

Remember these words.

Sat, 04/07/2012 - 10:57 | 2324405 optimator
optimator's picture

Remember Dr. Ron Paul's "Gallon of gas for ten cents right now" answer at one of the debates?  He meant one silver dime was enough to buy that gallon.

Sat, 04/07/2012 - 00:03 | 2324054 msamour
msamour's picture

I was thinking the same, there will be two economies (some argue there already is); the first one will be the "legitimate" economy whereby people keep some FRN's on hand to pay the minimum amount of taxes they must pay, and the second economy will be a grey/barter market whereby people will exchange stuff with one another.


A switch to this flow paradigm, will only accelerate the demise of the old monetary order.

Fri, 04/06/2012 - 19:01 | 2323574 HD
HD's picture

"We cannot fix what is broken by doing the same thing over and over."

That's all central banks know how to do. When all you have is a hammer - everything looks like a nail.

Fri, 04/06/2012 - 21:01 | 2323828 Havana White
Havana White's picture

Squid says Fed action is "highly unlikely" at April meeting but "more likely than not" at the June meeting.  The meetings are seven weeks apart, wtf.

Sat, 04/07/2012 - 09:40 | 2324352 Gully Foyle
Gully Foyle's picture


You seem to misunderstand just what is happening.

All currencies need to wither for digital currency to replace them.

No muss, no fuss, simpler to control and keep tabs on the populace.

Sat, 04/07/2012 - 12:04 | 2324476 RockyRacoon
RockyRacoon's picture

Coming to a country near you:

Canada unveils digital currency   Mintchip 'better than cash'; Royal Mint launches $50,000 contest to spur development of smartphone apps Read more:
Fri, 04/06/2012 - 23:58 | 2324050 Chief KnocAHoma
Chief KnocAHoma's picture

Who else has had enough of this double standard?

Sat, 04/07/2012 - 09:37 | 2324350 Gully Foyle
Gully Foyle's picture

Straying from t...

A dime bag a day may curb your addiction but some of us don't want to travel down that road.

Sat, 04/07/2012 - 04:51 | 2324187 Quintus
Quintus's picture

Quite right.  All this 'Will they, won't they' debate about QE resembles a medieval debate about how many angels can dance on the head of a pin.  It's meaningless.  

The simple fact is that there is an insufficient supply of muppets willing to lend the Treasury money at negative real yields.  Also, the US legislature have amply proved themselves absolutely incapable of exercising the sort of Fiscal retrenchment that would reduce borrowing requirements to levels the market might accept.  The final piece of the problem is that the Treasury cannot afford for yields to rise to a level that might attract sufficient demand.

Therefore, no matter how they dress it up in stock vs flow arguments or anything else, the Fed WILL continue to monetise the debt.  There is no Deus ex Machina that will save the day by some other means.

Arguments about Gas prices, inflation, asset bubbles or the political acceptability of QE are all utterly irrelevant.

Unless, that is, you honestly think that where option (a) is more QE and higher Gas Prices and option (b) is no QE and the Government shuts down due to lack of funding, Ben will chose option (b) because he is afraid of $5 gas.  Nonsense.

Fri, 04/06/2012 - 18:20 | 2323472 Gooseleg
Gooseleg's picture

End the Fed.

Fri, 04/06/2012 - 19:01 | 2323569 Zgangsta
Zgangsta's picture


Fri, 04/06/2012 - 20:29 | 2323764 AustriAnnie
AustriAnnie's picture

+1 for enthusiasm

Fri, 04/06/2012 - 22:16 | 2323943 donsluck
donsluck's picture

That's what she said.

Fri, 04/06/2012 - 19:19 | 2323600 DormRoom
DormRoom's picture

The Fed can't get the US out of this liquidity trap alone.  It needs cooperation form the fiscal authority.  And has been signalling as much, by QE & Operation Twist flattening the curve, and intencizing the government to borrow @ historical low rates, and spend.


read this working paper:


The real f00king problem is that the US has a dysfunctioning political body that serves the interest of cronies, and not the nation..  Atomically, it's neither politics, nor economics, but political-economy, which is the fundamental unit.

Fri, 04/06/2012 - 19:20 | 2323607 UP Forester
UP Forester's picture

Sub-atomically, it's the fact that all the crooks are "in charge"....

Fri, 04/06/2012 - 20:27 | 2323760 lakecity55
lakecity55's picture

Ron Paul!

I'm not holding my breath, but it would be good to see Mittens give Paul a Job.

End the Fed!

Fri, 04/06/2012 - 21:09 | 2323843 DeadFred
DeadFred's picture

Third Party Candidate is what I yearn for. There is no way Paul can push much through congress but he will replace Holder with a human being. Wall St. crooks will do time!

Sat, 04/07/2012 - 15:41 | 2324912 roadhazard
roadhazard's picture

A third Party candidate only has a chance of winning if they start there campaign for 2016, NOW. And they damn well better have some street credibility going in. It's always boggled my mind that the Libertarian Party never campaign before the Big Boys do. Sorry, but it's too late then.

Sat, 04/07/2012 - 09:28 | 2324342 sessinpo
sessinpo's picture

lakecity55   2323760                                              

Ron Paul!

I'm not holding my breath, but it would be good to see Mittens give Paul a Job.

End the Fed!



That will NEVER happen. RP is at the end of his career. There is NO reason for establishment politicians to put RP into any position. The FR is also a part of the establishment. Until things go real bad economically, don't expect much scrutiny of the FR. The FR has to much power and frightens our dumbass politicians. Another comment I am fairly certain I will be right on.


Ron Paul supporters need to be looking forward to the future. Maybe Rand Paul?

Fri, 04/06/2012 - 23:53 | 2324044 Clockwork Orange
Clockwork Orange's picture

Here we go.  Apple, or no Apple.

Fri, 04/06/2012 - 18:26 | 2323486 pauhana
pauhana's picture

You're ruining my enjoyment of The Masters.  Let's see what happens under this thesis on Monday when the muppets and their masters get back to work.

Sat, 04/07/2012 - 00:00 | 2324018 slewie the pi-rat
slewie the pi-rat's picture

speaking of blythe, tyler got a h/t+++ from these gataGuys for his take on our crimexia commoditae (?)

One of the 'Masters' of the universe gets a market manipulation question on CNBC

Watching today's CNBC interview with Masters, Zero Hedge's Tyler Durden figured things out quickly

yeah, BiCheZ!

the gata piece is great for it's historical perspective and contains linx to many of rKirby's essays about the fukers @ theMorgue

although it neglected to comment on how hot she is, it also stopped short of calling her a c*** but only by a hair, imo

Fri, 04/06/2012 - 18:28 | 2323493 KingPin 999
KingPin 999's picture

Great, I can't wait for $250 per barrel oil. Then the FED's dream of the destruction of the middle class will be complete.

Fri, 04/06/2012 - 18:28 | 2323495 Benjamin Glutton
Benjamin Glutton's picture

maybe it's time to consider a new approach altogether. no amount of funneling money to WS bonuses will address the true dysfunctional nature of our current structure.


if you think of the economic devastation as a hurricane that destroyed the entire country what good would it do to send FEMA only to Wall Street?

Fri, 04/06/2012 - 19:41 | 2323655 chunga
chunga's picture

Good one.

Not so sure about FEMA though.

I remain unconvinced that I'd like to meet them under any circumstances.


Fri, 04/06/2012 - 18:29 | 2323496 bugs_
bugs_'s picture

In any ponzi it is the flow that matters.  Goldman IS right this time!  (LOL)

Fri, 04/06/2012 - 21:17 | 2323859 RiverRoad
RiverRoad's picture

Like Chuck Prince said, "Just keep dancing 'til the music stops."  AKA "Go with the flow"...right over Niagara Falls.

Fri, 04/06/2012 - 18:29 | 2323499 BeetleBailey
BeetleBailey's picture

I can only hope that at the outset of the next war, some military leader takes out every single bank in existence. That they target every single Federal Reserve bank. Hits are put out for every single bank CEO - and, their underlings.

We need a complete re-rack of the entire banking system - top to bottom.

Fri, 04/06/2012 - 18:51 | 2323554 jeff314
jeff314's picture

i think Hitler tried that in ww2

Fri, 04/06/2012 - 20:06 | 2323713 Matt
Matt's picture

If he was trying to do that, he would have invaded Switzerland instead of Russia.

Fri, 04/06/2012 - 21:16 | 2323858 knukles
knukles's picture

Nah, he banked in Switzerland.

Fri, 04/06/2012 - 19:04 | 2323578 LowProfile
LowProfile's picture


Hits are put out for every single bank CEO - and, their underlings.




Fri, 04/06/2012 - 19:41 | 2323653 spentCartridge
spentCartridge's picture

Can't un-vote 'bout vote :(

Fri, 04/06/2012 - 21:27 | 2323889 onarga74
onarga74's picture

But then who would be left to hate?  Not Illinois Nazi's again?

Fri, 04/06/2012 - 18:34 | 2323508 Nid
Nid's picture

Ha ha ha ha!!! Looks like Bagger Ben ain't so damn tricksey after all....his industrial strength Ponzi has a limited shelf life.

Fri, 04/06/2012 - 18:35 | 2323513 fonzannoon
fonzannoon's picture

I don't believe that they could follow sich a brilliant diamond in the rough sentence with a complete full retard one...

"And fourth, the risk of a material inflation overshoot seems low given the still-large amount of spare capacity, not to mention the Fed’s ability to reverse course and tighten financial conditions substantially via forward guidance, rate hikes, or even asset sales should the need arise".

Kind of diminishes any brilliance.

Sat, 04/07/2012 - 00:44 | 2324089 Mary Wilbur
Mary Wilbur's picture

What does she mean by "spare capacity?"

Sat, 04/07/2012 - 03:04 | 2324147 Mentaliusanything
Mentaliusanything's picture

low Industrial output / Labor surplus - War puts them to use

Fri, 04/06/2012 - 18:40 | 2323523 Bluntly Put
Bluntly Put's picture


There fixed it for you :P




Fri, 04/06/2012 - 18:53 | 2323527 vast-dom
vast-dom's picture

This is actually rather obvious and I'm not even shocked GS fucktard would explicitly state this. In other words, how can you make money on ANYTHING BUT FLOW at this stage since the underlying fundamentals of most stocks are, let's be polite, wholly unrelated what their QE hopium propped up trading values are; ergo, fast flow swirls the shit around and up until it doesn't -- this is the very long end of the Ponzi curve where if the fed doesn't keep increasing the flow on anemic volume (ie investors abandoning ship and/or GS chum), we have essentially nothing but toxic grossly overvalued stocks (esp banking sector), iGizPodMaker notwithstanding.


Folks, flow is the driver of near zero volume and rising index values. Let the Russell2000 crash already and it'll still be overvalued.

Fri, 04/06/2012 - 20:12 | 2323728 Crimedog
Crimedog's picture

I'm not gonna argue that stocks are currently overvalued because I agree with you.  But to say "we have essentially nothing but toxic grossly overvalued stocks (esp banking sector), iGizPodMaker notwithstanding" 

is ridiculous.  There are a TON of good comapnies out there producing REAL goods in the economy and have REAL value.  Apple is not even close to being the only one.  Don't lump the banking sector in with the real economy that atually makes things.


I'm just glad this jobs number is going to be followed by a sell-off so that I can get back into good stocks on the cheap.

Fri, 04/06/2012 - 20:37 | 2323790 AustriAnnie
AustriAnnie's picture

By saying "Apple is not the only one" are you implying that Apple's stock price is justified by the "real goods" it creates and the "real value" of those goods?


Fri, 04/06/2012 - 21:34 | 2323883 vast-dom
vast-dom's picture

AustriAnnieI was being quite facetious re: Apple, as evidenced by the iGizFukPod devices mention....

Fri, 04/06/2012 - 21:33 | 2323880 vast-dom
vast-dom's picture

CrimedogOn average too many stocks, irrespective if issued by producing relatively productive companies, are grossly overvalued

And you precisely supply the proof by this YOUR statement: "so that I can get back into good stocks on the cheap." I'd amend cheap and say for FAIR MARKET VALUE.  

Further simplifying my above statement: do you think SP/DJ/NAS/Russell2k are grossly overvalued? If you do, then my statement above is correct. If you don't, then please, by all means put some of your monies into those indexes.

Sat, 04/07/2012 - 07:03 | 2324237 WTFx10
WTFx10's picture

There are a TON of good comapnies out there producing REAL goods in the economy and have REAL value.  Apple builds toys for adults who aren't too intelligent. I wouldn't call that real value. Toss the ipad ,iphone,  in a year and purchase the newer model with your iWallet ? Just revolving toys.

Fri, 04/06/2012 - 20:36 | 2323784 AustriAnnie
AustriAnnie's picture

"since the underlying fundamentals of most stocks are, let's be polite, wholly unrelated what their QE hopium propped up trading values are"

Problem is, their first tactic was to show up on every MSM market talk hour and say that it was fundamentals that made stocks worth buying.  But they didn't get the dummies to buy, so now they're throwing a "we want QE" temper tantrum.

Fri, 04/06/2012 - 18:41 | 2323528 mr. mirbach
mr. mirbach's picture

So many words to tell the FED to keep printing or the Ponzi ends.

Fri, 04/06/2012 - 18:45 | 2323537 kato
kato's picture

Nice writeup. Interesting. Thanks. Often wonder what Volkler is thinking.

Fri, 04/06/2012 - 19:39 | 2323646 LowProfile
LowProfile's picture

How to get his gold out of the country.

Fri, 04/06/2012 - 19:07 | 2323538 Hansel
Hansel's picture

No shit, goldman.  The treasury keeps issuing more paper, so if the fed doesn't soak it up, rates go up.  Is this goldman's attempt at intelligence?

Fri, 04/06/2012 - 19:39 | 2323650 LowProfile
LowProfile's picture

I honestly think it's their explaining to a clueless Fed how things really work.

Fri, 04/06/2012 - 18:46 | 2323539 Nid
Nid's picture

Long Bag-Holders

Fri, 04/06/2012 - 18:48 | 2323543 Cdad
Cdad's picture

Yep...QE infinity.  That is what is required that the Fed and the rest of the criminal syndicate have broken the markets, broken trust with the American people, and broken normal capital formation.  Of course, the other option is to let price discovery return to the markets while dismantling the TBTF criminal banks that have brought us to this sad place.  Either or...

Nice article, Tyler.  One of your best written and most concise.  Hat tip.

Fri, 04/06/2012 - 21:20 | 2323871 onarga74
onarga74's picture

Good luck bro.  Bernanke is a heroin dealer in a suit.

Sat, 04/07/2012 - 12:51 | 2324576 PalladiumJockey
PalladiumJockey's picture

Wonder if Benny Boy knows Charlie Sheen's coke dealer, who I also heard wears a suit!

Fri, 04/06/2012 - 18:50 | 2323549 lolmao500
lolmao500's picture

Meanwhile in Wisconsin :

Scott Walker Quietly Repeals Wisconsin Equal Pay Law

A Wisconsin law that made it easier for victims of wage discrimination to have their day in court was repealed on Thursday, after Wisconsin Gov. Scott Walker (R) quietly signed the bill.

The 2009 Equal Pay Enforcement Act was meant to deter employers from discriminating against certain groups by giving workers more avenues via which to press charges. Among other provisions, it allows individuals to plead their cases in the less costly, more accessible state circuit court system, rather than just in federal court.

In November, the state Senate approved SB 202, which rolled back this provision. On February, the Assembly did the same. Both were party-line votes in Republican-controlled chambers.

Fri, 04/06/2012 - 19:16 | 2323598 Raymond K Hessel
Raymond K Hessel's picture

Good.  The less government, the less economic interference.  Don't like your job?  Get a better one.  Don't like your pay?  Find an employer that pays better.  This law seems to court a Detroit-style economy for Wisconsinites.  If it didn't work in Detroit, why is it going to work anywhere.  

By Detroit I mean the auto industry.  

By the auto industry, I mean the way unions forced auto makers to pay everyone equally.  

By this, I mean socialism, failure, stupidity, etc.

Sack up and stop looking for other people to give you the "life you deserve".  

Fri, 04/06/2012 - 20:08 | 2323723 Ned Zeppelin
Ned Zeppelin's picture

On principle I kind of agree with you, on the other hand, I think you're probably just another douchebag interested in fleecing employees.

Fri, 04/06/2012 - 21:13 | 2323851 Havana White
Havana White's picture

Easy for you to say, the not-black, not-Hispanic, not-female Raymond K Hessel.

Sat, 04/07/2012 - 00:33 | 2324078 Zero Debt
Zero Debt's picture

Your best argument is an ad hominem?

Fri, 04/06/2012 - 22:26 | 2323956 donsluck
donsluck's picture

I have never understood the logic behind the "owner's can organize but workers can't" argument. A union is worker's reponse to the counter the corporate organization with one of their own. Otherwise each worker is a sitting duck.

Also, the owner's were never "forced" into anything, the only real power the workers have is to stop working, and when it's organized, it's a strike. It's just a power struggle, and unions level the field.

To suggest workers have no right to organize is un-American, as it's akin to limiting the freedom of association.

Fri, 04/06/2012 - 23:21 | 2324009 Prometheus418
Prometheus418's picture

Once again, the point of the Wisconsin public union debate seems to be lost on some people.

Walker did not do anything relating to private unions organized against corporations- he broke the back of the public unions, who were funneling tax money back to the politicians to vote themselves rases.  It was a closed system that was being used to strip tax revinue out of the private citizens' accounts.  It was exactly what he said he was going to do when he was campaigning, and he did it. Most of the protesters we've been dealing with are not even from the state- they were bussed in from other areas to make a huge noise.  It may look a certain way on your TeeVee- but when you've lived in a town with a population of a couple thousand your whole life, I assure you that you know when the people holding signs on the corner are not from your area.

The local public employess I know were afraid when it passed, but most have come to realize that they are now better off than they were before.  Schools have more funding, and it prevented massive layoffs of public-sector workers.  Trimming out excessive bureaucracy and systemic abuses from the public sector is not a bad thing- and it is certainly not the same thing as forcing private citizens to work for slave wages in a salt mine without PPE.

Private unions are another matter entirely, and while I'm not a fan of them myself, I would actively oppose any attempt of the government to eliminate them.  They're not the same thing, and should not be bundled together.

Walker is a good man- he says what he is going to do, and then actually does it- even when it is unpopular.  If even 10% of our national politicians were like him, this mess would be cleaned up by now- maybe not perfectly, but at least honestly.

Sat, 04/07/2012 - 00:39 | 2324084 Mary Wilbur
Mary Wilbur's picture

I agree with you. Scott Walker is a good governor. You're lucky to have him.

Sat, 04/07/2012 - 12:01 | 2324469 Flakmeister
Flakmeister's picture

He is a fucking hatchet man for the Kochs....


Sat, 04/07/2012 - 00:37 | 2324081 Mary Wilbur
Mary Wilbur's picture

GM and Chrysler should have been allowed to go bankrupt.

Sat, 04/07/2012 - 01:50 | 2324119 boogerbently
boogerbently's picture

....bailing out GM so the same employees that ran the company into the ground wouldn't lose their jobs,


bailing out banks, for their irresponsible investment practices, without any greater oversight or regulation???

I don't see much of a difference.

We pay for BOTH, right?

Sat, 04/07/2012 - 03:12 | 2324153 Mentaliusanything
Mentaliusanything's picture

It is the Westminster System in action.

Unions are always in opposition and Employers are always the Government.

It should always be closely balanced for the best outcomes

Read Symbiotic relationships

Fri, 04/06/2012 - 22:38 | 2323972 Marginal Call
Marginal Call's picture

Detroit has run full steam ahead into the limits of a finite world.  Expanding debt/credit wasn't a problem with cheap plentifull fuel.  The Detroit experiment started out great in that it provided the factory class wages to become the consuming class of the middle that grew the wealth of everyone.  The car economy was great until in didin't work anymore in the oil economy.


And as far as your opinion on jobs and government interference- that's how jobs and factories were created.  By governments robbing man of his ability to sustain himself and forcing him into the life of a wage slave at the behest of capital.  People didn't line up to work in factories because they wanted a job, they were forced to under the power of the state.

Sat, 04/07/2012 - 12:58 | 2324589 PalladiumJockey
PalladiumJockey's picture

Man, you're completely missing the point of that legislation.  The issue here is gender pay-gap, nothing else.  I guess you agree women are worth less than men?  Oh, I also suppose you'll like the China-like wave of worker policies that are coming back to these shores as well.  Enjoy!  Glad to think all the basic protections unions did get for us will be gone.  I'm really hoping to breathe in some toxic fumes 25 hours a day for virtually nothing.  While unions do go overboard now and again (UAW, anyone?), I think the workplace protections have helped workers.  Unfortunately, it appears we have to choose again between having a job and having health, as the world rebalances somewhat.  It would also be extra ironic if you read this on your iPad.

Sat, 04/07/2012 - 16:14 | 2324959 ffart
ffart's picture

Why should someone who bleeds a week of every month and takes 3 months of vacation a year get paid as much as a man?

Fri, 04/06/2012 - 18:51 | 2323550 TradingJoe
TradingJoe's picture

Monday's "Action" will be a "tell all" going forward!!! I expect a bounce, followed by the actual CORRECTION with the S&P in the triple digits as a result!!!

Fri, 04/06/2012 - 18:52 | 2323555 whoopsing
whoopsing's picture

Morphine for the dying , lest they realize they are dying

Fri, 04/06/2012 - 19:10 | 2323588 Raymond K Hessel
Raymond K Hessel's picture

Anyone who has studied Ken Hatten knows about the value in flow of funds vs capital as a store of value. 

Fri, 04/06/2012 - 19:13 | 2323593 RoadKill
RoadKill's picture

Of course it’s all about flow!  In fact STOCK actually work’s in the opposite direction.  The fact that the Fed already owns Trillions of stock, means they have to SELL it before we talk about moving away from ZIRP and get back to normal.  It’s like the lockup period after an IPO.

The government needs to issue $1ttn+ of new debt each year PLUS rollover $2-$3 trillion of maturities.  But the smart money has already figured out that this is a game of chicken/musical chairs.  The only question is WHEN it blows up and how – not IF.  The problem is – not knowing the when and how can still mean you lose everything between then and now.  That’s what the gold bugs don’t get.  They assume gold is 100% ordained to be considered money in the “New Normal”.  But it’s not.  Nor will other property rights necessarily be respected the way you think they should.  The world is going to wake up one morning and find that massive amounts of wealth it thought it had doesn’t exist (pensions and other retirement promises).  People will find out that they worked for 30-40 years assuming they’d be able to retire at 65 – but it’s only the people that got into the Ponzi scheme FIRST that were allowed to leech of society for the last 30 years of their life.  People (countries) will find out that they worked hard, spent less then they made and lent that excess to people (countries) that spent more then they made – and they will never get paid back (China and OPEC I’m looking at you).

The smart money knows the US is SCREWED in the long run.  The Dems aren’t willing to take the pain of SEVERE austerity (cutting government spending by 35%-50%) and the Republicans aren’t willing to raise marginal tax rates back to where they were after WW2 to pay off the debt (not that they could if they wanted to – I’d leave the country if I caught wind of that – IT’S NOT MY DEBT).  The ONLY choice a rationale politician looking to get reelected can make is to let this thing run to its inevitable conclusion over the next 5-10 years – A US DEFAULT!

Back to the importance of float.  The Japanese and Europeans have even worse money problems then the US.  The Russians and Chinese are starting to catch wind that the trillions of debt they already own is impaired – and don’t want to buy more.  And PIMCO/Wall Street is only willing to buy if the Fed guarantees they will buy it back at a higher price.  So who but the Fed is left to buy $3 trillion of US debt every year.

So of course its flow and not stock.  Forget UNWINDING QE1 or QE2.  The Fed MUST continue with QE3, QE4, QE5…. or the whole thing will blow up on them.

Whether we go into hyperinflation or deflationary default is still an open question.  The Dems clearly prefer hyperinflation.  I think the Repubs prefer deflation.  But after they see what deflation really looks like – who knows!  Personally I think from a global perspective we will swing between ever increasing bouts of deflation and inflation.  Greece was small, and yet it caused the SPX to go from 1,250 to 1,000 (Summer 2010)  to 1,350 (late 2010 and early 2011) to 1,100 (summer 2011) to 1,450 (current).  You can already see the seasonal adjustment BS rolling over and setting up Sell in May and Go Away.  I expect these swings to get larger and larger as the defaulting countries get bigger and bigger.  At some point the Fed/ECB/BOJ will lose control and we will bust through 666 or 6,666 – or maybe both in the course of 3 months.  It’s going to be the most exciting time in Finance EVER, and this time we have triple levered ETFs to play with.  Since at the end of the day I expect the government to try and take everything I’ve got, I may as well try and make enough money to buy a yacht and private security force first!  :)

Fri, 04/06/2012 - 19:28 | 2323624 surf0766
surf0766's picture

So taxes were not cut after WWII.. hmmmmmmmm

Fri, 04/06/2012 - 20:49 | 2323806 Everybodys All ...
Everybodys All American's picture

Give me deflation with a strong dollar. Get rid of Bernanke and the current FED. Give me a president who is willing to call China a parasite on our jobs and economy. Give me my personal freedom back with a much smaller federal government and I'll be willing to bet we can reduce this deficit to zero in ten years.

Sat, 04/07/2012 - 06:46 | 2324235 WTFx10
WTFx10's picture

Declare a world war on the crminal banking cabal . Then the governments of the world can use whatever the cabal has stolen or created since its inception to pay the debts off to the enetities that deserve them, S/ince the majority of the current syndicate will be prisoners of war or dead. The world can then decide on a new monetary system without the monopoly of the cabal or the input from any of its former members. Bloody or not its the cartels choice. I can not fathom why the world lets this monoply continue, cut out the middlemen BANKSTERS and the world will benefit.

Fri, 04/06/2012 - 21:05 | 2323834 fonzannoon
fonzannoon's picture

Go ahead and play those triple etf's. Let me know how it goes with tvix.

Fri, 04/06/2012 - 21:41 | 2323903 dolph9
dolph9's picture

You can't beat them at the digital game, so don't try.

Think physical, in everything.  What do you physically have under your possession, at all times.  It's much, much harder to confiscate physical wealth.  They literally have to go door to door, and if they ever tried it, you would ultimately have revolution and civil war.

In my very humble opinion, the only things that are relatively safe are land/property owned outright, goods that can be bartered, cash, a basic bank account, and physical metals or an equivalent account of allocated metal.

They can hyperinflate, but then you'll still have goods and metals, and the whole system will reset anyway.  They can deflate, but then you'll still have cash rather than depreciating financial assets like stocks and bonds. 

Sat, 04/07/2012 - 04:18 | 2324173 Amagnonx
Amagnonx's picture

I'd better get clarification here - you think a basic bank account is safe in what terms?  I wouldn't be putting money into a bank account at this stage of the game - except if you are forced to use an electronic payment by some vendor.  You also suggest allocated metals account?  Again, I think at this stage of the game this is extremely risky - more than risky, its foolish.


The best thing people can do is increase their own level of self sufficieny as much as possible - this really isn't going to end well, and perhaps we do have 10 more yrs before a total catastrophe occurs, but we shouldn't be niave as to things that can and will happen before total collapse occurs.


The other thing that I highly recommened is to divorce yourself from your government - write a social contract and ask people you know to sign on to it - with some basic rules you all agree on, so you have some functional community in the event there is no other social structures left.  Divorce from the government means begin using alternative currencies RIGHT NOW - start building a community of people who you know will accept silver, gold, bitcoins or whatever else you might be forced to use in future transactions.

Fri, 04/06/2012 - 19:13 | 2323594 Sutton
Sutton's picture

"...Not to mention the Fed's ability to reverse course and tighten financial conditions substantially via forward guidance, rate hikes, or even asset sales should the need arise."


Fri, 04/06/2012 - 19:22 | 2323603 BlandJoe24
BlandJoe24's picture

My understanding is


1a.  There is an astronomical amount of global debt (duh ;-)   Much of it will vaporize in a black hole of credit destruction as the global ponzi collapses, but a significant amount will remain.

1b.   The big creditors of this debt will want to be repaid in a currency that has value, one that they can use. ie; They need a reserve currency.  That currency has been the US Dollar.

2.  The overwhelming majority of the global debt is demoninated in US Dollars.  

3.  Debtors wish for the USD to be devalued, so their debt burden is effectively reduced.

4.  Creditors will want the USD to maintain value. 

5.  Whomever has more power - debtors or creditors - will determine if to devalue the USD or keep it as the reserve.



Fri, 04/06/2012 - 20:12 | 2323727 Ned Zeppelin
Ned Zeppelin's picture

Exactly, hence my prediction that the value of the FRN fiat will be enforced at gunpoint in the context of martial law, and all PMs will be outlawed and confiscated.  There will be no "gold winners" allowed.  Unless, of course, there is a revolution. . .

Fri, 04/06/2012 - 19:20 | 2323606 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

‘5. We admit to being puzzled by the twists and turns in Fed communications over the past few months. On January 25….. 


i feel sick, again.

Fri, 04/06/2012 - 19:39 | 2323648 noob
noob's picture

don't worry they're... "7. Stepping back from the tactics, ..."

Fri, 04/06/2012 - 19:27 | 2323617 ffart
ffart's picture

Cliff's notes version: The market is a heroin addict that needs another fix?

Fri, 04/06/2012 - 19:27 | 2323618 Smartie37
Smartie37's picture

Flow, flow, float the boat, gently down the stream

Merrily, merrily, merrily, merrily, fiat's just a dream

OH NO, RAPIDS AHEAD !!!!!!!!!!!!!!!!!!!!!!!!!!!!

Time to bail OUT, hurry !  

Did Sack see the Rapids Approaching this week ???

Fri, 04/06/2012 - 19:28 | 2323627 chet
chet's picture

"We don't have sufficient time to go into the nuances of what this revolutionary run-on sentence means on this good Friday..."

You have to love Tyler criticizing others for writing run-on sentences :)

Fri, 04/06/2012 - 19:31 | 2323632 sschu
sschu's picture

I surmise Bam has given Bennie his marching orders for the rest of 2012: 

1. Get oil under $80 (which means PMs are also down)

2. Keep the SP above $1,300 (which implies more liquidity injection)

3. Find a way to finance the deficit (does anyone have an extra $1.6T sitting around?)

Bennie adds his own objective of keeping his owners in the game and there you have it.  At this point Bam has the upper hand as he is promising the status quo if he gets elected, has threatened to expose their criminality if they do not cooperate and a Repub President is more of a wild card for this WS criminal class.  So Bennie will do Bam’s bidding until November.  After that, who knows, Bennie etal are more likely in the driver’s seat.

Doing all of these is a real balancing act and who knows if even Bennie and his WS cronies can pull it off.  Stocks up, oil down and monetize the deficit?  Yea sure.


Fri, 04/06/2012 - 19:36 | 2323640 lolmao500
lolmao500's picture

Risk collapse : bad for everything.... commodities, treasuries, stocks...

Fri, 04/06/2012 - 19:45 | 2323659 razorthin
razorthin's picture

Albeit new all-time highs any sooner than 5 years from now would be an inflationary farce and sharpen the blades of the pitchforks, a take-down is needed first (now or soon) in order to make those new highs by the election.

Fri, 04/06/2012 - 20:00 | 2323700 Withdrawn Sanction
Withdrawn Sanction's picture

it may be not just the stock of securities held by the Fed but also the ongoing flow of purchases that matters for yields.

Really, Sherlock?  Yeah, a $2T balance sheet is huge compared to its pre-crisis levels of $800 to $900 billions for years.  But the real game is in the churn.  The Fed ran $26T, according to the GAO, through its balance sheet from the crisis onset until recently ($16T in various domestic programs, and $10T in CB swaps).

It was the same thing w/the housing GSEs (Fannie, Freddie and the oft-forgotten FHLBs) in the mid-2000s.  Their balance sheets were growing fast along w/the housing boom, but the real trouble was in the amount of ST CP being funnelled through their consolidated statement of cash flows...$4T a year, or nearly 10Xs their annual run rate for their book of business.

Yeah, stocks (levels) matter, but the flows will get you every time. Not sure what to make of Goldman's recent regaining of consciousness...they're either really stupid, or they think we are.  

Fri, 04/06/2012 - 20:05 | 2323711 Michelle
Michelle's picture


What this means is that the big players of the game keep sucking all the injected liquidity out of the system! The moment it finds its way into an asset, the players suck it right back out! What a scam! Same with the BLOWJOBS BILL - ANOTHER SCHEME TO MAKE SURE POOR PEOPLE REMAIN POOR BY INVESTING IN LIGHTLY REGULATED FRAUDULENT COMPANIES.


Sat, 04/07/2012 - 00:30 | 2324074 Mary Wilbur
Mary Wilbur's picture

Nobody forces them to make stupid decisions about how to spend their money.

Fri, 04/06/2012 - 20:14 | 2323729 Motley Fool
Motley Fool's picture

You are starting to catch on Tyler, though you still need to broaden your view.


The spice must flow. ^^

Fri, 04/06/2012 - 21:07 | 2323840 Tyler Durden
Tyler Durden's picture

What part of "it vindicates what we have been saying since day one" is unclear.

Sat, 04/07/2012 - 00:06 | 2324055 Zgangsta
Zgangsta's picture

Was that a question or a statement?

Sat, 04/07/2012 - 18:01 | 2325089 no life
no life's picture

Easy... They are setting the stage for more "LSAPs".  No offsetting sales, no "sterilization" bullshit.  We're going back to the 11 am can't miss ramp up on POMO days.  This is what makes it easy enough for Goldman and every other trader to follow.  It's a touchy subject so they wanna ease into it. Of course they will leak the information way beforehand.. once we start cratering it's the final piece of the puzzle, to usher it in officially.



Sat, 04/07/2012 - 18:59 | 2325188 WmMcK
WmMcK's picture


Sat, 04/07/2012 - 08:45 | 2324304 Bob
Bob's picture

No doubt about it. 

As to GS's seemingly evolving appreciation for flow, it seems pretty damn likely to me that this shift is occurring "wittingly." 

Regardless of the Fed's cover story for their actions, I would guess they have a larger view of the genuine situation. 

My question is why would GS be springing the truth on the muppets now?

Fri, 04/06/2012 - 20:19 | 2323739 Quinvarius
Quinvarius's picture

There is only one asset class that cares about stock and does not need flow for success. Sound money of the non paper kind.

Fri, 04/06/2012 - 20:21 | 2323745 strangeglove
strangeglove's picture

What would MDB do?

Fri, 04/06/2012 - 20:23 | 2323753 CrashisOptimistic
CrashisOptimistic's picture

And once again, not a word about oil.

They understand nothing.

Fri, 04/06/2012 - 20:27 | 2323761 Centurion9.41
Centurion9.41's picture

"good Friday"

It's Good Friday.

Fri, 04/06/2012 - 21:38 | 2323902 Goldtoothchimp09
Goldtoothchimp09's picture

a.k.a. religious zealots and fanatics peak out on their symbology and mythology

Sat, 04/07/2012 - 06:28 | 2324227 WTFx10
WTFx10's picture

I call them SYFY fans. The fartheat thing from science but enough fiction to keep them faithful.

Fri, 04/06/2012 - 20:40 | 2323793 Everybodys All ...
Everybodys All American's picture

It's time to get rid of the head of this ugly ignorant Fed policy. Let the market find it's own way Bernanke. Step aside and admit you are a failure. Everyone else already knows how this ends and you soon will as well.

Fri, 04/06/2012 - 21:08 | 2323841 monopoly
monopoly's picture

Next meeting at the "Pound and Pence". LMAO.

Why do I get the feeling Tyler does not have any of his accounts in Squid Land.

Fri, 04/06/2012 - 21:20 | 2323872 logicalthought
logicalthought's picture

This doesn't exactly sound like rocket science-- I mean, the price of ANYTHING is determined by the marginal buyer... Isn't that what Goldman is saying here? Additionally (and equally obvious), as long as the U.S. keeps racking up massive deficits, the Fed is like Lucille Ball on the chocolate factory assembly line, whereby it CAN'T stop buying or rates will soar.

Sat, 04/07/2012 - 11:44 | 2324439 Tyler Durden
Tyler Durden's picture

Who cares what it sounds like: the Fed has explicitly stated over and over that it is the stock that matters, not the flow, as doing so would be a first step to confirming it is all one big ponzi.

There is a lot of literature on the matter. Feel free to read it

Sat, 06/02/2012 - 01:39 | 2486833 WallowaMountainMan
WallowaMountainMan's picture

with the greatest of respect, ty zh for bring me along so quickly as to my being able to actually understand stock vs flow. i have been many places slightly behind those who were ahead of the game, and you zh are the top of the top.


as of this week, the fed has told congress that additional swap line authorization may be needed. that is tacit admission of need for flow.

its seems an attempt at continued insanity, but...

the flow could be stopped by not printing.

stopped flow is stock.

by accumulating stock and limiting the flow out (printing), the fed could (but may well not) let the dollar rise and crash commodities. u.s. corps are a-ok cause they got big cash increasing in relative worth. stock market falls, but new strong usa theme takes hold. common folk happy too. low commodity mean more job.

once in a life-time, bernak. once in a life time.

whether accurate or not, time will tell about my 'tale of the usa'. but it is coherent. only because i've read zh.


Fri, 04/06/2012 - 21:31 | 2323893 island
island's picture

The game will continue until the sheeple wake up, or every last dime has been redistributed to the 1%.

Fri, 04/06/2012 - 21:33 | 2323897 Eric L. Prentis
Eric L. Prentis's picture

Because the stock market is a discounting mechanism, it is “flow of money,” rather than the “stock of money” that is important. The flow is the future, stock is the past. The consequence of this is the Fed Quantitative Easing Paradox: the Fed cannot stop quantitative easing, nor can it continue.


The Federal Reserve, with QE1, makes the credit crisis twice as bad by postponing the economic crash. With QE2, the problem becomes four times worse. With Operation Twist, our credit crisis is now eight times as bad.


IT IS IMPOSSIBLE !!!!!!!!!!!! for the Fed to unwind their electronic printing without the US economy experiencing the economic crash we should have had in 2008, but now, eight times worse.


If the Fed delays the crash again, with QE3, the eventual economic crash will be 16 times as bad. The Fed is killing us by monetizing the debt, which Bernanke told Congress he would NOT do. This is why we have laws that prevent monetizing the debt, which the Fed and politicians ignored. Now we are all screwed.

Sat, 04/07/2012 - 15:29 | 2324888 css1971
css1971's picture

Or they can make it 1 times as bad for 16 times as long.

Sat, 04/07/2012 - 18:58 | 2325185 WmMcK
WmMcK's picture

Lost decade(s)

Sat, 06/02/2012 - 02:02 | 2486846 WallowaMountainMan
WallowaMountainMan's picture

"The flow is the future, stock is the past."


the flow is now, and only now.

stock was a moment that provides opportunity for comparision at that moment.

the flow, control p, is chosen not given. results vary given the choice the fed makes. slowing, relatively, our act of printing vs. the other major printers, results in the accumulation of flow here in the usa and transforms flow into stock (aka assets) here.

etc., as mentioned in above posting to another.

Fri, 04/06/2012 - 22:19 | 2323947 ReactionToClose...
ReactionToClosedMinds's picture

excellent ZH ...... have wondered alot lately if the key is the 'dynamic' versus the 'substance' (aka 'flow' & 'stock').  And 'gold' (aka Precious Metals) are 'flow' resistant one could argue ....   Deleveraging needs oxygen (aka 'flow') just like the shark needs water flow to breath ... otherwise you stop 'buying time'.

When all else fails,  initiate the riots ... who cares what the reasons are .....


Fri, 04/06/2012 - 22:22 | 2323951 q99x2
q99x2's picture

Did the Easter Bunny steal the Goose's golden egg or wasn't that chocolate you were eating?

Do you walk to work or carry your Bernanke?

Tax the flow not the Hiatus.

Do you prefer teargas or a higher tuition.

This does not computer.

Daisey Daisey ...


Fri, 04/06/2012 - 23:14 | 2324004 Bansters-in-my-...
Bansters-in-my- feces's picture

Seeing as no one brought it up,I guess I will,FUCK Goldman Sachs.

Fri, 04/06/2012 - 23:31 | 2324022 Clifhanger
Clifhanger's picture

All well and good, but rising commodity prices will crush the economy and the Fed is already taking lots of heat for that (as the sheeple/muppets are beginning to realize). Either way they're so screwed (and so are we)!

Fri, 04/06/2012 - 23:35 | 2324027 Dre4dwolf
Dre4dwolf's picture

"changes the rules of the game" yea they tend to do that when they break the rules and get caught.

Fri, 04/06/2012 - 23:41 | 2324032 Zgangsta
Zgangsta's picture

"Just when you think you have all the answers, I change the questions!" - Roddy Piper.

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