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John Taylor Warns Of A "Highly Disastrous, Totally Uncontrollable Inflationary Conflagration"

Tyler Durden's picture


A must read from FX Concept's John Taylor for anyone who has been following the global central bank's exponential balance sheet expansion over the past several months.

Forest Fires
March 1, 2012
By John R. Taylor, Jr.
Chief Investment Officer

During the past few years, the activist strain of central banking has spread around the world like wildfire, but the impact of this change on the future course of the global economy is very unclear. The number of countries involved now covers the developed world, the multitude of interventions in the financial market has expanded dramatically, and the amounts involved are exponentially higher than they were in 1979 when the Chrysler bailout began the process. Back then, the US Treasury guaranteed a $1.5 billion loan to the automaker, but the government demanded and received $2 billion in concessions from labor, the company, and other stakeholders. The star-crossed team of Treasury Secretary G. William Miller and President Jimmy Carter fell to Lee Iacocca’s political pressure 15 months before the 1980 election. This outcome differed dramatically from that of the Penn Central collapse, nine years before, as Congress had turned down its bailout request. By the mid-1980’s, the Chrysler rescue was seen as a great success, while everyone knew that the Penn Central refusal ended as a black hole, with many billions poured into Conrail and Amtrak just to keep the trains running.

With the arrival of Alan Greenspan activism took a big step forward, as he reversed the stock market crash of 1987, rescued Mexico with Bob Rubin in 1995, South East Asia in 1997, and then the global banking system, as it got in too deep with Long Term Capital (LTCM) in 1998. There were some failures, most notably Russia in 1998, but these interventions led directly to a feeling of complacency among investors as moral hazard, the Greenspan ‘put,’ and the President’s Working Group on Financial Markets became a widely perceived reality. Buy risk, you were safe, was the only way to go. Still, the monetary base, heart of the fractional reserve system, was largely untouched. Now, 14 years after LTCM, we know that the previous quarter century was just child’s play. The central banks have to pay a lot more for optimism today. Loans aren’t enough; now they must give the money away. Printing presses are running flat out (I know this is different than Zimbabwe, but…) and the developed world monetary base is almost three times higher than it was at the start of 2008.

All this money sloshing around is nothing but kindling. This is enough to start one hell of a large inflationary fire, but probably not until we have a deflationary panic first – which will add even more kindling to the pile. The progression from the $1.5 billion Chrysler rescue to the current multi-trillion dollar worldwide financial support operations seems to parallel the march from the first US forestry service attempts to limit forest fires about a century ago to the far more sophisticated efforts possible today. Although the forestry service is successful limiting small fires, the longer they suppress them, the higher the probability of a highly disastrous, totally uncontrollable conflagration. Studies have shown that the onset of that catastrophe is almost totally unpredictable. By suppressing small fires, the forests approach an unstable state where the dead wood, resulting from the natural cycle of birth and death in the wild, is piled high, ready to explode into flames if the conditions are right. The central banks and other governmental authorities have piled the money so high that bubbles are popping up everywhere. This might be different than the explosion in the cost of a can of beans in Zimbabwe, but it is an inflation nevertheless and it impoverishes those who do not own these inflating assets. Furthermore, as those assets are in a bubble, a sharp reversal in price could appear at any time, just like the fire might begin in the forest. With so many bubbles and so much kindling, volatility in price is a sure thing. As research has shown that the timing of these dramatic breakdowns, whether a forest fire, an earthquake, or a market crash cannot predicted, or mitigated as it runs its course, the time to control these crises is way before they start. The US Forestry Service knows that, please tell Bernanke!


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Thu, 03/01/2012 - 12:26 | 2212896 maxmad
maxmad's picture

Inflationary Conflagaration, bitchez!

Thu, 03/01/2012 - 12:27 | 2212902 redpill
Thu, 03/01/2012 - 12:32 | 2212924 economics1996
economics1996's picture

Last time I checked with the reserves parked at the Fed if they were loaned out the money supply would increase $15 trillion.  You might say that is a inflationary problem, Houston.

Thu, 03/01/2012 - 12:33 | 2212935 economics1996
economics1996's picture

All that "liquidity" Ben has been pumping into the economy.

Thu, 03/01/2012 - 12:43 | 2212981 Pladizow
Pladizow's picture

"The US Forestry Service knows that, please tell Bernanke!"

WTF - Bernanke is the gasoline!

Thu, 03/01/2012 - 12:48 | 2212996 clones2
clones2's picture

Sounds like this guy is going to be right whether we have Deflation or Inflation...  Nice work taking both sides of the argument...

Thu, 03/01/2012 - 19:03 | 2214967 Clowns on Acid
Clowns on Acid's picture on comprehension skills....taylor said first deflation...then...hyperinflation. Clearly not taking both sides.


Fri, 03/02/2012 - 05:42 | 2216203 Harlequin001
Harlequin001's picture

If he is saying a deflationay event being collapsing bond prices due to liquidity issues followed by rampant inflation then he is correct. That is precisely what happened at Weimar. If he is saying his deflationary event is a general fall in prices before rising inflation then he is dead wrong...

Thu, 03/01/2012 - 12:52 | 2213014 rlouis
rlouis's picture

Bernanke is enjoying his lies so much now he isn't worth listening to.

Thu, 03/01/2012 - 13:45 | 2213249 Sudden Debt
Sudden Debt's picture

He can say whatever he wants about inflation.


There is one thing that he can't hide. And that are the signs of hyperinflation.
And how do you see when hyperinflation is comming?
Simple: when the printing or coinage of the money costs more than the amount written on the currency.

In this case for example, euro is still safe. There a 2 euro coin costs about 30 cents to produce

In the US... A 5 cent coin costs 7 cents in metal prices alone....

Fri, 03/02/2012 - 05:49 | 2216206 Harlequin001
Harlequin001's picture

A hyperinflationary collapse was well underway until Greece impoloded. Foreigners were already selling US T's. Funny how the crisis in Europe resulted in higher demand for US T's just when they needed buyers to counter collapsing demand. The market can now persist for a maximum of as long as it takes for Europe not to recover, but to not get any worse. Then it ends for the US, badly.

Funny how a crisis in European banking suppresses precious metals, but that's manipulation for you...

Thu, 03/01/2012 - 13:03 | 2213059 peekcrackers
peekcrackers's picture


Smokey the bear says, 'Only You Can Prevent Wildfires!'

Thu, 03/01/2012 - 13:05 | 2213074 The Big Ching-aso
The Big Ching-aso's picture



Wanna see a current amazing exchange of hubris, chutzpah, and panache?.........................

Thu, 03/01/2012 - 14:01 | 2213318 kill switch
kill switch's picture

Fucking thieves and con men, NICE SUIT THOUGH!

Thu, 03/01/2012 - 14:37 | 2213487 walküre
walküre's picture

Herr Klaus Masuch, ich würde gerne mit ihnen unter vier Augen sprechen

Mr. Klaus Masuch, I would like to speak with you in private please.



Thu, 03/01/2012 - 14:39 | 2213496 There is No Spoon
There is No Spoon's picture

that's a great clip, thanks

Thu, 03/01/2012 - 14:21 | 2213383 vast-dom
vast-dom's picture

you mean he's the unstable state more at destabilizer conflagator for the dead wood zombie pyre!

Thu, 03/01/2012 - 12:49 | 2213002 JPM Hater001
JPM Hater001's picture

First I've heard there's a problem.

Do we have any corroborating evidence?


Thu, 03/01/2012 - 12:41 | 2212947 V in PA
V in PA's picture

Sounds like a 'Bubble Party'

Thu, 03/01/2012 - 13:03 | 2213067 ShankyS
ShankyS's picture

"Conflagration" sounds like something that would come out of my backside after burrito night. 

Thu, 03/01/2012 - 12:46 | 2212990 candyman
Thu, 03/01/2012 - 14:52 | 2213534 Red Raspberry
Red Raspberry's picture

They are hoping and you will be left with nothing but change.

Thu, 03/01/2012 - 13:42 | 2213228 Stuck on Zero
Stuck on Zero's picture

Gotta light?

Thu, 03/01/2012 - 12:28 | 2212906 American34
American34's picture

That is all you ever say. Do you have any imagination?

Thu, 03/01/2012 - 12:30 | 2212921 achmachat
achmachat's picture

some imagination, yes! he changed conflagration to conflagaration. That should count for something!

Thu, 03/01/2012 - 12:32 | 2212933 The Big Ching-aso
The Big Ching-aso's picture



The stock market has old Ben-wa Balls by the short and curlies.  It yanks and Ben sez thanks.

Thu, 03/01/2012 - 12:51 | 2213011 john39
john39's picture

nah, all part of the plan.  create a crisis, propose the solution....    is this case it will be a new currency of some sort, with greater centralization of power...

Thu, 03/01/2012 - 13:07 | 2213083 Cognitive Dissonance
Thu, 03/01/2012 - 16:06 | 2213962 eddiebe
eddiebe's picture

I don't believe it for a minute. The Bernank with his unlimited amounts of money is jerking the market around any way he wishes.

Thu, 03/01/2012 - 12:29 | 2212908 joq
joq's picture

Bernanke says John Taylor is totally off and wrong. Seems we should trust Dr Bernanke on this one.

Thu, 03/01/2012 - 13:30 | 2213167 pemdas
pemdas's picture

Nice one joq! Worthy of MDB.

Thu, 03/01/2012 - 14:18 | 2213394 viahj
viahj's picture

nah, it need more anti-libertarian rant

Thu, 03/01/2012 - 16:32 | 2214179 RossE9
RossE9's picture

my classmate's mother makes $84 an hour on the internet. She has been fired from work for nine months but last month her pay was $19551 just working on the internet for a few hours. Read more on this web site .....

Sun, 03/04/2012 - 14:37 | 2222013 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

His classmate's mother works for the Plunge Protection Team?

Thu, 03/01/2012 - 12:30 | 2212916 non_anon
non_anon's picture

For all nations have drunk of the wine of the wrath of her fornication, and the kings of the earth have committed fornication with her, and the merchants of the earth are waxed rich through the abundance of her delicacies.

And the kings of the earth, who have committed fornication and lived deliciously with her, shall bewail her, and lament for her, when they shall see the smoke of her burning,

And the merchants of the earth shall weep and mourn over her; for no man buyeth their merchandise any more:


Thu, 03/01/2012 - 13:13 | 2213105 JPM Hater001
JPM Hater001's picture

Isn't there suppose to be something about smooting in there?

Thu, 03/01/2012 - 13:45 | 2213250 gaoptimize
gaoptimize's picture

I think this is interesting.  Who do you think "her" is about in the current context (in a allegorical sense, of course)?  Fiat money?  Credit?  Statist socialism and dependency?  Or since these things are mutually enabling, all of the above? 

Thu, 03/01/2012 - 17:27 | 2214603 non_anon
non_anon's picture

Standing afar off for the fear of her torment, saying, Alas, alas, that great city Babylon, that mighty city! for in one hour is thy judgment come

And the merchants of the earth shall weep and mourn over her; for no man buyeth their merchandise any more:

The merchants of these things, which were made rich by her, shall stand afar off for the fear of her torment, weeping and wailing,

And cried when they saw the smoke of her burning, saying, What [city is] like unto this great city!

Thu, 03/01/2012 - 14:12 | 2213365 gaoptimize
gaoptimize's picture


It goes on sounding like a recitation from the Book of Armaments by Brother Maynard from Monte Python's "Holy Grail"

"12:The merchandise of gold, and silver, and precious stones, and of pearls, and fine linen, and purple, and silk, and scarlet, and all thyine wood, and all manner vessels of ivory, and all manner vessels of most precious wood, and of brass, and iron, and marble,

13: And cinnamon, and odours, and ointments, and frankincense, and wine, and oil, and fine flour, and wheat, and beasts, and sheep, and horses,..."

Skip a bit brother.

Thu, 03/01/2012 - 12:31 | 2212925 Caviar Emptor
Caviar Emptor's picture

Biflation will make sure that inflation looks tame. But it ain't. Just like the ground can look high when you're standing in quick sand. 


Keep in mind this: TPTB in other countries manufacture inflationary conflagrations when they want to undermine the political system. Time honored tradition. They can blame whoever's in power and destroy everybody else's wealth

Thu, 03/01/2012 - 12:58 | 2213038 Hugo Chavez
Hugo Chavez's picture

It annoys the hell out of me to hear the term biflation.

You dont need to reinvent the wheel.

There is already a word for what we are going thru.

Thu, 03/01/2012 - 13:01 | 2213055 V in PA
V in PA's picture


Thu, 03/01/2012 - 13:02 | 2213060 Hulk
Hulk's picture

Bye Flatulation then, just so we don't piss off ole Hugo...

Thu, 03/01/2012 - 13:52 | 2213280 Caviar Emptor
Caviar Emptor's picture


Thu, 03/01/2012 - 14:00 | 2213309 Caviar Emptor
Caviar Emptor's picture

@Hugo: Let me just extend the annoyance a minute longer. 

The reason for a new term is it's a new circumstance that hasn't been described before and which, CLEARLY, even the venerable economists at the Federal Reserve have been unsuccessful in dealing with. 

Some of the classic disasters in history have occurred when people refused to accept that the old paradigm no longer applies to a new situation. Wars have been lost, famous ocean liners have sunk, and empires have collapsed with this. 

Unlike with stagflation, a term which was new in the 1970s because that situation was new, there is no wage inflation, no housing inflation, low demand and overcapcity. There is also a global economic dimension which didn't exist at that time. Finally there have been 40years of unfettered monetary expansion and experimentation since that time. The more we try to solve today's problems with yesterday's tools, the more danger we're creating

Sun, 03/04/2012 - 14:35 | 2222005 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

A Depression.

Thu, 03/01/2012 - 13:32 | 2213183 centerline
centerline's picture

Is for sure the frog in boiling water analogy.  The problem is that water is heating up too fast.  This sort of disaster would take generations to unwind (err... crush the masses and change social behaviors).  That sort of time isn't possible; hence, something is going to break sooner rather than later.  We probably won't even know when the first domino falls.  The friggin connections are so many and so complex.  Chances are when it let's go, it will happen fast.

Sun, 03/04/2012 - 13:15 | 2221815 FoodStampPrez
FoodStampPrez's picture

We have:

Deflation in things we want (electronics, etc.)

Inflation in things we NEED (oil, medical, food, etc.)


Thu, 03/01/2012 - 12:32 | 2212928 Mercury
Mercury's picture

Awesome.  I've been using the dry-brush-buildup-in-the-forest analogy for a while too when people have asked me about the market/economy.  It may have been in a ZH post from last week too.

Anyway, now I have a link.

Thu, 03/01/2012 - 12:33 | 2212939 fonzannoon
fonzannoon's picture

There is a dry bush joke in there somewhere.

Thu, 03/01/2012 - 12:38 | 2212956 HD
Thu, 03/01/2012 - 12:48 | 2212991 Mercury
Mercury's picture

You mean the former president's drinking habits or...umm....

Also notice how Taylor describes a scenario where no longer resistible deflation (which should be allowed to happen naturally after a credit binge/misallocation of capital) will be fought (even harder than it already is) with panic and centrally induced hyper-inflation.  This has long been a main prognosis from ZH (as far as I understand anyway).

Maybe not so fringey after all...

Thu, 03/01/2012 - 14:40 | 2213498 misnomer
misnomer's picture

All good loggers know that you have to let some fires burn to keep a healthy forest.  Let the TBTF fuckers burn, baby, burn!


Thu, 03/01/2012 - 12:37 | 2212949 HD
HD's picture

The sad thing is - the central banks and politicians can't even consider that we are headed for a cliff. They simply dismiss the possibility even exists. They desperately are trying to keep the system together at the top, while the bottom crumbles...

Thu, 03/01/2012 - 13:08 | 2213084 pirea
pirea's picture

they are selected and paid to do this. this is why the system can not be corrected from inside. either will collapse by itself or changed by revolutionary forces from outside.

Thu, 03/01/2012 - 12:39 | 2212958 Shameful
Shameful's picture

Tell Bernake what?  He's not this stupid, he knows what he is doing.  Really what are the odds that every central banker could be this economically and financially illiterate? They know what they are doing and are getting theirs out of it, and they will tell the Idiocracy masses that 'no one could have seen it coming' the dumb masses wishing to beleive everyone as foolish as they are.

Betting on the CB's pillaging for the big boys gain is the best bet their is. Betting on them to do the right thing is for suckers and chumps.

Thu, 03/01/2012 - 12:45 | 2212986 Sisyphus
Sisyphus's picture

Welcome back!

Thu, 03/01/2012 - 12:45 | 2212988 SheepDog-One
SheepDog-One's picture

Planned biggest transfer of wealth ever, the central banks are buying up everything in sight with free money. They dont care, and no one will stop them because theyre all getting paid. Meanwhile everyone is convinced theyre doing it for them so they can have a comfy pension retirement at The Villages playing shuffleboard. 

Big LULZ comin soon to everyone.

Thu, 03/01/2012 - 12:48 | 2212997 Shameful
Shameful's picture

And then remake the system.  If it's needs confidence back it with something for a few decades, long enough for the cattle to forget, then run them into the slaughterhouse again. Every iteration is an increase of power and wealth, why stop it when the masses seem incapable of caring or catching on?

Thu, 03/01/2012 - 13:37 | 2213205 centerline
centerline's picture

Same as it ever was...

This time there is the internet though.  But, the counter for this is to bombard people with so much data they simply shut down.  Hiding the truth in plain sight really isn't that hard.  Likewise, the rat race is at fever pitch and most people don't have time to give a rats ass.  Funny how they never put 2 and 2 together and really question the acceleration.  

Thu, 03/01/2012 - 13:50 | 2213269 centerline
centerline's picture

Bookmarked AND shipped to a few people I know who appreciate this. Thanks. Seriously cool link.

So much truth in that link it is hard to beleive that more people are not aware of what is being done to them - how it shapes them, and society as a whole. Even more... how it can be used against them over time. Shit, it is the very nature of man (in addition to bath math) that keeps leading me back to the conclusion that there isn't any good way out of the mess that we are in.

Thu, 03/01/2012 - 13:58 | 2213304 HD
HD's picture

I enjoyed it too mate. thanks +1


Thu, 03/01/2012 - 15:30 | 2213751 SHRAGS
SHRAGS's picture

Thanks Conrad, I finished 1984 last week, Brave New World next...

Sun, 03/04/2012 - 14:32 | 2221998 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Great link.  Thanks.

Is where we're heading some combination of both?

Thu, 03/01/2012 - 12:56 | 2213029 HD
HD's picture

Ben thinks he knows what he's doing. Allowing the world's poor and working class to pay for the sins of the bankers through inflation - it's theft but if it's done over a long enough time it will work. Unfortunately, after spending trillions to hold up the worlds markets, employment and growth are nowhere to be found and inflation is creeping in. For the world's 99% - everything they own is depreciating while everything they need costs significantly more.

TPTB are destroying their own wealth and power and don't even realize it.

Thu, 03/01/2012 - 17:38 | 2214665 victor82
victor82's picture

But look back through history. It is in the Nature of things for people to kick the can down the road. There is nothing new here. The Bernanke is simply taking the path of least resistance, hoping everyone will do what they always do in this situation, blame the President.

Thu, 03/01/2012 - 12:40 | 2212961 Hugo Chavez
Hugo Chavez's picture

Just dollar cost average into a diversified portfolio with volatility levels you can live with. Use assets that have low correlations with each other.

You cant predict what will happen. Adopt a somewhat fatalistic attitude and enjoy your life.

Thu, 03/01/2012 - 12:41 | 2212969 Savonarola
Savonarola's picture

Hexagram 63 Chi Chi - Completion
Water over Fire Order, Balance, Awareness, Culmination. Out of chaos comes order. This can quickly change. A warning here not to relax the discipline that has got you this far. It is necessary to be on guard against falling into chaos again.
Hexagram 64 Wei Chi - Before Completion
Fire over Water Caution, regeneration, Potential, Clarity. During regenerative times such as these there is intense pressure to succeed but, to get anywhere worthwhile, you need to proceed cautiously and with firm dedication to higher principles.


Thu, 03/01/2012 - 12:43 | 2212974 disabledvet
disabledvet's picture

"contain, contain, contain." that's why the current Japanese response to Fukushima is worse than the disaster itself and that's why our PTB (Paulson, Geithner, Bernanke) did EXACTLY the right thing when Wall Street had it's "Financial Fukushima." Contain...contain...contain. "the fact that the Fed can command low interest rates does not mean such rates spread to you and me." this was the "fear to be obviated" and to date it has worked beyond anything I thought mathematically possible. (and I did scoff/laugh/pontificate at the futility of even being able to do this for the government at the time.'I WAS WRONG!) if jobs return then consumption returns and growth returns...yadayadayada.

Thu, 03/01/2012 - 13:00 | 2213045 adr
adr's picture

Jobs will return but will pay far, far less. When boomers start dying the massive consumption collpase will start. Many boomers continue to make more on pensions, not actually working at all, than amost anyone in the 20-40 age range.

How many retired teachers are sitting on their ass making $70k a year on a pension, while new young teachers are lucky to get hired at $30k if at all? One way for young teachers to get into a school system has been removed as retired teachers have decided to double dip, by teaching as substitutes.

The wealth and consumer consumption levels of the 40 and over crowd dwarfs the ability of the younger generation. Yes, the coveted 18-24 crowd still consumes a lot. However, the majority of the are unemployed or work minimal wage jobs and live in mommy and daddy's basement. Without mom and dad's money there is no consumpton for them.

The current 30-40 generation with kids can not afford to house their children till age 30, enabling the current iConsumer. Ask yourself how the entire working population of the United States is going to carry a $15 Trillion GDP without boomer level wages.

Thu, 03/01/2012 - 13:38 | 2213215 Conrad Murray
Conrad Murray's picture

Boomers starving to death and their retarded Facebook children cannibalizing the remains...what a wonderful world.

Thu, 03/01/2012 - 14:20 | 2213409 roadhazard
roadhazard's picture

Looks to me like it's a good thing mom and dad Have money and a home so the youth at least have somewhere to go. It's time the youth stand up and demand to be paid a living wage.

People "sitting on their ass" WORKED for that pension. Nothing is FREE, son, not pensions, SS or Medicare. It's not the old folks fault you accept a low wage. 

Sun, 03/04/2012 - 14:15 | 2221954 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Then they should get back what they paid into it.

Sun, 03/04/2012 - 14:12 | 2221946 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

The sad thing is the younger generation won't be able to kill many of the boomers that fucked everything up because the boomers'll all be dead before the dumb younger fucks figure out they got scammed.

If  the younger generation could stop texting for 2 seconds they might figure it out. lol

Thu, 03/01/2012 - 12:43 | 2212976 SheepDog-One
SheepDog-One's picture

Certain massive catastrophy is innevitable....'but not for a while yet'.

Yea whatever.

Thu, 03/01/2012 - 12:46 | 2212989 Mario55
Mario55's picture

Mr. Taylor should concentrate on the management of his funds that have not done greatly recently rather than becoming the new Mr. Roubini...

Thu, 03/01/2012 - 12:47 | 2212992 spanish inquisition
spanish inquisition's picture

I think Ben Bernanke is on the right track in looking to avoid the Great Depression II. America is about bigger and better. I think he thinks, he can do better and I agree! He will go down in history helping the world avoid a mere Great Depression II.

Henceforth, the coming conflagration shall here be known to future history students as the GREAT BERNANKE of the 20teens. 

I can almost imagine some kid sitting in class 50- 100 years from now going "Cool, but I think I can do better."

Thu, 03/01/2012 - 12:49 | 2213003 SheepDog-One
SheepDog-One's picture

No way can you be serious, I guess I just cant spot the <sarc>.

Thu, 03/01/2012 - 13:43 | 2213223 Conrad Murray
Conrad Murray's picture

Now I understand why nobody expects you. Who would have ever thought a drool-stained buffoon would make its way out of the dumpster and onto the tubes?

Thu, 03/01/2012 - 12:49 | 2213000 Eisenhorn
Eisenhorn's picture

"EU's Juncker says Eurogroup agrees that 2nd Greek bailout still conditional on positive assessment of prior actions and successful bond exchange

- Eurogroup confident that the terms of Greek bond swap will appeal to private creditors with the broadest participation"



Thu, 03/01/2012 - 12:50 | 2213008 Yen Cross
Yen Cross's picture

 You know shit is getting bad when the undertaker wants your gold. You guys have gotta read this one!

Thu, 03/01/2012 - 12:56 | 2213025 fuu
fuu's picture


Thu, 03/01/2012 - 13:14 | 2213111 Eisenhorn
Eisenhorn's picture

Don't you mean "ghullish"?

Thu, 03/01/2012 - 15:39 | 2213791 fuu
fuu's picture

Nope. Ghul refers to demons.

Thu, 03/01/2012 - 17:24 | 2214591 Clowns on Acid
Clowns on Acid's picture


Thu, 03/01/2012 - 16:36 | 2214232 zerozulu
zerozulu's picture

Point I took from this story is,"charged with providing false information to pawnbrokers". Every one else who need to see pawnbroker at least make a spoon of it.

Thu, 03/01/2012 - 17:12 | 2214522 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

Hasn't this arways been the case?

Good reason to get into a business that everyone is "dying" to get into!

Sun, 03/04/2012 - 14:08 | 2221934 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

It's not like they were going to need it.  Unless Bernanke's inflating has reached heaven & hell too?

It's not like he was depriving them of property.

Thu, 03/01/2012 - 12:58 | 2213013 oddjob
oddjob's picture

 Years of forest service meddling have resulted in a huge buildup of fuel on the forest floor. The controlled burns they start, and usually lose control of, are a direct symptom and result of their own mismanagement.

Thu, 03/01/2012 - 13:33 | 2213189 Jena
Jena's picture

Exactly.  In decades past, loggers thinned forests by cutting down particular trees that were thoughtfully chosen by size and position.  That allowed enough sunlight to reach the forest floor so new growth coupld proceed.  In addition, logging roads were cut through terrain so they could reach target territory and that provided natural fire breaks.  

Then, as corporate logging took over, clear cutting became the norm.  Often replanting didn't occur under their watch and it left the land vulnerable to erosion if there was enough water run-off or wind to carry it.  It'd take decades for clear cut areas to recover unless the land was slated for housing or some other development. 

Predictably, environmentalist demands shut down clear cutting, logging roads and much of the reasonable logging.  Now these area are choking off new growth because light can't get past the tree canopies in many areas and as oddjob stated, the massive buildup of fuel on the forest floor is an inferno just waiting to happen.  When these fires do occur, they aren't the simple fires of the past which are part of the natural cycle.  Instead they are massive fires that destroy everything in sight and burn the top eight to ten inches of soil so that nothing will grow in those areas for years to come.

Forests are a renewable resource and the people who knew it the best were the one whose livelihoods depended on them being well-managed.  The forest service, despite all its science, does not seem to be on the same page.

Thu, 03/01/2012 - 17:20 | 2214576 Debt-Is-Not-Money
Debt-Is-Not-Money's picture


You seem to be suggesting that we thin-out particular international banksters that are thoughtfully chosen by size and position.

Interesting thought- I couldn't agree more!

What tools should we use?


Thu, 03/01/2012 - 23:18 | 2215668 Jena
Jena's picture

Debt-Is-Not-Money, trees have innumerable uses but I'm not sure one can say the same about international banksters.  


Thu, 03/01/2012 - 12:54 | 2213017 YesWeKahn
YesWeKahn's picture

Add to Robo trader's "Bernanke the greatest man on earth" list:


1) single handedly causes the "great inflation".

2) was the only one who wasn't able to maintain the price stability

Thu, 03/01/2012 - 12:56 | 2213026 Catullus
Catullus's picture

The outright monetization of treasury bonds was the down rabbit hole moment. There was never a real justification for it other than to protect a hedge fund redemption liquidation in late 2010. In retrospect, the Fed probably wishes they had never done QE 2. They got really cocky with their "success" (by that I mean, not having all of western finance collapse). There was just no reason to buy USTs. They monetized the collateralizing instrument. That's off the deep end kind of stupid.

The banks have parked this cash for way too long. Where are the next big cash flow out situations to go? The only major ones are the derivatives exposure, which we're seeing is not really a problem. And since most of the derivatives exposure is FX and IR swaps, the banks have the Fed puts already squarely in place. It's getting close to that time where they unleash their reserves on the world. They only have time and being crowded out to lose. I'm beginning to think that we just skip the deflation/liquidation panic phase altogether and go straight to the currency crisis phase.

Thu, 03/01/2012 - 12:56 | 2213028 LookingWithAmazement
LookingWithAmazement's picture

"John Taylor Warns Of A "Highly Disastrous, Totally Uncontrollable Inflationary Conflagration"

Finally, Armageddon. How about Japan after 22 years of printing?

Thu, 03/01/2012 - 13:14 | 2213081 EmileLargo
EmileLargo's picture

The Japanese didn't print on anything like that kind of scale after their 1990 bust. And they used their trade surplus to finance a budget deficit. Enitrely different thing. They will get their hyperinflation now anyway but their monetary policies in the 1990s were not hyperinflationary. They are becoming hyperinflationary now.

Thu, 03/01/2012 - 13:08 | 2213085 adr
adr's picture

Japan didn't have massive inflation because prices were already high and the money did not go into circulation. In case you didnt know the money that Japan printed was bought up by its population as savings. That money has been held for the last 20 years and is only now causing problems due to the increasing age of that population. As the bonds are redeemed for retirement, Japan is toast. The younger generation does not have the money or the desire to purchase new debt of the level needed to pay off the prior printfest.

Japan postponed their armageddon for a generation. This is the exact outcome the current power holding generation, the boomers, is trying for. Hold off total collapse for 20 years so they can all die in peacefull luxury. Let the fucking kids deal with the disaster.

Thu, 03/01/2012 - 13:43 | 2213239 WillyGroper
WillyGroper's picture

Your overgeneralization of blaming "The Boomer's" for your inablility to carve out your existence is getting old.  

Thu, 03/01/2012 - 13:56 | 2213294 centerline
centerline's picture

The first part of your statement is in conflict with the second part in such a tragic way it appears it may be impossible to pull your head out of your own ass as well.

Thu, 03/01/2012 - 13:00 | 2213046 Sutton
Sutton's picture

Trillions mean nothing to me anymore.  Call me when we're talking QUADRILLION.

Oh, yeah, swap dealers hold 1.5 Quadrillion dollars worth of derivatives on their books.

It's all fully hedged I know .  No worries.  Wall Street never breaks down.

Thu, 03/01/2012 - 13:00 | 2213047 monopoly
monopoly's picture

And I am prepared and ready.

Thu, 03/01/2012 - 13:03 | 2213069 Snakeeyes
Snakeeyes's picture

I believe Taylor!!!!!!!!!!!!!1


Thu, 03/01/2012 - 13:06 | 2213075 EmileLargo
EmileLargo's picture

The inflation will get to the can of beans eventually. It always does. Anyone hoping to confine the inflation to "assets" and not affect the prices of "goods" is living in dreamland.

Thu, 03/01/2012 - 13:15 | 2213116 NakedSwanTrading
NakedSwanTrading's picture

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Thu, 03/01/2012 - 13:16 | 2213117 EmileLargo
EmileLargo's picture

I like Marc Faber's latest newsletter. He talks about the possibility of gold at $50,000 an ounce at some stage. But then he says regrettably, "if gold is at $50,000 an ounce, we will probably be in the middle of WWIII."

Thu, 03/01/2012 - 13:19 | 2213124 EmileLargo
EmileLargo's picture

The problem did not start with Chrysler, it started with the creation of the Federal Reserve and the introduction of the income tax. The New Deal was also a massive step in this direction.

The rest, as they say, is history.

Thu, 03/01/2012 - 17:29 | 2214616 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

You left out the 17th amendment which effectively transformed our Republic into a Democracy by removing state control over federal spending. The Federal Reserve System (not Federal and has no reserves), and 16th & 17th amendments were all placed into effect in 1913 even though these amendmants were not constitutionally ratified and the Congress had no legal authority to delegate to others that which it's required to do under the Constitution.

Thu, 03/01/2012 - 13:22 | 2213135 azzhatter
azzhatter's picture

Blow me Ben

Thu, 03/01/2012 - 13:33 | 2213187 krispkritter
krispkritter's picture

Serfs: Help, help! We're being repressed! (Bloody peasants!)

Homes: Help, help! We're being depressed!

PIIGS: Help, help! We're feeling distressed!

Bennie: Ron, Ron! Is this a test!

Corzine: Hah, hah! I don't foresee an arrest!



Thu, 03/01/2012 - 13:33 | 2213192 Vince Clortho
Vince Clortho's picture

Trying to suck in some more sucker shorts.

Thu, 03/01/2012 - 13:40 | 2213221 Stuck on Zero
Stuck on Zero's picture

Sign over Obama's desk: "We will keep giving the banks trillions until the economy improves."

Thu, 03/01/2012 - 13:55 | 2213292 DavidC
DavidC's picture

"The US Forestry Service knows that, please tell Bernanke!"

Bernanke either doesn't know about, or refuses to acknowledge, the natural ebb and flow of ALL biological or other systems.


Thu, 03/01/2012 - 13:59 | 2213308 KingdomKum
KingdomKum's picture

we few, we happy few, we band of silver holders !

Thu, 03/01/2012 - 14:02 | 2213323 proLiberty
proLiberty's picture

It is a grave mistake to assume that an episode of deflation must come before rampant inflation.   The only thing we need is for some large amount of "liqudity" to be used to bid for labor or goods.  It will automatically trigger a rise in wages and prices. 

Thu, 03/01/2012 - 14:02 | 2213324 asteroids
asteroids's picture

I see a generation retiring into poverty.

Thu, 03/01/2012 - 14:15 | 2213334 rufusbird
rufusbird's picture

"Nice to see you."

When I first heard Ben Bernanke say to Ron Paul that it was “Nice to see you.” In the Testimony yesterday, I though he was being disingenuous. After reading James Reckards comments in “Currency Wars” last night I am not so sure he was not serous. After all, all he was going to do was obfuscate and mislead and justify and rationalize his agenda anyway. But first read Rickards where he is talking about the theories of Bernanke's former colleague at Princeton, Lars Svensson...

“Svensson also describes the difficulties of manipulating the public in the course of pursuing these policies. :

[If the central bank could manipulate private-sector beliefs, it would make the private sector believe in future inflation, the real interest rate would fall, and the economy would soon emerge from recession...The problem is that private-sector beliefs are not easy to affect.]

“Here was Bernanke's entire play book--keep interest rates at at zero, devalue the dollar by quantitative easing and manipulate opinion to create fear of inflation. Bernanke's policies of zero interest rates and quantitative easing provided the fuel for inflation. Ironically, Bernanke's fiercest critics were helping his plan by incessantly sounding the inflation alarm: they were stoking inflation fears with language no Fed Chairman could ever use himself.”

So, folks, from the insight this quote provides, am I wrong to conclude that this may explain he smug look he has (that people always comment upon) every time Ben Bernanke speaks with Ron Paul?

Sun, 03/04/2012 - 14:00 | 2221914 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

The problem is, if what they hypothesize comes true, the masses will want to hang Bernanke from a tree while they'll be thanking Ron Paul for warning them.

No 1 can hide forever & if U're the guy the world blames for inflating things until they cascade into a global collapse, U end up as popular as the idiot that ran Germany's central bank in the 30s.

Thu, 03/01/2012 - 14:36 | 2213484 New American Re...
New American Revolution's picture

Sorry, he can't hear you.  He has beans in his ears.

Thu, 03/01/2012 - 15:07 | 2213499 slewie the pi-rat
slewie the pi-rat's picture

it's only c(0^0)rdinated global easing to benefit criminal cabals via BK fascist fronts

the doodFreekBill gave the FED unheard-of powers to regulate bankstering, or so the legend goes...

...everything is screwed down tight...

personally, i'd give benzelbub a B+ right now, but as far as chairsatans go, none haz had his new "behind the curtain" console deluxe, so my perspective may change

maybe even all the way "down" (l0l) to the isda;  i guess it is better for the banks to sell insurance and then vote not to pay the policyholders!  how democratic!  it thought (and still think) they might like to own some of these bonds, but it will probably be cheaper to buy them in the market and keep the change from the CDS sale

then again, he might decide to change this first ruling, for some reason, too! so, by all means put on the popcorn and stay tooned!

Thu, 03/01/2012 - 14:46 | 2213517 Yardfarmer
Yardfarmer's picture

tis interesting that Matterhorn's Egon Von Greyerz employs the same metaphor of an all encompassing forest wildfire in a recent interview at King World News, suggesting that the devastating financial conflagration ignited by our economic engineers must run its natural course, completely laying waste to the very foundations of the endemic systemic corruption of the global economy before the ground is cleared for a new beginning. one can question such a wildly optimistic outcome, but even more cogent is his prediction of Au to $10,000 and Ag to $500, probably a more sober and reasonable expectation.

Thu, 03/01/2012 - 16:20 | 2214056 eddiebe
eddiebe's picture

I think that much more than half the people hoping that the 'shit will come down' have very little concept of how bad things could get in a hurry, and that the comforts we are enjoying now will be remembered by them with great longing. Careful what you wish for.

Thu, 03/01/2012 - 18:49 | 2214345 Mary Wilbur
Mary Wilbur's picture

The forest fire analogy comes from a book published in 2000 which revealed for the common man the results of more than a decade of research and experiments in the field of nonequilibrium physics. It seems that catastrophe is built into the fabric of both nature and history and can be described by very simple mathmatics. It is inevitable, but it cannot be predicted. The book is a revelation to me and an excellent read: "Ubiquity, Why Catastrophes Happen," by Mark Buchanan.

Thu, 03/01/2012 - 17:37 | 2214654 andyupnorth
andyupnorth's picture

1. The sociopaths first crash the economy, depress prices, and print up an insane amount of fiat.

2. The sociopaths then buy up everything for super low prices (relative to their insane amount of fiat).

3. The sociopaths then let hyperinflation loose on the peasants.  The peasant have worthless fiat; the sociopaths have all the assets... and power.  The peasants become slaves.

Ben Bernanke is one among many sociopaths.

Thu, 03/01/2012 - 18:32 | 2214870 pussum207
pussum207's picture

Enough already with that business about the US forestry service - this is about the 15th time I have read that analogy.

Fri, 03/02/2012 - 08:37 | 2216333 cnhedge
cnhedge's picture

inflation is the inevitable outcome.

Fri, 03/02/2012 - 15:28 | 2217607 robertocarlos
robertocarlos's picture

Smoot Hawley 1930?

Oh good grief. I'm a day late and a dollar short.

Sun, 03/04/2012 - 13:55 | 2221898 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

With interest rates @ zero %, they're attempting a mathematical impossibility.  Print money to fund government while interest accrues on money owed, @ the same time the economy is declining.

The US banking system & the economy cannot heal.

The money printing has to keep increasing exponentially until the whole thing blows itself to smithereens.

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