Lockhart Hints At More QE: "No Policy Option Can Be Ruled Out At The Moment" And "Slow Growth Bigger Problem Than Inflation"

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Wed, 08/31/2011 - 14:08 | 1619613 Long-John-Silver
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Insanity is doing the same thing over and over again expecting a different outcome each time.

Wed, 08/31/2011 - 14:13 | 1619638 baby_BLYTHE
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the problem is the government cannot tax in a Deflationary environment, the FED knows this.

That is why there mandate should be re-written to more accurately describes their purpose: INFLATE or DIE trying.

Wed, 08/31/2011 - 14:20 | 1619681 russki standart
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Deflation is death to big government and banksters.  Hyperinflation is a safer choice because the political leadership has some hope for hanging onto power, instead of hanging.  QE to infinity!

Wed, 08/31/2011 - 15:06 | 1619927 spiral_eyes
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QE is a safer choice than actually addressing the underlying fundamentals — 

military overspending, political corruption, public indebtedness, withering infrastructure, oil dependence, deindustrialisation, the withered remains of multiple bubbles, bailout culture, the derivatives-industrial complex, food and fuel inflation and so forth.


Wed, 08/31/2011 - 15:21 | 1619986 Mountainview
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Trade policy has to come forward now!

Wed, 08/31/2011 - 15:57 | 1620223 topcallingtroll
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Dont forget a sheeple wanting more goodies from the government and becoming increasingly dependent, plus the scumbag politicians who will plunge this country into a debt nightmare to further their own interests.

Wed, 08/31/2011 - 17:34 | 1620659 TruthInSunshine
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QE3 or QE4 or QE5...blah blah blah.


The economy is going to shit fast, and QE only accelerates the deterioration by causing prices of commodities, but not wages or incomes (or interest income), to spike, thus dampening consumption.

Stick QE up your ass, Dudley, Evans, Bernanke & Lockhart, you incompetent imbeciles.

Wed, 08/31/2011 - 16:13 | 1620315 RSloane
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Nicely put!

Wed, 08/31/2011 - 16:36 | 1620426 Alpha Monkey
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 Hyperinflation is a safer choice because the political leadership has some hope for hanging onto power, instead of hanging.

Hyperinflation will allow the "leadership" (wall street, etc) to grab up REAL assets with the new money being funneled to them first. That's why it is the prefered choice of the ruling elite.

Wed, 08/31/2011 - 16:45 | 1620468 Sudden Debt
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Very good point!

Never thought about that one...

But nobody accepts the new currencies and likes to stick to barter or foreign currencies.

Normally they get nationalized but the figures mostly stay in power.

I don't know if the go well in those situations.

But I really would like to know.


Wed, 08/31/2011 - 14:30 | 1619742 Yardstick of Ci...
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The Fed mandate should be exactly this:

"Inflation, bitchez."

Wed, 08/31/2011 - 14:33 | 1619755 Everybodys All ...
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Wed, 08/31/2011 - 14:35 | 1619771 Sudden Debt
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First inflation was only going to be a problem when it would be at 3%..... now it's at 4%.... and suddenly inflation isn't a problem anymore...

Growth is always good, untill it goes parabolic above 6% because than it overheats and causes more inflation...

Why not just do nothing?


Wed, 08/31/2011 - 15:38 | 1620085 disabledvet
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No shit. Phucking poor people. Play bridge or something.

Wed, 08/31/2011 - 14:09 | 1619616 HelluvaEngineer
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This reminds me of the Al Gore talking doll:


Wed, 08/31/2011 - 14:22 | 1619692 russki standart
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Hillarious! You are hearing me talk, the ultimate in political non communication. At least the doll does not need a teleprompter.

Wed, 08/31/2011 - 16:14 | 1620320 RSloane
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Wed, 08/31/2011 - 14:10 | 1619620 samsara
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Given the weak data we've seen recently and considering the rising concern about chronic slow growth or worse, I don't think any policy option can be ruled out at the moment.

Zero Growth.  THAT IS THE ISSUE.  The entire system is based on the bedrock paradigm of 'GROWTH'   Pushing the problems out to the future to be payed off.  

Without growth,  The RamJet Economy stalls and .... 

(a RamJet can't start itself.)


Wed, 08/31/2011 - 14:56 | 1619881 Oh regional Indian
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Perfect analogy Samsara. How do you resolve the need for infinite growth faced with massively negative growth (I hate the word degrowth, damn machiavillian sounding)???

I see it around me in India all the time. It's just like the US in 2004. Massive service economy gorging itself on cheap chinese crap and really bad fast food, bought on too easily available credit. They turned India from a net saving economy to a net far overspent economy in 15 short years. Pretty damn amazing as a feat of social engineering.

India's ramjet is startign to sputter too and I'm sur emany people would agree to that feeling wherever in the industrialized world they are.

QE3 will sink the ship. it's not a fundign mechanism, it's an iceberg waiting for the global titanic.

Sheepdog, it's coming. They have to pull the trigger sometime.



Wed, 08/31/2011 - 21:07 | 1621237 nyse
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They turned India from a net saving economy to a net far overspent economy in 15 short years. Pretty damn amazing as a feat of social engineering.

Exactly. This is the new imperialism. It used to be that "conquering" nations would plant their flag, now we just give them "Democracy", dollars to spend, and a market framework that ultimately evokes the same detremental behaviors we see all around us - namely an over reliance on credit and that McDonaldized "now" mentality. It works because this new form of conquering is a relatively easy pill to swallow; I mean, who doesn't want Levi's, election polls, iPads and bad cholesterol?

We are not freeing these nations we "help", we are indoctrinating them.

Wed, 08/31/2011 - 16:36 | 1620428 optimator
optimator's picture

Our economy is more like a Gnome-Rhone Rotary than a ramjet.

Wed, 08/31/2011 - 17:51 | 1620690 Shell Game
Shell Game's picture

Agreed.  The growth mantra is like the fiat-is-money mantra is like the terror-state mantra....all propaganda to steer us to consumer debt servitude and quiet compliance.

Wed, 08/31/2011 - 14:12 | 1619627 SheepDog-One
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Carrot on a stick again, QE is DOA, and all these bankster clowns know it theyre hyping this crap daily to distribute to the kneejerk moron pops.

Wed, 08/31/2011 - 14:18 | 1619668 Cdad
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They cannot buy T bills with the US dollar where it is.  The implosion in the value of the dollar would consume any and all QE effects immediately, and then plunge the US economy into recession via skyrocketing oil prices...just as was the case in 2008.

It is DOA...until such time as the Dixie is higher, somewhere above 76.

Wed, 08/31/2011 - 14:27 | 1619702 SheepDog-One
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Right, theyre OBVIOUSLY out of room in all areas to QE further! Dollar at LEAST 8 full points too low, gold too high, stocks far too high, theyre at the end of their rope and are now doing the only thing they can, rumors of QE to negate the bad news daily and drive markets rallies on fumes to distribute to.

Unless Sept 1st theyve got a series of terrifying market plunges planned down to under DUH 10K, QE3 is DOA already.

Wed, 08/31/2011 - 14:27 | 1619729 Cdad
Cdad's picture

Long Fed Fool jawboning/short S&P.


Wed, 08/31/2011 - 14:33 | 1619760 john39
john39's picture

they obviously know that this game can't last, so what comes next?

Wed, 08/31/2011 - 14:36 | 1619776 SheepDog-One
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Back in south Chicago where I grew up we used to call anyone who yapped and jawboned this much 'punks that need to be issued a good beating'.

Wed, 08/31/2011 - 14:53 | 1619856 Cdad
Cdad's picture

 A Chicago boy, ey.  Nice to know.  You f'n bully, Dog.  Have a friend that still lives outside of Chicago.  Never been in the city, myself.


Wed, 08/31/2011 - 14:51 | 1619849 SheepDog-One
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1 way they can get the dollar higher, collapse the markets down about 15%, then get their QE which might get us back up to about here, only with all conditions far worse.

Wed, 08/31/2011 - 14:11 | 1619630 SeverinSlade
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Okay TD, so are we flip flopping again?  Equities continue to rally on this news?  Or does the building pressure in Europe, the 3rd bailout of Greece, and a possible failure of the Sept 29th EFSF vote prove to be too much for even the permabulls?

I still see your original prediction of a 20+% decline in equities coming before QE3.

QE3 is going to be massive, we all know it.  So does this massive easing come with the S&P north or south of 1,200?  I'm betting on south. 

Wed, 08/31/2011 - 14:13 | 1619637 SheepDog-One
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Yea QE3 is going to be massive, a massive flop.

Wed, 08/31/2011 - 14:16 | 1619657 Iriestx
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How so?  It's going to take $2.5t+ from the pockets of men and women that work for a living, and hand it over to the elitist, lazy, entitled banking culture.  That's all it's designed to do, and it's a whopping success at doing it.

Wed, 08/31/2011 - 14:19 | 1619672 SheepDog-One
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There will be no diamond encrusted QE3 Ferrari unveiled late Sept...but hey buy it if you insist.

Wed, 08/31/2011 - 16:38 | 1620438 optimator
optimator's picture

No flop, think Bankster Bonus, mission accomplished.

Wed, 08/31/2011 - 14:16 | 1619655 Tyler Durden
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What flip flopping? We have always contended that for the Fed to pass QE3 a market crash is necessary in order to provide the political cover for "deflation." We have also contended that the market is bypassing this simple fact and is proceeding straight to step 2: pricing the whole thing in, as confirmed by the vapor melt up over the past 3 days and our observations thereof.

At some point one of the two will be proven wrong.

Simply said, the Fed's case for QE3 with stocks at 1200+ is untenable.

Wed, 08/31/2011 - 14:21 | 1619686 LawsofPhysics
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Don't fight the Fed (or the trolls Tyler).

Wed, 08/31/2011 - 14:24 | 1619705 SheepDog-One
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Dont fight the FED, maybe....but certainly look thru the FED's thinly veiled lies!

Wed, 08/31/2011 - 14:29 | 1619738 Ausperity
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or try to get in thru the repo window :)

Wed, 08/31/2011 - 14:29 | 1619739 Boilermaker
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I wish someone could answer why the level of stock market is the main driver for monetary policy.  What do the two things have to do with one another and why is it so dire to have high equity prices?

Seriously, other than being a massive scheme to enrich the already rich...what gives?

Wed, 08/31/2011 - 14:33 | 1619761 cosmictrainwreck
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well, looks to me like you answer your own question with your last line

Wed, 08/31/2011 - 15:01 | 1619902 Boilermaker
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I was hoping I was just paranoid.

Wed, 08/31/2011 - 16:17 | 1620336 RSloane
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Nope, you're spot on.

Wed, 08/31/2011 - 15:22 | 1619992 Mountainview
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Dollar rich but Gold poor...

Wed, 08/31/2011 - 14:30 | 1619741 MoneyWise
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"Simply said, the Fed's case for QE3 with stocks at 1200+ is untenable."

Sorry, no crash for you, we going straight to 14k,
non stop, with or without QE3..
Keep printing more negative sh**T it helps a lot,

Wed, 08/31/2011 - 14:33 | 1619758 SheepDog-One
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Youll be very shocked real soon.

Wed, 08/31/2011 - 14:47 | 1619807 SeverinSlade
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Thanks for clearing that up.  Must have misread some of your recent posts.

So do you still stand by your contention that the meltup continues on until/beyond the 2 day September meetings?

As you've noted, headline risks will continue to remain.  It seems that the only news that can stop this meltup is some major problems in Europe.  Economic indicators that clearly indicate economic contraction continue to be shrugged off so long as they beat [downward revised] "estimates."  (They also ignore even massive misses like the most recent Philly Fed).

And note:  For the record, I'm extremely honored that TD (whoever he/she/they may be) actually responded to me directly.  I've only been a member for a short time relative to others, but ZH has my utmost respect.  ZH provides the best news out there.  Period.

Wed, 08/31/2011 - 14:51 | 1619847 russki standart
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Consider youself privileged when  the TD God speaks back to you. I am jealous

Wed, 08/31/2011 - 14:54 | 1619864 SeverinSlade
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I do.  Pitchin' a tent right now.

Reminded of that classic scene from Wayne's world.

"We're not worthy!  We're not worthy!"

Wed, 08/31/2011 - 14:53 | 1619863 samsara
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ZH provides the best news out there.  Period.

And That's The Fact Jack.

Do NOT follow this link or you will be banned from the site!