The One Big Problem With QE To Infinity

Tyler Durden's picture

There is one big problem with the Fed's announcement of Open-Ended QE moments ago: it effectively removes all future suspense from FOMC announcements. Why? Because the Fed has as of this moment exposed its cards for all to see from here until the moment it has to start tightening the money supply (which may or may not happen; frankly we don't think the Fed tightens until hyperinflation sets in at which point what the Fed does is meaningless). It means easing is now effectively priced into infinity. Now rewind back to that one certain paper by the New York Fed, which laid it out clear for all to see, that if it wasn't for the expectation of easing in the 24 hour period ahead of the FOMC meeting, the market would be 50% or lower than where it is now, and would have been effectively in negative territory in the aftermath of the Lehman collapse. What Bernanke did is take away this key drive to stock upside over the past 18 years, because going forward there is no surprise factor to any and all future FOMC decisions, as easing the default assumption. It also means that Bernanke may have well fired his last bullet, and it, sadly, is all downhill from here, as soaring input costs crush margins, regardless of what revenues do, and send corporate cash flow to zero. Unfortunately, not even in the New Normal can companies operate without cash flow.

This is the chart.

Than you Fed for telling us what comes next.

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ACP's picture

Exposing his cards is right. The only thing Madman Bernanke can do is increase the money printing. Nothing else. Forever.

Anything else would create a truly EPIC crash.

metastar's picture

Open Ended ... just another way of saying Unlimited.

derek_vineyard's picture

keep this party going until we pass out or die

THX 1178's picture

OOH OOH I KNOW! Infinity doesnt exist in the real world. That was an easy one.

derek_vineyard's picture

don't worry my kids can pick up the tab

or kill us old fucks that allowed this

Offthebeach's picture

What children? They've been outsourced. Production cost are cheaper. When able to be productive, they are allowed in. Foreigner breeding, raising new muppets that Americans won't ( Democrat FSA excepted.)

DavidC's picture

It's going to come anyway - NOTHING has changed since 2008, except for debt on debt on debt. That's not sustainable.


spastic_colon's picture

Sorry but you're a bit off here Tyler(s) what the fed has done is made every, and I mean EVERY, less than good economic report bullish forever!

nope-1004's picture

Economic decay GUARANTEED from here forward.


Sofa King Confused's picture

Everything going exactly as planed...........

LeisureSmith's picture

What are the daugther products of economic decay?

donsluck's picture

Crime, starvation, war...

Gief Gold Plox's picture

I knew it. I knew there had to be something sinister about the game only old people played. Oh, wait... 

4realmoney's picture

Silver Maples still at spot + $1.95 free shipping. No uptick in premium yet. Looking at Lowest is TexMetals:

SmallerGovNow2's picture

If you didn't buy the dip at 26, 27, or 28, then you are too late to be buying in now at 35 or 36...

12ToothAssassin's picture

Still not too late but you certainly wont get the value you would have in the 26 range.

giggler123's picture

Why say that? if open ended printing is for real and high inflation comes about because of it, than 35 might as well be 5 - so in that case following your logic, now is a good time to buy?  not hard luck at all.

Red Heeler's picture

I wonder if you'll be around to say, "If you didn't buy the dip at $125, then you are too late to be buying in now at $150 or $160."

debtor of last resort's picture

I bought at 25, 26, 29, 83 whatever. Now and then when i had the money. Who cares about the price, shipping? BTFD till 31 december 2012. The rest is history.

OneTinSoldier66's picture

And the paper price of precious metals matters because.......?

Freegolder's picture

Silver is just an industrial metal, never going to be anything else.

Gold is going to resolve this mess, nothing else.

Zero Govt's picture

Gold is an inanimate object, it cannot resolve or solve anything

we need a better way, it's called rather modestly, Freedom

Vampyroteuthis infernalis's picture

The only thing that is going to fix this mess is a proper gov't, honest leaders and a productive society. Nothing else matters.

debtor of last resort's picture

Today's silver is tomorrows gold. 

redpill's picture

"I picked the wrong week to quit sniffing glue"

holdbuysell's picture

And the visual of all the "I picked the wrong week to quit..." sequences:

malikai's picture

Sounds like a winner.

Meesohaawnee's picture

stunning. theres no other way to describe where this country is being taken. surreal. been nice to know ya middle class. id call this an inflection point. Gonna be fun when crude gets to 110 120. Theatre over the weekend.

1835jackson's picture

Ha- so now the BLS is new FOMC!!! What a cunty joke!

drink or die's picture

But but but, if we elect Mitt Romney, then everything will be better!!!!

Theosebes Goodfellow's picture

But but but, if we elect Mitt Romney, then everything will be better!!!! /sarc off


dubbleoj's picture

But but but, if we reelect Barack Obama, then everything will be better!!!!

Is there an echo in here?

camaro68ss's picture

going long BOB's, BOV's, and a BOL

Coldsun's picture

Don't forget bread, bullets, and band aids.

drivenZ's picture

sure there is...he can announce a restart of unsterilized treasury purchases. I would imagine that would come into play if we fall off the fiscal cliff in Q1 13'

Hedgetard55's picture


Bingo. And the market will be demanding it starting next week.

101 years and counting's picture


Zero Govt's picture

perfect definition of the Feds role for the Parasite Club

the Fed credit card is all fired up again, Wall Street and Washington can go on a debt-spending binge compliments of the imprudent, un-disciplined fiscal anarchist, bubble Ben

GolfHatesMe's picture

Hilsenrath futures are way down

Village Smithy's picture

Nice one! After today he has certainly become redundant.

gojam's picture

He could still increases the monthly amount from $40 billion

There is the 'surprise' QE or more QE.

Gloomy's picture

This is 100% correct. Anyone who thinks he is out of bullets or can't surprise the market, you have another thing coming. When you own the printing press you are never out of bullets. Don't think he can shock the market? How about 100 billion per month? 200 billion? More?

foodstampbarry's picture

Time to buy stock in wheelbarrow manufacturing. Everyone will soon need one to carry their near worthless currency to the store for a loaf of bread.

Dr. Engali's picture

Invest in thumb drives since they will just be adding extra zeros to digital money.