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The One Big Problem With QE To Infinity
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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Thanks Ben!
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.
Open Ended ... just another way of saying Unlimited.
keep this party going until we pass out or die
OOH OOH I KNOW! Infinity doesnt exist in the real world. That was an easy one.
JPM is pleased
don't worry my kids can pick up the tab
or kill us old fucks that allowed this
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.)
It's going to come anyway - NOTHING has changed since 2008, except for debt on debt on debt. That's not sustainable.
DavidC
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!
Economic decay GUARANTEED from here forward.
Everything going exactly as planed...........
What are the daugther products of economic decay?
Crime, starvation, war...
Bingo.
I knew it. I knew there had to be something sinister about the game only old people played. Oh, wait...
Depression Now In Living Color Bitchez
Silver Maples still at spot + $1.95 free shipping. No uptick in premium yet. Looking at www.GoldShark.com. Lowest is TexMetals: https://www.texmetals.com/silver-monster-box.html
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...
Still not too late but you certainly wont get the value you would have in the 26 range.
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.
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."
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.
And the paper price of precious metals matters because.......?
Silver is just an industrial metal, never going to be anything else.
Gold is going to resolve this mess, nothing else.
Gold is an inanimate object, it cannot resolve or solve anything
we need a better way, it's called rather modestly, Freedom
The only thing that is going to fix this mess is a proper gov't, honest leaders and a productive society. Nothing else matters.
Today's silver is tomorrows gold.
Asshole.
"I picked the wrong week to quit sniffing glue"
And the visual of all the "I picked the wrong week to quit..." sequences:
http://www.youtube.com/watch?v=VmW-ScmGRMA
Sounds like a winner.
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.
Ha- so now the BLS is new FOMC!!! What a cunty joke!
But but but, if we elect Mitt Romney, then everything will be better!!!!
But but but, if we elect Mitt Romney, then everything will be better!!!! /sarc off
Fixed!
But but but, if we reelect Barack Obama, then everything will be better!!!!
Is there an echo in here?
going long BOB's, BOV's, and a BOL
Don't forget bread, bullets, and band aids.
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'
+55
Bingo. And the market will be demanding it starting next week.
STOP PAYING YOUR MORTGAGE. BEN IS BUYING IT. FUCK HIM. WELCOME TO AMERIKKA. LET SOMEONE ELSE WORRY ABOUT PAYING FOR YOU TO LIVE IN YOUR HOUSE!!!!
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
Hilsenrath futures are way down
Nice one! After today he has certainly become redundant.
He could still increases the monthly amount from $40 billion
There is the 'surprise' QE or more QE.
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?
Moar! Because moar!
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.
Invest in thumb drives since they will just be adding extra zeros to digital money.
Who's got a barrel of currency about to go worthless? I know I don't. Food stamps and welfare checks don't take up that much space either. Weimar Germans were staying warm by burning Deutchmarks. Americans won't have enough paper for a single ass wipe.
I'm venturing that a Mercury dime will suffice to buy a loaf of bread and a gallon of milk.
Oh, I think they still can get plenty of pop by teeing up whether they will double the monthly amounts. And so on.
What happens when Ben decides to STOP easing!!!!!!!!!!!!!!!!!111
http://confoundedinterest.wordpress.com/2012/09/13/fed-pulls-the-trigger-with-new-bond-buying-program-40-billion-in-mortgage-backed-securities-per-month/
We'll crawl out of that bomb crater when it's safe...
How does the Fed benefit from soaring gold, crude and commodities? How does it benefit from a 3% 30 year? What did today accomplish for Ben?
bailing out his banker buddys and buying time for there bunkers to be completed. Everyone knows this.
+!1This was all that mattered to ben
Is the Stock Market Voting for Obama?
Goldman's QE3 Shopping List: Stocks For When Bernanke Starts Buying Bonds
bonuses run wild for his buddies. they are sitting in the room right now. laughing how once again they just stuck a big dildo in joe six packs ass.
So negative economic news won't be taken as a positive anymore?
GOLD
SILVER!
AMMO!!
EGRESS.
Maybe he fired his last bullet.. but he will go down knowing he did it for the Messianic Choomer.
The FED ran out of bullets a while back, now they have run out of lies.
Of course you know what everyone wishes he would have done with his last bullet!
Lets have a moment of silence for those poor fools who are short silver....
Time's up! Bwahahahaha, suckerz!
Ben was trying to put up a good fight until...
http://www.youtube.com/watch?v=WKVkAsg9MFA
Zimbabwe Ben.
Next on the agenda: rising input costs, compressing margins, rising food costs, more unemployment, and lower interest rates (manipulated of course)
Mission being accomplished right now
PPI: Some Like It HOT!
Claims: Yuck
T T + 100 ---in a nut shell--everything "business" is going to grind to a screeching halt-- 70% of the jobs will die on the vine-- skillls will be lost along with infrastructure of the small business network.
Few people on this site (my opinion) have lived in a third world country during political economic turmoil--- I''m afraid its in the cards for the USA. --Get used to the smell of bodies in the ditches-keep your kids behind high cement walls with broken glass on the top, and send the "help" out for groceries with a body guard. If you can't afford that then be prepared to fight and maybe kill for what you need. Just sayin--
I'm certain to get a fair number of junks for this, but I think it's instructive to read the following and remember that, according to TPTB and The Deciders, this woman was far too stoooooopid to be Vice President...
President Obama is clearly revealing his rapid loss of any grip on the economic and security issues that are of utmost importance to our country. His economic and foreign policy blunders are manifesting chaos. On the same day when we see more chaos erupting in the Middle East and President Obama declaring that Egypt is no longer considered our ally, the Federal Reserve announced that it will spend $40 billion a month to purchase mortgage-backed securities with no end date set. QE3 is upon us.
In a speech nearly two years ago, I asked: “If [QE2] doesn’t work, what do we do then? Print even more money? What’s the end game here? Where will all this money printing on an unprecedented scale take us? Do we have any guarantees that QE2 won’t be followed by QE3, 4, and 5, until eventually – inevitably – no one will want to buy our debt anymore? What happens if the Fed becomes not just the buyer of last resort, but the buyer of only resort?”
As predicted, QE3 is upon us. Is it any wonder that the dollar is down against major currencies? This temporary, artificial economic “stimulus” bought at the expense of high inflation is no substitute for a stable currency and genuine long-term economic recovery. This is what happens when big government centralized planners try to “plan” our economy. President Obama is no doubt happy, though, that this latest sugar fix comes 53 days before the election. - Sarah Palin
Junk away... but please, in the process, share what precisely she has said here that's factually incorrect.
I'm sure that the people who wrote that for her (just like any other politician) are proud of themselves.
Did she read that off her palm? She is a petty thief of political talking points.
When even Sarah Palin gets it, you know it's really fucking obvious!
When even Sarah Palin gets it, you know it's really fucking obvious!
Yes, as a dumb ass, who was a successful Governor, kicked out the GOP's good old boy club, and started sending oil revenues to the Citizens, (she is so stupid),beat the estab, and the oil companies,and resigned in her second term, she of course is terminally stupid.
Quit showing your Dem roots.
She is a lot more savvy than anyone thinks.The MSM would not have,never have crucified anyone they do not believe to be a major THREAT.
And, there are multiple millions of sheeple out there that still do not get it, until they GET IT(Franked).
My DEM roots? GFY, and please get over this red team blue team shit.
HAHAHAHAHA!!!! Stop it, RP, yer' killin' me.
~"...please get over this red team blue team shit."~
RP, you can't have it both ways. If you trash-talk about Palin, (or any other politico), and then get ruffled by someone calling you out on it, you run out of room to claim to be apolitical.
In answer to your seemingly rhetorical question, I would think that the Obama administration and the clowns at the Fed are too stupid to see the obvious. So instead of doing what needs to be done, (with the undoubtable pain associated with it), they follow their Keynesian instincts and kick the can one last time. All we are gauranteed is even more brutal pain later. Buckle up, the ride gets interesting now.
Quite the opposite. Anyone with the slightest shred of objectivity can clearly recognize Palin is not the sharpest tool in the shed, it has nothing to do with politics. That red teamers get so easily butthurt about it is the indication of being a slave to the party duopoly. The same thing happens with blue teamers when anyone points out that Joe Biden is a complete moron.
I concur. And I'm pretty sure you are an RP guy...exactly the person I believe she tried to emulate, pilfer and replace with her "grass roots" bullshit shoveled on people by Fux "not" news.
If she had any courage or political honor she would have endorsed Ron Paul. That shows all the stripes I need to see.
Palin is a self-serving opportunist. Her intelligence is irrelevent. Would you quit your Governorship post (elected by her constituents to DO HER JOB) just because you do not hold the post for life? She didn't want to be a lame duck, but all politicians end up as lame ducks eventually. She has no credibility or accountability.
http://www.youtube.com/watch?v=UlMKFUy6KBc
So let me get this straight. She's a "self-serving opportunist" and you and everyone else are "dedicated altruists"? She left the office of governor when she realized that staying would just expose her to more partisan attacks from her opponents. The fact that the Lt. Gov. would not was one factor, plus she could spare her family, (to some extent), the exposure to those whose sole purpose was to demonize and destroy her.
Yup, that's pretty "self-serving" in my book. /sarc off
I have always told my liberal friends that all they say about her may or may not be true... and yet she would still make a much, much better president than what we have now. Go figure.
She would quit as soon as the going got tough. She is a coward.
And you sir, are an idiot. So you think that she should have stayed and taken whatever scheming the Alaskan democrats were cooking up so as to satisfy your sense of bravery? Really?!? Add to that that the MSM goes apoplectic at the very mention of her name and would do anything to destroy her? Tell me of all the times the MSM has gone and witch-hunted Pelosi, Reid, Feinstein or Biden? If you want to be pissed off and find cowards, ask the MSM were they were when they were supposed to be vetting Barack Obama, either in 2008 or even now. Has any correspondent of the corporate media shown one ounce of interest in the fact that Barack Obama's SS# is from a state he never lived in? Or that the stamp on his Selective Service Card is an obvious fake? What about his digitally manufactured "birth certificate"? Speak not to me of cowards when a woman the media hates decides it is in her family's best interest if she no longer serves as governor. Asshat.
docj : she quit the governor gig, and the case against her for financial malfeasence went away. coincidence? the fed was already doing 40billion+ per month under the cloak of ignorance.
Uh, what does this have to do with anything, perchance?
Today the Fed officially became a joke. The clown posse of economic policy
America, what happened to you?
america is toast. to have this happen so close to election with crude where it is.. ben and obama just said F&^k you to the middle class.
http://www.4-traders.com/WTI-SPOT-2355639/news/OIL-FUTURES-Crude-Up-afte...
Spot oil up almost as much as the stock casinos today.
This will be the greatest depression evah
Is President Obama's Depression Coming Our Way?
Fine print just to clarify...America (a concept) is still very much alive in her protagonists. The problem is the United States (a manifestation) has been hijacked by the government sworn to serve, protect and defend her.
Money is power.
The Central bank has now decided to give up its power by devaluing its money.
The banks sure want to get their loans paid back to them in worthless dollars and politicians want worthless bribes.
On a serious note, if the Fed has fired its last bullet in its attempts to offset deflation then it is now trapped.
Either assets begin to deflate and economy collapses,
or interest rates begin to rise/bond prices to fall and take down balance sheets with them - which is again deflation.
That should pretty much wrap up the election. Mitt shoulda never messed with Ben.
I am not a Mitt guy, nor Obummer for that matter, but if the ec onomy goes to hell in a hand basket when oil hits 120 maybe even 200 if Israel attacks Iran, then Obummer will be finished....
As long as the FED is funding the government with rubber dollars, the spending is not going to stop, the hits to business from this administration isn't going to stop and the problems we have are going to continue so therefore the FED actions will continue in an endless loop.
The terrible NFP numbers didn't move the market at all, nor did the death of an ambassador move the market. The only things moving the market is central banker speeches. FUBAR
Homer & Iliad come to mind. Bernanke lives in another tangent/dimension.
The American public is so, so too stupid to ever think there is any politics behind trying to keep unemployment low and to ever think that the FED should have a responsibility to be involved in unemployment in the first place
The bald little maggot is destroying america to enrich his gangster friends. They think they have it under control because of the patriot Act, NDAA, 30,000 drones soon to be, Fema camps, and dumbass Americans -well-dumbass Americans can get smart real quick -when they are hungry and scared.
Game on -who wins -thee banksters who seek to enslave us -or the American people? -the patriots have to awaken the dumbass Americans before the Banksters put them away in Fema camps - it's a race. Not sure who will win, but I'll place my bets on the American masses.
Money is power.
The Central bank has now decided to give up its power by devaluing its money.
The banks sure want to get their loans paid back to them in worthless dollars and politicians want worthless bribes.
On a serious note, if the Fed has fired its last bullet in its attempts to offset deflation then it is now trapped.
Either assets begin to deflate and economy collapses,
or interest rates begin to rise/bond prices to fall and take down balance sheets with them - which is again deflation.
Piss poor money shot.
Wow - things must be horrific in the economy if this is their reaction. God help us!
not "the economy"
banking and Govt
Sort of like the beginning of the end of what has already been a long ending...is about to begin again. Yeah whatever. Confused forever.
Correct. There is no end to this.
Someone at the Fed is not going to be able justify stopping. The "but the world will end" logic will always apply.
QE2 was when this was confirmed. There was no reason for it then. There's no reason for it now. There will be no reason any time in the future.
From now on, they'll be planning a global currency and global central bank.
What the fed has just done also is effectively provide a backdoor bailout for Fannie and Freddie and the Treasury as life for Fannie and Freddie gets to be really hard after 2012 based on the story below:
http://www.fas.org/sgp/crs/misc/RL34661.pdf
Fed loves their backdoor activities........fuckers of last resort....
nevertheless prepare for hyperinflation...
images not applicable? http://forgifs.com/gallery/d/204691-1/Helicopter-vs-zombies.gif
*9999* __ thanks 4 the link ;)
regards
Welcome!!!
Lovely. Puzzle solved.
If the fresh money is going to F&F, how's this a QE?
Destination matters.
Bravo!!! Tyler :-))
So, without the FED meetings, the S&P would have become negative at one point. That would have been the time to load up.
I'm a crappy market timer, but today I'm getting a strange sell-the-news kinda vibe.
I think you're right. I'm going all in. As soon as enough suckers are lured back into this death-trap "market", it's toast.
Ah but can't their be expectations of "MOAR PRINTING!!!"? Sure the current QEInfinity is baked into the cake, but it's a matter how fast we get to the end of the line.
This is worse than not doing QE.
No schedule = Insecurity.
At least, without QE, everybody knew what was going to happen.
1) How does one plan having absolute insecurity?
2) How much MBS is in private hands? Meaning, let's it there's 400 billion in MBS it will take 10 months to buy up the market. So theoretically, how long would it take for the Fed to buy up all the market if it goes ahead at 40 billion for each month?
Hmm. It sounds to me like the last effort to lure suckers.
Very fishy.
Excellent post EKM. Speaking of luring suckers! The robo/signing settlement debacle comes to mind. Refi your house and pay "ordinary" tax on the 100k writedown, and absolve the lender, via "new (non robo) title".
Yen
They will be buying crappy MBSs. Ok.
Question: From whom? Fannie and Freddie? Primary Dealers? It makes a huge difference since it defines where the fresh cash is going to.
They're just twisting USTs.
It looks like the Fed is increasingly becoming a bad bank buying crap MBS from Fannie or Primary Dealers. It's like bailing out Fannie and Freddie, but without a schedule.
And again, it was for Fannie and Freddie bonds that China and Russia got paid 100% in 2008.
Very fishy, very, very, very, very fishy.
Excellent pointe' EKM! The Fed. Think of a giant corporation. Where is your unit cost going to give you the most bang for the buck, in unreal numbers. The median price of 1m-300k is 500k(about). The median cost of a bag of (iphones) is much less.
I'm talking semantics here EKM. Overall you are absolutely correct! :-}
This is a Fannie/Freddie bailout!!!
http://www.fas.org/sgp/crs/misc/RL34661.pdf
Sell the news fine. But I would not sell miners. And this is what we need. We will never have resolution until they all print and print. I have said it before....Until the printing press is taken away from The Bernank, there will be no change. But at that point it all collapses and then maybe we can do what is needed to save this country for our children. But it will be a while.
How can a few men destroy so much. So sad.
A day of infamy !
Why? Why? Weimar!
How do spell Zimbabwe?
Trick question!
How do you spell Zimbabweanesque?
you spell it: USA
Germany must be pissed, QE to infinity means Euro to 1/2 infinity. I foolishly thought that behind closed doors POTUS had made a deal with the Germans to work together and save each other. This tells me that the Fed has decided the only card they have is the "we are the cleanest dirty shirt" card.
Draghi can start his OMT now. ;-)
Draghi really must be pissed for not playing in the same league as Ben. Today there's ni-ne again in germany, with Schäuble totally neglecting everything of the latest events in Germany (ESM, OMT).
I guess the next step is Q squared....then Q cubed. Then, of course, four Q
The only thing we need now to complete the trifecta, is an open-ended debt ceiling,
then we will have removed all surprises from the stock market in perpetuity.
time to stock up on more Lentils...
Very much in agreement. Bernanke jawboning is over.
divide by zero
There is plenty to annouce after this.
QE the 13th
QE Rocky X
QE Halloween 17
QE Jaws 9
As a Bear I felt this was obvious. They had pretty much said it a couple of weeks ago.
I got out of my short positions and went long.
Oh I would love to see the Banks get what they deserve - but I still have to feed the kids too.
I will wait for the coming collapse. But if you look at Japan it could be a while.
Stagflation until stagflation will not work anymore.
Tonight, when I drive home, I'm going to look in the faces of my three young children and ask for foregiveness. Forget mortgaging the future, we've officially ended any chance of stepping back from the abyss. Thanks Ben!
So we enter the next stage of the madness.
Flood the planet with worthless FRN's.
The response from China should be interesting.
D'oh
only ONE problem?
http://i.ytimg.com/vi/OCWa0Jv9o50/0.jpg
QE TO INFINITY AND BEYOOOOOOOND
While it's true that the suspense has been taken out of all future Fed announcements as to whether they will be easing through asset purchases (until they don't), the Fed did leave open the possibility that they will make "additional asset purchases" if labor markets don't cooperate. This means, I suppose, that $40 billion of MBS per month could become $50 billion. Or $60 billion, etc. And that other asset purchases could ensue, including corporates (Benny did mention corporates in his presser).
So, while Benny is "all-in" today with open-ended QE, he could always go to the casino cashier (who works for him) and increase the size of his bankroll to do more.....and more.....and more of other stuff we haven't imagined yet. He did say he has a "wide variety of tools" at his disposal still. Lots of options. Until that printing press in the form of a casino cashier is taken away, he is right. Meanwhile, Benny keeps up his craps game by adding more and more chips on the table while others are betting on the numbers working. And working, they will. Until the "7 out" is rolled. Or maybe I should just stick to the poker analogy!
I'm gonna go ahead and say that this is not The Big One.
Yes, I read the "open-ended" part. In my opinion, there will always be another avenue for the Fed, and then the Treasury, and then the Federal government, to pursue to prop thing up until this country is literally hell on earth - because there won't be any revolultion in the foreseeable future. So the Fed and/or Treasury will be granted permission to buy literally anything it wants - it's all funny money - inflation will occur, undoubtedly, but this has happned countless times and it can go on for many years with or without civil unrest and market disruption, certainly very far beyond what most expect.
They will never simply capitulate and walk away to leave the market/country to its own devices, never. Cartels will be created, then monopolies, then nationalization of all major industries - we are already seeing plenty of this, but it can go much, much further.
Perhaps The Big One will never be announced as such, in which case I concede the point that this was the announcement. However, in terms of desperate policy actions on the part of the US government, we have not seen the anything
Most of us are, I believe, waiting for a 9/11 or Black Friday type event, a black or grey swan, a discrete event lasting no more than a day which signals to all that prior predictions and plans must re-evaluated because "everything has changed" in some vague but naggingly persisntent way. Don't wait for another such event, history is not long stretches of nothing interrupted by discrete major events, though our cognitive biases and prevailing modes of historicity make it appear this way. Those who waited and waited in the days before crises past were also waiting for some unmistakable sign to spur them to action, such a sign never materialized and they suffered immensely.
Did anyone notice Bernanke's voice today at the speech and Q&A? He seemed to be speaking more energetically and faster than he typically does at these events.
It reminds me of Hemmingway's quote on how he went bankrupt.
~"How did you go bankrupt?"
"Two ways, gradually and then suddenly."~
QE accomplishes precisely one thing. It shifts wealth from the great majority of us who don't really matter to those few who do. We get zero rate of return on savings, declining real wages and the steady drumbeat of debilitating inflation. And they get increased corporate profits, massive paper stock market gains and the ability to keep the whole big ponzi rolling along for awhile longer.
The only trick is to tailor the propaganda so the great idiot herd goes along with the show rather than rioting as they so rightly should.