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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Thu, 09/13/2012 - 13:49 | 2790784 fuu
fuu's picture

Thanks Ben!

Thu, 09/13/2012 - 13:55 | 2790840 ACP
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.

Thu, 09/13/2012 - 14:00 | 2790866 metastar
metastar's picture

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

Thu, 09/13/2012 - 14:19 | 2791033 derek_vineyard
derek_vineyard's picture

keep this party going until we pass out or die

Thu, 09/13/2012 - 14:36 | 2791165 THX 1178
THX 1178's picture

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

Thu, 09/13/2012 - 14:54 | 2791302 YBNguy
YBNguy's picture

JPM is pleased

Thu, 09/13/2012 - 15:31 | 2791571 derek_vineyard
derek_vineyard's picture

don't worry my kids can pick up the tab

or kill us old fucks that allowed this

Mon, 09/24/2012 - 17:30 | 2825864 Offthebeach
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.)

Thu, 09/13/2012 - 14:54 | 2791307 DavidC
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.


Thu, 09/13/2012 - 15:42 | 2791633 spastic_colon
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!

Thu, 09/13/2012 - 13:56 | 2790841 nope-1004
nope-1004's picture

Economic decay GUARANTEED from here forward.


Thu, 09/13/2012 - 14:04 | 2790914 Sofa King Confused
Sofa King Confused's picture

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

Thu, 09/13/2012 - 14:28 | 2791089 LeisureSmith
LeisureSmith's picture

What are the daugther products of economic decay?

Thu, 09/13/2012 - 14:41 | 2791203 donsluck
donsluck's picture

Crime, starvation, war...

Thu, 09/13/2012 - 14:44 | 2791224 LeisureSmith
LeisureSmith's picture


Thu, 09/13/2012 - 15:11 | 2791427 Gief Gold Plox
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... 

Thu, 09/13/2012 - 14:00 | 2790870 LMAOLORI
Thu, 09/13/2012 - 13:49 | 2790785 4realmoney
4realmoney's picture

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

Thu, 09/13/2012 - 14:09 | 2790959 SmallerGovNow2
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...

Thu, 09/13/2012 - 14:29 | 2791102 12ToothAssassin
12ToothAssassin's picture

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

Thu, 09/13/2012 - 14:36 | 2791155 giggler123
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.

Thu, 09/13/2012 - 15:05 | 2791380 Red Heeler
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."

Thu, 09/13/2012 - 15:28 | 2791554 debtor of last ...
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.

Thu, 09/13/2012 - 16:17 | 2791862 OneTinSoldier66
OneTinSoldier66's picture

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

Thu, 09/13/2012 - 14:30 | 2791107 Freegolder
Freegolder's picture

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

Gold is going to resolve this mess, nothing else.

Thu, 09/13/2012 - 15:17 | 2791458 Zero Govt
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

Thu, 09/13/2012 - 22:16 | 2793204 Vampyroteuthis ...
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.

Thu, 09/13/2012 - 15:29 | 2791564 debtor of last ...
debtor of last resort's picture

Today's silver is tomorrows gold. 

Thu, 09/13/2012 - 13:50 | 2790789 digitlman
digitlman's picture


Thu, 09/13/2012 - 13:50 | 2790790 redpill
redpill's picture

"I picked the wrong week to quit sniffing glue"

Thu, 09/13/2012 - 15:22 | 2791513 holdbuysell
holdbuysell's picture

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

Thu, 09/13/2012 - 13:51 | 2790798 malikai
malikai's picture

Sounds like a winner.

Thu, 09/13/2012 - 13:51 | 2790802 Meesohaawnee
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.

Thu, 09/13/2012 - 13:51 | 2790805 1835jackson
1835jackson's picture

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

Thu, 09/13/2012 - 13:51 | 2790807 drink or die
drink or die's picture

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

Thu, 09/13/2012 - 14:27 | 2791078 Theosebes Goodfellow
Theosebes Goodfellow's picture

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


Fri, 09/14/2012 - 00:39 | 2793544 dubbleoj
dubbleoj's picture

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

Is there an echo in here?

Thu, 09/13/2012 - 13:51 | 2790809 camaro68ss
camaro68ss's picture

going long BOB's, BOV's, and a BOL

Thu, 09/13/2012 - 14:55 | 2791310 Coldsun
Coldsun's picture

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

Thu, 09/13/2012 - 13:52 | 2790812 drivenZ
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'

Thu, 09/13/2012 - 14:09 | 2790958 Hedgetard55
Hedgetard55's picture


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

Thu, 09/13/2012 - 13:52 | 2790814 101 years and c...
101 years and counting's picture


Thu, 09/13/2012 - 14:50 | 2791085 Zero Govt
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

Thu, 09/13/2012 - 13:52 | 2790816 GolfHatesMe
GolfHatesMe's picture

Hilsenrath futures are way down

Thu, 09/13/2012 - 14:04 | 2790920 Village Smithy
Village Smithy's picture

Nice one! After today he has certainly become redundant.

Thu, 09/13/2012 - 13:54 | 2790817 gojam
gojam's picture

He could still increases the monthly amount from $40 billion

There is the 'surprise' QE or more QE.

Thu, 09/13/2012 - 15:28 | 2791558 Gloomy
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?

Thu, 09/13/2012 - 18:32 | 2792405 agent default
agent default's picture

Moar! Because moar!

Thu, 09/13/2012 - 13:54 | 2790823 foodstampbarry
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.

Thu, 09/13/2012 - 14:04 | 2790917 Dr. Engali
Dr. Engali's picture

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

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