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Santelli On Liquidity And More Central Bank 'Counterfeiting'

Tyler Durden's picture


In a little under two-and-a-half minutes, CNBC's Rick Santelli surveys the landscape of just what exactly is Quantitative Easing, why more debt does not solve the problem of too much debt, and why these actions (as even Frau Merkel has ascribed concern) are nothing but counterfeiting. He rhetorically questions how the printing of more money is the way to solve our 'problems', adding via Rick Rule, that "there's been no shortage of cash in the system; but one wonders [given] this economy seems based on liquidity, whether building an economy on what is, in fact, counterfeiting is very good for the economy in the long term?"


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Mon, 08/27/2012 - 13:59 | 2741362 LawsofPhysics
LawsofPhysics's picture

Ron Paul and others pointed this out 35 years ago Rick.  Ask yourself, are you still accepting the paper?  

Turn those paper promises into something real Rick, and fast.

Mon, 08/27/2012 - 14:02 | 2741370 Boris Alatovkrap
Boris Alatovkrap's picture

Ron Paul is rockstar!

Mon, 08/27/2012 - 14:12 | 2741389 Uncle Remus
Uncle Remus's picture

That make Romney/Ryan like Leningrad Cowboys. Not real, but put on kind of good show.

Mon, 08/27/2012 - 14:22 | 2741420 francis_sawyer
francis_sawyer's picture

More like 'clowns' from where I sit... But I'll buy your premise...

Mon, 08/27/2012 - 14:28 | 2741437 ratso
ratso's picture

Santelli, Romney, Pribus et al are afraid of QE because if will boost the economy before the election!

So, let's get real about why Bernake is being hammered and QE is being questioned.

Mon, 08/27/2012 - 16:31 | 2741498 Kitler
Kitler's picture

Counterfeit economies require frequent injections of counterfeit money to remain fraudulently healthy.

It's simple Kleptonomics 101 actually, it's all good until it isn't and then there will be a lot of crying.

Mon, 08/27/2012 - 14:54 | 2741515 fourchan
fourchan's picture

counterfitting works for 100 years evidently if the world goes along with it, give or take a couple years.

dont worry its almost over. 97 years and counting.

Mon, 08/27/2012 - 15:18 | 2741621 James
James's picture

Not trying to be snarky fourchan but it is the DOLLAR that has lost NINETY-SEVEN %.

The counterfeiting has gone on for ninety-nine years.

Mon, 08/27/2012 - 16:51 | 2741917 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

For sure, but let's not overlook our coin. We used to have silver coinage but now we have plated base metal that looks like silver - is that also not the definition of counterfeit?

Who is responsible for aprehending counterfeiters? The Secret Service, that's who! That is if they have time to spare whoreing in Columbia or getting flat assed drunk the night before the Kennedy assassination. Is there a sitting Federal Grand Jury somewhere in this country that has the balls to indict all of them for violating their oath-of-office (a class 1 felony)?

Mon, 08/27/2012 - 20:09 | 2742305 sun tzu
sun tzu's picture

QE boosts the economy? Gee, so simple. All we need is QE to infinity and the economy will be booming forever with no fatal side effects. 

Mon, 08/27/2012 - 14:44 | 2741481 Uncle Remus
Uncle Remus's picture

You've never seen a pic of the Leningrad Cowboys...

They're a "rock band" that sprung out of a TV show (or maybe a movie) in Russia. Sound familiar?

Although, they do a pretty mean cover of "Stairway to Heaven" with The Red Army Choir doing backup vocals.

Mon, 08/27/2012 - 14:46 | 2741494 ratso
ratso's picture

The Lenningrad Cowboys are actually a famous Finnish rock group.

Mon, 08/27/2012 - 15:17 | 2741614 Uncle Remus
Uncle Remus's picture

I stand corrected on their country of origin.

Mon, 08/27/2012 - 14:18 | 2741405 FreedomGuy
FreedomGuy's picture

It is not only counterfeiting, it is theft. At it's core, money is a way to trade your labor and products with others. When you do QE, counterfeit or create fake money you trade something of no value for something of real value.

Put another way, if you are a doctor and I come to see you, I offer to trade my money which is a receipt for my work for your work. We trade our labor at an agreed on rate. I trade a hundred dollars of my work for the same amount of your work, even if it takes me a whole day to earn that and it takes you one hour. If someone creates money that has no value and no products or services behind it, they steal. First, they lie and say they are trading me some work that was never done and then they steal mine by printing these fake work receipts known as money. It is immoral and it is also how inflation is created. Those fake receipts dilute the value of the real work as they work into the system.

Another example would be playing Monopoly and secretly taking $5k from the bank when no one is looking. You starting buying properties at the old prices with fake money you did not earn. The fake money then works its way through the game and the property prices rise. You win because you used the unearned money to buy things at the old prices and then you drove up the prices of everything else...for no work at all.

This is legal for government and it is why the large financial houses stay very close to the sources of the "fake" money while you and I have to actually earn real money and trade with each other. It is why playing with money is so much easier and profitable than actually making anything from a good cup of coffee for people to running a functional railroad. The paper-FRN game pays way better. It is also why we seem to be getting poorer over time even with increased productivity and two incomes. Fake money is diluting your earning power.

One day, maybe we can jail or exile these bastards with their financial alchemy.

Mon, 08/27/2012 - 14:29 | 2741447 tbone654
tbone654's picture

Monopoly, a great analogy...  you should pass Go to inject money into the game/economy...  without that concept, there is no market, it's just manipulated pricing...

Mon, 08/27/2012 - 15:20 | 2741632 philosophers bone
philosophers bone's picture

Or win second prize in beauty contest

Mon, 08/27/2012 - 17:46 | 2742021 ZeroAvatar
ZeroAvatar's picture

If only Bernanke would go directly to jail.............

Fri, 08/31/2012 - 22:29 | 2754454 FreedomGuy
FreedomGuy's picture

I have wondered if the world economy goes into a crash and governments fall if there would ever be a sort of Financial Nurembury trials. I doubt it because there would have to be enough people who actually understood what went wrong. One can hope, though.

Mon, 08/27/2012 - 15:09 | 2741581 BlackSunshine
BlackSunshine's picture

You forgot that there is 3 types of labor, labor that creates (engineering design, farming, etc), labor that adds value, and labor that transfers wealth (laywers. medical doctors?).

So explain how one hour of wealth transfer labor equates to 10 hours of product producing labor? That is an issue in itself. Doctors used to be laughed at because they required no education, about 200 years ago (look it up), but now they are revered as experts in medicine, but they are still pretty quacky overall, even with years of practice and education.

Bankers used to be looked at as pimps, and con artists (look that up as well) but now they are a modern knighthood onto itself.

So tell me again, how does trading labor make any sense? It doesn't. The population must be given the illusion that bankers run the world, that money runs the world, and that doctors are worth an hour of labor that a farmer takes 10 hours to produce.

The entire system is an illusion.

Mon, 08/27/2012 - 19:51 | 2742276 Better_late_tha...
Better_late_than_never's picture

When you are dying, you might be interested in trading 10 hours of your past labor (you had saved) for one of the doctors hours right now. If you're a fool and didnt save any of your labor, you call the banker. You hope the banker has investors that want a return on their investment so he can loan to you... Thats the sane world. Unfortunatly, that no longer exists. Savings has been replaced by credit, mandated by the government, and provided by the bankers. The Government gets first dibs on the credit before you do so they can buy bombs, votes, and workers. They encourage you to pay off the debt with the illusion of choice between red and blue. As the credit expands, your wallet slowly gets lighter. You blame it on team red if you are on team blue or vice versa. It works for quite a long time until all the vaule gets sucked out. Then, all the monopoly money goes back in the box and they start over.

Its kinda like being at a poker room. They just take a buck or two out of every pot and nobody really notices because they are winning and losing hands of hundreds of dollars. But, of course, if the game keeps going all day and night, sooner or later all of the chips on the table are gone and people have to get out their wallets and buy more chips. Nobody notices because people are always getting up and new people are sitting down. And its fun because they serve drinks and have football on the tv's.

Imagine if they changed the rules at the poker room and allowed you to buy poker chips on a tab. Ha ha, how long is that game going to last? And, if you are playing at that table, how long are you going to play before you cash out? At the end of that game, someone is getting their ass kicked in the parking lot.        

Mon, 08/27/2012 - 20:13 | 2742313 sun tzu
sun tzu's picture

Who looks at bankers as kings?

We'll see what you do when you get old and start having heart problems or if you ever break your arm or leg. The medicine of 200 years ago isn't the same as medicine today. A gunshot wound during the Civil War used to mean death or amputation. Today they can put you back together while saving your limbs. While some modern medicine is quack, you can't beat the West for trauma care. 

Fri, 08/31/2012 - 22:37 | 2754462 FreedomGuy
FreedomGuy's picture

There really are not three types of labor. Labor is human strength and ingenuity applied to almost anything in life. Doctors and Medicine produce tremendous value given our increasing life spans despite being overweight and inactive. Doctors used to earn less than teachers in the 1930's because they were worth less on the market. They could diagnose very well but effective treatments were very few.

You focus, like many on just tangible hard goods. That is a logical error. A sales trainer who improves sales by 25% in a company through better training does bring real value. Bankers who evaluate collateral, credit worthyness and make investment decisions as well as store your PM's and car titles benefit the bank and you, too.

There is non-productive labor in the sense that your DMV is nearly a total loss as we have to expend our labor to do then thousand things with our autos and we also have to pay the government workers who harass us. However, in the micro, they still produce something with their time and they trade you for it.

The point is that simply printing and pumping money with no real backing into the system is theft. It is cheating and it is stealing and the benefits do not go to the producing class. You and I have to bring wealth into the world and trade it, but they fake and steal it. I would love have Nuremburg trials for the bastards one day.

Mon, 08/27/2012 - 16:27 | 2741865 Gamma735
Gamma735's picture

This is why when the public finally catches on, then prices begin to rise in anticipation of more money printing and that begins the runaway inflation.

Mon, 08/27/2012 - 16:16 | 2741653 YouAreBliss
YouAreBliss's picture

GOP plan to balance the budget (no need for the Fed to print):

1) Eliminate the defense cuts in the sequester.

2) Make the bush tax cuts permanent.

3) Pass new tax cuts for the wealthy banksters

4) Increase enforcement budgets to fund new Social Conservative agenda; ie, make now legal activities illegal like: all birth control,all abortion, all gambling, all pornography, alcohol consumption, coffee consumption, non-magic pants wearing, etc...need at least another 100,000 SC (SocCon) police and judges - not to mention the increased funding for another million in prison (Of course run by BAIN/GOLDMAN Prisons-r-us Inc. headquartered in Qatar).

And of course absolutely no new taxes!

We can make it up in growth - (well not the growth of the wealthy and corporations -they have a 0 cap gains/divid rate, and the rest is run through tax sheltered off shore accounts.)

I can almost see the Ryan budget balanced now - in 2099!  After the enactment of the GOP re-enslavement act of 2079.

We can rejoice - Free of Freedom at last!

Thanks Rick!

Mon, 08/27/2012 - 20:16 | 2742325 sun tzu
sun tzu's picture

democrats plan to balanced the budget....

waste money on scams and kickbacks

waste even more on scams and kickbacks

bail out bankers, insiders and failed crony companies


4 years of $1.5 trillion deficits. thank the lord obama for his fiscal responsibility

that terrible bush had $400 billion deficits

Mon, 08/27/2012 - 22:16 | 2742573 YouAreBliss
YouAreBliss's picture

Stop watching Fox-aganda moron and get your facts straight.

Well here are a few facts for your Sarah Palin sized brain:

Of the last 7 Presidents Bush II had the third highest rate of growth in per capita government spending

Nixon-Ford had the highest, close behind REAGAN, then BushII.

The lowest three:

Clinton, then Obama then Carter.


You see wars on the other side of the planet are fucking expensive - and the GOP love them!  But despite all their rhetoric they love BIG

Government - growing it in almost every way possible.

Another great article from Libertarian think tank Reason:


Bush Was a Big-Government Disaster He expanded the state, and the idea that the state is incompetent

"Bush...During his first four years in office—a period during which his party controlled Congress—he added a whopping $345 billion (in constant dollars) to the federal budget. The only other presidential term that comes close? Bush's second term. As of November 2008, he had added at least an additional $287 billion on top of that (and the months since then will add significantly to the bill). To put that in perspective, consider that the spendthrift LBJ added a mere $223 billion in total additional outlays in his one full term...."

"...If spending under Bush was a disaster, regulation was even worse. The number of pages in the Federal Registry is a rough proxy for the swollen expanse of the regulatory state. In 2001, some 64,438 pages of regulations were added to it. In 2007, more than 78,000 new pages were added. Worse still, argues the Mercatus Center economist Veronique de Rugy, Bush is the unparalleled master of "economically significant regulations" that cost the economy more than $100 million a year. Since 2001, he jacked that number by more than 70 percent. Since June 2008 alone, he introduced more than 100 economically significant regulations..."

Nixon added the EPA, the ERA, and many new government agencies. 

Bush II added the worst of the worst The Beloved Dept of Homeland Security.

Or how about from Wiki answers:

Which president grew the size of government the most?


Answer: Bush and Reagan


Read more: 








Sat, 09/01/2012 - 12:40 | 2755078 FreedomGuy
FreedomGuy's picture

Let's see, Wilson, a Democrat got us in WWI. We entered WWII under FDR. We started Vietnam under JFK, expanded under LBJ, got out under Nixon. Bosnia was Clinton. Desert storms were under two different Bush's. Okay, yes it is the Republicans that love war. Yup, that's the evidence.

Second, I will categorically agree that no matter who is President government grows. I will remind you that under Reagan we had Democrat Senate and Congress most of the time while under Clinton we had a Republican house and senate. For a short while Bush had it all then lost it.

With the exception of Reagan, there has not been a single President ideologically opposed to the growth of the bureaucratic-collectivist state. I do not think Romney has any problem with it, either. He will run it better than the moron currently in office. However, if he does the hard things that are required he will become very unpopular while things improve. Then we will elect another whiney juvenile Democrat who wants to be nice with other people's money again.

Mon, 08/27/2012 - 14:01 | 2741368 rubearish10
rubearish10's picture

Fake, indeed!

Mon, 08/27/2012 - 14:15 | 2741369 Jlmadyson
Jlmadyson's picture

And when it hits the capital wall it will all fall apart.

Also Tsipras is right. They are hanging Greece now with every headline that hits. Clearly they do not have any answers and very little time now.

They all chant together; No more!

The end game is here.

Mon, 08/27/2012 - 14:02 | 2741371 Temporalist
Temporalist's picture

The fiat is only counterfeit if you are the last one to accept it.  Bagholders unite!

Mon, 08/27/2012 - 14:24 | 2741428 francis_sawyer
francis_sawyer's picture

Joo confetti bitchez!... This 3 card monte is as old (probably older) as/than anything written...

Mon, 08/27/2012 - 14:02 | 2741373 Sofa King Confused
Sofa King Confused's picture

Hmm...I thought that was illegal....guess not.  Anyone know where I can find cotton fiber paper?

Mon, 08/27/2012 - 14:27 | 2741435 TrustWho
TrustWho's picture

If you want to legally counterfeit, got to be a member of Fed club,

If you want to legally steal, got to be member of TBTF bank club,

If you want to legally practice organized crime, got to be member of US/state justice clubs,

If you want to make a fortune from legal bribery, got to be member local/state/federal legislative/executive/judicial clubs.

Sorry to see the morality of our leaders be corrupted by money, but just what happens once you cross the line and become a Banana Republic.  

Mon, 08/27/2012 - 14:03 | 2741374 madcows
madcows's picture

Printing does 3 things for them:

1   It makes them look like they are doing SOMEthing instead of watching Rome burn.

2.  It buys them Time for the economy to come around and magically grow itself out of debt.

3.  It creates inflation, which helps reduce the debt load.

In reality though, the Gov just keeps borrowing and going further into debt.  No fix at all.  The real fix will come when the gov balances the budget.  Of course, Nancy Pelosi won't even pull a budget together, never mind balance one.  There in lies the real problem, Polit(Corrupt)icians.

Mon, 08/27/2012 - 14:07 | 2741381 LawsofPhysics
LawsofPhysics's picture

There isn't enough collateral on the fucking planet to cover the total debt outstanding.  Growth is dead and by default or hyperinflation so is all fiat.

Still amazes me how long "mark to fantasy" accounting has been allowed to continue.

Mon, 08/27/2012 - 14:17 | 2741400 Hype Alert
Hype Alert's picture

one wonders [given] this economy seems based on liquidity, whether building an economy on what is, in fact, counterfeiting is very good for the economy in the long term?"



They can't undo Mark to Fantasy accounting until the debt is inflated into irrelevance.

Mon, 08/27/2012 - 14:47 | 2741486 iDealMeat
iDealMeat's picture

+1, Yup..  bout' 100 Trillion in assets world wide. CDO'd and levered into well over a quadrillion in derivatives.  Soon we're talking about some real money..


Mon, 08/27/2012 - 14:09 | 2741387 101 years and c...
101 years and counting's picture

"3. It creates inflation, which helps reduce the debt load."

Really?  the US hits $16 trillion this week.  does NOT seem to be going lower to me.

Mon, 08/27/2012 - 14:16 | 2741406 Brazillionaire
Brazillionaire's picture

That's because $16 trillion is still considered a lot of money. The trick is to make it where it is not. 

Mon, 08/27/2012 - 17:56 | 2742041 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"The real fix will come when the gov balances the budget."

How can the budget be balanced if one is never passed???

Mon, 08/27/2012 - 14:06 | 2741377 Abraxas
Abraxas's picture

CNBC? Why is anybody watching this crap?

Mon, 08/27/2012 - 14:18 | 2741410 KingTut
KingTut's picture

Real Question: How does Santelli stay on the Air?

Numerous "guests" have been removed from the list because they said things not half  as inflamatory as Santelli.   

Mon, 08/27/2012 - 14:28 | 2741440 Dr. Engali
Dr. Engali's picture

CNBS has to have their one token voice of descent so they can have the appearance of being objective.

Mon, 08/27/2012 - 14:33 | 2741458 jcaz
jcaz's picture

Yep- just a matter of time before Santelli angers The Mighty Oz and disappears-  fun to watch him work it while he can.

Mon, 08/27/2012 - 15:41 | 2741505 francis_sawyer
francis_sawyer's picture

If he EVER says "Joo", or mentions the Apartheid State of Israel... It'll be lights out 'subito'...

He hasn't crossed that Rubicon yet... Which is the REAL Rubicon... As long as criticism is nebulous, he can be paraded out there to make it seem like there's a dissenting voice on the subject... That pacifys the mob...

Trust me... If he ever accidentally 'whispers' joo... We'll find out the next day that he had a mental breakdown, was on heavy anti-depressant meds, & was in to kiddie porn...

Mon, 08/27/2012 - 15:44 | 2741722 Amagnonx
Amagnonx's picture

Kiddie porn now trumps the mail bomb, because it can be downloaded remotely onto your PC.  I'd be guessing 99% of the time you heard about it, it was a bomb.

Mon, 08/27/2012 - 15:02 | 2741549 piliage
piliage's picture

The traders on the floor love him. He has credibility and gets great inside scoops, so as long as he doesn't shout "Jesus is a goat fucker" or some such, he'll stay around.


Mon, 08/27/2012 - 15:42 | 2741717 francis_sawyer
francis_sawyer's picture

that's pretty much what I just said...

Mon, 08/27/2012 - 14:46 | 2741492 spastic_colon
spastic_colon's picture

notice how they call everything he says a "rant".....immediately trying to discredit him

Mon, 08/27/2012 - 18:38 | 2742131 TimmyB
TimmyB's picture

Santelli's a fucking idiot who attracts the highly valued "fucking idiot" viewer demographic that advertisers crave.  Santelli helps sell crap to fucking idiots, so he stays on the air. 



Tue, 08/28/2012 - 18:25 | 2742132 TimmyB
TimmyB's picture

double post


Mon, 08/27/2012 - 18:47 | 2742155 neidermeyer
neidermeyer's picture

 CNBC? Why is anybody watching this crap?

Because they won't let you watch Skinemax when you're cold calling from your cube.

Mon, 08/27/2012 - 14:10 | 2741388 Brazillionaire
Brazillionaire's picture

This market needs more money on the sideline.

Mon, 08/27/2012 - 14:13 | 2741394 MillionDollarBoner_
MillionDollarBoner_'s picture

This is what we in the UK call an "arse-covering exercise".

CNBC spouts 24/7 propaganda. At some point they will be called to account.

Rick's articles will then be evidence for the defence.

Mon, 08/27/2012 - 14:14 | 2741395 socalbeach
socalbeach's picture

Only thing I would take issue with is his statement that QE is "printing more debt" and "creating debt to solve a debt problem".

QE, as long as it's not undone, neutralizes debt since it takes Treasuries (debt) out of circulation, and the Fed sends most of the interest it receives back to the Treasury.  If you loan me a million dollars and I never have to pay you back and don't have to pay interest, that's a gift, not a loan.

Mon, 08/27/2012 - 14:23 | 2741423 LawsofPhysics
LawsofPhysics's picture

It gets worse, several bonds now with negative yields.  What happens when retirees have to pay to loan the treasury a billion dollars?

Mon, 08/27/2012 - 14:31 | 2741451 TrustWho
TrustWho's picture

Don't worry, as FDR collected gold to support the currency, US will tax wealth to pay for the debt. Hell, economist already discussing wealth tax.

Mon, 08/27/2012 - 17:46 | 2742019 Disenchanted
Disenchanted's picture



"and the Fed sends most of the interest it receives back to the Treasury."


According to who...the liars club?


And TARP made us(taxpayers) a profit. Yeah, right.

Mon, 08/27/2012 - 23:43 | 2742620 LMAOLORI
LMAOLORI's picture

socalbeach "Only thing I would take issue with is his statement that QE is "printing more debt" and "creating debt to solve a debt problem".

QE, as long as it's not undone, neutralizes debt since it takes Treasuries (debt) out of circulation, and the Fed sends most of the interest it receives back to the Treasury.  If you loan me a million dollars and I never have to pay you back and don't have to pay interest, that's a gift, not a loan"


Actually the Member Bank's get to keep the interest they make on IOER we are paying them interest to borrow and hold it's a GIFT.


How Bernanke Can Get Banks Lending Again If the Fed reduces the reward for holding excess reserves, banks will have to find something else to do with their money, like making loans or putting it in the capital markets.



"The Fed's hostility toward lowering the interest on excess reserves is almost self-contradictory. When Mr. Bernanke lists the weapons the Fed plans to use when the time comes to tighten monetary policy, he always gives raising the IOER a prominent role. His reasoning is straightforward and sound: If the Fed makes holding reserves more attractive, banks will hold more of them. Why doesn't the same reasoning apply in the other direction?

But suppose it doesn't work. Suppose the Fed cuts the IOER from 25 basis points to minus 25 basis points, and banks don't lend one penny more. In that case, the Fed stops paying banks almost $4 billion a year in interest and, instead, starts collecting roughly equal fees from banks. That would be almost an $8 billion swing from banks to taxpayers. There are worse things."

in full





" Bruce Bartlett, writing in the Fiscal Times in July 2010, observed:

Economists are divided on why banks are not lending, but increasingly are focusing on a Fed policy of paying interest on reserves — a policy that began, interestingly enough, on October 9, 2008, at almost exactly the moment when the financial crisis became acute. . .   

Historically, the Fed paid banks nothing on required reserves. This was like a tax equivalent to the interest rate banks could have earned if they had been allowed to lend such funds. But in 2006, the Fed requested permission to pay interest on reserves because it believes that it would help control the money supply should inflation reappear. 

. . . [M]any economists believe that the Fed has unwittingly encouraged banks to sit on their cash and not lend it by paying interest on reserves.

At one time, banks collected deposits from their own customers and stored them for their own liquidity needs, using them to back loans and clear outgoing checks.  But today banks typically borrow (or “buy”) liquidity, either from other banks, from the money market, or from the commercial paper market.  The Fed’s payment of interest on reserves competes with all of these markets for ready-access short-term funds, creating a shortage of the liquidity that banks need to make loans. 

By inhibiting interbank lending, the Fed appears to be creating a silent “liquidity squeeze” -- the same sort of thing that brought on the banking crisis of September 2008. "

in full

and also this





Keeping interest rates low is considered the first line of defense for central banks bent on easing the credit crisis and getting banks to lend again. The Federal Reserve’s target for the federal funds rate -- the overnight interest rate that banks charge each other – has been kept at a rock-bottom 0% to 0.25% ever since December 2008. A growing number of economists now think it could stay there well into 2011 or even 2012, prompted by fears that a spreading debt crisis in Europe could hurt a budding U.S. recovery.

Dirk van Dijk, writing for the investor website, explains what a good deal this is for the banks:

“Keeping short-term rates low . . . is particularly helpful to the big banks like Bank of America (BAC) and JPMorgan (JPM)Their raw material is short-term money, which is effectively free right now. They can borrow at 0.25% or less, and then turn around and invest those funds in, say, a 5-year T-note at 2.50%, locking in an almost risk-free profit of 2.25%. On big enough sums of money, this can be very profitable, and will help to recapitalize the banking system (provided they don’t drain capital by paying it out in dividends or frittering it away in outrageous bonuses to their top executives).”

This can be very profitable indeed for the big Wall Street banks, but the purpose of the near-zero interest rates was supposed to be to get the banks to lend again. Instead, they are investing this virtually interest-free money in risk-free government bonds, on which we the taxpayers are paying 2.5% interest

in full



Mon, 08/27/2012 - 14:19 | 2741411 Brother Sebastian
Brother Sebastian's picture

Someday, someone is going to make Santelli an offer he can't refuse.

Mon, 08/27/2012 - 14:55 | 2741518 Fractal Parasite
Fractal Parasite's picture

Survival instinct, bitchez..

Mon, 08/27/2012 - 19:07 | 2742061 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"Someday, someone is going to make Santelli an offer he can't refuse."

Could it be that he's already done that in reverse and maybe that's why he's still on the air? If so, I hope he has a doomsday weapon!

(He IS Italian isn't he?)

Mon, 08/27/2012 - 14:22 | 2741419 diogeneslaertius
diogeneslaertius's picture

you Can build an economy on counterfeiting; However, the monetary unit of exchange must be Constitutional (i wont bother to explain the logistics)and backed by something (even if, as i have elsewhere suggested, it were backed by a Basket of Commodities weighted "at run time" [jit] via primary exports)


you cant have all of the free trade amalgam either


you cant have treaties


you must have (at first incremental of course but then ramping up as per live effect data) tariffs

Mon, 08/27/2012 - 14:26 | 2741427 diogeneslaertius
diogeneslaertius's picture

the root of evil is the FRS and the NWO central banking cartel

even fractional reserve lending is okay within certain contexts but not otherwise!


we might need to shut down the securities exchanges though and force a different methodology for capex generation, it seems impossible but we need the same tacit, discrete logistics but ... the design has to be perfect, we need to make it so the players cant rig the game


again game design

again Organic Life as Elementary Game Theory (fuck RAND)

Mon, 08/27/2012 - 14:26 | 2741433 diogeneslaertius
diogeneslaertius's picture

i love Santelli

but also...

Mon, 08/27/2012 - 14:27 | 2741438 tahoebumsmith
tahoebumsmith's picture

QE has become the new synthetic drug of choice. All the addicts on Wall St. just wait for their next fix. Remember what happened when the previous drug of choice, Synthetic MBS AND CDO dried up and all the addicts went into withdrawls? Soon the same will happen when QE is no longer an option. This time they have created the perfect storm for depression, Just imagine what will happen if the interest rates go up just a mere 2% and the free money starts costing something? If the financial system can't correct itself thus far with all the help from QE, ZIRP,LTRO, HAMP,TALF, TWIST and all the other gimmicks it is pretty obvious this isn't going to end well. Then again we have relied on a person that didn't even see the housing crisis staring him in the face. When the dominos start falling this time, there will be no drugs left to feed the junkies and the whole system will become one big drugless crack house... Nothing more then a bunch of washed up has-BENS!

Mon, 08/27/2012 - 14:32 | 2741455 Jlmadyson
Jlmadyson's picture

Soft that was good times.

Someone needs to put together a chart with names and all the key BS phrases that have been pushed in the last 5 years. Then we need a chart with all the programs and costs associated with all the free money floated in the last 5 years.

Altogether it has got us nothing more than mountains if more debt at the end of the day.

Mon, 08/27/2012 - 16:25 | 2741857 grid-b-gone
grid-b-gone's picture

Lock box

Mon, 08/27/2012 - 14:33 | 2741456 Juan Wild
Juan Wild's picture

The Feds only mandate is to devalue the dollar. One dollar in 1913 is worth only a nickel today! HAPPY FUCKIN' 100th BIRTHDAY YOU FUCKIN' DEN OF THEIVES!!!!!


Mon, 08/27/2012 - 14:37 | 2741465 mickeyman
mickeyman's picture

I like the bold caption "QE has a new name."

Mon, 08/27/2012 - 14:37 | 2741466 TrustWho
TrustWho's picture

Today's market....Who refuses to allow this market to fall? biased Algos? PPT/Fed?

The market gaps up and stays for a period of time. The market gaps down and bang; 5 minutes and market has recovered from  the gap down. 

Mon, 08/27/2012 - 15:38 | 2741697 TrustWho
TrustWho's picture

With the low volume, they can easily have the S&P close green, even if only .00000001. What a comedy!

We will see if I am wrong

Mon, 08/27/2012 - 14:38 | 2741469 LouisDega
LouisDega's picture

So does this mean im ok Spider or im not ok Spider?

Mon, 08/27/2012 - 14:47 | 2741496 savagegoose
savagegoose's picture

hey guys, i dont where to say this, there is no topic yet about the fact banks and the BIS FED have allowed gold as  tier 1 capital reserve.

i see this as a go ahead for banks to re accumulate gold, and then drive up the price as high as possible. thus giving them a  real reserve base.


it was pointed out to me with this chart, that for since ww2, gold sat at $35. then in the 80-90 after the unloading it avg $350 for 2 decades!

now with the massive liquidity injection another 10x the price is at hand, and banks will be implicit in getting it there and keeping it there.



Mon, 08/27/2012 - 14:47 | 2741497 Juan Wild
Juan Wild's picture

Ron Paul is in a class by himself. He is the only man in the house. He is the only threat to the status quo. He is the only threat to the money lenders.
And to the the money lenders, Obama, Romney, Bush, Clinton, and all previous Presidents, and all the clowns in the House and Senate (with notable exceptions) are but groveling, sniveling, spineless, easily-bought scum. And dear said scum, know this: the money lenders know Ron Paul is the only MAN in the house. And they know he can NOT be BOUGHT like you common scum. That's why his voice is squelched and you scum are free to talk your clown asses off anytime you want. FUCKIN MUPPETS!

Mon, 08/27/2012 - 15:06 | 2741561 Seasmoke
Seasmoke's picture

dont count Andrew Jackson on your list

Mon, 08/27/2012 - 15:02 | 2741551 indio007
indio007's picture

If it wasn't for the SS counterfieting would be good for my personal economy too.

Mon, 08/27/2012 - 15:14 | 2741600 MrBoompi
MrBoompi's picture

What Santelli doesnt say is that the central banks don't try to "solve the problem of too much debt" they just make sure the interest payments are made and the debt continues to increase.

Mon, 08/27/2012 - 15:22 | 2741622 “Rebellion to t...
“Rebellion to tyranny is obedience to God.”-ThomasJefferson's picture

Same story, different day.  People are inherently stupid.  In the past 15 years or so, Greenspan and Bernanke, with the explicit authority from each and every member of both houses of congress, and our idiot Presidents, looted this country to the point of no return.  And very few people seem to actually give a fuck! Shame on us when we and our hopelss descendants are slaves to the Walton family. Credit Rick Santelli for at least shouting into the wind, hoping some moron awakens to his warnings.

Mon, 08/27/2012 - 16:59 | 2741942 grid-b-gone
grid-b-gone's picture

Every Ponzi needs new recruits to be sustained, which is why federal jobs keep expanding in each administration.

People are reluctant to vote themselves out of a job, even knowing their children will somehow pay for the overspending.

Greece made it to 14% of working-age people employed by the government before collapse. 

The U.S. is at 8%. 

Mon, 08/27/2012 - 16:41 | 2741900 cranky-old-geezer
cranky-old-geezer's picture



Is it counterfeiting when a company issues more stock?

No, of course not.  

When a company issues more stock, it dilutes the value of all shares, but no one calls it counterfeiting.

Printing more currency is like the stock analogy.  It dilutes the value of the currency, but it's not counterfeiting.

In the last 4 years M2 has grown 300% ($2.5 trillion in 2008, $10 trillion today).  

What would happen to someone's shares of stock in company A if they issued 300% more stock, going from 100 million shares outstanding to 400 million shares for example?

Wouldn't it dilute the value of each share?  Wouldn't each share be worth 25% of its original value?

Count your blessings.  US dollar is still worth 50% of its 2008 value.

But it's not counterfeiting. 

Counterfeiting is illegal printing, like if you or I started printing FRNs.

But that $7.5 trillion of Fed printing is legal.

Actually it's more like $30 trillion.   Most of it is "off balance sheet".





Mon, 08/27/2012 - 16:54 | 2741926 Winston Churchill
Winston Churchill's picture

One estimate from a commentator ( an ex FedRes guy) I sometime follow is;

$32 tn off balance sheet plus the $7.5tn M2 growth.

Thats why the Fed is desperate to avoid a full audit.

Just imagine the gold price if that got out.

Strange that $32tn seems to match the money stashed in safe havens.

Sure its just coincidence.

Mon, 08/27/2012 - 18:54 | 2742169 cranky-old-geezer
cranky-old-geezer's picture



$32 tn off balance sheet plus the $7.5tn M2 growth.

Thats why the Fed is desperate to avoid a full audit.

Doesn't matter, when someone introduces a gold-backed currency, USD will collapse to zero, and that $32 trillion off-balance-sheet cash stashed away in safe havens will be worthless.

Of course everone else's US dollars will be worthless too.

Tue, 08/28/2012 - 00:23 | 2742771 James
James's picture

"Count your blessings.  US dollar is still worth 50% of its 2008 value."


Problemw/that my friend is the U.S. dollar was only worth,thru inflation,.five-cents

But you are right.

It is only worth HALF that.(pennies)


Tue, 08/28/2012 - 00:34 | 2742786 Antifaschistische
Antifaschistische's picture

Cranky Ole...

Yes, technically counterfeiting is an illegal fraudulent act and since the Fed's behavior is legal it's 'legally' not counterfeiting.

But it's also NOT like issuing new stock.  A company makes a decision between debt and equity.  Either way, they're looking for a return in excess of their cost of that capital.   Raising money via. stock sales, should be, to increase the wealth of all owners...NOT dilute the wealth of exiting owners.  Which is why new share issuance is not immediately met with a drop in the market value of that stock. 

The FED does NOT do this.  There is no ROI.  There is only dilution.  This is why it is 'like' counterfeiting.   The FED dilutes value.  The cost of capital for a counterfeiter is near zero so their only incentive is to keep counterfeiting.

Mon, 08/27/2012 - 17:21 | 2741976 kevinearick
kevinearick's picture

counterfeit people, robots, with counterfeit money, debt, paying one another to agree that they are humans, which they clearly are not.

Mon, 08/27/2012 - 17:48 | 2742030 Disenchanted
Disenchanted's picture



shiny plastic people...

Mon, 08/27/2012 - 21:59 | 2742549 jharry
jharry's picture

Nice observation V.  They even counterfeit silver coins.  Ha ha ha ha ha, aha!

Mon, 08/27/2012 - 23:37 | 2742719 Antifaschistische
Antifaschistische's picture

Counterfeiting?  Could any of these guys read ZH?   FINALLY!!  After decades of this nonsense someone actually calls it counterfeiting.   Except if anyone else does it, it's fraud.


Tue, 08/28/2012 - 09:49 | 2743347 supermaxedout
supermaxedout's picture
Goldman&Co: The First Bankers

In exchange for this gold, the depositors received a receipt: 'promissory notes'. These notes, the first bank notes, once their veracity was established, proved to be very popular with their recipients, as gold was heavy and cumbersome. Soon, these notes began to be used as currency, with everyone happy to accept that each was backed 100% by a deposit of gold.

Except that once the goldsmiths realised that few people actually wanted to redeem their notes, they began very secretly to issue more than they had gold to back them. This newly-created money was then lent out to people who wished to borrow it at a rate of interest. This was a practice of highly dubious legality, but its practice was never tested in court.

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The Bank of England

Then in 1694, this practice of creating money out of thin air was effectively legitimised with the founding of the Federal Reserve Bank an affiliate of the Bank of England. It was not the first bank to be founded (Coutts was founded in 1690), but the nature of its creation was central to the role that banks went on the play in the supply of money.

In 1694, England was still a predominantly rural country. Most people still grew their own food, built their own homes, collected their own firewood for fuel, drew their own water from wells and frequently made their own clothes. Money was not the necessity that it is today for most people, but it was still needed in large amounts when the nation went to wars.

The then King (William III) needed money to fight his war against the French. Both the King's capacity to tax and his authority was limited, so the quickest and easiest way to acquire his needs was to borrow.
A consortium of six London goldsmiths, lead by one William Paterson, were given royal authority to the create the first 'joint-stock' bank on the condition that they lent the King £1.2 million in gold at 8%. This was the start of the National Debt.

More importantly, however, they were given the authority to create £1.2 million in paper money for private lending. This paper money was theoretically backed by the gold, but as that had been lent to the King, it meant that the same sum of money was lent out twice over! The validity of this practice was never tested in a court of law, as it remained a matter that was hidden from the general public. Even today, the banks like to draw a veil over their activities.

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