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Stocks, Precious Metals Spike On Report Fed Considering "Sterilized" QE

Tyler Durden's picture


Update: yup. It's Jon "Mouthpiece" Hilsenrath all right. This is nothing but a test to gauge if the market will ramp on the clarification that future QE may be sterilized. If market ramps regardless, the sterilized clause will be ultimately eliminated. Full story link.


While we have yet to see the actual report, almost certainly emanating from Jon Hilsenrath, it appears that the QE3 rumormill has started, initially with speculation that the Fed's activity will be merely "sterilized" or more Twist-type purchases, unclear however if in TSYs or also in MBS. Via the WSJ:

  • Fed Officials consider "sterilized" option for Future bond buying
  • Operation Twist Reprise, QE Other Options For Fed Bond
  • Still Unclear Whether Fed Will Launch Another Bond-Buy

As a reminder, yesterday we said that according to the EURUSD, the implied market expectation is for a $750 billion QE out of the Fed. However, that is for unsterilized balance sheet expansion. If the Fed goes ahead and does not grow its balance sheet (hence "sterilized"), it may well be EURUSD, and thus risk, and gold, negative, as no new money will enter the market for actual speculation. Which perhaps is precisely what the Fed is planning, as every incremental dollar now goes into Crude first, and everything else later. In other words: this is a very big risk off indicator as no new money will be available to pump up stocks, and all this will do is try to make longer-dated yields even lower, an approach that has proven to be an abysmal failure to date.

This also means that while the ECB is borrowing ever more and more tricks from the FRBNY Goldman team, such as massive Discount Window usage, the Fed is now using the ECB playbook when it comes to selective easing without generating inflation - the US goes German. Of course, there is no such thing as truly sterilized intervention, as ultimately the Fed will merely fund the banks indirectly in some other way, to give them the dry powder needed to sterilize and generate the required ROEs without which their stocks would plunge.

This move may have to be faded:


From the WSJ. INFLATION word count 9:

Federal Reserve officials are considering a new type of bond-buying program designed to subdue worries about future inflation if they decide to take new steps to boost the economy in the months ahead....The aim of such an approach would be to relieve anxieties that money printing could fuel inflation later, a fear widely expressed by critics of the Fed's previous efforts to aid the recovery..... If growth or inflation pick up much, officials seem unlikely to launch a bond-buying program because the economy might not need the extra help or because doing more could spur higher inflation. The Fed's approach to a bond buying program matters a lot to many investors. More money printing could push commodities and stock prices higher, or send the dollar lower, if it sparks a perception among investors that inflation is moving higher, said Michael Feroli, an economist with J.P Morgan Chase.


Fed officials have used different types of bond-buying programs since 2008. In each case the aim has been to drive down long-term interest rates to spur investment and spending by businesses and households. In case they decide to act again, they're exploring three different approaches, according to people familiar with the matter. Those approaches are:


• First, they could use the method they used aggressively from 2008 into 2011, in which the Fed effectively printed money and used it to purchase Treasury securities and mortgage debt. The Fed has already acquired more than $2.3 trillion of securities in several rounds of purchases using this approach, widely known as "quantitative easing," or QE.


• Second, the Fed could reprise a program launched last year in which it is selling short-term Treasury securities and using the proceeds to buy long-term bonds. This $400 billion program, known as "Operation Twist," allows the Fed to buy bonds without creating new money.


• Third, in the new novel approach, the Fed could print money to buy long-term bonds, but restrict how investors and banks use that money by employing new market tools they have designed to better manage cash sloshing around in the financial system. This is known as "sterilized" QE.


The Fed's objective under any of these programs would be to reduce the holdings of long-term securities in the hands of investors and banks. The Fed believes that reducing the amount of long-term bonds in the hands of investors drives down long-term interest rates, encourages more risk-taking, and thus spurs spending and investment by households and businesses.


The differences between the three approaches involve where the money comes from and where it ends up. The Fed hasn't literally print more money, but it has electronically credited the accounts of banks and investors with new money when it purchased their bonds under quantitative easing. The Fed has pumped more than $1.6 trillion in new money into the financial system this way, and has also rejiggered it existing holdings, as part of its bond-buying efforts.


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Wed, 03/07/2012 - 12:19 | 2232356 LawsofPhysics
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Two words;  "head fake".


It is either that or Bill Gross has been right all along.

Wed, 03/07/2012 - 12:22 | 2232376 SilverTree
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My Take On Andrew Maguire’s Silver Arrow

Wed, 03/07/2012 - 12:34 | 2232457 strannick
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Where are these 'unsterilzed funds' to come from?

I thought that by June, the income from previously bought bonds (twist) wont be sufficient to buy up the newly issued bonds, and that therefore 'unsterilzed' buying (QE) will have to recommence.

Wed, 03/07/2012 - 12:39 | 2232481 Stax Edwards
Stax Edwards's picture

Jawboning to inflict pain on shorts IMO.  Probably better get used to it.

Wed, 03/07/2012 - 12:48 | 2232514 Spirit Of Truth
Spirit Of Truth's picture Ben is both impotent and sterile now?  Maybe that means he'll stop raping the middle class.

Wed, 03/07/2012 - 12:55 | 2232529 Chief KnocAHoma
Chief KnocAHoma's picture

This is too easy.... release the rumor and watch the suckers flock in. Of course they have no other option than to print, but by giving verbal resistance to the idea, they try to keep inflation in check.

Truth is we're fucked.

Wed, 03/07/2012 - 13:23 | 2232653 trav7777
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Vive Le Sterilizacion!!

Wed, 03/07/2012 - 12:59 | 2232551 tmosley
tmosley's picture

That just makes him mad, so he'll use a broken broomstick instead.

Wed, 03/07/2012 - 13:10 | 2232590 Hippocratic Oaf
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Who gives a shit, Big East Tourney is on. <slight sarc>

Wed, 03/07/2012 - 13:14 | 2232610 stocktivity
stocktivity's picture

That won't happen.

Wed, 03/07/2012 - 12:35 | 2232464 Manthong
Manthong's picture

Interesting that in the case of bankers and the government "sterilization" means preserving toxicity. 

Wed, 03/07/2012 - 12:38 | 2232477 Comay Mierda
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ignorance is strength

Wed, 03/07/2012 - 12:40 | 2232491 The Big Ching-aso
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They sterilize to prevent conception.   In this case they sterilize to promote deception.  

Wed, 03/07/2012 - 13:17 | 2232624 OpenEyes
OpenEyes's picture

Sterilized QE  ??   Oh man, now they're just making shit up.

Wed, 03/07/2012 - 12:37 | 2232475 JPM Hater001
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Subscriber...solid piece I saw it this morning.

Wed, 03/07/2012 - 12:25 | 2232397 Lost Wages
Lost Wages's picture

I think Bill Gross is about to be right all the way to the bank. And to a far lesser extent, PTTRX fund holders. I was suprised to see PIMCO vote against triggering CDS, then bitch about their own vote afterward. Makes me think they know something, playing both sides of the issue like a goldman squid.

Wed, 03/07/2012 - 12:33 | 2232451 Theta_Burn
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BG is no dummy

Wed, 03/07/2012 - 13:34 | 2232699 trav7777
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Gross is levered long on mortgages, right?

Wed, 03/07/2012 - 12:52 | 2232522 LawsofPhysics
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ZIRP is QE.  Free money for the PDs and no soup for you.

Wed, 03/07/2012 - 14:22 | 2232878 Stoploss
Stoploss's picture

One word: "perplexed" What happens when we see this word?? Did we see this word in '08? Why, yes, yes we did.

Wed, 03/07/2012 - 12:19 | 2232360 achmachat
achmachat's picture

are those the algos that react that quickly to rumors?!

Wed, 03/07/2012 - 12:40 | 2232487 dracos_ghost
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Yup. Except the headline parsers just read FED CONSIDERS QE. Damn quoted adjectives like "Sterilized" don't get included in the linguistic context.

Wed, 03/07/2012 - 12:20 | 2232361 Cognitive Dissonance
Cognitive Dissonance's picture

Gotta love the rumors. After a selling day like yesterday the Ponzi welcomes any "help" it can get.

Wed, 03/07/2012 - 12:27 | 2232413 Divided States ...
Divided States of America's picture

I thought too much risk taking and people living way beyond their means was what got us into this mess in the first place...and the Fed is promoting this? Wow, we're royally fucked.

Wed, 03/07/2012 - 12:36 | 2232469 Cognitive Dissonance
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Not too loud son or the natives might hear ya.

Wed, 03/07/2012 - 12:40 | 2232490 Dr. Engali
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The fed has been promoting it for 100 years. They have just been turning up the dial.

Wed, 03/07/2012 - 12:51 | 2232519 The Big Ching-aso
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"My risk is different than your risk. All I ask from you is to take a risk on my risk. Someday I'll let you know what that risk is."

B.S. Bernanke

Wed, 03/07/2012 - 12:53 | 2232527 SheepDog-One
SheepDog-One's picture

This one goes to 11.

Wed, 03/07/2012 - 12:57 | 2232539 Divided States ...
Divided States of America's picture

Crap, my shorts will have to wait till June for another triple digit down day. I heard this phenomenum only occurs once every quarter now. Thank you Benny and Timmy and Bammy.

Wed, 03/07/2012 - 13:02 | 2232564 Dr. Engali
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+1 Spinal Tap

Wed, 03/07/2012 - 14:53 | 2232997 exi1ed0ne
exi1ed0ne's picture

Nah, sterilization is where they make 10 louder with a cold sore. 11 is coming though.

Thu, 03/08/2012 - 17:56 | 2237420 downrodeo
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yeesh, my head is starting to hurt from it all

Wed, 03/07/2012 - 12:19 | 2232362 GeneMarchbanks
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"Sterilization" is an ECB trademark, please pay up.

Wed, 03/07/2012 - 12:19 | 2232364 ghostfaceinvestah
ghostfaceinvestah's picture

Thanks Benocide, you sure helped my oil position, it was looking a bit weak until this news broke.

Wed, 03/07/2012 - 12:49 | 2232513 AccreditedEYE
AccreditedEYE's picture

Look at the other benefit too... we practically filled the gap down/up on market indicies and volatility in 1 morning. This is developing nicely....

Wed, 03/07/2012 - 12:20 | 2232366 Marge N. Callz
Marge N. Callz's picture

Wow a 20 point drop in S&P yesterday and we need a QE rumor rally.  Somebody must be real nervous...

Wed, 03/07/2012 - 12:47 | 2232509 SheepDog-One
SheepDog-One's picture

Theyre totaly screwing themselves by not allowing even a bit of reality into the one with any real money is going to buy into this crap ever again!

Wed, 03/07/2012 - 12:59 | 2232549 Chief KnocAHoma
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Bank stocks took it in the teeth on Tuesday. We can't have that shit! Our banks are too fragile to allow their stock valuation to melt.

Wed, 03/07/2012 - 12:20 | 2232367 Moneyswirth
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Wed, 03/07/2012 - 15:44 | 2233190 slewie the pi-rat
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slewienomics indicates that t: "sterilization" is always and everywhere a temporary monetary phenomenon

it is the economic equivalent of the physical science relativity principle which i shall incorporate here for the thankless fuking task of enlightening those who dwell in fiat darkness, to wit:

imagine a big turd of printed fiat shit-money speeding toward the rotary oscillator at a relatively constant velocity: Vturd

now the "sterilizer" grabs the fan and moves it opposiotionally away from the approaching fiat turd and a velocity which, due to utter hypocrisy and lies + a fat bankster ass, can appraoch, but never equal the appraching monetary mud-pie of fiat stink

then, zeno, the sterilizer holding the fan and "moving" it at Vz < Vturd, realizes that in this dimesion, you cannot outrun yourself, as peterSellers knew so well, and yes, BiCheZ, the shit eventually hits the fan, because that thought, being real, actually stops zeno b/c he really knew it, all along

no shit, sherlock!  gold and silver are really pretty good money for the money, BiCheZ!

Wed, 03/07/2012 - 16:24 | 2233340 Scalaris
Scalaris's picture

If v< vturd  then the oscillator will eventually be excrement-stricken. Got it.  

Appreciate the shit slinging mechanics tutorial.

Wed, 03/07/2012 - 12:21 | 2232372 kito
kito's picture

more rumors!!!! hopium abounds!!!!! pms pump and dump here we come!!!

Wed, 03/07/2012 - 12:39 | 2232483 JPM Hater001
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Market up BS.

Wed, 03/07/2012 - 13:31 | 2232664 GoinFawr
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It's not QE until you say its kuey.

Wed, 03/07/2012 - 12:23 | 2232374 Comay Mierda
Comay Mierda's picture

just like i said earlier this morning - the bernank is fueling up his helicopter

spx is just doing a fibonacci retracement on yesterday's move.  it will prob come up to 1355ish.  it will continue trading in a downward channel

Wed, 03/07/2012 - 13:03 | 2232568 stormsailor
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maybe the fib lines work on a down-channel,  not much luck with it on the last 90 day up trend

Wed, 03/07/2012 - 13:54 | 2232777 Alea Iactaest
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Then maybe a leg down tomorrow, just to hit 23.6% at 1,335 (12/19 - 3/1)? I can't see 38.2% at 1,310. We are sitting at SMA200 on the hourly. Otherwise a lot of noise. (Alternative is to revisit the trendline from 10/3 and 12/19-20 which was confirmed with the Thanksgiving dip at the end of November?)

Wed, 03/07/2012 - 12:24 | 2232380 SheepDog-One
SheepDog-One's picture

Hey big boy! Is that another fake QE rumor in your pocket or are you just happy to see me?

Wed, 03/07/2012 - 12:26 | 2232407 Cdad
Cdad's picture

Proving once again that the entire market is a complete abomination.  Just ridiculous.  

Wed, 03/07/2012 - 12:46 | 2232501 rufusbird
rufusbird's picture

So ultimately, all this talk about economics and what is really driving the titanic Fed is all about managing perceptions?

Wed, 03/07/2012 - 13:09 | 2232589 MsCreant
MsCreant's picture

That is ALL it is.

Wed, 03/07/2012 - 14:55 | 2233008 exi1ed0ne
exi1ed0ne's picture

Every good con needs an engaging cover

Wed, 03/07/2012 - 12:56 | 2232536 kito
kito's picture

did you hear???!!! laura told barbara that she overheard jane tell pete that maria heard directly from bobby that he will ask you to the prom!!!! Isn't that great!!!!.......lets go pick out your prom dress!!! I hear you can buy it on credit!!!!!!!

Wed, 03/07/2012 - 12:23 | 2232386 Jim B
Jim B's picture

The Fed wants 0% interest rates for the next 2 years, they must and will  buy! 

Wed, 03/07/2012 - 12:25 | 2232399 SheepDog-One
SheepDog-One's picture

Go ahead! Lets make this clownshow interesting, lets see what happens when oil shoots over $150! Bring it on!

Wed, 03/07/2012 - 13:25 | 2232661 eddiebe
eddiebe's picture

hey sheepdog, remember just a couple of years ago when oil went all the way to 32 bucks? Don't understimate the power of unlimited amounts of buying and shorting power, nor the herd mentality if the bottom drops out again.

Wed, 03/07/2012 - 13:29 | 2232672 SheepDog-One
SheepDog-One's picture

Not this time. 2012 is a far different wasteland than good old 2009 was.

Wed, 03/07/2012 - 12:29 | 2232390 AccreditedEYE
AccreditedEYE's picture

Hey Fisher, here's the patient's heartbeat after being shown the next money syringe.... your opinion is useless and your thinking is very quaint and "old world" it would seem.


Wed, 03/07/2012 - 12:25 | 2232391 Hansel
Hansel's picture

LMAO at this:  "Third, in the new novel approach, the Fed could print money to buy long-term bonds, but restrict how investors and banks use that money by employing new market tools they have designed to better manage cash sloshing around in the financial system. This is known as "sterilized" QE."

They are grasping at straws, praying for a hail mary.  They are panicking.

Wed, 03/07/2012 - 12:27 | 2232412 SheepDog-One
SheepDog-One's picture

'Yea see we'll print this money, and tell you EXACLTY what you will do with it'.....GEE as long as its not all 100% fascist or anything...

Grasping at straws totaly.

Wed, 03/07/2012 - 12:54 | 2232531 LawsofPhysics
LawsofPhysics's picture

Yep.  In other words, major capital and price controls.

Wed, 03/07/2012 - 12:59 | 2232553 AccreditedEYE
AccreditedEYE's picture

Without the ever-elusive velocity, they're still pissing in the wind...

Wed, 03/07/2012 - 13:10 | 2232591 anarchitect
anarchitect's picture

Restricted how?  As in being forced to keep the new money in an audited mattress?  Who would cough up their long bond under such bullshit conditions when they could sell it on the open market?

Wed, 03/07/2012 - 13:28 | 2232670 trav7777
trav7777's picture

yes. They are not seeing the economic activity that their ZIRP led them to believe would come.  Instead they are seeing oil go up up up and gold and corn and everything the fuck else....except housing.  Meanwhile industrial metrics slide.

Demand isn't being stimulated, additional lending isn't happening.  Their world is upside-down and they can't figure it out.

If they want to restrict things, just reinstate Glass-Steagal rules.  The Fed is at some point going to have no choice but to force its member banks, even da Squidz, to work like it does- as a UTILITY.  Either way they can't print oil, but they do not appear to know that yet.  I wager that very few geologists or engineers work at the Fed.

They're all economists.

Wed, 03/07/2012 - 15:44 | 2233167 4horse
4horse's picture

They are not seeing the economic activity that their ZIRP led them to believe would come
         outside of their own banks, any such economics does not concern them


Instead they are seeing oil go up up up and gold and corn and everything the fuck else
yes. do not like to compete against their own cheap money likewise being used on commodities
          by others. anyone else. anybody but them, owning their gold, which they now control and soon own. all of it


....except housing.
  who can afford it

Demand isn't being stimulated
   they never intended it to be
their customers. consumers. all busted-out


additional lending isn't happening.
    they never intended to lend
        except to each other
    through one another's banks
where they are each counterparty to the other
    over money which don't exist
yet are their own counterparty profits
    over profits which don't exist
  exceptin their own minds and on paper
 over what quadrillion don't exist
yet is owed--------->only to them

       so . . . has to be stolen
as transparently as it is transnationally
now stolen right under everyone's nose
    over the whole western world
except for what's left of its only use to them
    000000digital figures0000000
troops. eqipment. materiel. military. force

                West v East

            might makes right
as they rip-off and to-shreds, everyone
   West, in roiding up on all the gold they'll own 
      v       for
    East  sino-zion syzygy, already aligned
                  dropping 000000000000000000s
                             financial products. smartbombs


Their world is upside-down and they can't figure it out.
          upon last facing east, for the first time . . .
          . . . they likewise emerged fully oriented
         with all their figures rounded to the nearest hemisphere. western

Thu, 03/08/2012 - 00:21 | 2234729 StychoKiller
Wed, 03/07/2012 - 14:11 | 2232845 NotApplicable
NotApplicable's picture

Frozen liquidity? Genius!

Now why didn't I think of this first?

Wed, 03/07/2012 - 15:49 | 2233206 rayduh4life
rayduh4life's picture

I don't know, they could threaten these "investors" with a Corzine like vaporization.  just saying.

Wed, 03/07/2012 - 13:25 | 2232392 firstdivision
firstdivision's picture

Might want to sterilize those headline scanning algos first, or the douche bags that plant the headlines.  No fears, Obama will be out in about 20 min condemning those "evil speculators (that we let run free cause if we shut them down real price discovery will be achieved and the ponzi will collapse)".

Wed, 03/07/2012 - 12:25 | 2232393 TradingJoe
TradingJoe's picture

Man the amount of desperation is growin by the minute and that exponentially :)) most likely they KNOW the PSI DEAL is DEAD and need another ramp to sell! Volume is ZEROOOOOO!

Wed, 03/07/2012 - 14:44 | 2232948 viahj
viahj's picture

if this is all the "ramp to sell into" that they can's time for them to fuel the G6 and amscray with the olgay.

Wed, 03/07/2012 - 12:26 | 2232401 Dr. Engali
Dr. Engali's picture

Sterilize, vaporize, transitory, rehypothecation...the hits just keep coming.

Wed, 03/07/2012 - 13:12 | 2232602 MsCreant
MsCreant's picture

Bovine scatologized. 

Wed, 03/07/2012 - 12:26 | 2232403 Quintus
Quintus's picture

More QE?  Well who'd have thought it!  


Timmy's $1.3trillion in new debt issuance this year won't just buy itself.  Some assistance from Ben's Heidelbergs will definitely be required.

Wed, 03/07/2012 - 12:28 | 2232420 SheepDog-One
SheepDog-One's picture

Just totaly fake....but HEY go for more QE Im bored lets get some excitement up in here with some $150-$200 oil! Lets go!

Wed, 03/07/2012 - 12:26 | 2232404 fonzannoon
fonzannoon's picture

If the idea here is that the twist won't work because there is no new money in circulation than why have the markets rocketed up since the original Twist started?

Wed, 03/07/2012 - 12:26 | 2232405 dwdollar
dwdollar's picture

Why have QE when rumor is enough to give the algos a boner? Nothing has changed in months.

Wed, 03/07/2012 - 12:29 | 2232429 SheepDog-One
SheepDog-One's picture

More Carrot and Stick economic model. 1 SPR tap rumor, 1 QE rumor= stock market boner....objective completed.

Wed, 03/07/2012 - 12:26 | 2232406 Moneyswirth
Moneyswirth's picture

Something wicked and vile this way comes....


Wed, 03/07/2012 - 12:26 | 2232408 oogs66
oogs66's picture

Isn't considering sterilized QE a step back from considering QE?

Wed, 03/07/2012 - 12:31 | 2232434 SheepDog-One
SheepDog-One's picture

As long as 'QE' is in the scripted pre-planned headline, objective completed. Algos read and pop stocks...days work done.

Wed, 03/07/2012 - 12:30 | 2232411 DormRoom
DormRoom's picture

If true, Central Banks are turning to more exotic policy options.   Once again, it shows they are ill prepared to contain tail risks, since they are making sh*t up ad hoc.


Listen to Volcker, if you loosen your inflation policy, by massaging inflation expectation, and underweighting the probability of real inflation, then you risk the worse of both outcomes:

HIGH inflation;

HIGH unemployment



Wed, 03/07/2012 - 13:31 | 2232686 trav7777
trav7777's picture

Volcker didn't matter.  There is no Saudi Arabia to rope into our monetary regime at this point.

The petrodollar was the New Bretton Woods and it relied on swing production capacity from Gulf States like UAE, Qatar, Kuwait, and KSA to establish itself.  THAT is what brought the inflation under control, the understanding that you would STILL be able to get something for a dollar!

Wed, 03/07/2012 - 14:58 | 2232972 GoinFawr
GoinFawr's picture

"There is no Saudi Arabia to rope into our monetary regime at this point."

There's Canada, no? Already been done?

Wed, 03/07/2012 - 14:58 | 2233026 Treeplanter
Treeplanter's picture

Hell will freeze over before they adopt the Yankee Dollah.  We will soon be buying loonies.

Wed, 03/07/2012 - 16:33 | 2233388 4horse
4horse's picture


but looney's thinking that canada is somehow separate

Wed, 03/07/2012 - 15:45 | 2233193 trav7777
trav7777's picture

Canada can't produce 9mbpd...ever

Wed, 03/07/2012 - 16:50 | 2233433 GoinFawr
GoinFawr's picture

fair point, though back bacon for breakfast is good for keeping the midwest going 'til lunchtime. It's always good to get your eggs from more than one basket.

Wed, 03/07/2012 - 12:29 | 2232414 flyonmywall
flyonmywall's picture

You can't sterilize being caught between a rock and a hard place.

Once somebody in a position to manipulate the markets has done it once, it's like crack cocaine, you can't stop, because power is addicting. So they have to keep "fine-tuning" the process.

But now, you keep "fine-tuning" and slowly realize that printing, manipulating and arm-twisting have consequences. So you keep screwing with it some more, and so the price of gold keeps going up, because you can't "fine tune" gold.

You either have it, or you don't. A gold mine takes 5-10 years to develop. Gold either goes up, or it goes down, cuz you can't print it. Sure you can manipulate it quite a bit with worthless paper contracts. But, once people start seeing through the charade, it's pretty much all over.


Wed, 03/07/2012 - 13:03 | 2232569 Abitdodgie
Abitdodgie's picture

People have been saying that for years now TPTB can carry on manipulating the market as long as they want , the people who trade papper gold are in on the game and they are making a lot of money from it , if you were in the loop would you stop trading paper ,I think not . So this game will just keep going , even if there was no physical left they can keep it going and as for all the shorts JP Morgan has do you really think they give a fuck about covering them I think not. There are no rules in America anymore.

Wed, 03/07/2012 - 13:04 | 2232571 Abitdodgie
Abitdodgie's picture

Your Gold/Silver is worth what the banks say it is.

Wed, 03/07/2012 - 14:19 | 2232863 NotApplicable
NotApplicable's picture

Price and value are NOT the same thing.

Besides, ALL valuations are individually subjective. Anything is worth exactly what I determine it's value to me to be at the time. What you're discussing is preference for cash vs a preference for PMs at a given price as determined by the paper market.

Which... just happens to be far lower than what I determine its value to be to me. Just like it has been for the last eight years.

Wed, 03/07/2012 - 17:20 | 2233536 4horse
4horse's picture

solipsism<------->economics are antithetical, immediately excluding the very idea of the other


. . . ALL valuations are not individually subjective : Water is worth exactly what I determine it's value to me to be at the time . . . ?


Life may be not only the ultimate but only value, yet your life at any next moment is worth/less what any next being feels it to be, nevermind the PTB

try it and see


call evelyn, and tell'im you're comin over to finally fix, london-like, the true value of rules,guns'n'gold




although, Life, inside or in-the-ground, maybe you might get to decide exactly what U determine it's value to me to be at that time


well  .  .  .
feelin lucky


Wed, 03/07/2012 - 12:28 | 2232421 Everybodys All ...
Everybodys All American's picture

same old same Benocide ... when will someone lock him up?

Wed, 03/07/2012 - 12:31 | 2232422 Zola
Zola's picture

NO NO NO TYler.... Sterilized QE ?? Wtf does that mean ?? They extract reserves while keeping short term rates at 0 ? Another scam like the "Twist" which was a QE... Amazing it took only one day of a selloff that could evolve in waterfall to bring out the clown rumors and ponzi patrons

Wed, 03/07/2012 - 12:32 | 2232439 Tyler Durden
Tyler Durden's picture

Wrong. Only thing that matters is if Primary Dealers get one incremental dollar as part of more "easing." This is ALL that matters.

Wed, 03/07/2012 - 12:37 | 2232476 TradingJoe
TradingJoe's picture

That my dear "Tylers" summs it pretty much up! Without the FEDsters banks would be DEAD and the "rich" would shop at Big Lots! :)) Eventually they will have to, anyways!

Wed, 03/07/2012 - 12:44 | 2232500 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

So when the PDs flip bonds to the Fed T+1 after auction, that is easing?  When the Fed swaps currency to the ECB so the ECB can flush their banking system with fiat, that is easing.  So they are easing, is that what you are writing?

Wed, 03/07/2012 - 16:14 | 2233303 Chief KnocAHoma
Chief KnocAHoma's picture

Tyler talks funny.

Wed, 03/07/2012 - 12:33 | 2232452 SheepDog-One
SheepDog-One's picture

Just another headfake to get us past initial invasion of Iran....this is all just a puppet show.

Wed, 03/07/2012 - 12:29 | 2232425 Bob Paulson
Bob Paulson's picture

The WSJ article, instead of saying "The aim of such an approach would be to relieve anxieties that money printing could fuel inflation later, a fear widely expressed by critics of the Fed's previous efforts to aid the recovery."

should read:

"The aim of such an approach would be to own every mortgage in the country that is part of a mortgage bond"



Wed, 03/07/2012 - 12:39 | 2232484 SheepDog-One
SheepDog-One's picture

Central banksters quietly buying up every bond, stock, and mortgage in the world while saying 'We're working to save the economy, we're doing Gods work here, trying to save you'...LOL

Wed, 03/07/2012 - 13:33 | 2232690 trav7777
trav7777's picture

instead of being a tool, get your claim tickets.  Do what they do.

Wed, 03/07/2012 - 12:29 | 2232428 digalert
digalert's picture

Ooh, sterilized, it sounds so clean and pure. Implying that FED pumps in the past weren't so clean...maybe even dirty?

Wed, 03/07/2012 - 15:19 | 2233079 GoinFawr
GoinFawr's picture

sterilized for any new QE means it will be 'clean and pure'.

The former, unsterilized version of QE is to be seen as virile, potent, fruit-bearing, lion libido


Wed, 03/07/2012 - 12:31 | 2232436 fuu
fuu's picture

Makin' it rain.

Wed, 03/07/2012 - 12:31 | 2232438 JR
JR's picture

Finally, the Goldman model for fraud begins to be uncovered. And Greece is the puzzle piece that will complete the picture.

Zero Hedge has been exactly right that the Greek default is going to be much worse than they say. Greece is going to bring down the international financiers. The Greek default is going to make Lehman look lame. They’ve finally overstepped their criminal manipulation of governments. It’s one thing to cheat individual investors by lying to them; it’s another thing to cheat entire nations of peoples. 

Wed, 03/07/2012 - 12:46 | 2232503 GeneMarchbanks
GeneMarchbanks's picture

Make that three or four continents depending on where you think Asia stands as of this point in time. Argentina, Ecuador, now Greece and clearly most of the EU nations are in line.

The entire thing continues to slow roast and people who think there will be a 'trigger event' are deluded.

Wed, 03/07/2012 - 12:55 | 2232533 JR
JR's picture

Good observation. Down slow or down with a trigger, is still down. Either way, it has to be done.

Wed, 03/07/2012 - 13:13 | 2232603 Abitdodgie
Abitdodgie's picture

Greece will NEVER default, because if they did it would bring down the whole system and thats NOT going to happen.

Wed, 03/07/2012 - 12:32 | 2232440 Moneyswirth
Moneyswirth's picture

The Fed hasn't literally print more money, but it has electronically credited the accounts of banks and investors with new money when it purchased their bonds under quantitative easing.

We're so boned...

Wed, 03/07/2012 - 12:45 | 2232502 Tsar Pointless
Tsar Pointless's picture

Yep. Not real physical dollars, just numbers on a computer screen.

Digi-dollars, as I like to call them.

The best friend of the Central Banker cabal - digital currency.

Wed, 03/07/2012 - 13:02 | 2232563 RSloane
RSloane's picture

Of course, why go through the expense of actually printing and dispensing money?

Wed, 03/07/2012 - 13:13 | 2232604 Tsar Pointless
Tsar Pointless's picture

Right-o! Especially when you get all of the lovely "transitory" inflation associated with raw printing.

Less time spent running the presses, more time spent buying up all physical and real property as you possibly can.

After all - isn't that what the past three years has been all about?

Wed, 03/07/2012 - 12:32 | 2232441 SheepDog-One
SheepDog-One's picture

Bernank is putting on sterilized rubber gloves and dipping into the KY jar....bend over!

Wed, 03/07/2012 - 12:32 | 2232443 lizzy36
lizzy36's picture

First of all, Fed implicity stating that QE was targetting inflation and NOT growth.

Second, inflation transmission mechanism is more than anything crude.

Finally:the fed is destroying the US faster than any terrorist ever could.

Wed, 03/07/2012 - 15:05 | 2233047 Bansters-in-my-...
Bansters-in-my- feces's picture


I hate to be the one to break it to ya.....The FED "is" a "Terrorist".

Wed, 03/07/2012 - 12:33 | 2232445 Village Smithy
Village Smithy's picture

They know that it's SHTF time in Greece tomorrow, so it's ramp time today. Gotta keep those indexes as far above their 200 days' as possible. I feel so very sorry for my children.

Wed, 03/07/2012 - 13:16 | 2232618 Abitdodgie
Abitdodgie's picture

" I feel so very sorry for my children"  Then do somthing about it like stop paying taxes and grow some balls.  

Wed, 03/07/2012 - 14:00 | 2232805 catacl1sm
catacl1sm's picture

I STILL haven't seen anyone give me a way of doing that that won't involve me getting thrown in jail and my house taken away. Neither of those is good for my children in the short or long term.

Wed, 03/07/2012 - 12:33 | 2232447 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Inflation means fiat is deteriorating at at least a 10% clip worldwide.  Who cares about all the mumbo jumbo the Fed and ECB says when the fact is every single good and asset you can't hold in your hand that doesn't store wealth is worthless.

Wed, 03/07/2012 - 12:33 | 2232448 You Lie
You Lie's picture

Of course there is incremental dollars even if "Sterlized".    The Fed overpays for bonds when buying, under charges when selling,  and  telling the banks "Keep the change!"


Wed, 03/07/2012 - 12:35 | 2232449 Dermasolarapate...
Dermasolarapaterraphatrima's picture

Feel safer at night...putting money into a fund?


"HOUSTON (AP) -- Investors taken in by Texas tycoon. R. Allen Stanford expressed relief and a sense of vindication after a federal jury convicted the jet-setting financier of swindling them out of more than $7 billion. But they said the verdict will never replace the loss of their life savings.

"He sentenced them to a life of hardship and poverty, and they have no chance to ever recover from what has happened to them," British retiree Kate Freeman said in a telephone interview from her home in Antigua. She lost $820,000 in Stanford's Ponzi scheme. "I don't think (the verdict) will make a lot of difference with regard to victims seeing any money any sooner."

Wed, 03/07/2012 - 12:34 | 2232458 Gomie
Gomie's picture

"Risk off"?? Well, if that's the case the market sure doesn't seem to following your line of thinking. Bouncing nicely today with dip buyers grabbing all they can before another strong BLS report on Friday.

Wed, 03/07/2012 - 12:44 | 2232499 SheepDog-One
SheepDog-One's picture


Wed, 03/07/2012 - 12:34 | 2232461 VulpisVulpis
VulpisVulpis's picture

Third, in the new novel approach, the Fed could print money to buy long-term bonds, but restrict how investors and banks use that money by employing new market tools they have designed to better manage cash sloshing around in the financial system. This is known as "sterilized" QE.


Schemers. The more they tinker, the more tinkering is needed. Such is the slippery slope of a managed economy. Unfortunately for us, history demonstrates the schemers never win.

Wed, 03/07/2012 - 12:36 | 2232468 Vince Clortho
Vince Clortho's picture

Lucy pulls the football from Charlie Brown every time.

Charlie still falls for it every time.

Club Fed issues a statement with "QE" in it and the algos go into stampede mode.

Always good for a chuckle at the club Fed brunch.


Wed, 03/07/2012 - 12:37 | 2232473 Sutton
Sutton's picture

Tyler, you nailed it yesterday with the 750 billion Fed move.

Oh, to be an academic.  So the actual amount of money printing doesn't matter, only the spread or differential to other Central Bank whores does.

An endless loop of money  expansion, within loose parameters.  It really is QE to infinity.

And Reinhart told us the other day that the check on this, rising oil prices, actually will spur Ben to loosen MORE.

Buy precious metals- and don't be here when WHEN it all comes down.  No One Here  Gets Out Alive.




Wed, 03/07/2012 - 12:43 | 2232496 SheepDog-One
SheepDog-One's picture

No its not QE to infinity its print imaginary money out of thin air, hand to central banksters to buy up every bond, stock, and mortage in existance...all while saying 'We're doing it to save you'...and one morning everyone looks around and wonders how it is theyre broke while the 'elites' have just pulled off the biggest robbery in world history, owning the world outright themselves. Enjoy, peasants.

Wed, 03/07/2012 - 13:17 | 2232620 Tsar Pointless
Tsar Pointless's picture

You just hit every nail in the entire universe on its head!

Wed, 03/07/2012 - 12:38 | 2232479 johnjkiii
johnjkiii's picture

This is the "Moral Suasion" part of the Fed's mandate. They gonna "Suase" you into thinkin' what they wants you to think. Let's face it, everything they do has been and will be a failure. We jus be have'n tuh do what the massa wants us doin.

Wed, 03/07/2012 - 12:43 | 2232488 xela2200
xela2200's picture

How I hate these "people" and their stupid games.

Wed, 03/07/2012 - 12:40 | 2232489 Shizzmoney
Shizzmoney's picture

Cue the Fed Manatees for the next rumor in the rumor machine!

Wed, 03/07/2012 - 12:42 | 2232495 Obnoxio
Obnoxio's picture

Wow, silver is really taking off today and I'm lovin it.

Wed, 03/07/2012 - 12:43 | 2232497 lizzy36
lizzy36's picture

I think Bernanke missed the chapter in his Ph.D thesis, whereby margin compression due to high, higher and highest commodity inflation causes JOB LOSS, not GAINS.

Somone should take the time to explain that to him.

Also screw the depression, someone should teach Bernanke & co about social instability, and the price of food and gas. See the arab spring for how this works.

Jobs that paid $50-60k 10-12 years ago, being re-shored for $25k. Meanwhile USD has lost 45% of its value and consequently fuel prices have gone up 400%.

The defination of insanity is doing the same thing over and over and execting a different outcome.

Wed, 03/07/2012 - 12:57 | 2232515 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Technological developement will make up for margin compression.  Also, so will a monopoly, hence why the Fed's PDs are proxy outfits of the House Banking System in the regulation of the Fiat Ponzi.

Wed, 03/07/2012 - 13:07 | 2232582 RSloane
RSloane's picture

This is what is so astounding to me. How could he not know, unless what he wants is the same outcome.

Wed, 03/07/2012 - 13:40 | 2232717 Teamtc321
Teamtc321's picture

Do you think they actually care? 

Wed, 03/07/2012 - 12:46 | 2232504 surf0766
surf0766's picture

Where is the best place to track food prices?

Wed, 03/07/2012 - 12:47 | 2232508 adr
adr's picture

your local grocery store.

Wed, 03/07/2012 - 12:49 | 2232516 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Or your local gas station.

Wed, 03/07/2012 - 12:54 | 2232528 Dr. Engali
Dr. Engali's picture

Damn you beat me to it.

Wed, 03/07/2012 - 13:03 | 2232567 surf0766
surf0766's picture

I should have know better...

Wed, 03/07/2012 - 12:46 | 2232505 adr
adr's picture

What happened to the twitter bomb idea?

If Twitter was bombed with "FED ends QE program" would the market tank?

If Twitter was bombed with "Fed launches QE3" would the market rally 10%?

Exposing the farce of the market should be priority #1.

Wed, 03/07/2012 - 12:50 | 2232517 SheepDog-One
SheepDog-One's picture

'No new money for stock speculation...big 'risk off'....well maybe, but for now hockey-helmeted algos are having a great time playing with their new QE cat turds in the sandbox anyway.

Wed, 03/07/2012 - 12:52 | 2232521 crawl
crawl's picture

This is just too much. A 1 day sell off brings rumor of QE?

It's tough being a bear in these crazy times.

So what will the shrill be on Friday morning as the NFP release shows massive employment spike due to seasonal adjustments?

Wed, 03/07/2012 - 12:59 | 2232547 SheepDog-One
SheepDog-One's picture

Now we get Hopium style great economic improvement news, PLUS QE rumors too! And throw in some 'tap the SPR' rumors as well! Fell down the rabbit hole into Fantasyland, and now just fell down another mineshaft from FantasyLand to who knows what this shit is! Hell?

Wed, 03/07/2012 - 12:52 | 2232526 Lost Wages
Lost Wages's picture

Is "sterilize" just a new word for "laundering"?

Wed, 03/07/2012 - 15:28 | 2233144 GoinFawr
GoinFawr's picture

"Not all who launder are washed"

Wed, 03/07/2012 - 12:54 | 2232530 Tsar Pointless
Tsar Pointless's picture

Can't we just get the nuclear war on already?

This is getting droll and boring.

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