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"Supercommittee That Runs America" Urges End To The "Zero Bound", Demands Issuance Of Negative Yield Bonds

Tyler Durden's picture


One of the laments of the uberdoves in the world over the past several years has naturally been the fact that interest rates are bound by Zero on the lower side, and that the lowest possible rate on new paper is, by definition, 0.000%. Which is what led to the advent of QE in the first place: in lieu of negative rates, the Fed was forced to actively purchase securities to catch up to a negative Taylor implied rate. This may be about to change, because as the just released letter from the Treasury Borrowing Advisory Committee, or as we affectionately called the JPMorgan/ Goldman Sachs Chaired committee, the "Supercommittee That Runs America", simply because it alone makes up Tim Geithner's mind on what America needs to do funding wise, demand, "It was broadly agreed that flooring interest rates at zero, or capping issuance proceeds at par, was prohibiting proper market function. The Committee unanimously recommended that the Treasury Department allow for negative yield auction results as soon as logistically practical." And what JP Morgan and Goldman Sachs want, JP Morgan and Goldman Sachs get. And once we get the green light on negative yields at auction, next up will be the push for the Fed to impose negative rates on all standing securities, which means that coming soon savers will be literally paying to hold cash. And that will be the final straw.

Not only that, but beginning in just 4 short months, the Treasury may launch a brand new product: a Floating Rate Bond. From the TBAC:

The second charge was to explore the viability of Treasury issuing floating rate notes (FRNs). In particular, the presentation [attached] assessed potential client demand, optimal maturity, reference index, and reset frequency. The structural decline in the stock of global high-quality government bonds, coupled with an increase in demand for non-volatile liquid assets, should make U.S. government issued FRNs extremely attractive. Pricing for a hypothetical two year FRN was estimated to be in the arena of 3 month Treasury bills plus 8 basis points.


A discussion then ensued over whether 3 month Treasury bills or Fed Funds Effective was the more appropriate floating rate index. In conjunction with fixed-rate issuance, FRNs give Treasury an attractive alternative to increase the average maturity of its debt. While more analysis on the specifics of the program must be done, the Committee was unanimously in favor of Treasury issuing FRNs.

As a reminder, this is what Treasury's Mary Miller said earlier:

Treasury continues to study the possibility of issuing Floating Rate Notes (FRNs).  The Treasury Borrowing Advisory Committee suggested in its February 2012 charge that FRNs could complement Treasury’s current suite of products.


Treasury recognizes that FRNs may provide a number of benefits to government finance, and plans to announce a decision regarding whether or not to introduce an FRN product at the May 2012 Quarterly Refunding.

Ealier we were kidding about that PIMCO gold fund. Now that we look at tit, it may not have been a joke...


From the just released TBAC letter:

Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association


January 31, 2012

Dear Mr. Secretary:
Since the Committee last met in early November, economic activity has continued to expand, and real GDP increased at a 2.8% annual rate in the fourth quarter, the fastest pace of growth in over a year. The acceleration in activity last quarter was supported by a rebound in stockbuilding, as businesses returned to building up inventories following the more cautious attitude displayed in the third quarter. Inventories added 1.9%-points to last quarter’s gain in output, following a third quarter in which stockbuilding subtracted 1.4%-points from growth. The lift from replenishing lean stocks helped support manufacturing production, which expanded at a 3.9% annual rate in the fourth quarter.

With inventories now better aligned with final sales, the support to industry from a positive turn in the inventory cycle will likely diminish. In addition, slowing global growth may exert a damping effect on US factory output. Despite these headwinds, early manufacturing surveys for January suggest the factory sector is faring well early in the year. Automaker production schedules indicate that this key sector should continue to expand in the current quarter.

Real consumer spending increased at a 2.0% annual rate last quarter. Spending growth was particularly strong for consumer durables; a normalization of auto and truck inventories after the Tohoku earthquake supported vigorous growth in light vehicle sales, which climbed to a 13.6 million annual pace of sales by year-end. Modest but steady gains in labor income are providing support to consumers. Employment has increased by 137,000 jobs per month on average in the fourth quarter, and the average work week increased last quarter after declining in the third quarter. Consumer spending was also supported by a decline in retail gasoline prices, undoing some of the drag on purchasing power witnessed earlier in 2011. Even so, the holiday shopping season was a modest disappointment. One possible explanation is that households are seeking to bring saving rates back up, after lowering saving earlier in the year to smooth consumption growth in the face of the hit from higher energy prices. So far, indicators regarding consumer spending in early 2012 are mixed.

After growing vigorously for much of the expansion, real business fixed investment spending cooled off to a 1.7% pace of growth last quarter. Real outlays for equipment and software expanded at a trend-like 5.2% annual rate. Meanwhile, business spending for structures surprisingly declined at a 7.2% rate. Spending on mining-related structures fell off sharply, as lower natural gas prices have reduced the economic feasibility of capital spending in this area. Residential investment, however, expanded at a 10.9% pace. While housing indicators generally remain mixed, there have been some encouraging signs recently, particularly a jump in homebuilder sentiment. Mortgage rates have recently fallen to new all-time lows, providing an important support to housing demand.

Declines in real government spending continue to drag on overall economic growth. Real government outlays declined at a 4.6% annual rate last quarter. The decline was exaggerated by a big drop in the volatile defense spending category. While this decline may be partly reversed in coming quarters, real defense outlays are generally set to trend lower. Real outlays by state and local governments declined at a 2.7% rate, the 13th decline in the last 16 quarters. Late last year, policymakers extended expiring payroll tax and unemployment benefit provisions. Those programs are now extended through late February, and most analysts expect they will be extended through year-end.

Real exports expanded at a 4.7% pace, the same as in the third quarter. However, growth in foreign markets has slowed decisively, from Europe to large Emerging Market countries including China and Brazil, and this slowdown should be expected to restrain export growth before long. While the trade spillovers from slower European growth are likely to have a negative effect on the US economy, sentiment regarding financial spillovers has improved recently, as aggressive actions by the ECB to provide liquidity to the banking system has helped to stabilize the sovereign debt crisis.

Inflation has moderated in recent months, largely due to a decline in energy prices. In the three months ending in December, the PCE price deflator increased at only a 0.1% annual rate. Outside of food and energy, core consumer prices increases have also been modest as the core PCE deflator increased at a 1.4% annual rate in the past 3 months and 1.8% over year ago. The easing in commodity prices has taken some pressure off of core goods prices, and the normalization of vehicle inventories has allowed vehicle prices to cool off after surging earlier in 2011. Even though the unemployment rate fell by a half percentage point last quarter, wage inflation remains subdued: average hourly earnings are up only 2.1% on a year-ago basis. Contained labor costs should continue to limit the pace of consumer price inflation.

Monetary policy has remained active. At the January FOMC meeting, the Federal Reserve unveiled new Committee forecasts for the path and timing of interest rates. Moreover, the FOMC statement pushed back the guidance on the time for the first rate hike, from mid-2013 to late 2014 at the earliest. The revised guidance has further served to keep interest rates quite low. For now, it would appear the Fed has exhausted their options for easing policy through communications. The prospects for further asset purchases remain in flux. Committee members have publicly expressed differing views on the desirability of such action. But, importantly, Chairman Bernanke’s comments in the Q and A following his recent press conference lowered the bar considerably for further Fed asset purchases.

Against this economic backdrop, the Committee’s first charge was to examine what adjustments to debt issuance, if any, Treasury should make in consideration of its financing needs.  The Committee did not feel that any changes to Treasury coupon issuance were necessary at this time.

There was a lengthy discussion regarding the bid-to-cover ratios at recent Treasury bill auctions. It was broadly agreed that flooring interest rates at zero, or capping issuance proceeds at par, was prohibiting proper market function. The Committee unanimously recommended that the Treasury Department allow for negative yield auction results as soon as logistically practical. 

The second charge was to explore the viability of Treasury issuing floating rate notes (FRNs). In particular, the presentation [attached] assessed potential client demand, optimal maturity, reference index, and reset frequency. The structural decline in the stock of global high-quality government bonds, coupled with an increase in demand for non-volatile liquid assets, should make U.S. government issued FRNs extremely attractive. Pricing for a hypothetical two year FRN was estimated to be in the arena of 3 month Treasury bills plus 8 basis points.

A discussion then ensued over whether 3 month Treasury bills or Fed Funds Effective was the more appropriate floating rate index. In conjunction with fixed-rate issuance, FRNs give Treasury an attractive alternative to increase the average maturity of its debt. While more analysis on the specifics of the program must be done, the Committee was unanimously in favor of Treasury issuing FRNs.

In the final charge, the Committee considered the composition of marketable financing for the remainder of the January 2012 to March 2012 quarter and the April 2012 to June 2012 quarter. The committee’s recommendations are attached.



Matthew E. Zames [JP Morgan]


Ashok Varadhan [Goldman Sachs]
Vice Chairman


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Wed, 02/01/2012 - 10:43 | 2116145 youngman
youngman's picture

and people will buy them............I need to start drinking again

Wed, 02/01/2012 - 10:47 | 2116162 Chuck Bone
Chuck Bone's picture

In Soviet America, government debt earns interest from you!

Wed, 02/01/2012 - 10:48 | 2116172 gmrpeabody
gmrpeabody's picture

Surely, Tyler, you jest.

Wed, 02/01/2012 - 10:53 | 2116197 johnQpublic
johnQpublic's picture

on a long enuf time line ,everyones savings drops below zero

Wed, 02/01/2012 - 11:37 | 2116381 Comay Mierda
Comay Mierda's picture

commence market melt up to record highs

Wed, 02/01/2012 - 11:49 | 2116419 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

USA!  USA!!  USA!!!

Wed, 02/01/2012 - 13:11 | 2116758 trav7777
trav7777's picture

People wonder why Gross is pissed?  How's he going to explain this shit to his rentier class customers?  Not only do they have to pay HIM but now they have to pay someone ELSE too?  And all to LOSE net worth?

Grab something real that can't be taxed.

Wed, 02/01/2012 - 13:31 | 2116844 zaphod
zaphod's picture

Just wait till Gross decides to move his $1.3T into Bitcoins!

Wed, 02/01/2012 - 16:09 | 2117542 SWRichmond
SWRichmond's picture

I recall reading about a forced-inflation currency scheme where the currency was date-coded and, on each successive date, actually reduced in value by a specidifed amount.  ALL inflation schemes essentially seek the same outcome: stimulate the economy by turning money into a hot potato.  They all resultin the same thing: the complete destruction of savings, and of anyone who relies on savings, for example the financially prudent.  This is why hard-working and self-reliant people everywhere despise central banking.

Wed, 02/01/2012 - 22:06 | 2118642 TheGoodDoctor
TheGoodDoctor's picture

@SWRichmond. I think people would shit a brick (riot in the streets) before they let that happen. I was thinking about your post. And wouldn't a black market form with the old money that wasn't dated? Either that or there would be a strictly barter economy.

Wed, 02/01/2012 - 13:56 | 2116944 Bananamerican
Bananamerican's picture

what haunts me is the idea that there is a "final solution' for gold (legal sanctions?) already in place, to go along with a neg interest rate program (i almost wrote pogrom) which case any holders are going to have to simply ride out the storm, waiting for gold's monetary utility to re-emerge on the other side...

Wed, 02/15/2012 - 04:57 | 2160904 jonytk
jonytk's picture

At last, the rich paying taxes


Wed, 02/15/2012 - 04:57 | 2160905 jonytk
jonytk's picture

At last, the rich paying taxes


Wed, 02/01/2012 - 13:21 | 2116809 prains
prains's picture

USA!  USA!!  USA!!!      backwards is the new forwards

Wed, 02/01/2012 - 13:44 | 2116900 smlbizman
smlbizman's picture

heree wee go gool-old here we go (clap-clap)...heree wee go gool-old here we go(clap-clap) ...heree wee go gool-old here we go.. (clap-clap)......

Wed, 02/01/2012 - 10:55 | 2116201 Buckaroo Banzai
Buckaroo Banzai's picture

OF COURSE we will be required to pay money to hold cash. It is the logical extension of the policy that has been in force since 1913: (1) punish savers and (2) reward debtors, and those that traffic in debt.

OUR ENTIRE MONETARY SYSTEM IS BUILT ON DEBT. Savers are anathema to this system and must be crushed. How can it be any other way?

Sow the wind, and reap the whirlwind.

Wed, 02/01/2012 - 10:57 | 2116215 johnQpublic
johnQpublic's picture

monetary policy by yogi bera


investing always beats savings and vice versa

Wed, 02/01/2012 - 11:25 | 2116331 Captain Kink
Captain Kink's picture

FRNs and Federal Reserve Notes--same thing.


Wed, 02/01/2012 - 11:16 | 2116290 sushi
sushi's picture

Pay the coupon in Hopium.


Americans love that stuff.

Wed, 02/01/2012 - 11:51 | 2116429 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Everyone in stocks!  C'mon!  All at once, everyone in!  You're missing the rally!  Best October, January, what if it's the best Spring ever, and you miss it?  Don't want to miss it!  Don't miss it! 

Wed, 02/01/2012 - 12:47 | 2116668 LouisDega
LouisDega's picture

Yes, But the volume. The volume. That mudda fucking volume. Whats a volume?

Wed, 02/01/2012 - 13:06 | 2116739 CrazyCooter
CrazyCooter's picture

I can't hear what you are saying.



Wed, 02/01/2012 - 12:15 | 2116539 DaveyJones
DaveyJones's picture

you meant pee in the wind

Wed, 02/01/2012 - 21:17 | 2118532 Buck Johnson
Buck Johnson's picture

We are getting close to end game right now.  By going this route, they are out of options.

Wed, 02/01/2012 - 10:53 | 2116195 Roy Bush
Roy Bush's picture

So let me get this can buy US Treasuries at a loss or you can just hold cash and make nothing... Hmmmm.  I don't get it.

Wed, 02/01/2012 - 11:03 | 2116241 Axenolith
Axenolith's picture

If you're holding cash you're losing value to inflation.  You've got to spend it on "Things" and "Stuff" to hold value.  At this point in time, "Things" should be gold, silver, and lead and "Stuff" should be food, TP and liquor...

Wed, 02/01/2012 - 11:28 | 2116349 Captain Kink
Captain Kink's picture

Except I hold my negative rate bond for 3 years, get $95 for my $100, and the $95 has been further eroded by 3 years of inflation!

Thu, 02/02/2012 - 11:21 | 2119874 connda
connda's picture

Whaddayamean!  The CBO says that essentially there is next to no inflation.  That's their story and their stickn' with it.


Wed, 02/01/2012 - 14:50 | 2117162 Citxmech
Citxmech's picture

So let me get this straight - are we now essentially paying GS and JPM to gamble at a rigged casino using our credit card while they get to make all the  side bets they want?

Is that basically what this means?

Thu, 02/02/2012 - 14:59 | 2120800 SomethingWicked
SomethingWicked's picture

Well, we're also paying for their mixed drinks and hookers / lobbyists.  You can't run a casino without that.

Wed, 02/01/2012 - 11:04 | 2116247 unununium
unununium's picture

-% bonds = Kryptonite

floating treasuries = finally a treasury I could love.  But at what price after GS and JPM gobble them all up?

Wed, 04/11/2012 - 08:50 | 2334077 Overflow-admin
Overflow-admin's picture

html tag bug, comment removed...

Wed, 02/01/2012 - 11:15 | 2116249 tarsubil
tarsubil's picture

It makes perfect sense really. Everyone that holds treasuries pays the government instead of the government paying them. Budget be balanced, biznitchez.

The debts are done miahnn.

Wed, 02/01/2012 - 11:17 | 2116293 bbq on whitehou...
bbq on whitehouse lawn's picture

There is not enough cash on the planet for holders of US debt to buy.  Its also about convenience and its price.

So yes pay they will just as Japan found out. If you have small enough savings you can keep it outside the bank, maybe.

Wed, 02/01/2012 - 11:29 | 2116352 Instant Wealth
Instant Wealth's picture

The 11th Commandment:


"Thou shalt wander through the shopping mall and spend thy shillings on all the wonderful goods thither"

Wed, 02/01/2012 - 12:55 | 2116686 Stares straight...
Stares straight ahead's picture


Wed, 02/01/2012 - 14:05 | 2116985 Clycntct
Clycntct's picture

"I don't get it."

Ahhh now you get it.

Wed, 02/01/2012 - 11:03 | 2116239 tarsubil
tarsubil's picture

You think this is bad. Greece is now asking people to take a 150% haircut.

Wed, 02/01/2012 - 11:18 | 2116295 hedgeless_horseman
hedgeless_horseman's picture



flag as very funny (1)

Wed, 02/01/2012 - 11:19 | 2116309 fonestar
fonestar's picture

150% haircut implies half of their frontal lobes are chopped off as well.....

Wed, 02/01/2012 - 11:38 | 2116386 Kobe Beef
Kobe Beef's picture

They lost their frontal lobes when they became bankers. I'd say we're working on lopping off Sensory/Motor cortex by now.

Wed, 02/01/2012 - 13:10 | 2116750 CrazyCooter
CrazyCooter's picture

Best comment in the whole thread!



Wed, 02/01/2012 - 11:18 | 2116299 fonestar
fonestar's picture

Negative rates?  Sure, why not... paperbugs love losing money!

Wed, 02/01/2012 - 13:23 | 2116819 vato poco
vato poco's picture

Don't see what the big deal is. All the history books tell us that JFK was pure & shining & beloved by the whole country. The Morgan/Goldman cabal is just taking his diktat to a higher level, is all. "Ask what you can do for your country!"

Well, here's our answer.

Wed, 02/01/2012 - 10:47 | 2116166 chubbar
chubbar's picture

OT, but here is the easy to read transcript from Obama's eligibility hearing in Georgia. If you will read pages 13-15 you'll see some pretty interesting information on his SS# and past names. Christ, hard to believe this isn't covered at all in the MSM, obviously they are paid off.

Wed, 02/01/2012 - 11:01 | 2116227 Hmm...
Hmm...'s picture


I heard he's a space alien who eats little Christian children and shits out communists who then invade america forcing straight people to have gay sex... and then abort their gay sex progeny.

You would think this is impossible, but not with O, an avowed muslim.

Wed, 02/01/2012 - 11:13 | 2116267 francis_sawyer
francis_sawyer's picture


Gee, I thought he was just a community organizer who sucked at being TOTUS & bombed other countries using explosive devices embedded in Nobel Peace prize medals in his spare time or when the greens & fairways were being aerated...

Wed, 02/01/2012 - 11:17 | 2116292 Manthong
Manthong's picture

Yeah, boring alright..

Just reconcile yourself to who exactly is sending that third aircraft carrier through the Suez.

Wed, 02/01/2012 - 11:28 | 2116336 Hmm...
Hmm...'s picture

Dude, I hate Obama with a passion.  He is the Trojan Horse President who can neuter the left and deliver a neoconservative corporatist agenda to our BigCorp masters.  He can do what no Republican President could ever dream of.  Which is why he will win his second term.  Which is why the Republicans put up such buffoons.  Only they could possibly lose to Obama.

We don't need to invent stupid reasons to get Obama out of office.  And these birther arguments are just about as stupid as my above argument

as for who sends the Aircraft carriers to the Suez canal... do any of you think it would be different with ANY other President?  The answer is no.

Of course I'll get a lot of "Ron Paul wouldn't do it!" 

and that's exactly why he will never be president, much like anybody else who stands up against BigCorp. 
Ron Paul has as much a chance of the Presidency as my candidates Bernie Sanders or Denis Kucinich.  for exactly the same reasons.

so now that we know that Ron Paul, Denis Kucinich, and Bernie Sanders will never be President, who are we left with? yeah... people who suck.

Wed, 02/01/2012 - 11:50 | 2116418 francis_sawyer
francis_sawyer's picture

do any of you think it would be different with ANY other President? The answer is no.

Completely "non sequitur" follow up...

Folks (you know, the citizens of the DIEBOLD States of America), voted for this chump because he made a boatload of promises which he went in exactly the opposite direction on...

It's not fair to bring Ron paul into the argument (until or unless he gets voted in & has the opportunity to live up to his words or prove that he's FOS)... All Obama has proven is the latter (in spades ~ no pun intended)...

Wed, 02/01/2012 - 12:00 | 2116460 Hmm...
Hmm...'s picture

I agree with you. 

as I said, I hate Obama with a passion, and agree that he talks a bunch of shit and does the exact opposite.  This is why I call him the Trojan Horse President.

I don't know about it being fair or not to bring RP into the conversation, but I actually gave him the benefit of the doubt and I assume he WOULD keep to his non-interventionist and non-military word given his long record in office. 

He is the ONLY person running for president with these ideas.  But he will not win the Republican Nomination and he stated he would not run third party.  Thus not sure how he would become our president. 

I only brought it up because a previous poster asked how I felt with a Kenyan in charge of the Naval fleet on its way toward Iran.  to me it doensn't matter because the real people pulling the strings aren't the Prez anyway.

Wed, 02/01/2012 - 12:16 | 2116545 Manthong
Manthong's picture

I feel I am a stranger in a strange land.

Wed, 02/01/2012 - 12:49 | 2116679 squib
squib's picture

Land of ice and snow?

Wed, 02/01/2012 - 13:01 | 2116721 ZeroChance
ZeroChance's picture

Trapped inside this prison!

Wed, 02/01/2012 - 12:51 | 2116687 LFMayor
LFMayor's picture

i grok that, bro

Wed, 02/01/2012 - 11:52 | 2116431 Hmm...
Hmm...'s picture

wow.  you people really believe this stuff.   intriguing. 

Ok, I'll bite then.  Let's assume that Obama has no legal authority to be our President.  So what?  What should be done about it?  Even the Republicans who despise Obama are not going down that path.  They are doing EVERYTHING in their  power (theoretically) to make sure he doesn't win another term, and they were willing to Impeach Clinton based on his lying about a blowjob, but even they aren't pursuing this.  The state where he was born certifies that he is Hawaiian, so no route there.

So what's the next step?  More court cases that Obama will win through our corrupt Justice system?  Get the word out in the bought and paid for MSM?  Lobby our legislators who aren't interested?

I'm just interested in finding out what should be done that hasn't already been done unsuccessfully.  (doesn't seem to be much reason to pursue what's already been done since it did not lead to his impeachment or removal).

Is the goal to only maintain the anger and indignity of a Kenyan running our country? Or is it to assassinate him?  what?

Wed, 02/01/2012 - 13:20 | 2116806 blunderdog
blunderdog's picture

Let's assume that Obama has no legal authority to be our President.  So what?  What should be done about it?

It was demonstrated during the previous administration that government has no effective power to challenge a President without impeachment.

So, yeah.  That's where we are. 

The most powerful man on Earth isn't really that powerful, but you can't actually do anything about him because the most powerful country on Earth is set up to prevent anyone from messing with the guy.  He could twist the heads off puppies in the state of the union address and face-rape your best friend's daughter and we'd all still be sitting here whining about not having gotten what we voted for.

Wed, 02/01/2012 - 13:01 | 2116719 roadhazard
roadhazard's picture

Right wingers crack me up. You'd think intelligent people wouldn't fall for this shit. Apparently you all ain't as smart as you think you are.

And the RNC does not want a repubican in the White House. If you haven't figured that out yet it's because you are too busy buying bullshit.

Wed, 02/01/2012 - 10:49 | 2116178 grid-b-gone
grid-b-gone's picture

The people won't buy them, but they will be bought on behalf of the people.

Wed, 02/01/2012 - 10:51 | 2116185 Roy Bush
Roy Bush's picture

How is this not the "feature story"?  Who gives a fuck what Bill Gross says....anyone investing in US Paper is a retard.  Especially when his volumes are so large that he can't exit his position.

Wed, 02/01/2012 - 10:54 | 2116198 Stoploss
Stoploss's picture

I have been waiting for this. 5 mths too early though. Now is the time to start getting serious about protection, which is open to interpretation, as we are now standing on the trap door. This is a first, which generally marks " the last " for it's target for help.

Wed, 02/01/2012 - 11:03 | 2116237 Hmm...
Hmm...'s picture

I am not sure people will buy it.

If anything would push regular people to buy Gold, negative rates would be it.

they would need to pair negative rate bonds with negative rate saving's vehicles and also expiration dates on physical cash and also make gold illegal.

not saying they won't do it, but I'm not sure it's workable unless we really see a collapse.

Wed, 02/01/2012 - 11:23 | 2116329 Kali
Kali's picture

Individual investors are flocking to gold not so much the "pros" says this article. 

Wed, 02/01/2012 - 11:35 | 2116373 Hmm...
Hmm...'s picture

there is a difference between a sizeable move of the common folk towards gold (which has happened over the last 5-10 years) and the tsunami that would happen under negative rates.

Wed, 02/01/2012 - 12:43 | 2116661 Kali
Kali's picture

Yes.  The flower will bloom.   Or is that kabloom!

Wed, 02/01/2012 - 11:10 | 2116269 q99x2
q99x2's picture

This too shall pass.

Wed, 02/01/2012 - 11:28 | 2116347 AGuy
AGuy's picture

Goodbye ZIRP, Hello NIRP!

Sounds like a plan to introduce a Negative interest rate policy. I guess the gov't wants to hasten its demise. When the dollar becomes worthless, the Federal Gov't ceases to exist. I welcome this policy. Anything to get rid of Washington, and the sooner the better!




Wed, 02/01/2012 - 19:33 | 2118255 SWRichmond
SWRichmond's picture

I need to start drinking again

Already have, my friend.

Wed, 02/01/2012 - 10:44 | 2116146 MsCreant
MsCreant's picture

In both the literal and figurative sense, I don't buy it.

Wed, 02/01/2012 - 11:52 | 2116433 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

No, but your taxes do.

Wed, 02/01/2012 - 10:44 | 2116148 dwdollar
dwdollar's picture

I hope they do it. Fuck, let's take this farce to it's maximum lunacy so it shall be remembered for centuries to come.

Wed, 02/01/2012 - 11:42 | 2116400 Kobe Beef
Kobe Beef's picture

"One point twenty-one gigawatts, Marty!!!" "Maximum Lunacy!"

I hope we make 88 mph before that wall gets any closer.

Wed, 02/01/2012 - 12:49 | 2116676 Burnbright
Burnbright's picture

That's precisely what I was thinking.

Wed, 02/01/2012 - 10:44 | 2116150 GeneMarchbanks
GeneMarchbanks's picture

'Ealier we were kidding about that PIMCO gold fund. Now that we look at tit, it may not have been a joke...'

Looking at tit is always serious business.


Wed, 02/01/2012 - 10:53 | 2116194 Miss Expectations
Miss Expectations's picture

One must pay close attention, tits often difficult to know when Tylers are joking.

Wed, 02/01/2012 - 10:45 | 2116153 SMG
SMG's picture

Sic semper tyrannis!

Wed, 02/01/2012 - 10:45 | 2116156 MsCreant
MsCreant's picture

Tyler left out the Onion citation

Wed, 02/01/2012 - 11:00 | 2116223 DeadFred
DeadFred's picture

I kept looking and looking but searching for 'onion' only brings me here. Wanna bet this hits the Daily Show?

Wed, 02/01/2012 - 12:08 | 2116501 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Stewart isn't that financially savvy.

Wed, 02/01/2012 - 11:33 | 2116366 SofaPapa
SofaPapa's picture

Sadly, no.


We weren't inflating fast enough, so the push for hyperinflation is on.  As long as those in the know can be ahead of it and ride the wave, they don't care.

Wed, 02/01/2012 - 12:07 | 2116498 Jumbotron
Jumbotron's picture

<An Excerpt from that page>

There was a lengthy discussion regarding the bid-to-cover ratios at recent Treasury bill auctions. It was broadly agreed that flooring interest rates at zero, or capping issuance proceeds at par, was prohibiting proper market function. The Committee unanimously recommended that the Treasury Department allow for negative yield auction results as soon as logistically practical. 

Matthew Zames



Can someone check to make sure that Matthew Zames did not at one time edit The Onion ?

Jesus, Joseph and Mary....this is the beginning of the end.

Wed, 02/01/2012 - 10:46 | 2116159 Everybodys All ...
Everybodys All American's picture

Que up robo tard

Wed, 02/01/2012 - 10:47 | 2116160 fonzannoon
fonzannoon's picture

what is the takeaway here? People will be buying bonds with negative interest rates? Banks will charge people to keep cash in the bank?

Wed, 02/01/2012 - 10:47 | 2116163 LawsofPhysics
LawsofPhysics's picture

Are you fucking kidding me?  Here take my paper and "suprise me" with the interest rate, what is that, the rate just went negative?  The paper-pushers are indeed getting desparate.  Fucking halarious.  Wake the fuck up, there is a very real cost for creating capital without adding any real value.  Any physical asset of real value is you only hedge against ZIRP.

Wed, 02/01/2012 - 11:06 | 2116256 scatterbrains
scatterbrains's picture

but if it means I can get a 30 year fix mortgage rate at 1%  with most of my paper transfered to physical I say fuck it let this bitch burn.

Wed, 02/01/2012 - 11:15 | 2116284 wisefool
wisefool's picture

We get our gold standard after all? Abject surrender of fiat with a cherry on top? The only reason I am not a fan of this plan is because it will lead to violence. If wealth can be gained by physically taking it, that is what is going to happen, between people who do not deserve that type of real injury.

Wed, 02/01/2012 - 10:48 | 2116176 tabasco71
tabasco71's picture

we've been implicitly paying to hold cash for a couple of years - inflation eroding the present value

but if my bank literally starts to charge me - well, I shall take it all out...

Wed, 02/01/2012 - 12:42 | 2116652 Sunshine n Lollipops
Sunshine n Lollipops's picture

And you shall have a red checkmark placed next to your name at DHS, noted as a potential terrorist threat hoarding excessive amounts of cash and/or precious metals. Expect a midnight 'visit' from the agency's Clandestine Anti-Terrorism Special Hoarding Interception Team (CATSHIT) and permanent relocation to a FEMA re-education center.

Wed, 02/01/2012 - 10:50 | 2116179 wisefool
wisefool's picture

This does make sense. Isn't Timmay the guy who invented the concept of net negative taxes, when his predecessor Hank "tanks in the streets" Paulson invented the concept of zero taxes?

Hans "Morton Fork" Gruber. "You ask for the impossible, I give you global keynsian central bankers in charge the national revenue service."

Ron Paul 2012

Wed, 02/01/2012 - 10:50 | 2116180 Cdad
Cdad's picture

Up the Banana Republic Tree.

I hope they do it.  Just put a spotlight on their own incompetence, and show Average Joe senior citizen what his future is with this cabal.

Wed, 02/01/2012 - 10:51 | 2116181 scatterbrains
scatterbrains's picture

So will I be able to change my $100 dollar bills for $90 at my bank soon too? Can't wait this is great news.

Wed, 02/01/2012 - 11:29 | 2116353 RichardENixon
RichardENixon's picture

Hold your hundred dollar bills for a while and they will change themselves into $90 bills.

Wed, 02/01/2012 - 11:46 | 2116415 scatterbrains
scatterbrains's picture

When the monetary system is teetering on a knifes edge it's prudent to have both gold and cash unless you know which way this time bomb blows in advance.

Wed, 02/01/2012 - 11:54 | 2116439 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Confucius say, "He he hold gold, don't give a fuck."

Wed, 02/01/2012 - 12:10 | 2116512 Jumbotron
Jumbotron's picture

Until the government confiscates it.  Then Confucius is fucked.

Wed, 02/01/2012 - 12:10 | 2116513 francis_sawyer
francis_sawyer's picture

Man who run behind car become exhausted...

Man who run in front of car become tired...

Wed, 02/01/2012 - 13:32 | 2116852 Acet
Acet's picture

Actually, the other part of this NIRP policy will be to make it illegal to hold more than $1000 in cash.

Wed, 02/01/2012 - 10:51 | 2116186 johnQpublic
johnQpublic's picture

so, on a long enuf time line ,everyones savings drops below zero

Wed, 02/01/2012 - 11:01 | 2116188 hedgeless_horseman
hedgeless_horseman's picture



The structural decline in the stock of global high-quality government bonds, coupled with an increase in demand for non-volatile liquid assets, should make U.S. government issued FRNs extremely attractive.

Tonight, I am going to have a few drinks and try to imagine I am the person who wrote the above sentence.   

I am...
I am...
I am the Super Committee,
And I can do anything.

Wed, 02/01/2012 - 11:01 | 2116232 MsCreant
MsCreant's picture

Imagine you are an incredible, pompus, dick that no one can stand. That should help with the thought experiment.

Wed, 02/01/2012 - 11:33 | 2116259 hedgeless_horseman
hedgeless_horseman's picture



Now imagine the offal-wet mess that arrives on you car's hood AFTER the political hack that has bankrupted 99% of the world, high on cocaine, mumbles to himself, "I can fly," and steps off the penthouse terrace.

Is not that exactly where this is all headed?

Or will The structural decline in the stock of global high-quality government bonds continued attacks on the Euro and Yen, coupled with an increase in demand for non-volatile liquid assets supressing the precious metals markets, should indeed make U.S. government issued FRNs extremely attractive? 

If so, then for how long?


Wed, 02/01/2012 - 11:06 | 2116255 Miss Expectations
Miss Expectations's picture

Careful hedgeless...after all, who wants to be Greenspan?

Wed, 02/01/2012 - 10:52 | 2116190 scatterbrains
scatterbrains's picture

What if this dosn't work and peeps still refuse to be pushed into the stock market ?

Wed, 02/01/2012 - 11:15 | 2116283 lizzy36
lizzy36's picture

They won't be pushed into stocks.

Between Jan 1996-Dec 2000 investors poured $524B into long only equity funds. This was stagnant money until March 2007, when they began pulling money out. From march 3007 until Dec 2011, investors PULLED $518B from long only equity funds. 

No doubt some of this money found its way into ETF's, but the majority of ETF's are not investment vehicles, rather they are trading vehicles.

The bottom line is only 20% of Yanks have real investments in the stock market. Another 30% may have a rounding error number in thier 401k's (less than $25K).

For the majority of middle class they have had 20 years of stagnant wages and increasing costs of actual living. They are cutting back on discretionary auto travel. These people are worried about return of capital NOT return on capital. They cannot absorb $1 of loss. They should NOT be in equity markets.

Wed, 02/01/2012 - 12:00 | 2116461 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The fear for these people you speak of is imbeded into their psyche.  It is the American fear of not losing, but not winning.  Americans must win, they must be a leader (of course, the duality of this is that they follow the given leader, but I digress).  So to lead would be chasing (I know, it doesn't make sense) stocks, because they don't want to miss a run.

Americans have a greater need to make money than they are scared to lose it.  And their attention span is shorter than two minutes.

I am not saying that all the money will flow back into stocks, but when 14k is staring them in the face, they are going to give in and pour money back in.  Also these people have no idea how to balance, let alone manage, their assets.

Wed, 02/01/2012 - 13:27 | 2116828 CrazyCooter
CrazyCooter's picture

I have been 100% in MMMF (us govvies) since '08. I am *extremely* limited in my investment choices, so screw the loss to inflation. I just don't want to be robbed blind.

I watch the stock market with some sort of morbid curiosity, but I have reached the conclusion its a rigged casino. Unless I have a very strong notion of a specific investment, I would probably avoid the stock market all together ... unless I see a real correction and lots of perp walks.



Wed, 02/01/2012 - 10:53 | 2116193 Milton William ...
Milton William Cooper's picture

FaRt Notes bitchezzzz

Wed, 02/01/2012 - 10:58 | 2116199 Everybodys All ...
Everybodys All American's picture

What this tells me is that JPM and Goldman have no way of making their earnings with the current policies. They are essentially in runoff mode and are banking utilities. Instead of asking the jackass chairsatan to raise rates so they would have a decent spread and more normal lending. They go completely insane and ask for negative rates.

What should be done? These too big to fail banks should be taken out and declared bankrupt. But that would mean that true accounting principals would be needed and that is not in the chairsatans best interest. Because it exposes what a failure and liar he has been.

Wed, 02/01/2012 - 11:14 | 2116279 MsCreant
Wed, 02/01/2012 - 11:27 | 2116343 fuu
fuu's picture


Wed, 02/01/2012 - 13:10 | 2116752 slewie the pi-rat
slewie the pi-rat's picture

ok, but if that rash doesn't go away by tomorrow, better have someone else lQQk at it...

Wed, 02/01/2012 - 19:05 | 2118152 MsCreant
MsCreant's picture

The  3.14-rat  is funny.

I tried pi but they took my pi. What up wid dat?

Wed, 02/01/2012 - 11:58 | 2116446 francis_sawyer
francis_sawyer's picture


...IF they want bank runs (& your conclusion is correct)...

Then the only motivation I can conceive of for doing so is that they are planning to re-issue the currency... IOW ~ mattress cash for everyone... ZAP re-issue the NEW DOLLAR (& tell everyone that they can come back and get new dollars for their old ones... devalues, of course)...

Am I crazy here?... Just trying to follow your logic... maybe I veered off...

Wed, 02/01/2012 - 12:02 | 2116470 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I think we will see all the crazy shit happen in lockstep.  Rally to 14k, Europe falls off the cliff, Bernanke "saves" America with a bank holiday, savers lose $$$, stocks go up again, and the world is saved.

Wed, 02/01/2012 - 19:18 | 2118201 MsCreant
MsCreant's picture

Whatever they do, count on it to be epic yet craven.

They have no substance, they try to manage and give impressions about things. No one has the balls to admit anything or do anything. I was sort of sarcastic and sort of not about them wanting bank runs. 

Underneath it all, it is yet another "vehicle" through which to disguise the watered down flow of cash as it circulates through the zombified Ponzi scheme that is the global economy. 

Wed, 02/01/2012 - 20:48 | 2118453 DosZap
DosZap's picture


Of course that is what they want, a reason for calling off the '12 elections.

Which I sincerely believe will not happen.

There must be a reason for a Declaration of Natl Emg, and or Martial Law or both.

Otherwise the odumster is out.

Wed, 02/01/2012 - 10:55 | 2116202 kurzdump
kurzdump's picture

Wait, thats the best idea in years! Reverse the sign of all interest rates - this will turn back time and fix all the the problems for sure! As soon as problems arise once again reverse the signs again. Rinse, repeat.

Wed, 02/01/2012 - 10:56 | 2116206 lizzy36
lizzy36's picture

The exact opposite of what they "should" be doing.

Of course the helps US treasury the most.

What a clusterfuck.....millions of Americans live on fixed income. There risk profile negates their ability to participate in the casino that passes as the equity market. 

One wonders what the likely GOP POTUS candidate has to say about this issue. As he is "not concerned" about the poor, but about the middle class. I wish to hell someone would ask him about this as it is probably most important issue facing the country today.

"I'm not concerned about the very poor." he said Wednesday. "We have a safety
net there. If it needs repair, I'll fix it. I'm not concerned about the very
rich. They're doing just fine. I'm concerned about the very heart of America,
the 90-95 percent of Americans who right now are struggling."

Asked whether his comment about the poor might come across as odd to some,
Romney reiterated.

"We will hear from the Democrat party the plight of the poor and there's no
question, it's not good being poor, and we have a safety net to help those that
are very poor," Romney said, adding that he's more worried about the unemployed,
people living on Social Security and those struggling to send their kids to

Wed, 02/01/2012 - 11:03 | 2116243 Everybodys All ...
Everybodys All American's picture

Not fond of Romney commentary because it shows a lack of compassion or understanding. Though I will add that the real gripe should be with Bernanke. He is making all of us poorer through his inflationary policy.

Wed, 02/01/2012 - 11:08 | 2116263 marathonman
marathonman's picture

Bernanke's job (and every other Central Banker) is to make all of us poorer and make the bankers richer.  Don't ever assume for a minute that his job is something different.

Wed, 02/01/2012 - 12:04 | 2116481 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

They go after the fixed income crowd because what the fuck are they going to do about it?  Throw their canes at the bankers?  Run them over with their wheelchairs?  Throw tomatoes they bought with their food stamps?  As long as they have TV, they will die on their couches.

Wed, 02/01/2012 - 11:08 | 2116261 MsCreant
MsCreant's picture

Why can't the GOP get anyone up there that does not seem addled?

Wed, 02/01/2012 - 11:18 | 2116300 Dr. Engali
Dr. Engali's picture

Because they don't want anybody up there who doesn't seem addled. They are just fine, in their eyes, sitting back and letting Obummer take the hit. Not that is matters anyway, the two parties are just for show to keep s divided and arguing with each other.

Wed, 02/01/2012 - 12:07 | 2116494 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

the two parties are just for show to keep us divided and arguing with each other.

Shut up!

Wed, 02/01/2012 - 11:42 | 2116342 kaiserhoff
kaiserhoff's picture

If Mittens is the answer, it's a damn strange question;)

Wed, 02/01/2012 - 11:40 | 2116389 divide_by_zero
divide_by_zero's picture

Progressive MSM won't let them, or haven't you notice how they coddle Romney, a progressive, one of their own.

Wed, 02/01/2012 - 12:19 | 2116531 Jumbotron
Jumbotron's picture

MsCreant said.....Why can't the GOP get anyone up there that does not seem addled?


Because they all get free anti-depressives from Big Pharma that they support and write laws for.

Wed, 02/01/2012 - 12:47 | 2116673 Jim in MN
Jim in MN's picture

Cuz the ones that aren't addled are subtractled and that's even worse.

Wed, 02/01/2012 - 18:21 | 2117342 slewie the pi-rat
slewie the pi-rat's picture


Wed, 02/01/2012 - 14:03 | 2116974 blunderdog
blunderdog's picture

I think it's because the Republican party traded a set of coherent policies in the '70s for batshit wingnut crazee starting with the Reagan revolution and the rise of the "cut taxes and spend big on blowing up the world" neocons.

Anyone who came into any kind of power in the Republican party over the past 30 years has done so against a backdrop of totally contradictory policies.  They HAD TO BE crazy to succeed.

(I'd contrast this to the Democrat party, where you had to be weak and ineffectual to get anywhere.)

Wed, 02/01/2012 - 19:45 | 2118281 akak
akak's picture


(I'd contrast this to the Democrat party, where you had to be weak and ineffectual to get anywhere.)

That's not true at all --- Hillary has bigger balls than most American men will ever have (the fact that they are strap-on is quite beside the point).

Then there's Nancy Pelosi, the Borg queen herself.  And Howard Dean, whose scream reverberated around the nation for days. And Jon Corzine, who boldly went where no Ponzimaster had gone before. And Bawney Fwank, who sucked off so many on his way to the top (or the bottom, we're still not sure) that he lost his teeth in the process, not to mention his ability to say "R"s.  And then there is the Mulatto Messiah himself, who managed to recreate himself from an obscure and questionable past and rise to the presidency after the vast political career of 2/3 of a term in the US senate.  Now if these are not examples of dedication and hard work, well, I don't know what would be!

Wed, 02/01/2012 - 21:02 | 2118488 blunderdog
blunderdog's picture

Humor!  Ar ar!

Thu, 02/02/2012 - 02:07 | 2119122 Jumbotron
Jumbotron's picture

Hillary has bigger balls than most American men will ever have (the fact that they are strap-on is quite beside the point).

Are we sure about the strap on part?  Maybe they just haven't dropped yet.   But when they do....LOOK OUT.....don't get your feet crushed !

Wed, 02/01/2012 - 10:56 | 2116207 scatterbrains
scatterbrains's picture

Obviously they are desperately trying to get people to buy back all that spoo from them that they've accumulated over this entire ponzi stock bubble.

Wed, 02/01/2012 - 10:56 | 2116208 swissaustrian
swissaustrian's picture

It's a patriotic duty to hold bonds, right?

Wed, 02/01/2012 - 10:56 | 2116212 Gubbmint Cheese
Gubbmint Cheese's picture

Hello liquidity trap confirmstion

Wed, 02/01/2012 - 11:02 | 2116228 spanish inquisition
spanish inquisition's picture

I would like to announce that I am in the process of putting together paperwork to issue -100% bonds. It will be a crack operation, top notch. Advising me on my advisor list is Bernie Madoff and we have a letter of intent from Jon Corzine (unless he is pegged to replace Jamie Dimon at JPM) to run the operation as CEO<CFO<C3PO.

Wed, 02/01/2012 - 12:05 | 2116478 spanish inquisition
spanish inquisition's picture

Obviously, if I can't VAPORIZE the money, I will need to have a back up 37B clause. Just need to find and set out some Fizzy-Lifting drinks (now if they drink it they stole it)......

Wonka: [angrily] Wrong, sir! Wrong! Under section 37B of the contract signed by him, it states quite clearly that all offers shall become null and void if - and you can read it for yourself in this photostatic copy - "I, the undersigned, shall forfeit all rights, privileges, and licenses herein and herein contained," et cetera, et cetera... "Fax mentis, incendium gloria cultum," et cetera, et cetera... Memo bis punitor delicatum! It's all there! Black and white, clear as crystal! You STOLE Fizzy-Lifting Drinks! You BUMPED into the ceiling, which now has to be washed and sterilized, so you get... NOTHING!!! You lose! GOOD DAY, SIR! [returns to work]
Wed, 02/01/2012 - 11:03 | 2116238 fuu
fuu's picture

We have now gone Ludicrous Retard.

"Yeah there's a storm on the loose sirens in my head
I'm wrapped up in silence all circuits are dead
I cannot decode
my whole life spins into a frenzy
Help I'm steppin' into the twilight zone
The place is a madhouse"

Wed, 02/01/2012 - 15:35 | 2117412 slewie the pi-rat
slewie the pi-rat's picture

most excellent!

now the we have made contact w/ magisterLudiCrisTard, we are but one thought experiment awaaaay!

but first...let's fire up the bong, shall we...???

Wed, 02/01/2012 - 16:06 | 2117526 fuu
fuu's picture

Fire it up!

Wed, 02/01/2012 - 16:43 | 2117662 slewie the pi-rat
slewie the pi-rat's picture

aaaand...they did!

Wed, 02/01/2012 - 11:03 | 2116244 Dr. Engali
Dr. Engali's picture

These people are fucking insane. I hope they do it. Just watch how fast people start pulling their money and either stuffing it under their mattress or putting it into PMs.

Wed, 02/01/2012 - 11:05 | 2116250 marathonman
marathonman's picture

So people will just willingly ask these clowns to @ss rape them and steal their money?  I guess its been going on for darn near 100 years.  Why quit now?

Wed, 02/01/2012 - 11:10 | 2116266 i_fly_me
i_fly_me's picture

We appear to be moving toward a world where loans could be structured to pay themselves off.  It's just another one of those interesting things that happen when you kill your currency.  Welcome to the other side of the event horizon.

Wed, 02/01/2012 - 11:49 | 2116420 HungrySeagull
HungrySeagull's picture

The howls of anguish from the counting houses will make certain that wont be allowed.

Wed, 02/01/2012 - 11:12 | 2116272 ZeroPoint
ZeroPoint's picture

If you take inflation into account, bonds are already yielding negative returns.

Wed, 02/01/2012 - 16:39 | 2117577 slewie the pi-rat
slewie the pi-rat's picture

"growth" is too.  but who tf cares about "inflation" any more?  it's so transitory!  benzlebub must have it licked or these geniuses wouldn't dare utter these words, riiiight?  what is doesn't matter

what will be, will be...

but some things never change:  the 4Q11 data comes in "below consensus" and we immediately hear some "evidence" that 'thingsRbettRAlReddy" and, with centralPlanningTM everyone always lives happily ever after.  trust us!  [and if you don't understand and accept that, there is something wrong~~~with you!]

when and where, we aren't told;  probably not the NE coast of japan or chernobyl, tho...i'm sure we'll hear more from theMorgue about the prospects, 'later'...   maybe india would be nice! or the republicOfTexas!  iceland is getting it rilly together!   anywhere but here!  get outa here, now! and hurry!  it's gonna be rilly, rilly bad where you are, so leave!  and, we'll remind you again before your next meal, too, ok?  you are paying attention, aren't you?  please don't stop paying attention...

perhaps our progeny will worship and adore us for all the ages for providing them with so much unencumbered "wealth" and insured prosperity and secure freedom...  from want, of course...  from wanting...wanting freedom.  boy!  will they have it made, huh? 

maybe tomorrow, or the tomorrow after tomorrow, or the tomorrow after the tomorrow after tomorrow, or...we'll see the happiness erupting all around the world like a wonderful exploding volcano full of really cute unicorns with rainbow hair and...

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