What Mitt Romney Also Said: A Glimpse Of The Endgame?

Tyler Durden's picture

By now everyone has heard the infamous Mitt Romney speech discussing the "47%" if primarily in the context of how this impacts his political chances, and how it is possible that a president "of the people" can really be a president "of the 53%." Alas, there has been very little discussion of the actual underlying facts behind this statement, which ironically underestimates the sad reality of America's transition to a welfare state. Recall Art Cashin's math from a month ago that when one adds the 107 million Americans already receiving some form of means-tested government welfare, to the 46 million seniors collecting Medicare and 22 million government employees at the federal, state and local level, and "suddenly, over 165 million people, a clear majority of the 308 million Americans counted by the U.S. Census Bureau in 2010, are at least partially dependents of the state."

Yes, Romney demonstrated potentially terminal lack of tact and contextual comprehension with his statement, and most certainly did alienate a substantial chunk of voters (most of whom would not have voted for him in the first place) but the math is there. The same math that inevitably fails when one attempts to reconcile how the $100+ trillion in underfunded US welfare liabilities will someday be funded. Yet the above is for political pundits to debate, if not resolve. Because there is no resolution. What we did want to bring attention to, is something else that Mitt Romney said, which has received no prominence in the mainstream media from either side. The import of the Romney statement is critical as it reveals just what the endgame may well looks like.

In response to an audience question:

Romney: [The] former head of Goldman Sachs, John Whitehead, was also the former head of the New York Federal Reserve. And I met with him, and he said as soon as the Fed stops buying all the debt that we're issuing—which they've been doing, the Fed's buying like three-quarters of the debt that America issues. He said, once that's over, he said we're going to have a failed Treasury auction, interest rates are going to have to go up. We're living in this borrowed fantasy world, where the government keeps on borrowing money. You know, we borrow this extra trillion a year, we wonder who's loaning us the trillion? The Chinese aren't loaning us anymore. The Russians aren't loaning it to us anymore. So who's giving us the trillion? And the answer is we're just making it up. The Federal Reserve is just taking it and saying, "Here, we're giving it." It's just made up money, and this does not augur well for our economic future. You know, some of these things are complex enough it's not easy for people to understand, but your point of saying, bankruptcy usually concentrates the mind.

Source: Mother Jones

And that is how the Fed effectively took over control of the United States, as without it, it is game over. This is also why the ongoing presidential election is a farce, and has absolutely no bearing or significance for the future of the US, whose true ruler does not reside at 1600 Pennsylvania Avenue, but instead holds America hostage in a powerful Stockholm Syndrome grip from the deep recesses of the Marriner Eccles building located, paradoxically, on Constitution Avenue.

Don't worry though: like any "true democracy", the real "leader" of the nation will never be eligible for popular vote. Ever.




P.S. It appears that Paul Krugman has promptly taken offense to the realization that Bernanke is "monetizing 75% of all debt." He has even promptly penned an article "Misinformed Monetary Mitt" proving the Noble prize-winning economist really has little understanding of the dynamics of debt monetization.

Here is the reality: under ZIRP, all bonds with a maturity inside the guaranteed 0% envelope are essentially cash equivalents. This means all bonds 3 years and less, which as is to be expected for riskless paper, have a coupon of roughly 0% (except Fed counterparty risk of course, because the only reason they should trade above 0% is if the Fed loses control of inflation and ends ZIRP prematurely before its announced end date now sometime in 2015). When the Treasury issues them the buyers takes on ZERO risk, thanks to ZIRP. This is also the reason why the Fed sells $45 billion in short-end paper each month, as part of Twist sterilization. In essence the only debt issuance that matters for the US Treasury is that of longer-dated issuance. This amounts to roughly $45 billion per month in the 10-30 year window, and is virtually all the debt that the Fed monetizes on the long-end as part of Twist. This is also knows as Flow as we have explained repeatedly, but we don't except someone still stuck teaching 1980s economics to understand this (Goldman explained this here)

But this is not news: back in February we noted that Under Twist the fed has monetized 91% of all LT gross issuance.

Between Twist 1 and 2, the Treasury has not auctioned off one dollar of gross LT debt to the private market, as evidenced by the total inventory of 10-30 year paper which has remained fixed at $650 billion. It is this liquidity limitation that forced Bernanke to monetize not more TSYs, but to commence buying Mortgage Backed debt.

The fact that Krugman does not get this simplest fact about the nuances in the Fed's monetization activities demonstrates just how dangerous it is to assume that just because someone has been awarded a Nobel, they automatically are an expert in something, anything, especially involving numbers.

And because we enjoy spreading knowledge, and for the benefit of even the most math-challenged Economics professors, here again is a simple clip showing how Romney is actually lowballing the real number of relevant gross issuance, which is nearly all in the critical 10-30 year ballpark, and where the Fed will soon be virtually the sole marginal market player.

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tip e. canoe's picture


At a time when states are struggling to reduce bloated prison populations and tight budgets, a private prison management company is offering to buy prisons in exchange for various considerations, including a controversial guarantee that the governments maintain a 90% occupancy rate for at least 20 years

of course, this will help levitate the USGDP.   in other words, don't expect the circle jerk to end anytime soon.

BurningFuld's picture

As neither myself or my country requires USD to buy oil I dispute your assertion. 

grid-b-gone's picture

I don't think we get a failed auction because we already have failed auctions where 100% of the offering still ends up being bought.

What we get is someone, probably in an oil transaction several years in the future, who rejects the U.S. dollar as the medium of exchange, knowing years of failed auctions have destroyed its underlying value. 

This may come after the yen and euro get rejected on the world stage and the dollar gets one final temporary boost as the reserve currency.

I think Mitt, given his choice of Ryan and anti-bernanke statements, would take the export hit to maintain a stronger dollar that is still accepted as the world's reserve currency.

If the dollar ever fails, gold becomes the reserve currency by default. Bernanke thinks he can reverse that. Mitt has the sense not to risk it.

But an Obama vote is a vote to let the party continue. Many look at Japan and think we can extend and pretend for another 10-15 years. 

Ron Paul was rejected for wanting to take the punchbowl away entirely. Mitt's plan is to just add a turd. Obama wins with his call to just party on.

I think we're past the point when a majority could ever act prudently to avert a financial crisis, so all we can do is prepare as individuals.

Everybodys All American's picture

He's said he would get rid of Bernanke. I'm hoping he meant  put him in prison. That might send the right message. What ya think?

12ToothAssassin's picture

Yah, but will the replacement be worse? I dont think it matters who is the chairman, the same agenda will be pushed. Just another empty suit in the long list after POTUS, Attorney General, etc.



The puppet show

Everybodys All American's picture

I agree. So lets jail the whole fucking cabal.

elementary's picture

Only if it's a Turkish or Peruvian jail. Otherwise jail is not enough.

Moon Pie's picture

Cabal...great word and most fit for the description.   They are one, big, hot mess of a Cabal...and I think they don't know whether to shit or go blind....but opt to shit and run for the hills and leave us to sort it out without anihilating each other.  Bankers are cunts.

New England Patriot's picture

Paul Krugman has been running for Chairman since he was born. 


Not looking for a replacement for Bernanke. Looking for a replacement for the Fed.

grid-b-gone's picture

Jim Grant. Reduce the number of governors to seven and fill at least four of the spots with the likes of Ron Paul, Eric Sprott (Canadian), and Kyle Bass.

HappyCamper's picture

Sounds like Romney’s been reading ZH and he has the balls to speak the truth. Does any politician have a chance in hell who acts that way?

GoinFawr's picture

Or Ralph Nader. That said, i still up arrowed your goofy ass.

nmewn's picture

I don't know...the jury is still out.

But the criminals are now making the case for why he was wrong to say it ;-)

RockyRacoon's picture

I'm with you on that, but... (yeah, here it comes).  I think that the bigger picture may be missing in the recent $50K dinner so-called gaffes by Romney.  I see what he said in complete alignment with his philosophy:  Say what is pleasing or acceptable to the immediate audience -- whatever, whenever.   It's been the case since his Governorship.  He only lacks the ability to gauge and measure the statements and foresee the ramifications of his statements.   For that reason alone I think he may not be presidential material.  As we all know, a President has to be able to juggle lots of lies and misdirections without pissing off too many people to remain in office.   Romney's inability to juggle his words/thoughts as needed will not come in very handy when dealing with foreign governments!  Kinda scares me.  Someone who has a pathological need to be loved doesn't belong in public office.  Note that I don't attribute these characteristics to Romney to the exclusion of any other politician.  Most of them fit the description, but a lot of them are more adept at the legerdemain.  There are words for those better suited for the job, like "diplomatic" and "charismatic".   Liars all.

Clinteastwood's picture

You must have loved Bill Clinton.

RockyRacoon's picture

Read the last two-word sentence.  He was a master liar.  Still is.

If I don't mention your pet politicians by name you'll assume I am enamored of them?  Not so.

blunderdog's picture

Replace Bernanke and you'll just find another guy who's SURE the solution is low rates forever.

If I'm wrong, and he were to bring in a Volcker wannabe, it's hard to imagine how a 15% Fed rate would HELP.  But I too would like to see it tried, I suppose.

All hail King Dollar....cough cough...

Urban Redneck's picture

What's needed is INNOVATION, which means bringing in someone from OUTSIDE, who can think outside the boxes of conformity that are mindlessly checked off when selecting traditional candidates.

What's known is that the current decider-in-chief will continue to the policy of steal-from-the-poor in order to give-to-the-rich and maintain the support of the stupid "poor" in the process.

In theory, Romney could follow a different path, since the private sector does reward results and success, the problem is that his experience of "success" has been predicated on access to easy money.  

blunderdog's picture

The Fed is a monetarist institution--it only has two tools.  It's not like the Fedhead can hold a bakesale or redefine what the dollar is.

Urban Redneck's picture

As long as the atatus quo of gridlock is maintained, yes.

Even broad overreach of authority by the Executive branch couldn't bring enough direct "change", other than indirectly by leading to revolt and overturn of the current abomination.

sgt_doom's picture

Tax dodger, draft dodger Rummey doesn't understand crap -- and this is an idiotic blog post (although good comments on your part, Vagabond).

Romney raided the American tax base with his PE leveraged buyouts and dividend recaps, and further destroyed it with their offshoring of jobs and destruction of companies through some of those PE LBOs.

Romney has helped to destroy the tax base with the aforementioned, and by tax avoidance, etc.



ronaldawg's picture

Your tinfoil hats shines better when you use a smaller font.  Very original.

He he he - you referenced a rolling stone article?  Now that's an unbiased source....

Larry Dallas's picture

Sgt Doom: you are definately broke as I can see becasue you don't know what tax dodging or tax evasion is. don't you think Romney has been audited several times?

He's rich because he is smarter than you. Period. He uses the tax loopholes that are available to him and all the other polesmokers in office.

Read a book and put down the Rolling Stone. Maybe get a Suze Horman course. Get a clue.  

BKbroiler's picture

you are definately broke as I can see becasue

this is either awesome sarcasm or pure idiocy.  I'm either impressed or revolted... and the initials LD, no this has to be irony.  MDB?

sgt_doom's picture

Welcome to the (Romney) Matrix

Mitt Romney’s individual contributors (please see end for list of financial institution contributors)

 John Paulson, hedge fund manager, Bob Mercer, Renaissance Technologies, Bill Koch, member of Koch family, and various other hedge fund managers and private equity LBO firms, etc.

 John Paulson was the hedge fund manager who made an estimated $5 billion one year betting on the economic meltdown thanks to a supertanker-sized amount of insider information. (Remember that when Alan Greenspan left his position as chairman of the Federal Reserve, he went to work for Paulson at his hedge fund.)

To illustrate the direct wealth transfer in action: Paulson buys a credit default swap (CDS) for $1.4 million, which later pays out $100 million --- and he does that any number of times.

Paulson and the other banksters and hedge fundsters, now have their billions and A.I.G. and Goldman Sachs and JPMorgan Chase and Morgan Stanley, et al., “must” be bailed out by the taxpayers --- who later lose their jobs and homes or residences, and must go on “austerity” programs because Paulson and Goldman Sachs and JPMorgan Chase and GE bought those CDSes and AIG and the others who sold them didn’t have any capital on hand to back them up.

Bob Mercer’s Renaissance Technologies is an institutional investor in the major banks and oil companies which were heavily involved and responsible for the global meltdown as they speculated – or financially manipulated – the prices of oil, energy and commodities – jacking up the paper market price of oil to 13.8 times higher than the actual physical market by May of 2008 by super-selling oil futures to each other, forcing the price upwards.

They used the same scheme to jack up the prices of refinery-involved chemicals and oil transportation costs (using forward freight futures to raise the price of supertanker rental and bulk carriers, etc.)

Mitt Romney’s Fortune

Born into wealth, Romney would accumulate even more by selling debt, loading companies with debt and more debt by taking out loans against companies in leveraged buyout deals to reward himself.

He accumulated even more money by avoiding taxes; utilizing offshore finance centers in the Caymans, Switzerland, and other locations. (The leveraged buyout structure itself is predicated on tax avoidance and shifting the burden of taxation onto the workers due to the tax deductibility of debt payments.)

This is what plutocracy looks like!


(And his Super PAC individual donors)


FrankDrakman's picture

Gee, who did you think the Koch bros., Paulson, and the others were going to contribute to? Bambam? Did you think they were going to sit back and let the Maumau bring in a wealth tax unopposed?

Man, you are one smart dooooood....

nmewn's picture

So what am I to infer from this?

Thats quite a cross section, housewives, retirees, attorneys, investment bankers...one guy even ponied up a hundred bucks...lol.

Odd, I don't see Soros on here...wonder where his money is going...or Buffet or Gates ;-)



tip e. canoe's picture

is there such thing as an unbiased source?

everybody's talkin their book dawg.

Cathartes Aura's picture

more Romney /Bain backstory, via deep connections to Monsanto,

John W. Hanley, the Monsanto CEO at the time, has said how “impressed” he was with the 30-year-old Mitt. Hanley became so close to Romney that he and Romney’s boss Bill Bain devised the idea of creating Bain Capital as a way of keeping Romney in the fold. Unless Mitt was allowed to run this spin-off venture firm, Hanley and Bain feared, he would leave. Hanley even contributed $1 million to Romney’s first investment pool at Bain Capital. Monsanto’s Hanley is in fact the only business executive outside of the Bain founding family to so shape Romney’s career—jumpstarting the two companies, Bain & Company and Bain Capital, that account for all but two years of Romney’s much-ballyhooed business experience. Bain and Romney whispered in Monsanto’s ear until 1985, when Hanley’s successor Richard Mahoney says he “fired” them and when Romney moved on to Bain Capital.


well documented, worth a read. . .

knukles's picture

As I was reading that I thought the punch line was gonna be he (head of Monsanto) started planting GM corn seeds up his bung or something more up close and personal.


Dr. Sandi's picture

There are two things I like about Romney.

First, they say he's a draft dodger. And I say, good, we needed millions more like him during the Vietnam stupidity.

Second, Romney is turning out to be way more entertaining than the past 4 years of Obama.

Since there's not a cunt hair of difference in how the country will be administered for the owners under either one, I'm pulling for Romney. It'll be the excitement of GW Bush as opposed to Pappy Bush.

Forget governance, it's a student council race. Do we prefer President Chocolate or President Vanilla?

But Romney doesn't stay with the teleprompter, and that means we'd have 4 years of great yucks and occasional guffaws when he speaks to us muppets.

Shit, with that kind of material to work with maybe Leno would even be FUNNY again.

Bunga Bunga's picture

Roman empire survived by conquering new territories to gain more tribute payers ... at least for some time.

The economic system needs something it can exploit at reasonable cost to get out of the vicious cycle of debt. Otherwise the disintegration of a state system is only a matter of time.




Zymurguy's picture

The Romans also in turn destroyed their economy by devaluing their currency over and over and over to fund those wars, etc.  The fact they and all similar societies run up against is a law of diminishing returns.  Face it, we're fooked brah.

Alexandre Stavisky's picture

Heart of darkness.  Needs a sacrifice.


Demons make war


Evacuating embassies?  Russian media ploys?  Gulf Buildup.

Sure thing.  Machete and flesh.  Space and will only, separate them.

Axes laid at the root of every tree.  Bring forth not good fruit? Land of Vespucci.

Hew down.  Within and without.

GMadScientist's picture

Sorry, doesn't work that way, son. If there were something to exploit, idiots would line up to borrow money to be the first to climb on the bandwagon.

They never tire of recycling the bigger fool theory.

The international megacorp and nation state are inseparable symbiotes.

Gringo Viejo's picture

Like all Presidents before him, he'll do what he's told. Nothing more, nothing less.

williambanzai7's picture

No, he is just saying what Whitehead told him. As a Squid, Whithead clearly understands.

trebuchet's picture

What Mitt Romney also appeared to suggest in that speech was who his candidate for Chairman of the Fed was

trebuchet's picture

What Mitt Romney also appeared to suggest in that speech was who his candidate for Chairman of the Fed was

Watauga's picture

Well, your description of his plan is rather doubtful.  He clearly understands at least a substantial part of the problem.  Why would he then go further down the path of failure?  No, his plan would be to cut spending, lower taxes to a reasonable rate, and reduce govt regulation, all designed to promote private sector growth and the creation of jobs.  If he is able to do that, then we start chipping away at deficits and debt.  Can anyone at this point save the U.S. as we have known it for decades?  Likely not.  However, the right plan, well executed, with the right leadership, may well reduce the level of pain for many Americans as we ease into a new American. 

Is Romney part of some ZHer's conspiracy of the willing (Rothschilds, Morgans, Bushes, and so forth)?  I have no idea.  But the one thing I do know is that the longer we suffer under a President Obama, the faster and deeper will be our collapse.  It is HIS plan, HIS desire, HIS goal.  He has been wildly succcessful so far, and his lapdog MSM is carrying his water for him.  If Romney does not win, expect the worst and immediately prepare for TEOTWAWKI.

Boeing Boy's picture

I thought Gordon Brown was bad.  

rustymason's picture

And you are still correct!

sgt_doom's picture

"$100+ trillion in underfunded US welfare liabilities will someday be funded. "

Well, if they --- the banksters --- could turn $10 trillion into $1.2 quadrillion in derivatives, I imagine that shouldn't really be a problem.

Or else all their ill-gotten gains could be repatriated.

Alexandre Stavisky's picture

My peace is gone,

My heart is sore:

I never shall find it,

Ah, nevermore!

My bosom yearns

For paper alone;

Ah, dared I clasp it,

And hold, and own!

And store my wealth,

To heart's desire,

Just 'til the bonds died

So I too must expire!

Gold had I naught,

but many pledges

Nothing more to be bought,

There were zero hedges.