When Doves Laugh: 4 Weeks Until The Quiet Coup In The Fed Gives QE3 A Green Light

Tyler Durden's picture

While the world continues to be hypnotically captivated with every word out of Europe, the ongoing fiasco in the insolvent socialist continent is a welcome diversion from our own issues here in the US, which as we noted yesterday, has not "decoupled" from the rest of the world's woes but merely is "lagging." After all the European recession is now guaranteed, and no matter how it is spun it will never amount to a positive GDP event for the US, even more when considering that the PBoC's recent resumption of monetary loosening will take at least several quarters to be felt globally. But a lag to what? Why 2012 of course, and specifically the January 24-25, 2012 Fed statement when as SocGen pointed out the Fed is most likely to announce yet another $600 billion episode of quantitative easing. But why then? Why not at the December 13 meeting, the topic of Fed telegraph Jon Hilsenrath's latest piece, according to which the Fed will soon emphasize that it will never hike rates and as a result collapse all refi activity because who wants to go into a 30-year fixed at 4% when it will be available at 2% 3 months later, and at 0% 6 months after that? Simple: the Fed's balance of power is about to shift substantially. With under 30 days left in 2011, the current roster of 4 rotating voting Fed governors is about to be swept out, only to be replaced with 4 new ones. Yet as the chart below from SocGen shows, the rotation will probably be the most dramatic in Fed history as 3 die hard Hawks (and 1 dove) are eliminated only to be replaced with a panel which is almost exclusively Dovish. In fact, at the end of the day the only modest Hawk on the Fed's voting committee will be Richmond Fed's Jeffrey Lacker (the only member to vote against the drop in FX swap line rates), and even he in the past has shown his dovish wings. Which means that for all intents and purposes, the major delay in global events, and market uncertainty, merely has to last until the end of the year when the doves take over. Furthermore to anyone who will point out that in 2012 virtually every single Hawk will be mysteriously out of the voting rotation, all we can say is: "you are correct." And if Europe or Iran or China or any other event serves as a welcome distraction for a few more weeks until the Fed once again does what it does best (and only), so be it.

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Corn1945's picture

Zero Hedge has been pushing the QE angle for months and it hasn't happened. Every article somehow suggests more QE is around the corner, especially articles fron notable investment banks that I wouldn't trust with two nickels. 

Corn1945's picture

That's moving the goal posts.

brew's picture

let the junking commense...

Corn1945's picture

I surrender. Please junk me to oblivion. 

I'm just pointing out the divergences on Zero Hedge. Half the articles (justifiably) bash the fraud factories on Wall Street (Goldman Sachs, etc) and the other half publish "analysis" from those same institutions that somehow is meaningful. 

Some articles talk about perpetual QE (good for stocks at least nominally) while others say the S&P is going below 1000. 

Just make up your mind. That's all I ask. 

Tyler Durden's picture

Re-read the Dylan Grice piece earlier (yes, of evil SocGen), which explains perfectly the difference between what will happen and what should happen.

GetZeeGold's picture



What should happen = CNBC.


What will happen = ZH.


Corn1945's picture

I read the piece (unlike most of your audience who I highly suspect doesn't actually read anything you put out, at best they skim the headlines).

I commented at the time:

This is a poor quality article and lacks any real original thought or insights. This is typical of "analyists" that work for large financial institutions so I'm not surprised. 

This is exactly what I'm talking about. On one hand we have continous bashing of these thieves and on the other we have articles that bend and twist history by large financial institutions. For example, Hitler's rise *began* during the hyper-inflation of the Weimar Republic. He didn't come out of nowhere during the deflationary period like the "article" suggests. He became well established in the minds of the German people during the hyper-inflation. 

GetZeeGold's picture


Dude.....maybe you should get a new hobby.....I don't think this stuff is for you.


The market is a snakepit......expect snakes.


living on the edge's picture

Corn 1945, crawl back into your hole = corn hole

chump666's picture

Everyone should read When money does by Adam Fergusson, also social/historic analysis (non economists) about the Weimar period.  In short, inflation stole wealth from the middle class in Germany and basically decimated them, thanks to Germany's brutal hyper-inflation.  The property/land owners did fine, as did any holders of company stocks.  But  that was a tiny minority.  Hitler saw this and used it as a reason to create a power base eg creating a scapegoat minority group.  That SoGen idiot who is probably running a bet on a super rally via the ECB/FED is looking at deflation as the cause for a new Hitler to be reborn.  

Terrible self interest based article.

I hate dishonest a-holes in finance, it's a dirty game 

stacking12321's picture

a correction, the title is "when money dies", not "when money does".

pdf download here:



chump666's picture

just did a line of coke when i wrote that...

Fred Hayek's picture

It was such a meteoric rise during the period of hyperinflation that essentially ended in 1923 that in German elections of December 1924, the nazis got . . 3% of the vote.

In May 1928 they got . . 2.8% of the vote.

Then you have CreditAnstalt (sp?) collapse in Austria, the market crash in the U.S. and deflation worldwide.

In elections of 1930, the nazis jump to winning 18.3% of the vote.

From there, they jumped up to being the largest party in the Reichstag.

So, there actually is a good case to make that Hitler was nothing without the deflation of the great depression.

chump666's picture

Jeez even Wikipedia gets it right, I 'll tell ya, the paranoid deflationists are nut jobs. Bank economists have plays to get that end yr bonus, probably they want that hooker who asks for $1000 a f*ck.  Again, inflation causes the problems, deflation is good medicine.  The best for an overcooked economy.  The Krugmans and the other lame asses are going to get us all up sh*t creek.  So if they print, we are ALL done.  Oil, which if goes to the break point of 120 140, will guarantee China will take dump on the US. Overnight.  
Germany will toss Merkel across to France and the world will enter a inflation/stagflation nightmare.


Although the inflation ended with the introduction of the Rentenmark and the Weimar Republic continued for a decade afterwards, hyperinflation is widely believed to have contributed to the Nazi takeover of Germany and Adolf Hitler's rise to power. Adolf Hitler himself in his book, Mein Kampf, makes many references to the German debt and the negative consequences that brought about the inevitability of "National Socialism". The inflation also raised doubts about the competence of liberal institutions, especially amongst a middle class who had held cash savings and bonds. It also produced resentment of bankers and speculators, whom the government and press blamed for the inflation.[5] Many of them were Jews, and some Germans called the hyperinflated Weimar banknotes Jew Confetti.[6]


Jack Napier's picture

Corn1945, how presumptuous of you to stereotype the membership an entire web site where anybody can join if they are patient enough to wait for a moderator to approve their account. I suspect you are more ignorant than your seemingly intelligent sentence structures let on, based on your inability to identify a group of folks (Bush throwback) beyond a broad, and more importantly unfounded generalization. I not only skimmed the headline and read the entire article, but I also read your whining comments.

Deep's picture

I agree, I love ZH, but come on guys, you cant have it both ways. You guys have been banging the QE drums since June, and nothing. Operation twist is not QE, and you know it. Each QE has diminishing effetcs, so the next one will probably last 4-6 months, then the next one 2-4 months and so on. QE cant fix our problems, only makes it worse as we pile more and more debt.

fonzanoon's picture

Operation twist may not have expanded the balance sheet but it is inflationary. Also while they may be calling for QE3 on this site it is not because they think it is a good thing, they just think it is inevitable. IMHO.

TheSilverJournal's picture

Rates don't just stay at 0% autimatically, QE is needed in order to keeps rates ultra low.

fonzanoon's picture

If QE is perpetual as you say to keep rates at 0% why does gold not perpetually go up? I am not saying you are wrong. I am just askin....

marsdefIAnCe's picture

Gold prices, like any other asset, have a large dependency on the mindset of the buyers.  When these buyers are in the "fuck, the fed is retarded" mode, gold goes up.  When these buyers are noticing a suspension of US citizens right to trial and possibility of indefinite detainment, Russia and China gearing up for WW3, Bibi acting like a crazied looney, Pakistan shutting down supply routes to Afghanistan and Russia threatening the same, and so on ... there is a transition into "OOOHHH FUUUCCCK!!!" mode where your buying tastes shift towards assets like guns, ammo, water purification systems, non-hybrid seeds, and methods of transport to as middle of fucking nowhere as possible.

foofoojin's picture

I just got a internship at a multi billion $ oil company that paying me 5k a month for 3 months. there a good chance i'll get a job offer at the end of the internship. i'm five weeks away from doubling my position on physical  silver.  I have no kids. no credit card debt. no house payment. and im 5k in school debt. my mind set is that i need plan for the best, prepair for the worst.

the two largest mine in the world for gold have less then 10 years left. it doesn't really matter what the public thinks of gold . it's going up.

tmosley's picture

Funny, I heard "take a break, and start QE later" ie force the market and politicians to beg for it.

Which was probably wrong, since the money supply has continued to explode upwards.  QE never stopped.  They just stopped reporting it.

LongBalls's picture

Exactly. As Marc Faber stated. You can't have interest rate reductions without some kind of Fed easing. QE has never stopped. The money supply continues to increase. The Fed's policy will never work. We are in the midst of a solvency issue not a liquidity issue. Therefore you can not solve the problem by creating more debt.

Tyler Durden's picture

Operation Twist is QE and everyone knows it - as by definition it is an act of Fed intervention to modify the Treasury curve shape. It is not an LSAP: that comes next. What nobody contests is that neither Twist nor QE x will achieve anything, and yes half lives will be shorter and shorter. And yes, it will only make it worse.

The issue, as Grice pointed out in the context of the ECB, is that none of the above matters:

it is what the Fed does, it is the only thing the Fed knows how to do, and it is what will happen.

fonzanoon's picture

So if any Republican other than RP were to unseat Obama, would they have the balls to put a stop to the fed? If they did, or if RP were elected and put a stop to the fed, what would happen?

stacking12321's picture

JFK ring a bell?

there's too much vested interest in the status quo, they have to stop him at any price.

fonzanoon's picture

I don't buy that. So if Romney/Bachman won. Romney would get hit by a bus and the next day Bachman would get eaten by a Lion? It is inconceivable that what I am suggesting plays out?

stacking12321's picture


are you suggesting romney or bachman are anything but tools of the establishment?

think about it.

why is it the MSM has a blackout on RP but give romney and bachman full coverage?

fonzanoon's picture

I picked two people...and to your credit those two are not the right ones to illustrate my point, especially Romney. All I am suggesting is...were a republican to unseat Obama, and replace Bernak with say Richard Fisher...or Jim Grant or whoever and they put an end to what the fed is doing now, what would be the result?

slewie the pi-rat's picture


who tf is talking about ron paul?

am i the only person to notice that tyler had just contradicted himself? 

there is no coup, and no green light for QE3 from the FED

YBNguy's picture

OMG TD speaks, its like the messiah coming to Noah on Mt Ararat!!!


J/K TD, I really respect you (but am convinced there is more than one of you who use that moniker to post articles...)


Anyways, thanks for doing what you do. Ill probably get myslef a ZH tshirt for Christmas. Just because Id love to be stopped in public by a fellow ZH fan and have a great conversation.

TheSheepWolf's picture

Is it important how many TDs are out there? More interesting question is why they run the site... Just to sell some zh-shirts or to spread the truth? Oh come on... 


Anyways... I really like ZH :-)

I think I need to buy a gun's picture

"we won't have inflation until 2012" John Bogle Vanguard CEO (former) jan 2010

fonzanoon's picture

I am not putting this on ZH at all because I found found the most informative articles on this site but I totally agree with this statement: Half the articles (justifiably) bash the fraud factories on Wall Street (Goldman Sachs, etc) and the other half publish "analysis" from those same institutions that somehow is meaningful. This goes for almost any site.

I have no understanding why analysis from the same institutions that are regarded as evil can be worth any consideration at all.

traderjoe's picture

If you consider the banks to be the enemy (and I do), don't you think it's worth knowing what they say/think/propose?

Corn1945's picture

I already know what they are going to say.

The formula is pretty straight-forward: If it's against the financial interest of a middle class family, then it will be done. I don't need some always-wrong analyst to re-write history while telling me that. 

These institutions are so totally disecredited that I don't trust anything they write. 

Ned Zeppelin's picture

You make good points. You do not deserve to be so brutally junked, but if you go seem to go up against TD (and I think you were not, only questioning) that is what you get sometimes here. However, TD responded to your questions and if you were totally off the reservation I think he/they would not have bothered to educate you on his/their thinking. 

By the way, TD never has predicted the onset of QE at a particular time, only that it is coming. And I agree, it is.  Just as surely as the ECB will print. 

But I agree with you in mistrusting the statements out of these jokers at the TBTFs.  They are useful only for parsing through, like a pile of chicken entrails, to figure out what they really think, often the opposite of what they say, or even more often, subjects they do not discuss or ignore.  

Troll Magnet's picture

i'm with you there. corn deserves props for raising his questions. whoever junked him are living in their own little fucking bubbles. this is fight club, bitches! think for yourself!

Freebird's picture

Well Corn, as you know you need to separate the wheat from the chaff. The PDs & others put out retail punter "intelligence" & also produce obviously, internal intell foe their prop desk. If you think ZH or any poster will provide you with a 100% accurate roadmap for the next 12 months, man you must be either in denial or delusional.

fonzanoon's picture

not if what they say/think/propose in writing to the public does not correlate to what they actually believe and do. Then they are just trying to sucker the public. 

Jason T's picture

Keep your friends close and your enemies closer?

FeetOnTheGround's picture

They are worth consideration, since these are their 'playbooks.'

slewie the pi-rat's picture

don't be such a wussy, corn!


trust me!

willien1derland's picture

Corn1945 - I do not want to see anyone junked - it is vital that diverse opinions & thoughts be posted - that is one of the core value of America (well not Levin/McCain, but you get the point) - I think the fact that Zero Hedge publishes the diversity of articles is because its readership is left to consider the information, evaluate & analyze the content & MAKE UP THEIR OWN MINDS rather than abdicating their thought process to another - That is how it works you can lead, follow, or stand on the sidelines - the choice is yours & it is simply the most respectful manner anyone can expect - I would encourage you to make up your mind -if you think S&P will go to 1,000 then act upon it, if you think otherwise then act on it - DEFEND your thesis & screw the concerns about being junked - sometimes one's positions are unpopular - that doesn't make them any less valid - stand your ground and let the chips fall where they may - I am grateful beyond measure for this site & its participants as I have learned more here - from posts & commentary - than from any other resource - sometimes I disagree & I junk a comment - sometimes I disagree with an author & publish my commentary & other times I agree or ask questions of authors & commenters - but it is all in the spirit of respect - NOW EVERYONE CAN JUNK MY POST ACCORDINGLY! Vive ZH!

HCSKnight's picture

Corn, ZH is becoming what they despised. Though Tyler does better than the MSM & most other aggregating blogs, you'd be a fool to expect anything other than self-serving bias. Something proven repeatedly in the past through his mis representation of verifiable information.

What is most interesting is that it sometimes is contained in the very piece he links to.