36 votes

Ben Bernanke just took QE Infinity to a new level of stupid

The FED just announced that they will start buying $45 billion in treasuries per month in addition to the $40 billion in mortgage backed securities the FED was already buying. That's $85 billion per month now. As expected, gold, silver, and stocks have rallied today on the news. We're now officially following in Japan's footsteps.

From Bloomberg:

"The Federal Reserve said it will buy $45 billion a month of Treasury securities starting in January, expanding its asset-purchase program, and for the first time linked the outlook for its main interest rate to unemployment and inflation.

The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor-market conditions,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington.

The Fed said interest rates will stay low “at least as long” as the unemployment rate remains above 6.5 percent and if inflation “between one and two years ahead” is projected to be no more than 2.5 percent. The committee “views these thresholds as consistent with its earlier date-based guidance.”

The rest can be found at the following link:

http://www.bloomberg.com/news/2012-12-12/fed-boosts-qe-with-...

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it is getting much later

in the game. Got inflation?

This tells me China is no longer buying our treasuries

and the FED is trying to fill the void. Isn't this the last step before all hell breaks lose? Any one on Wall Street with a brain should see that the end is near and PM's are the only safe haven for investments.

Gold standard: because man can not be trusted to control his greed

Reinflating the Bubble

This time it will only last a few years, until 2015 to be exact according to Bernanke.

There is a really short window here but there will be money to be made. Get after it, especially if you are a business owner.

Stay disciplined, pay off debt and invest wisely. DO NOT extend yourself. The credit rates are going to be very seductive.

You do not want to be caught short on the back-end of this hyper-bubble.

Best of luck.

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

Many of us here are basically

Many of us here are basically saying "this is not going to work", but I am willing to bet it does work for who it is intended to work for. The dollar is still the reserve currency of the world and it is going to be a long time before it isn't, so the elite shareholders and CEO's of the world will enjoy all the quantitative easing and artificial propping-up of stocks backed by artificially low priced labor costs in other countries for some time coming. The poor and broke in every country will suffer as usual.

Cyril's picture

Help Wanted - Breathtakingly Beautiful Charts Need Update !

Help Wanted - Breathtakingly Beautiful Charts Need Update !

Current Charts Landscape

http://dotxml.brinkster.net/2012/Misc/G4_Charts.pdf

Current Nomenclature (emphasis mine)

Chart #2 - Factors Adding to Reserves on Federal Reserve's Balance Sheet (Assets) Plus Off-Balance TSLF from 6/27/07 to 12/5/12

* AIA Aurora LLC and ALICO Holdings LLC
* Other Credit Extensions
* Mortgage Backed Securities <<<--- Please Help !
* Other Federal Reserve assets
* Central bank liquidity swaps
* TALF and TALF LLC
* Net Portfolio Holdings of Maiden Lane II LLC
* Net Portfolio Holdings of Maiden Lane III LLC
* Net Portfolio Holdings of Commercial paper Funding Facility LLC
* Securities Lent to Dealers - Overnight Facility
* Securities Lent to Dealers - Term Facility-TSLF
* Asset-Backed Commercial Paper Money Market Mutual Fund
* Liquidity Facility
* Net Portfolio Holdings of Maiden Lane LLC
* Credit Extended to AIG
* Primary Dealer Credit Facility-PCDF
* Term Auction Credit-TAF
* Regular Discount Window Credit (Primary, Secondary and Seasonal Credit)
* Repurchase Agreements
* Misc (Float,Gold Stock, Special Drawing Rights and Treas. Currency)
* Securities Less Mortgage Backed Securities

Chart #3 - Factors Using Reserves on Federal Reserve's Balance Sheet (Liabilities) from 6/27/2007 to 12/5/2012

* Reserve Balances
* Other Liabilities and Capital
* Deposits - Not Reserve
* Balances
* Treasury Cash Holdings
* Reverse-RPs with Dealers
* Reverse RPs: Foreign
* Official and International
* Accounts
* Currency in Circulation
* TSLF-3/11/08
* "TDWP - 8/17/07"
* TAF-12/12/07

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Mortgage Backed Securities <<<--- Please Help !

It is not clear to me what help is requested. The collection of colorful charts you found are quite impressive. They stand on their own. I have written many times about Federal Reserve & their pranks: TARP, Maiden Lane fairy tales & such.

Exposing the nonsense of each central bank for each major international currency is here: Central Banks Committing Chomos? Submitted by Mark Twain, 05/26/2011

What a wild ride.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

The Late Day Drop in Gold and Silver

Apparently the Fed Reserve is continuing to naked short gold and silver pretty heavy, keeping Gold contained < 1750 and Silver < 35. Of course they cover these shorts with printed fiat dollars. We all know the Fed really can't go broke. Todays Fed move apparently buys the treasuries (US Debt) that foriegners are significantly slowing down on.

Zero US Foriegn Gold reserves now

http://research.stlouisfed.org/fred2/series/BOPOGLD

I think today's Benny news was a indication we are getting close to economic reset. Get ready Daily Paulers...Buckle your seat belts, get your helmets on..

"This isn't what the govern meant"

"Win the crowd and you will win your freedom"

DJP333's picture

This

is making my head hurt.

"It’s not pessimistic, brother, because this is the blues. We are blues people. The blues aren’t pessimistic. We’re prisoners of hope but we tell the truth and the truth is dark. That’s different."

Head hurts today...

... your backside is going to hurt for a lot longer.

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

Cyril's picture

A Tale of Zeroes and Paper in La-La-Land...

A Tale of Zeroes and Paper in La-La-Land...

...

$ 4 0 , 0 0 0 , 0 0 0 , 0 0 0 + $ 4 5 , 0 0 0 , 0 0 0 , 0 0 0 =

$ 8 5 , 0 0 0 , 0 0 0 , 0 0 0 (a month)

...

$ 8 5 , 0 0 0 , 0 0 0 , 0 0 0 x 1 2 =

$ 1 , 0 2 0 , 0 0 0 , 0 0 0 , 0 0 0 (a year)

...

PRINTARDATION IN LA-LA-LAND !

PAPER REAL ESTATE -OR IS IT REAL PAPER ESTATE?- IS THE NEW HYPE !

...

You're right : let's get us a Cognac and some rest.

Nap well.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

This is exactly what I expect

From the bernake. This will just keep going until the "crash"

Incoming!!! Fiancial warfare bomb - out of Benjie's helicopter.

On 12-12-12, for those who notice such things. I am implying no particular significance, merely pointing out the date they made the announcement. They have everyone looking for "false flags" while they engage in warfare on entirely different fronts.

Love or fear? Chose again with every breath.

Expanding M1 money supply?

So do I understand correctly that the FED's 85 Billion/month open market purchases will expand the M1 money supply by 85B/month? If that is the case wouldn't it double the M1 money supply in one year?

Still learning, thanks for the help.

Yes...it will immediately go into M1...

...but their goal is for that to work its way into M3 (via fractional reserve banking) and re-inflate the credit markets. Of course, this hasn't been working very well.

Cuimhnigh orm, a Dhia, le haghaidh maith.

Fed is buying Govt Debt, most likely last step for the US $

This move is to self purchase treasuries, US Govt Debt., today there is a slow up of foriegn countries to buy our debt. Asia in particular is now feeling the risk, that we will not pay back...so the Fed "prints more dollars" and puts this debt on their balance sheet. This devalues the US dollar. Putting inflationary pressure on US economy.

Meanwhile Gold and Silver are traditionally a safe haven to protect your net worth, but the Fed is also "naked shorting" Gold prices to keep Gold < 1750 or Silver <35. They do this by selling Gold and Silver it does not really have in stock, and covering these losses with more printed US dollars. As we know the Fed can't really go broke, they simply print more paper. Again pressure for inflation.

So where once China, Japan and So. Korea were once buying our debt, today's worse news is that we the "Tax Paying Units" are buying the debt by Fed Reserve putting it on it's books.

M1 is no longer used, since the Govt. tries to hide this reality, use the current in use index is MZM. You can see US foriegn reserves on Gold are now ZERO...apparently US is hanging by a thread.

http://research.stlouisfed.org/fred2/series/BOPOGLD

I give the dollar 12-18 more months tops. A good video...

http://www.youtube.com/watch?v=iGujjO_Za2c

"This isn't what the govern meant"

"Win the crowd and you will win your freedom"

QE infinity times infinity +1!!!

FU Ben!! Now what!!

Patriot Cell #345,168
I don't respond to emails or pm's.
http://www.youtube.com/watch?NR=1&feature=endscreen&v=qo8CmO...
Those who make peaceful revolution impossible will make violent revolution, inevitable.

Translating Benny

Benny Bernacke really was saying today...

" I can't get China or Japan to buy more treasuries, so the Fed will step up buying of them to the tune of 40b $ a month. and just so Gold doesn't spike, we will naked short the Gold and Silver markets and cover the shorts with more phony balony US $'s".

"Oh yes and we will keep Interest rates frozen until unemployment drops under 6.5%, but we are the Fed we do not give a F'n A about unemployment."

"This isn't what the govern meant"

"Win the crowd and you will win your freedom"

Shorthand stenography pad left on floor @ US Treasury Auction

This notebook belongs to: Federal Reserve

  • No = Primary Dealers (aka: Too-Big-To-Fail Failed Banks)
  • No = Japn
  • No = China

Auction ends. Fed still holds notes. Music stops.

Game over.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

The floggings will continue...

until morale improves.
The Fed has stepped in because the market for government bonds is drying up just as it stepped up to encourage mortgage lending by being a buyer of mortgage backed securities nobody else wants.
Allowing the real estate market to reset from the 2001-2008 bubble will put a lot of mortgage holders further upside down in their properties. This also causes more write-offs for the banks who will have to foreclose. The banks stopped loaning. The price of houses dropped. Nobody wanted to buy mortgages from the banks in a falling market. So the Fed did to prop up the banks by being the market for mortgages.
Now, since the Chinese have allegedly become a net seller of U.S. debt, nobody wants that either. The Fed has to buy the debt or allow interest rates to rise. This will put the federal government into default sooner. It will also work to push the price of housing down.
With interest rates going up and real estate values dropping, this puts local governments who depend on real estate taxes and issuing bonds to make budget into a pinch as well.
As long as interest rates remain low, no one is going to save. Nobody is going to lend. Nobody is going to invest in expansion as long as the inventory is not allowed to clear at market prices. Instead of encouraging recovery with its low interest rate policy, the Fed is preventing it. Expect unemployment to remain above 6.5% until the balance of unemployed have been out of work for more than a year and fall off the statistics. Low interest rates is not going to lower unemployment. There will be no inflation as long as the banks refuse to lend to anyone but the federal government at these rates.

[F]orce can only settle questions of power, not of right. - Clyde N. Wilson

I don't think we can yet grasp...

the complete and utter disaster that will occur when the FED decides to raise interest rates to reality. I believe this is what is truly the beginning of the end.

Ben will get up there and make the announcement in a year or so...

It won't decide to, it will be forced to

And that will not occur for a very long time because people still have more trust in the dollar above all other currencies.

You honestly don't think

they will do it themselves, when they can't prolong it anymore, they will get their ducks in a line, spread the info to all insiders to prepare, and drop the bomb. They will maximize their return either way. Same as the depression, but, far far worse.

No that's insane

As soon as they did it all the banks would become insolvent again. The fed funds rate will not be increased until it is essentially forced higher by the market.

Ben's doing precisely what every other central bank has done

Ben's doing precisely what every other central bank has done: monetizing the public debt. Nothing strange. Nothing unusual. Its just too small: $85,000,000,000 a month is only two-thirds of the deficit. He'll have to ramp it up a tad to totally cover the Emperor Barack Hussein's spending.

Except for the fact that the United States commands a position that no other country in history has ever attained: supreme economic authority with the dollar being the reserve currency of the world.

Bernanke's monetization weakens that reserve status immensely. But the nearsighted fools in power require endless deficits to meet their obligations. As it was recently stated on Mike Krieger's blob, by the time the last babyboomers retire, total obligations will have exceeded $200,000,000,000,000.

With Bernanke's printing spree, of course, we'll have to add a couple of zeroes to that figure.

"Cowards & idiots can come along for the ride but they gotta sit in the back seat!"

Every central bank for every country monetizes National Debt.

That is the national monopoly-money chase.

"... precisely what every ... central bank has done: monetizing the public debt. Nothing strange. Nothing unusual." - FightApathy

What you write is the definition of what central banks do.

Exposing the nonsense of each central bank for each major international currency is here: Central Banks Committing Chomos? Submitted by Mark Twain, 05/26/2011

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

I'm afraid that the phrase "going full retard"...

...is no longer sufficient to express the insanity of US monetary policy. Inflation of $85 billion per month forever...yea, that's gonna end well. Sigh..

This, by the way, makes it less likely the Congress will make any substantial spending cuts any time soon. The day of reckoning in the bond market has been pushed out into the future again. The day of reckoning at the grocery store and the gas pump, well that's another matter.

"Alas! I believe in the virtue of birds. And it only takes a feather for me to die laughing."

Cyril's picture

Indeed. Thus, I propose to coin (pun intended...) a new noun

Indeed.

Thus, I propose to coin (pun intended...) a new noun, with well-known prefix qualifier :

" FEDERAL PRINTARDATION "

Copytheft Federal Reserve System, 2012. All Wrongs Reserved.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Need your advice

If I have some money in the bank the best option now is to purchase gold or silver in case this printing money behavior continues. What about land-real estate? Is that a good option to protect against coming inflation?

thanks.

Low interest rates &

Low interest rates & inflation make keeping your money in the bank to generally be a bad option. Then there are also other risks such as a large future crash, banks going bust, FDIC being overwhelmed & your money tied up in accounts for a long time. Seems like a lot of risk to keep a lot of money in the bank. Who knows... a bad enough crash & maybe by the time the FDIC returns your money it would have lost significant purchasing power (as far as I know, the FDIC insures the deposited amount but does not insure against inflation or a hyperinflationary event).

Most of us here are extremely bullish on gold & silver. That might be a good option to go with.

Something else to think about, though, should be income producing assets.

If you have enough to purchase a rental property then that might be a good idea. Sure, real estate prices can still go down but the income producing aspect enables for a way to recover those potential losses. For gold/silver, what if we hit a peak as in 1980 then it bottoms out for the next 10-20 years? You just need to sit on it all that time to recover. With an income producing asset, let's say a small apartment building, maybe you spend $250k for 5 2bd apartments & they generate $4-5k monthly. Even if the real-estate value drops to $175k you still earn your total investment back in 5-6 years, so you then would have the $250k + the apartment building which by then is all profit.

Lots of ways to go, I suppose.

...