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One trillion out of thin air; Bernanke puts gun in mouth

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  • Fri, Mar 20, 2009 - 01:15am

    #1

    SkylightMT

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    One trillion out of thin air; Bernanke puts gun in mouth

http://market-ticker.org/archives/879-Bernanke-Inserts-Gun-In-Mouth.html

Anyone read this recent ticker by Denninger? About printing a trillion dollars out of thin air, announced yesterday by Bernanke.

We have little choice in this matter because the most-recent TIC data that has been published, along with what hasn’t been published (yet) but which we have, shows that foreigners have given us the finger in buying any more of our agency, corporate and sovereign debt.  In short, we’re screwed – within months – and we know it. 

"Folks, this is the most frightening statement I’ve read from the FOMC – ever.

Notice what’s missing – the statement just a few days ago from Ben Bernanke in which he said that the economy would recover in early 2010, and the recession would end in late 2009.

If this was the base case the FOMC believed, there would be no reason for the actions taken today."

 

"The nightmare scenario that is staring us in the face, right here, right now isn’t hyperinflation.  It is in fact a collapse of monetary systems driving demand for dollars through the roof in a crescendo of attempted redemptions into collapsed ("no bid") asset prices – a demand that Ben will not be able to meet, as the collateral backing those dollars will have all been exchanged for toilet paper.  Whether Bernanke holds all this trash on his balance sheet or manages to scam Treasury into exchanging it for T-bills, the result is the same – there is no collateral behind Bucky and as employment collapses no production to replace it with either."

Watch for a bond market dislocation very carefully. 

"I have been singing this song – raise cash now – for quite some time.  Let me be succinct – it has been my considered belief that you need enough in liquid cash – not credit access in the form of credit card available balances or anything similar – for at least six to twelve months.  I’m upping that here and now to twelve to twenty-four months – that’s right – one to two full years of "minimum necessary to make it" expenses.  Figure out right here and now what your minimum "monthly nut" is, and raise 12-24 months of that much in safe, liquid funds."

  • Fri, Mar 20, 2009 - 03:04am

    #2
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: One trillion out of thin air; Bernanke puts gun in mouth

I did read it this morning. I’m completely paralyzed on whether to buy more gold, in the face of it’s sudden strengthening, or hold onto my cash. I wish like heck the compelling voices out there in the blogosphere weren’t so split on the question of inflation/deflation…..

  • Fri, Mar 20, 2009 - 03:35am

    #3
    Peak Prosperity Admin

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    Re: One trillion out of thin air; Bernanke puts gun in mouth

I have to admit, as scary as hyperinflation sounds, I think hyper-deflation could be the real monster. I know that most people on this site are expecting massive inflation, especially after the Feds action yesterday, but I have always been in the deflation camp, and Denninger’s post "rings true" with me. I guess ultimately, no matter what happens, your best investment is in developing the most self-reliant lifestyle you can. I hope Dr. Martenson can elaborate on community building soon.

Jeff 

  • Fri, Mar 20, 2009 - 03:52am

    #4
    Peak Prosperity Admin

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    Re: One trillion out of thin air; Bernanke puts gun in mouth

Totally off-topic, I was interested to read about your wife’s trigger point therapy practice, Jeff. I found neuromuscular therapy and in particular trigger point work to be the most effective tool in my massage therapy toolbox. I found Clair Davies’ Trigger Point Therapy Workbook particularly helpful and recommended it to many of my clients, though I don’t know that many of them actually went out and got the book and tried to work on themselves. 

I haven’t restarted my practice since moving to Colorado, have been reveling in staying home with the kids again, but I may do so, I miss it, and your website just reminded me of that! 

  • Fri, Mar 20, 2009 - 04:21am

    #5
    Peak Prosperity Admin

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    Re: One trillion out of thin air; Bernanke puts gun in mouth

These posts state the problem pretty clearly: we don’t know what is about to happen. Will it be inflation or deflation? Nobody knows for sure. It seems to me that we had better forget about our financial assets — for now — and concentrate on doing things we can reasonably do to ensure our survival if and when TSHTF.

We appear to have arrived at a historical "inflection point". We are in "interesting times" in the sense of the ancient Chinese proverb ("May you live in interesting times!").

 

  • Fri, Mar 20, 2009 - 04:36am

    #6
    Peak Prosperity Admin

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    Re: One trillion out of thin air; Bernanke puts gun in mouth

Sue,

Gold could be expected to perform well in both deflation and inflation.  Mish (as you probably know) is one of the most vocal proponents of a prolonged deflation, and he’s said he is long on gold a few times in recent posts.  In fact in a post from today he indicated a possible wave 3 up in gold mining stocks.  

And of course, as the big move today indicated, gold would be expected to do very well if inflation is expected.

Either way, a strong case can be made for owning gold right now.

  • Fri, Mar 20, 2009 - 04:39am

    #7
    Peak Prosperity Admin

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    Re: One trillion out of thin air; Bernanke puts gun in mouth

That was an interesting read, and he makes a good argument, but there is too much conflicting information out there.  Aside from real estate, stocks, and some demand driven commodities like oil and NG, I’m not seeing much (if any) price deflation, but massive monetary inflation (adjusted monetary base), which usually leads to price inflation. 

Does anyone remember in the depths of the tech bust when many economists (including Bernanke: http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm) were talking about the threat of deflation?   Granted, the Fed has pulled out all the stops and re-inflation hasn’t happened YET, but the economy doesn’t turn on a dime either.   There are WAY too many moving parts to watch here.  I’m with Sue…the jury is out.  I think one is better off being agnostic about this for now; stop speculating about potential outcomes, and prudently deal with the present realities. 

  • Fri, Mar 20, 2009 - 05:04am

    #8
    Peak Prosperity Admin

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    Re: One trillion out of thin air; Bernanke puts gun in mouth

[quote=SkylightMT]

"I have been singing this song – raise cash now – for quite some time.  Let me be succinct – it has been my considered belief that you need enough in liquid cash – not credit access in the form of credit card available balances or anything similar – for at least six to twelve months.  I’m upping that here and now to twelve to twenty-four months – that’s right – one to two full years of "minimum necessary to make it" expenses.  Figure out right here and now what your minimum "monthly nut" is, and raise 12-24 months of that much in safe, liquid funds."

[/quote]

What do you guys consider safe, liquid funds?

I think I may start manufacturing and selling Wheel Barrels to carry the money around that it will take to by a loaf of bread… 😉

 

  

  

 

  • Fri, Mar 20, 2009 - 05:16am

    #9
    Peak Prosperity Admin

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    Re: One trillion out of thin air; Bernanke puts gun in mouth

Sue,

Its great to see another trigger point therapist out there! You should start practicing again in Colorado, its extremely rewarding work. Thanks for the feedback…Jeff

 

  • Fri, Mar 20, 2009 - 09:41am

    #10
    Peak Prosperity Admin

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    Re: One trillion out of thin air; Bernanke puts gun in mouth

Imagine trying to get a job at the moment, Im having a great time….

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