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

24 posts / 0 new
Last post
SkylightMT's picture
SkylightMT
Status: Silver Member (Offline)
Joined: Sep 30 2008
Posts: 125
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."

suesullivan's picture
suesullivan
Status: Gold Member (Offline)
Joined: Oct 6 2008
Posts: 305
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.....

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
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 

suesullivan's picture
suesullivan
Status: Gold Member (Offline)
Joined: Oct 6 2008
Posts: 305
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! 

BSV's picture
BSV
Status: Silver Member (Offline)
Joined: Jan 26 2009
Posts: 170
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!").

 

switters's picture
switters
Status: Platinum Member (Offline)
Joined: Jul 19 2008
Posts: 744
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.

Ragnar_Danneskjold's picture
Ragnar_Danneskjold
Status: Silver Member (Offline)
Joined: Feb 23 2009
Posts: 100
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. 

MCFooter's picture
MCFooter
Status: Member (Offline)
Joined: Nov 7 2008
Posts: 2
Re: One trillion out of thin air; Bernanke puts gun in mouth
SkylightMT wrote:

"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."

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... ;-)

 

  

  

 

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
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

 

nhubble's picture
nhubble
Status: Member (Offline)
Joined: Mar 20 2009
Posts: 3
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....

randallriggs's picture
randallriggs
Status: Member (Offline)
Joined: Apr 16 2008
Posts: 21
Re: One trillion out of thin air; Bernanke puts gun in mouth

sue:

I understand your pain and concern over what to do. I feel the same way. I read about 15 blogs everyday trying to get a read on what's happening because the MSM just doesn't tell us the truth anymore.

The way I see it, there is a lot of deflation still to come nearterm....probably thru late summer. This because of the unwinding of CDS positions and the shadow banking system we have all heard about. AIG's Liddy said this they have unwound about 1/3 of their derivative positions!  However, after that, I believe inflation will start to come in big! You want to be in PMs and commodities then. Pretty soon from now (i'm hoping for another downleg in the market) I'm going to open positions in a range of commodity etfs like MOO, DBA, DBC, USO, DBB, DBO. This includes oil which I think will go up as well.

Bottom line.....short term more deflation, long-term inflation. I hope this helps. 

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: One trillion out of thin air; Bernanke puts gun in mouth

Love the image called up by the headline of this post.

Bernanke puts gun in own mouth ... 'Okay, folks, borrow and spend ... or the bankster gets it.'

Imagine
his shock as thousands ape his gesture, pointing their index fingers at
their temple, and begin chanting 'Shoot, shoot, shoot!'

Cool

Harvey's picture
Harvey
Status: Member (Offline)
Joined: Mar 16 2009
Posts: 18
Re: One trillion out of thin air; Bernanke puts gun in mouth

Hi everyone , I am new to the sight . Decided to join after watching the crash cousre . Some eye opeaning stuff .

My question is what do you consider liquid assets ? If its gold are you holding it yourself ? I would think any instution would be useless if TSHTF . I read a different story from a guy who went thru argentina's crisis and he mention how gold rings were  something he wished he had more of . I'm thinking maybe I head to my local jeweler and max out a credit card on gold rings?

Any thoughts or suggestions ?

 

Regards

Harvey

plantguy90's picture
plantguy90
Status: Gold Member (Offline)
Joined: Jan 26 2009
Posts: 271
Re: One trillion out of thin air; Bernanke puts gun in mouth

My bet on deflation is waiting a bit longer to buy a used skip loader from some contractor, but all this money printing is getting hopes up from the general swing-a-hammer crowd that things will get better (inflation), so no one is selling me one at the price I seek.  I dont want to pay a lot for something which I assume will have higher operating costs inthe future (oil, labor inflation, material inflation).  While I wait for further deflation, it doesn't seem likely, without another leg down in trashing the economy, but all this funny money may stem that deflationary tide for all practical purposes..

joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
Re: One trillion out of thin air; Bernanke puts gun in mouth

damn machinehead

when i read the headlines i play a little game to see if i can guess who posted it. i almost always get yours (i love them)

i thought for sure this was yours considering how much you love ben.

good one skylight. 

i am all for self inflicted violence by the perps................oops i hope the moderator misses that one

joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
Re: One trillion out of thin air; Bernanke puts gun in mouth

dont go to the jeweler.

run an infomercial on late night tv saying you will buy gold. you can buy it for pennies on the dollar.

hold gold buying parties ala tupperware you will be the hit in your neighborhood.

i have an old triple beam balance from a previous lifetime if you need a scale..........much more impressive than a digital.

ps remember gold is measured in troy ounces

welcome to the party harvey

joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
Re: One trillion out of thin air; Bernanke puts gun in mouth

hi jeff

community building is the most difficult thing anyone can embark on.imagine having a marriage with as many partners as you would think be members of your community, then consider the divorce rate in this country is around 50%. then look at all the communities that have failed in this country. add in the rugged individualistic mindset of americans as evidenced on this site and you will see how daunting a task it is.

i have been working on it for a long time starting in the back to the land movement in the 70's

i suggest if you are interested you look at the work of scott peck. the different drum is a good place to start.

he identifies 4 stages , psuedo community, chaos, emptiness, and true community.

if you use the search feature on this site you will find some threads addressing community tho not as many as you would think.............surprisingly

joe

 

Aaron M's picture
Aaron M
Status: Diamond Member (Offline)
Joined: Oct 22 2008
Posts: 2373
Re: One trillion out of thin air; Bernanke puts gun in mouth

Harvey,

I agree with Joe - if you've got the latitude - buy Gold and Silver bullion.
The jewlery was an "incidental" form of currency that sprang up from abundance and had no strong value attached to it.

Tangible goods and assets (gold/silver) are a far better investment.
Silver is more "spendable" for smaller transactions, and gold will store wealth better.

Neither of them can be eaten though, or used to stop bleeding or splint a broken leg...

Cheers, and welcome!

Aaron

DrKrbyLuv's picture
DrKrbyLuv
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 1995
Re: One trillion out of thin air; Bernanke puts gun in mouth

This is a zero sum game that debauches the currency.  The newly created debt dollars add no value, they simply subtract value from the existing currency proportionetly.  This is a hidden and heionous tax inflicted on all who hold dollars - and the rest of the world knows it. 

"The best way to destroy the capitalist system is to debauch the currency" - Lenin

Currency debauchment is a choice - usually a last resort.  In the past we've seen third world countries take this route and without exception, it was a prelude to collapse.  The big problem is, once you make this choice, no one wants your currency or government bonds.

I take this as an alarm signal, its time to buy more prescious metals.

Larry

Harvey's picture
Harvey
Status: Member (Offline)
Joined: Mar 16 2009
Posts: 18
Re: One trillion out of thin air; Bernanke puts gun in mouth

Hi Aaron

 

Thanks for the response . So your suggersting buying and hold gold and or silver in small tradeable amounts . Thats what I was thinking rather then buying funds or gold/silver notes , because if things fall apart fast I'm not sure how you could get access to them . so holding it yourself is the best bet. As far survial steps food,first aid ,defense etc. are all things I am just starting to look at . I do feel like I came to the dance late so to speak , so I'm going to play catch up for a while. But I am ahead of those still in denial . People I try to talk to at work about this think I being to negative and it well all be fine if I just believe in "the system" . Of course they have nothing to back this up but "hope" !!!

 

 

Harvey

 

 

 

joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
Re: One trillion out of thin air; Bernanke puts gun in mouth

there are plenty of jobs on wall street right now................they are leaving in droves because the bonuses are being taken away.i am applying for head of aig...............i sent an app to my congressman

caroline_culbert's picture
caroline_culbert
Status: Platinum Member (Offline)
Joined: Oct 2 2008
Posts: 624
Re: One trillion out of thin air; Bernanke puts gun in mouth
joe2baba wrote:

there are plenty of jobs on wall street right now................they are leaving in droves because the bonuses are being taken away.i am applying for head of aig...............i sent an app to my congressman

LMAO-- too funny!!! Smile

gregroberts's picture
gregroberts
Status: Diamond Member (Offline)
Joined: Oct 6 2008
Posts: 1024
Re: One trillion out of thin air; Bernanke puts gun in mouth

Peter Schiff

March 20, 2009

The Mother of All Bells

There is an old adage on Wall Street that no one rings a bell at major market tops or bottoms. That may be true in normal times, but as many have noticed, we are now completely through the looking glass. In this parallel reality, Ben Bernanke has just rung the loudest bell ever heard in the foreign exchange and government debt markets. Investors who ignore the clanging do so at their own peril. The bell’s reverberations will be felt by everyday Americans, whose lives are about to change in ways few can imagine. While nearly every facet of America’s economy has been devastated over the past six months, our national currency has thus far skipped through the carnage with nary a scratch. Ironically, the U.S dollar has been the beneficiary of the global economic crises which the United States set in motion. As a result, our economy has thus far been spared the full force of the storm.

This week the Federal Reserve finally made clear what should have been obvious for some time – the only weapon that the Fed is willing to use to fight the economic downturn is a continuing torrent of pure, undiluted, inflation. The announcement should be seen as a game changer that redirects the fury of the financial storm directly onto our shores.

In its statement, the Fed announced its intention to purchase an additional $1 trillion worth of U.S. treasury and agency debt. The purchases, of course, will be made with money created out of thin air through the Fed’s printing presses. Few can doubt that they will persist with these operations until the economy returns to its former health. Whether or not this can ever be accomplished with a printing press alone has never been seriously considered. Bernanke himself admits that we are in uncharted waters, with no map or compass, just simply a hope that more dollars are the answer.

Rather than solving our problems, more inflation will only add to the crisis. Falling asset prices, the credit crunch, declining consumer spending, bankruptcies, foreclosures, and layoffs are all part of the necessary rebalancing of our economy. These wrenching movements, however painful, are the market’s attempts to resolve the serious problems at the root of our bubble economy. Attempts to literally paper-over these problems will lead to disaster.

Now that the Fed has recklessly shown its hand, the mad dash to get out of Treasuries and dollars should not be far off. The more the Fed prints to buy bonds the less the dollar is worth. Holders of our debt (read China and Japan) understand this dynamic. We must expect that they will not only refuse to buy new bonds, but they will look to unload those bonds they already own.

Under normal circumstances, if creditors grew concerned that inflation was eating into their returns, the Fed would raise interest rates to entice them to buy. However, the Fed will avoid this course of action as it fears higher rates are too heavy a burden for our debt laden economy to bear. To maintain artificially low rates, the Fed will be forced to purchase trillions more debt then it expects as it becomes the only buyer in a seller’s market.

Just last week, Chinese premier Wen Jiabao voiced concern about his country’s massive investments in U.S. government debt. In the most unequivocal statement yet by the Chinese leadership on this issue, Wen made it plain that he was concerned with depreciation, not default. With his fears now officially confirmed by the Fed statement, we must wonder when the Chinese will finally change course.

There is a growing consensus that if China no longer wants to buy our bonds, we can simply print the money and buy them ourselves. This naïve view fails to consider the consequences implicit in such a change. When the Treasury sells bonds to China, no new dollars are printed. Instead, China prints yuan which it then uses to buy treasurers. This effectively allows America to export its inflation to China. However, now that we will be printing the money ourselves, the full inflationary impact will fall directly on us.

With such a policy in place, America has now become a banana republic. It won’t be too long before our living standards reflect our new status. Got Gold?

For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read Peter Schiff’s book "Crash Proof: How to Profit from the Coming Economic Collapse".


caroline_culbert's picture
caroline_culbert
Status: Platinum Member (Offline)
Joined: Oct 2 2008
Posts: 624
Re: One trillion out of thin air; Bernanke puts gun in mouth
Harvey wrote:

Hi everyone , I am new to the sight . Decided to join after watching the crash cousre . Some eye opeaning stuff .

My question is what do you consider liquid assets ? If its gold are you holding it yourself ? I would think any instution would be useless if TSHTF . I read a different story from a guy who went thru argentina's crisis and he mention how gold rings were  something he wished he had more of . I'm thinking maybe I head to my local jeweler and max out a credit card on gold rings?

Any thoughts or suggestions ?

 

Regards

Harvey

Liquid Assets:

1. Knowledge (pertinent to self-sustaining)

2. Fresh Water

3. Food

4. Gold/Silver

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments