No doubt, Bernanke is watching the price of crude and the tape is telling him his inflation forecast is no good. The leak this evening is just Ben’s way of hinting to the market that he understands where we are on inflation, and he is not going to stir the pot anymore than he has.
The WSJ article indicates that the Fed is on hold for at least three months, till June. Moreover, Bernanke can’t do anything big on the monetary front within five-months before a national election. Therefore, the next legitimate time for another LSAP/QE is in December of 2012.
Bernanke’s leak to Hilsenrath is not really new news. I have been saying that Ben is "done" for some time. This confirms it.
I don’t expect this development to significantly move markets. I see it as being mildly dollar supportive (other bigger factors are at play). It should put a floor under bond yields, but I don’t see this as a reason to sell bonds. It might very well take some froth out of the stock markets. I don’t see it affecting the price of crude one way or the other (again, bigger factors will drive crude).
Ben and Jon aren’t taking away the punch bowl just yet. We have a very long road ahead of ZIRP, and already bloated Fed balance sheets. I think the Fed is keeping the punch bowl full, but not putting any alcohol in it. Bernanke’s new punch might quench your thirst, but it won't get you high.
Note:
Said it before, Ill say it again. I’m disgusted that Bernanke uses Hilsenrath and the WSJ as his go-to place to leak monetary policy. Bernanke made a big deal about improving transparency at the Fed recently. He just blew any credibility that he might have gained. Nothing has changed. Ben B. is a leaker.
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while I know using the WSJ as a place to leak your intent isn't the best vehicle, to be fair to Ben B he did try to say this last week. While the gold market picked up on it no one else really spent a lot of time thinking about it and by Thursday we were making new closing lows in stocks with bond yields calm.....I guess he felt he needed to hit home the notion in the WSJ for everyone to see....
ReplyDeleteThere is an article on Social Security on Yahoo finance now. Bruce,I thought of you as I read the final paragraph.
ReplyDelete"Of course, projections on how to maximize Social Security benefits depend on the ability of the trust fund to continue making payments....trustees say they will have enough cash to pay full scheduled benefits through 2036, followed by three-quarters of scheduled benefits through 2085."
Confidence building? I think not.
Can we stop acknowledging the myth that Social Security benefits are paid out of a "Social Security Trust Fund" or that the "balance" in this "fund" has any relevance? While this delusion may need to be perpetrated for Mainstream America, can we move beyond it here, in intelligent conversation?
DeleteI second that idea... anyone who talks about a trust fund should be dismissed as a political fraud.
DeleteThere is no fund, and never was. No one in the private sector (not even Goldman Sachs) has ever told such a whopper of a lie.
Sorry if I sounded cranky--must be a case of the Mondays :>)
DeleteBut really, wouldn't it be interesting if we started to call things as they are and not how TPTB frame them--not in a vengeful or self-congratulatory way, but simply in the spirit of liberating ourselves from the constraints of the system? Would it make us better investors or not?
I can't remember if I was supposed to take the red pill or the blue pill to free my mind... Monday's can have that effect
DeleteBut sorry to tell you a little mean spiritedness should be expected after TPTB steal $50 trillion and counting. Robbery victims are often mean toward their attackers; I am sure TPTB are spending $10 million of taxpayer dollars to study why this is
The WSJ seems to be the preferred medium to float trial balloons. Couldn't help but notice all those MF Global stories with un-named sources, saying JP Morgan had the money and then the money vaporized. Was it like this pre-Murdoch? I don't recall.
ReplyDeleteExcellent post - they have reached their pre-determined limit of soiling the dollar's reserve currency status to monetize and inflate
ReplyDeleteAnd the clown show continues with bread and circus for all the sheeple. The ECB has injected $1 Trillion since Dec. 2011, so the pigmen must think that will hold things together until after the election, and there are other PIIGS to rescue as well. It's a full on race to the bottom for all fiat currencies, so Benny and the FED will be back to grease the skids for their banker masters.
ReplyDelete1. Currency Wars
2. Trade Wars
3. BIG WAR
Excellent point, anon. To say that there will be no qe until after the election is ridiculous. It has simply moved to a global scale. Duh...
ReplyDeleteWhat, Ben Worry?
ReplyDeletehttp://chart.ly/6vhh699
In a recent trustees report, Stephen Goss, the chief actuary of Social Security said, in effect, there is no liquidity crisis for Social Security until the trust fund is exhausted. In effect, he is saying there are no financial drawbacks to tapping the trust fund, as long as it has a positive balance.
ReplyDeleteUnfortunately, this is false, for tapping the principal and interest of the Treasuries requires general revenues to redeem them.
It is the same way government pays all expenses, whether in a trust fund or not.
Social Security may have been originally set up to invest the surplus in nonmarketable securities to be used only for Social Security beneficiaries.
Unfortunately, internal borrowing of all of the surplus was done by the Treasury to pay for current expenses, and lower the deficits. How can the trust fund be a store of wealth, if all of its wealth has been lent and spent? How can those surplus dollars and interest be in 2 places at the same time?
My latest discussion on this topic can be found at ritholtz.com.
The story is entitled "Memo to Political Bloggers, dated March 3rd. I provide a quote from the Social Security Advisory Board, which one commenter simply casts aside as rubbish. Better to believe Stephen Goss, than the SSAB.
Don Levit
I really enjoyed your informative blog. More power to you!
ReplyDeleteFBI in the process of creating a system for monitoring all conversations on social networking sites
ReplyDeleteRevert to Code
Contact: 1-800-834-1803
Code: ISBN 978-1-4349-0974-9
déjà vu
ReplyDelete(Bernanke and the Rothschild Effect)
When an historical event was so holocaustic that history itself was in denial:
History may repeat itself!
The Old World Order
The same conditions that led the German People to elect an anti-Jewish Hitler are being repeated here in the United States and around the world.
The New World Order
The Cocaine-like addiction to Power and Wealth has coalesced into a New World Order:
Funded by the Federal Reserve; promoted by the Council on Foreign Relations; implemented by the military-industrial-complex and ritualized by the Supreme Court and Citizens United.
Before there was writ there was krystal nacht!
Jewish law forbids usury except to strangers!
When the Federal Reserve allows or causes the interest rates to rise, the Friends-of-Ben will have enough interest free money to buy up just about everything: As they have been doing with adjustable rate mortgages, reverse mortgages, credit card fees, inflated property taxes, etc, etc.
The avarice and greed of some persons?, in my opinion, is the Anti-Christ!
Is a holiday tree really kosher?
FBI in the process of creating a system for monitoring all conversations on social networking sites
ReplyDeleteRevert to Code
Contact: 1-800-834-1803
Code: ISBN 978-1-4349-0974-9
As I am new to having the scoop on what really goes on at the Fed (to the extent that we DO know the corruption and malfeasance that exists there), I am unfamiliar with the abbreviation TPTB. Can someone please clarify? I was unable to figure it out based on context alone. Any/all help appreciated. Thanks!
ReplyDeleteThe Powers That Be
DeleteDon, Stephen Goss and the SSAB are lying.
ReplyDeleteThere is NO SS Trust Fund! It is literally a metal file cabinet, I believe in Parkersburg, Maryland. It is filled with IOU's from Treasury to Social Security (ie the federal government to the federal government)and has been since LBJ made it that way.
SS payments are "paid" from SS revenuemonth to month, which is now a negative net. It is all accounting gibberish. THERE IS NO TRUST FUND!!!!
The federal government has been spending 40 cents of every dollar in deficit essentially since B.O. was elected. Whether you call it QE or any other name, creating "money" out of thin air is the only way the US government can "pay" it obligations.
Bernanke, et al., know that there are really no moves left for them. The inflation spring is wound so tight, that when it finally breaks loose, it will be economic Armageddon in the good old USA.
BTW, the federal government "manages" the Unemployment Trust Fund, Medicare Trust Fund and all of its other "trust funds" the same way. THERE IS NO TRUST FUND!!!! They just call it that and pay ongoing "benefits" out of ongoing receipts every month (minus the 40 cents they didn't receive - which must be paid with funny money). Call your US Congressman and Senator and challenge them to prove to you that this description is not accurate.
There has been no trust fund since hmm...let's see...1937! A matter of public record, so yes, whatever political figures discuss a SS "trust fund" is a: stupid, b: lying, or c: both.
DeleteSO,SO, SO Accurate!!!!!
DeleteTPTB - The Powers That Be, perhaps
ReplyDelete