Elect a New Congress

In Our Continued Endeavor to Keep You Informed… from ZeroHedge.com

Unedited: Spot on, and if you’ve been keeping up with this blog, this is an astute observation worth knowing.  What you see is what you get, and when it is the truth, then it becomes what you think.

When Herding Cats Fails: A Visual Tale Of Two QEs

Tyler Durden's picture

Following last week’s Japanese market fireworks, one thing has finally become clear: any ongoing collapse in the Yen, and corresponding surge in the Nikkei225 – supposedly beneficial “side-effects” of Abenomics impacting the Japanese economy – will send Japanese bond yields surging as more panic and sell their fixed income exposure, leading to further instability and volatility in the bond market, which in turn becomes a selling catalyst and so on in an escalating selling feedback loop. Because, as we have been warning, Abenomics “works” only as long as it only impacts stocks beneficially, i.e., sends them higher, but much more importantly as long as nobody sells their bonds. This is the reason for the surge in damage control out of Japan, desperate to “keep Mrs Watanabe’s faith” in the wealth effect mechanism known as the stock market following last week’s epic market crash best summarized in this piece by Bloomberg: “Kuroda Backs Japan Bulls After Stock Plunge Jolts Confidence.”

So with Abe and Kuroda supposedly unwilling to take a break until long-term inflation expectations are anchored at 2%, this means the 10 Year JGB, most recently trading south of 1%, has much, much more downside. And as we explained before, the ongoing plunge in JGB prices means massive Tier 1 capital impairment for various Japanese banks which are the biggest holders of JGBs. It also means that as Kyle Bass has long been warning, the amount of Japanese tax revenues needed to fund interest will explode to nearly half of all. Although when the central bank directly monetizes the deficit, all sound math and logic becomes moot.

All that, and many other reasons why QE of the type implements in the US are impossible, have been explained extensively in the past on these pages.

However, the best argument why the type of Quantitative Easing imposed by Ben Bernanke, and the associated “necessary and sufficient” condition to exit this greatest of all monetary experiments, or eventually allow Ben and Kuroda to taper QE, i.e., the “great rotation” from government bonds into stocks (because otherwise both the Fed and the BOJ will be stuck monetizing and monetizing and monetizing until one day, soon, they own all government bonds), will never work in Japan is a simple one. And quite visual.

The chart below is a comparative study of the US and Japanese government bond markets: it assumes tota US government and Japanese debt of $16.7 trillion and $11.5 trillion, respectively, are indexed 1:1.

What is shown, and is far more important, is the relative size of the associated stock market, nearly $20 trillion for the US, but just a tiny $3.3 trillion in Japan.

And here lies the rub. Because while for the US the relative party of the bond and equity markets (delta of under 20%), the largest in the world, allows Bernanke to experiment with major moves in and out of the bond and stock market without major impacts to either class, in Japan the ratio of the bond to the stock market is a whopping $11.5 to $3.3 or a tiny 0.29x

Now, we won’t get into the details of what happens when one tries to funnel liquid (because it literally is “flow”) from a massive container into a tiny one, and the volatility that results on the margin as more and more contents from massive bucket A are transferred into tiny bucket B, but we don’t think it is necessary. It is sufficiently intuitive.

The bottom line is that what may have worked for Bernanke up until now, will absolutely not work for Abe and Kuroda, who literally try to herd massive cats into a tiny trap, and where the bond and stock markets are literally worlds apart.

Of course, if Abenomics entire purpose is to destabilize global markets on the margin, create unprecedented stock and bond volatility, and ultimately crush faith in the Yen first, and then all other fiat, then he most certainly is on the right path.



Sign the Declaration

reset congress

The time has come to hit the Big Red Reset Button.

Sign the Declaration of Liberty to Elect a New Congress.

All American Voters.: Sign the Declaration of Liberty

Demand candidates to Congress to reclaim all Powers (Art I-Sec 8-US Con)

Greetings,

I just signed the following Declaration of Liberty addressed to: All 162,000,000 registered American voters..

----------------
Demand candidates to Congress to reclaim all Powers (Art I-Sec 8-US Con)

DECLARATION of AMERICAN LIBERTY

WHEREAS LIBERTY is defined as that State where the people rule over the government: This Declaration is given to underlining those critical terms required to ensure that Liberty, which is the original intent of our United States Constitution, be restored to the daily governance and operation of our United States Government.

To that revered document and America’s Declaration of Independence, this Declaration of American Liberty is subservient.

We acknowledge that Liberty requires all powers of the Congress be removed from the access and control of individuals, groups, or agencies; for it is only by usurpation of these powers, that factions gain control over the laws of the land and the lives of her people. It is this criminal and treasonous usurpation of power, that “ is the customary weapon by which free governments are destroyed.”

Further, that these restored powers of Congress are to be executed under the authority of all the people, re-establishing not only the power of Congress, but also its fiduciary duty to the people. The incorporation of the procedures inherent to Liberty in our government is our touchstone and the very cornerstone by which we judge our Liberty.

THEREFORE, We hereby sign and resolve ourselves and our representatives to,

Demand:

I.
Complete restoration of all constitutional powers of Congress, back to Congress, as written in Article I, sec. 7, 8, & 9, of our United States Constitution, and so restore operational Liberty in the execution of the business of the nation, causing two things to occur.

a. A nations political model determines its economic model with Liberty supplanting our centrally planned tyrannical state, which “once taken root is a plant of rapid growth.”
b. By taking power away from public and private agencies, it is removed from the hands of “unprincipled men” attracted to these very powers, and ends their means to transfer wealth away from all Americans.
c. This is the problem and enemy. Political Liberty is the solution.

II.
Congress wholly conduct and execute all introduction, discussion, compromise, and vote on all Acts, exercising their powers exclusively within the public forum on the floor of Congress, only thus they ensure;

a. Maximum Transparency in the execution of its duty which provides for,
b. True Consent of the Governed as required by our Declaration of Independence.

III.
The Necessary and Proper Clause (Elastic Clause), requires that the word, Proper, means all legislative and policy laws or decrees must be subject to the same process as any Act of Congress, performed exclusively and wholly within its public forum.

IV.
By Congress reformation, to perform its constitutional powers/duties and its demands upon its time, Congress must restore to the states those powers not specifically assigned to the Congress.

V.
Prosecution of all criminal and treasonous financial crimes prior to, during, and after the financial upheavals of 2008, must be pursued thoroughly regardless of any high standing or collateral impact.

Be Resolved: We either live in Liberty, or tyranny. We either rule our government, or be rule. We either all enjoy the bounty of our nation, or we wait for scraps from the hierarchy which rules our money, our lives, and our freedom, for Liberty means nothing if tyranny has one hand in your pocket and the other round your throat.

Liberty and tyranny are in dialectic opposition. They define each other by which they are not. Everyone must make their choice, and no decision is a decision for the status quo of tyranny that afflicts and rules the nation today.

THEREFORE, We the undersigned cast our lot and lives for Liberty.

“” G. Washington Excerpts: Farewell Speech to the Nation, September 19th, 1796 (words/terms)

For more information, go to www.ElectaNewCongress.com.

----------------

Sincerely,

[Your name]

Sign the Petition to Elect a New Congress

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Sign the Petition

Sign the Petition to Elect a New Congress

All American Voters.: Sign the Declaration of Liberty

Demand candidates to Congress to reclaim all Powers (Art I-Sec 8-US Con)

Greetings,

I just signed the following Declaration of Liberty addressed to: All 162,000,000 registered American voters..

----------------
Demand candidates to Congress to reclaim all Powers (Art I-Sec 8-US Con)

DECLARATION of AMERICAN LIBERTY

WHEREAS LIBERTY is defined as that State where the people rule over the government: This Declaration is given to underlining those critical terms required to ensure that Liberty, which is the original intent of our United States Constitution, be restored to the daily governance and operation of our United States Government.
This Declaration of American Liberty supports and is subservient to America’s Declaration of Independence & our U.S. Constitution.
We the People, acknowledge that Liberty requires all powers of the Congress be removed from the access and control of individuals, groups, or agencies; for it is only by usurpation of these powers, that factions gain control over the laws of the land and the lives of her people. It is this criminal and treasonous usurpation of power, that “ is the customary weapon by which free governments are destroyed.”*
Further, that these restored powers of Congress are to be executed under the authority of all the people, re-establishing not only the power of Congress, but also its fiduciary duty to the people. The incorporation of these procedures inherent to Liberty into our government is a touchstone and the very cornerstone upon which we judge our Liberty.
THEREFORE, We the People, hereby sign and resolve ourselves bind our representatives to, Demand:

Article I.
Complete restoration of all constitutional powers of Congress, back to Congress, as written in our United States Constitution, Article I, Sec. 7, 8, & 9, and so restores operational Liberty in the execution of the business of the nation. This causes two things to occur.
a. Liberty replaces our tyrannical centrally planned state. As a nations political model determines its economic model, so will “Liberty, once taken root, is a plant of rapid growth.”**
b. Liberty, by taking power away from public and private agencies, it removes from power the hands of “unprincipled men”*, and ends their means to transfer wealth away from all Americans. This is America’s problem and enemy. Political Liberty is the only solution.

Article II.
Congress wholly conduct and execute all introduction, discussion, compromise, and vote on all Acts, exercising their powers exclusively within the public forum on the floor of Congress, only thus they ensure;
a. Maximum Transparency in the execution of its duty which provides for,
b. True Consent of the Governed as required by our Declaration of Independence. This is the only means by which the people rule.

Article III.
The Necessary and Proper Clause (Sec 8), requires that the word “Proper” means all legislative and policy laws or decrees must be subject to the same process as any Act of Congress, performed exclusively and wholly within its public forum.

Article IV.
Congress must restore to the states those powers not specifically assigned to the Congress, as Congress, in order to perform its own powers/duties, will be pre-occupied in its reclaimed constitutional performance. This natural restriction of time inherent to these powers/duties will weigh in when there are questions.

Article V.
Prosecution of all criminal and treasonous financial crimes prior to, during, and after the financial upheavals of 2008, must be pursued thoroughly regardless of any high standing or collateral impact.
We the People either live in Liberty, or tyranny. We either rule our government, or be rule. We either all enjoy the bounty of our nation, or we wait for scraps from the hierarchy which rules our money, our lives, and our freedom. For Liberty means nothing if tyranny has one hand in your pocket and the other round your throat.
Liberty and tyranny are in dialectic opposition. Each defines the other by which they are not. Everyone must make their choice, and no decision, is a decision for the status quo of tyranny that afflicts and rules our nation today.
THEREFORE, We the undersigned cast our lot and lives for Liberty.

*George Washington excerpts: Farewell Speech to the Nation, September 19th, 1796
** GW quote.

For more information, go to www.ElectaNewCongress.com.

----------------

Sincerely,

[Your name]

Sign the Petition to Elect a New Congress

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