Bernanke Unleashes The Path To New All Time Highs In Precious Metals
Submitted by Tyler Durden on 09/13/2012 13:17 -0400
There was one thing, ONE THING only that Bernanke could do, to become a gold bug’s best friend today, than merely announcing QE 3/4. It was to announce open-ended QE. This means this is the Fed’s final shot and there is no way to frontrun the Fed any more by definition. It means the terminal start of currency debasement is now here. It also means that the path to all time nominal (and inflation adjusted) highs in gold, which is now just $160 away, silver, platinum, and all other metals, as well as all other hard assets is now clear. It also means that very soon stocks are about to realize what soaring “input costs” mean for the bottom line.
Thank you Chairsatan: you are truly a gold bug’s bestest friend!
So, the latest FOMC policy announcement is here. A new mortgage-backed securities buying spree of $40B per month — but it seems to be open ended, so before you do the math, its either $480 billion over the next 12 months, or its appreciably higher.
Get some refi papers and take advantage of our new low low rates.
Also as part of the announcement as expected) the period of accommodation is extended to 2015. So on second thought, there is little need to hurry those refi papers after all.
As we continue reading, its noteworthy that this $40 large is on top of the existing twist operations of $45 billion per month til the end of the year. That’s $85 billion per month in September, October, November and December.
Those of you who insisted that September was too close to the election for more Fed action, here is some humble pie for you.
I want to see clarification as to whether this is truly open-ended (it appears to be). That is potentially a significant upgrade to liquidity, a bold spark for equities, Gold and commodities.
The fundamentals are not particularly appealing to me as an asset manager. The economy, as the Fed acknowledged appears to be weakening. That seems to be continually trumped by Fed action.
They are getting seriously desperate to do this now. If the market tanks into the close look out below. I see this as a big gamble most likely triggered by ME unrest. They had to get peoples attention off that situation. IMHO, the players are using this to get out of some of their positions.
ThePessimisticChemist
Who cares about elected officials, as long as Benny’s in charge we have no chance in hell of righting this ship.
Cynical30
Open fucking ended. Desperation smells like a cross between skunk ass and shame. The other day I explained what QE was to my girlfriend, who was enraged at the prices she noticed in the grocery store today. I think the gold and silver I have in my house is worth more than my cash savings now. It’s definitely worth more than my car.
Hope
I will amend my prep buying this weekend to include tobacco, more ammo and those airline sized bottles of alcohol, heh.
Mark the date folks. This IS the beginning of the end.
Between this and the middle east I doubt we will even make it to election time.
Steve Hogan
Was there ever any doubt? The only question was the timing and the amount of counterfeiting.
I take great comfort in knowing that the banking elite have learned one important lesson from previous efforts: avoid putting deadlines on their criminal activity. By making this round open-ended, they may try to claim that QE3 is it. No more. They promise on a stack of Bibles!
Let’s recap: the president is a clown, Congress is hopeless, and our central bankers are corrupt to the core. And these fuckers are supposed to fix things. God help us.
That sell off right before the rocket was lit was rather interesting to me. Can’t help but wonder at that and how much coin was banked for those buying at the bottom.
The fact that Ben announced that the QE is open ended reminds me of Jim Sinclair’s statement about, “QE to Infinity.”
Unbelievable. The implications are staggering. Ben blows his final load, his last money shot, right before the election. Nothing left in his dried up scrotum when things really go south. Once the markets figure out it will have no substantial benefit to anyone, and they can’t front-run the Fed any longer, and we’re in a recession, and inflation is going to the moon, and people start dumping treasuries, it won’t react well. It’s an amazing time, watching the show. Great entertainment. The fireworks are just starting. To QE infinity and beyond!
The Fed’s Balance At The End Of 2013: $4 Trillion
Submitted by Tyler Durden
Here is what happens next:
Imminently, the Fed’s Open Markets Operations desk will commence buying $40 billion in MBS per month, or about $10 billion each week. Concurrently, the Fed which is continuing Operation Twist, will still purchase $45 billion in “longer-term” Treasurys, sterilized by the $45 billion or so in 1-3 years Bonds it will sell until the end of the year at which point it runs out of short-term paper to sell.
End result: every month through the end of 2012, the Fed’s balance sheet expands by $40 billion in MBS.
Beginning January 1, 2013 the Fed will continue monetizing $40 billion in MBS each month, and will continue Operation Twist, however it will adjust the program so that it continues to increase its long-term holdings at $85 billion per month, without sterilized as it will no longer have short-term bonds to sell. It will also need to extend its ZIRP language “through the end of 2016” so all bonds 1-3 years are essentially risk free, as they are now, in effect eliminating the need to sell them.
End result: every month in 2013 the Fed will increase its balance sheet by $85 billion, consisting of $40 billion in MBS, and $45 billion in 10-30 year Treasurys, or the natural monthly supply of longer-dated issuance. The Fed will therefore monetize roughly half of the US budget deficit in 2013.
Putting it all together, the Fed’s balance sheet will increase from just over $2.8 trillion currently, to $4 trillion on December 25, 2013. A total increase of $1.17 trillion.
This is what the Fed’s balance sheet will looks like:
Another way of visualizing this is how many assets as a percentage of US GDP the Fed will hold on its books. Currently, this number is 18%. By the end of 2013, the Fed’s historical flow operations will be accountable for 24% of US GDP.
Why is this important? Simple: when the time comes for the Fed to unwind its balance sheet, if ever, the reverse Flow process will be responsible for deducting at least 24% of US GDP at the time when said tightening happens. If ever.
Finally, and what is scariest, is that as of this moment, all of this is priced in. Any incremental gains in the stock market will have to come from additional easing over and above what Bernanke just announced.
This is an actual interview with Bernake today, read it and weep.
The Punchline In His Own Words: Bernanke Advocates Blowing Asset Bubbles As The Antidote To Depression
If there was one absolutely must see moment exposing everything that is broken with the Fed’s brand new policy of QE-nfinity, it was this exchange between Reuters’ Pedro da Costa and the Chairman. It explains, beyond a reasonable doubt, that the only goal the Fed now has is to reflate the stock market bubble to previously unseen levels, to focus on generating jobs although not for everyone but only for Wall Street, consequences be damned, because by the time the consequences arrive, and they will (just recall that subprime is contained) they will be some other Fed chairman’s problem. Bernake’s term mercifully runs out in January 2014.
QUESTION: My question is — I want to go back to the transmission mechanism, because speaking to people on the sidelines of the Jackson Hole conference, that seemed to be the concern about the remarks that you made, is that they could clearly see the effect on rates and they could see the effect on the stock market, but they couldn’t see how that had helped the economy.
So I think there’s a fear that over time this has been a policy that’s helping Wall Street, but not doing that much for Main Street. So could you describe in some detail, how does it really different — differ from trickle-down economics, where you just pump money into the banks and hope that they lend?
BERNANKE: Well, we are — this is a Main Street policy, because what we’re about here is trying to get jobs going. We’re trying to create more employment. We’re trying to meet our maximum employment mandate, so that’s the objective. Our tools involve — I mean, the tools we have involve affecting financial asset prices, and that’s — those are the tools of monetary policy.
There are a number of different channels — mortgage rates, I mentioned other interest rates, corporate bond rates, but also the prices of various assets, like, for example, the prices of homes. To the extent that home prices begin to rise, consumers will feel wealthier, they’ll feel more — more disposed to spend. If house prices are rising, people may be more willing to buy homes because they think that they’ll, you know, make a better return on that purchase. So house prices is one vehicle.
Stock prices — many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.
One of the main concerns that firms have is there’s not enough demand. There are not enough people coming and demanding their products. And if people feel that their financial situation is better because their 401(k) looks better or for whatever reason — their house is worth more — they’re more willing to go out and spend, and that’s going to provide the demand that firms need in order to be willing to hire and to invest.
Pirate Jo
My thinking on this was always that there *had* to be more QE, because that’s the only way our government can get the trillion and a half dollars it needs to borrow every year. You know this election will come and go, and regardless of who we end up with in Congress and in the POTUS seat, the entitlement checks will keep going out the door. That’s already more than the government receives in taxes every year. So there it is. Even based solely on that one thing – entitlements – the borrowing must continue, and therefore so must the QE.
I put the $5K limit into my IRA earlier this year and bought more shares of CEF and GTU with it when gold prices were in the upper $1,500s. So it is nice to see that IRA balance go up so much in a single month. Of course, that happened last year as well, and prices went back down – some, anyway.
Overall, though, it kind of depresses me to have to be buying gold and silver, just because our fiscal and monetary policies are so bad, most companies will never be able to earn money fast enough to keep up with that money’s devaluation. That’s what scares me away from the stock market. Companies get paid in currency, so the effect on them when hyperinflation sets in is going to be just like the effect it has on people.
In a better world, I could be buying stock in a company that builds or makes things or provides a service people need.
Someone on Zero Hedge (I think it was, anyway) was saying that you can’t really come out a winner by investing in gold and silver, because all you’re doing is retaining your purchasing power, not increasing it through productive profit generation. That is debatable, but even if we assume it’s true, things are all relative. When everyone around you loses everything, and you can still hang on to a scrap of your purchasing power, then being a winner might mean setting the bar pretty low, but not as low as everyone else.
Can you believe there were ever people who were born and mostly lived through a time when things were getting better and it seemed like they always would?
Bernake today: “There are not enough people coming and demanding their products. And if people feel that their financial situation is better because their 401(k) looks better or for whatever reason — their house is worth more — they’re more willing to go out and spend, and that’s going to provide the demand that firms need in order to be willing to hire and to invest”
Putting off a depression by creating bubbles. The last bubble nearly crashed the world. The stock market is yet another massive bubble created by the Fed, all in an effort to get broke, in debt consumers, hammered by inflation, real incomes down 11%, to start spending again. It’s pure insanity. The greedy squids on Wall Street love bubble after bubble. What happens when they blow?
DaveL
“Silver up 4.1%.”
I like that, but my 600 ounces is still to save family lives.
Where else would the U.S. government get the money it needs to borrow?
I don’t ask the question to be waggish – I’d like to hear your opinion, and anyone else’s, on the issue of whether you think the driving force behind all QE is the funding of U.S. government debt.
Pirate Jo
@Admin, I need the pirate one: “The floggings will continue until morale improves!”
After being in a suppressed state of panic all afternoon after seeing this QE3 crap, I said fuck it I ain’t dead yet.
So Mr. HZK and I went to our local steak house for some yummy prime rib, I’ve had 2 glasses of an awesome Merlot from Texas (yeah!) and now I’m gonna get laid.
These douchbag brain dead motherfucking assclowns seem determined to crash the Ship of State but I am jumping ship and they can all collectively kiss my B52-wide Texas ass.
Keep your powder dry boys and girls.
Have a nice Armageddon and I’ll see you on the other side.
Dayum, all fake blondes surrounded by hornly old farts and not a single of these women are even looking at them.
Its a dyed clam party with vienna weiners!
Jimi d
This latest QE is “shooting the last wad”! Signs of a slowing economy are everywhere apparent. New pick up trucks, motorcycles, boats, ATV’s etc., etc for sale in people’s front yards in ever increasing quantities. I have a friend in Great Barrington, MA that runs 3 food pantries and a Thursday night ‘soup kitchen’ – just spoke with him yesterday and he said in the 9 years that he has been running these the need has never been greater. Usually averages about 60 persons each Thursday at the meal. Now up over 90 persons. The food pantry demand is insatialbe. Things are plainly not getting any better. Now with this latest QE effort that is going to finally end this economic depression, the 99% are going to see food, fuel and heating costs rise to crushing levels. Thanks Bennie
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Gold up $25 on the news.
Bernanke Unleashes The Path To New All Time Highs In Precious Metals
Submitted by Tyler Durden on 09/13/2012 13:17 -0400
There was one thing, ONE THING only that Bernanke could do, to become a gold bug’s best friend today, than merely announcing QE 3/4. It was to announce open-ended QE. This means this is the Fed’s final shot and there is no way to frontrun the Fed any more by definition. It means the terminal start of currency debasement is now here. It also means that the path to all time nominal (and inflation adjusted) highs in gold, which is now just $160 away, silver, platinum, and all other metals, as well as all other hard assets is now clear. It also means that very soon stocks are about to realize what soaring “input costs” mean for the bottom line.
Thank you Chairsatan: you are truly a gold bug’s bestest friend!
Good day to own physical gold, physical silver and CEF.
Thank you Ben.
It’s pretty much open ended money printing now.
I expect the government to follow suit with open ended deficits as well.
“See you on the other side Ray!”
We are so gonna have hyper-inflation.
Stocks up 1.3%
Gold up 2.1%
Silver up 4.1%
Interest rates are up. I thought QE was supposed to lower rates.
QE Wheeeeeee!
By Barry Ritholtz – September 13th, 2012, 12:44PM
So, the latest FOMC policy announcement is here. A new mortgage-backed securities buying spree of $40B per month — but it seems to be open ended, so before you do the math, its either $480 billion over the next 12 months, or its appreciably higher.
Get some refi papers and take advantage of our new low low rates.
Also as part of the announcement as expected) the period of accommodation is extended to 2015. So on second thought, there is little need to hurry those refi papers after all.
As we continue reading, its noteworthy that this $40 large is on top of the existing twist operations of $45 billion per month til the end of the year. That’s $85 billion per month in September, October, November and December.
Those of you who insisted that September was too close to the election for more Fed action, here is some humble pie for you.
I want to see clarification as to whether this is truly open-ended (it appears to be). That is potentially a significant upgrade to liquidity, a bold spark for equities, Gold and commodities.
The fundamentals are not particularly appealing to me as an asset manager. The economy, as the Fed acknowledged appears to be weakening. That seems to be continually trumped by Fed action.
2:27p Bernanke: QE is not designed to spark inflation
ROTFLMAO
Oil over $98 a barrel.
QE is surely going to help the little guy.
They are getting seriously desperate to do this now. If the market tanks into the close look out below. I see this as a big gamble most likely triggered by ME unrest. They had to get peoples attention off that situation. IMHO, the players are using this to get out of some of their positions.
Who cares about elected officials, as long as Benny’s in charge we have no chance in hell of righting this ship.
Open fucking ended. Desperation smells like a cross between skunk ass and shame. The other day I explained what QE was to my girlfriend, who was enraged at the prices she noticed in the grocery store today. I think the gold and silver I have in my house is worth more than my cash savings now. It’s definitely worth more than my car.
I will amend my prep buying this weekend to include tobacco, more ammo and those airline sized bottles of alcohol, heh.
Mark the date folks. This IS the beginning of the end.
http://t1.gstatic.com/images?q=tbn:ANd9GcR_Ttpqo-uVF2d2sVcFGlxOKE5edDPx_d-JDfZgZZLYK85D37hQ
Between this and the middle east I doubt we will even make it to election time.
Was there ever any doubt? The only question was the timing and the amount of counterfeiting.
I take great comfort in knowing that the banking elite have learned one important lesson from previous efforts: avoid putting deadlines on their criminal activity. By making this round open-ended, they may try to claim that QE3 is it. No more. They promise on a stack of Bibles!
Let’s recap: the president is a clown, Congress is hopeless, and our central bankers are corrupt to the core. And these fuckers are supposed to fix things. God help us.
every stock I own went up, even the one with a mine in mali
durden summed it up best
That sell off right before the rocket was lit was rather interesting to me. Can’t help but wonder at that and how much coin was banked for those buying at the bottom.
The fact that Ben announced that the QE is open ended reminds me of Jim Sinclair’s statement about, “QE to Infinity.”
“I think the gold and silver I have in my house …” —- Cynical30
Where do you live? Street, City, and ZIP please. Just curious, that’s all.
CNN reporting the stock market is the highest it’s been in 5 years.
So, what the hell are you doomers worried about?
Obama 2012 — just got guran-fucken-teed.
QE open-ended to infinity. Marc Faber is doing his Doom Doom dance. We are so fucked.
Unbelievable. The implications are staggering. Ben blows his final load, his last money shot, right before the election. Nothing left in his dried up scrotum when things really go south. Once the markets figure out it will have no substantial benefit to anyone, and they can’t front-run the Fed any longer, and we’re in a recession, and inflation is going to the moon, and people start dumping treasuries, it won’t react well. It’s an amazing time, watching the show. Great entertainment. The fireworks are just starting. To QE infinity and beyond!
The Fed’s Balance At The End Of 2013: $4 Trillion
Submitted by Tyler Durden
Here is what happens next:
Imminently, the Fed’s Open Markets Operations desk will commence buying $40 billion in MBS per month, or about $10 billion each week. Concurrently, the Fed which is continuing Operation Twist, will still purchase $45 billion in “longer-term” Treasurys, sterilized by the $45 billion or so in 1-3 years Bonds it will sell until the end of the year at which point it runs out of short-term paper to sell.
End result: every month through the end of 2012, the Fed’s balance sheet expands by $40 billion in MBS.
Beginning January 1, 2013 the Fed will continue monetizing $40 billion in MBS each month, and will continue Operation Twist, however it will adjust the program so that it continues to increase its long-term holdings at $85 billion per month, without sterilized as it will no longer have short-term bonds to sell. It will also need to extend its ZIRP language “through the end of 2016” so all bonds 1-3 years are essentially risk free, as they are now, in effect eliminating the need to sell them.
End result: every month in 2013 the Fed will increase its balance sheet by $85 billion, consisting of $40 billion in MBS, and $45 billion in 10-30 year Treasurys, or the natural monthly supply of longer-dated issuance. The Fed will therefore monetize roughly half of the US budget deficit in 2013.
Putting it all together, the Fed’s balance sheet will increase from just over $2.8 trillion currently, to $4 trillion on December 25, 2013. A total increase of $1.17 trillion.
This is what the Fed’s balance sheet will looks like:
Another way of visualizing this is how many assets as a percentage of US GDP the Fed will hold on its books. Currently, this number is 18%. By the end of 2013, the Fed’s historical flow operations will be accountable for 24% of US GDP.
Why is this important? Simple: when the time comes for the Fed to unwind its balance sheet, if ever, the reverse Flow process will be responsible for deducting at least 24% of US GDP at the time when said tightening happens. If ever.
Finally, and what is scariest, is that as of this moment, all of this is priced in. Any incremental gains in the stock market will have to come from additional easing over and above what Bernanke just announced.
Bernake’s new keyboard. Pushing the “p” key results in instantaneous money printing.
Last one and I’ll stop.
This is an actual interview with Bernake today, read it and weep.
The Punchline In His Own Words: Bernanke Advocates Blowing Asset Bubbles As The Antidote To Depression
If there was one absolutely must see moment exposing everything that is broken with the Fed’s brand new policy of QE-nfinity, it was this exchange between Reuters’ Pedro da Costa and the Chairman. It explains, beyond a reasonable doubt, that the only goal the Fed now has is to reflate the stock market bubble to previously unseen levels, to focus on generating jobs although not for everyone but only for Wall Street, consequences be damned, because by the time the consequences arrive, and they will (just recall that subprime is contained) they will be some other Fed chairman’s problem. Bernake’s term mercifully runs out in January 2014.
QUESTION: My question is — I want to go back to the transmission mechanism, because speaking to people on the sidelines of the Jackson Hole conference, that seemed to be the concern about the remarks that you made, is that they could clearly see the effect on rates and they could see the effect on the stock market, but they couldn’t see how that had helped the economy.
So I think there’s a fear that over time this has been a policy that’s helping Wall Street, but not doing that much for Main Street. So could you describe in some detail, how does it really different — differ from trickle-down economics, where you just pump money into the banks and hope that they lend?
BERNANKE: Well, we are — this is a Main Street policy, because what we’re about here is trying to get jobs going. We’re trying to create more employment. We’re trying to meet our maximum employment mandate, so that’s the objective. Our tools involve — I mean, the tools we have involve affecting financial asset prices, and that’s — those are the tools of monetary policy.
There are a number of different channels — mortgage rates, I mentioned other interest rates, corporate bond rates, but also the prices of various assets, like, for example, the prices of homes. To the extent that home prices begin to rise, consumers will feel wealthier, they’ll feel more — more disposed to spend. If house prices are rising, people may be more willing to buy homes because they think that they’ll, you know, make a better return on that purchase. So house prices is one vehicle.
Stock prices — many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.
One of the main concerns that firms have is there’s not enough demand. There are not enough people coming and demanding their products. And if people feel that their financial situation is better because their 401(k) looks better or for whatever reason — their house is worth more — they’re more willing to go out and spend, and that’s going to provide the demand that firms need in order to be willing to hire and to invest.
My thinking on this was always that there *had* to be more QE, because that’s the only way our government can get the trillion and a half dollars it needs to borrow every year. You know this election will come and go, and regardless of who we end up with in Congress and in the POTUS seat, the entitlement checks will keep going out the door. That’s already more than the government receives in taxes every year. So there it is. Even based solely on that one thing – entitlements – the borrowing must continue, and therefore so must the QE.
I put the $5K limit into my IRA earlier this year and bought more shares of CEF and GTU with it when gold prices were in the upper $1,500s. So it is nice to see that IRA balance go up so much in a single month. Of course, that happened last year as well, and prices went back down – some, anyway.
Overall, though, it kind of depresses me to have to be buying gold and silver, just because our fiscal and monetary policies are so bad, most companies will never be able to earn money fast enough to keep up with that money’s devaluation. That’s what scares me away from the stock market. Companies get paid in currency, so the effect on them when hyperinflation sets in is going to be just like the effect it has on people.
In a better world, I could be buying stock in a company that builds or makes things or provides a service people need.
Someone on Zero Hedge (I think it was, anyway) was saying that you can’t really come out a winner by investing in gold and silver, because all you’re doing is retaining your purchasing power, not increasing it through productive profit generation. That is debatable, but even if we assume it’s true, things are all relative. When everyone around you loses everything, and you can still hang on to a scrap of your purchasing power, then being a winner might mean setting the bar pretty low, but not as low as everyone else.
Can you believe there were ever people who were born and mostly lived through a time when things were getting better and it seemed like they always would?
Bernake today: “There are not enough people coming and demanding their products. And if people feel that their financial situation is better because their 401(k) looks better or for whatever reason — their house is worth more — they’re more willing to go out and spend, and that’s going to provide the demand that firms need in order to be willing to hire and to invest”
Putting off a depression by creating bubbles. The last bubble nearly crashed the world. The stock market is yet another massive bubble created by the Fed, all in an effort to get broke, in debt consumers, hammered by inflation, real incomes down 11%, to start spending again. It’s pure insanity. The greedy squids on Wall Street love bubble after bubble. What happens when they blow?
“Silver up 4.1%.”
I like that, but my 600 ounces is still to save family lives.
AWD, what would happen if he said ‘no?’
Where else would the U.S. government get the money it needs to borrow?
I don’t ask the question to be waggish – I’d like to hear your opinion, and anyone else’s, on the issue of whether you think the driving force behind all QE is the funding of U.S. government debt.
@Admin, I need the pirate one: “The floggings will continue until morale improves!”
Peak Oil Does Not Cause High Gasoline Prices.
My Money Printing Proves It.
After being in a suppressed state of panic all afternoon after seeing this QE3 crap, I said fuck it I ain’t dead yet.
So Mr. HZK and I went to our local steak house for some yummy prime rib, I’ve had 2 glasses of an awesome Merlot from Texas (yeah!) and now I’m gonna get laid.
These douchbag brain dead motherfucking assclowns seem determined to crash the Ship of State but I am jumping ship and they can all collectively kiss my B52-wide Texas ass.
Keep your powder dry boys and girls.
Have a nice Armageddon and I’ll see you on the other side.
HZK
Full of red meat, drunk, and is getting laid. Yippee! Things could be a lot worse.
Mommy, can you tell the man to stop the ride? I have to throw up!
Pirate Jo
How about a flag you can fly outside your house?
Purchased here;
http://www.piratesplunder.com/index.cfm?fuseaction=product.display&Product_ID=33
Dayum, all fake blondes surrounded by hornly old farts and not a single of these women are even looking at them.
Its a dyed clam party with vienna weiners!
This latest QE is “shooting the last wad”! Signs of a slowing economy are everywhere apparent. New pick up trucks, motorcycles, boats, ATV’s etc., etc for sale in people’s front yards in ever increasing quantities. I have a friend in Great Barrington, MA that runs 3 food pantries and a Thursday night ‘soup kitchen’ – just spoke with him yesterday and he said in the 9 years that he has been running these the need has never been greater. Usually averages about 60 persons each Thursday at the meal. Now up over 90 persons. The food pantry demand is insatialbe. Things are plainly not getting any better. Now with this latest QE effort that is going to finally end this economic depression, the 99% are going to see food, fuel and heating costs rise to crushing levels. Thanks Bennie