Goldman: The Fed Needs To Print $4 Trillion In New Money

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Sun, 10/24/2010 - 13:10 | 673476 SWRichmond
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7 December 2008

How much new money will Bernanke have to print in order to do this? Early estimates (April '08) of the amount of capital destruction ran in the $1.5 Trillion range. Roubini stopped estimating at $2 Trillion, so let's say that $2 Trillion of capital has disappeared. If that $2 Trillion blew a credit bubble at an average 30:1, you have an approximate estimate for the value of global economic activity, so the scale of this number is probably correct. Now, if $2 Trillion in capital has vanished, and if that $2 Trillion had been lent out to create "credit" at 30:1 ($60 Trillion worth of credit), how much new capital will Bernanke and the rest of the central bankers have to print in order to replace it at 10:1? Answer: $6 Trillion.


Sun, 10/24/2010 - 13:36 | 673535 Oh regional Indian
Oh regional Indian's picture

4 trill, 6 trill.... all the same eh? Trillion, used to be a big number.

I'd re-weight my portfolio towards Silver if I were you (mine is).

Gold is for the Annunaki eh? (Hat Tip Zach Sitchin!!!).

Also, ever wondered about the phrase "born with a silver spoon"? Why not a gold spoon?

Meaningless you say? Stupid? 

Hmmmmmmmm.......... egregores take a long time to be born. Eh? Worth paying them some attention.

November 3rd might well be the last big Fed meeting of any import. Ever!

Mark my words.



Sun, 10/24/2010 - 13:50 | 673567 Sudden Debt
Sudden Debt's picture

It's already getting more and more difficult to buy silver at spot. Mostly it already costs 20 to 30% above spot.

For those who still need to step in, it's getting 5 minutes before 12.

Sun, 10/24/2010 - 14:22 | 673622 EscapeKey
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I haven't yet seen any issues here in the UK; is still (fairly) well stocked.

Sun, 10/24/2010 - 14:43 | 673656 Oh regional Indian
Oh regional Indian's picture

Escape, there is availability and then there is the illusion of availability.

Vested interests (who do you think supplies bullionbypost???), will keep the ilusion of availability going till the end.


Sun, 10/24/2010 - 14:47 | 673664 EscapeKey
EscapeKey's picture

I understand that, but I've essentially bought continuously for the past 9 months (get paycheque, buy PMs, wait for another month, etc.), and haven't yet had any issues with unfilled orders.

But having had a 2nd look today through their entire catalogue, it seems as if quite a few (especially) silver bars, and the lower demoninated gold coins are out of stock.

If they are starting to run out of stock, however, then this is very, very interesting. Inflection point?

Sun, 10/24/2010 - 15:14 | 673695 Oh regional Indian
Oh regional Indian's picture

Interesting. So we'll know soon enough won't we?

Week after next will be the prologue for what's really in store (!!!).


Mon, 10/25/2010 - 08:59 | 674718 bingaling
bingaling's picture

I have to agree with you . Either massive QE2 or none at all (which would surprise everybody except maybe a couple of insiders,but I think the insiders knew about qe2 b4 joe public and had their bets in ) . Geithner in China is also an indicator that something big is about to go down.

One question though . How is a 4 trillion dollar QE dump going to bypass congress ? Will there be a public debate or is the FED now also controlling the Federal budget ? It is the one thing I can't wrap my head around being if they can just create 4 trillion in debt ,what the hell do we need congress and a president for?

Sun, 10/24/2010 - 17:38 | 673875 Max UK
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Hi escape key; some UK banter:

i use that firm too. Good supplier. BUT BACK AT THE RANCH, at the Royal Mint (who effectively set the price bar, even if it is the price ceiling) two interesting developments.
No.1: They have an alert on their site, that gold items are likely to increase in price on the 11th Nov (and they already sneaked up the prices of sovereign products recently, the basic sovereign being hiked from £245 to £255).
No.2: The only silver coin anywhere near spot, is the one ounce silver Britannia. It has been intermittently in stock, at £22.50, and recently went up to £25.00. I wouldn't be surprised if it goes up again on the 11th Nov, else 1st Jan is another likely time for a price hike when the VAT rate goes up to 20%.

Royal Mint is an interesting benchmark. At times, like in early 2009, their prices on some products were within 2% of spot; I think they are slow to respond to spot price movements, they must operate a FIFO product costing system or something, so always worth keeping them in mind for such anomalies.

Sun, 10/24/2010 - 15:39 | 673737 Sudden Debt
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They charge 28$  for a eagle + 17,9% tax!

Spot is 23,3$!

Sun, 10/24/2010 - 16:22 | 673791 Chappaquiddick
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If you want to pay $37 an once use these guy's - fuck that!!  

Sun, 10/24/2010 - 16:41 | 673812 EscapeKey
EscapeKey's picture

Well, bullionbypost are ok for kg bars, which is essentially all I've bought off their site. Their charge for those: 521*1.6/32.15 = 25.93 USD/oz.

The VAT added on top, well it sucks, but it's the law here in the UK.

Sun, 10/24/2010 - 18:03 | 673917 merehuman
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stellasecrets just did a vid (utube) on escaping the vat. hope i got the name right

Sun, 10/24/2010 - 23:20 | 674309 Careless Whisper
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why would anyone waste their time reading something published by an economist at goldman sachs?

Mon, 10/25/2010 - 01:36 | 674460 boiow
boiow's picture

this guy is good for uk buyers /sellers

when i sold some gold recently he paid spot price. money in bank account immediatly.  he has also started doing silver recently and offered me spot price on a 100oz bar. nice chap too.

 i also buy from to get around the uk vat robbery.

Mon, 10/25/2010 - 15:03 | 675831 Chappaquiddick
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Follow the link to VAT free metal

Mon, 10/25/2010 - 13:38 | 675508 Ripped Chunk
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Dirtbags. Doing business with them will only cause strife.

Sun, 10/24/2010 - 15:55 | 673763 oddjob
oddjob's picture

First Majestic sells $1 above spot.

Easy pay,easy delivery.They do limit to 300 ozs. per month.



Mon, 10/25/2010 - 00:06 | 674372 High Plains Drifter
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anybody used Tulving?

Mon, 10/25/2010 - 09:12 | 674748 SheepDog-One
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Dont worry about this gold and silver, worthless to 'trade' in chaos...instead buy a bunch of cases of pint Jack Daniels bottles. Now youre talking real tradeable money.

Sun, 10/24/2010 - 19:20 | 674010 goldsaver
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Shit, I just checked. APMEX is almost out of 10oz bars and have almost nothing else below 100oz. And I was planning to buy more next paycheck. SHIT!!!

Mon, 10/25/2010 - 05:37 | 674574 barkingbill
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save up an buy a nice 100oz

Mon, 10/25/2010 - 08:54 | 674710 goldsaver
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At the rate is going up it would be a loosing battle.

Mon, 10/25/2010 - 08:47 | 674701 tmosley
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Looks like they still have 1oz Buffaloes, as well as 1oz American flag bars.

Supply is much drier than it was when I last checked at the end of last week.  Last time it was this dry was in 2008, when the price had been cut in half.  This time, the price was down, what, 5%?  Not good news for those of us still in accumulation mode.

Sat, 07/02/2011 - 11:49 | 1421192 cole
cole's picture

When you are thinking of buying, indecision can be fatal. It is always best to take quick decisions but ultimately mistake

Fotos del mundo - Calcular hipoteca

Mon, 10/25/2010 - 03:27 | 674509 IQ 145
IQ 145's picture

A coin collection is not a retirement account. in London has all the Silver Bullion you need for your store of wealth. It's a very old and simple business model, they keep it in  the vault and you can sell it at any time to obtain current expenses currency. The website explains everything in detail. Only a fool would pay a premium over spot.

Mon, 10/25/2010 - 05:29 | 674571 EscapeKey
EscapeKey's picture

Bullionvault != physical.

Mon, 10/25/2010 - 08:57 | 674719 goldsaver
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SO I'm a fool for paying a premium for having my physical in my safe? Only a wise man would trust some centralized storage facility with physical not been over leveraged or subject to confiscation?


Mon, 10/25/2010 - 15:16 | 675879 Chappaquiddick
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Well if you really want to get paranoid, they can track your purchases from all of these sources through the vendors sales ledger.  Unless you pay cash for bullion eg at a car boot sale or an auction, where your id is not linked to the purchase, then in theory they can track your ownership and come a calling if they so choose.

We know that the US has a history of gold confiscation and that could translate to gold and silver this time in Europe and the US - I put the chances of that at near zero.  But diversification is a means to mitigate that risk, so you need a hard metal basket that includes metals other than the above and coins, which bypassed the restrictions last time.

Personally, I'm not too worried.  I hold the majority of my investments in overseas vaults and collect coins, which is fun.

Mon, 10/25/2010 - 15:43 | 675941 Chappaquiddick
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Mon, 10/25/2010 - 15:39 | 675942 Chappaquiddick
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Sun, 10/24/2010 - 15:36 | 673730 tmosley
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Rich children were fed with silver spoons to prevent common infections, thus the saying.  Gold spoons gave no such benefit (though it was certainly tried).

Though I agree that silver will appreciate in purchasing power to a much greater extent than gold.

Sun, 10/24/2010 - 16:15 | 673784 Oh regional Indian
Oh regional Indian's picture

Thanks tmos. Not an appropriate enough metaphor then and I'm glad to know the source. See silver is good for you, better than the barbarious relic! ;-)

But equally, anecdotally speaking, here in India, for as far back as memory (it's said in old stories), when someone got really lucky in matters of wealth, they always said "Chandi Lag Gayi", which means, literally, I got silvered. You hear it in conversation all the time. Never Sona (gold).

Always Chandi. And there is some linguistic education for all of you.

In hindi

Sona = gold

Chandi (pr..Chaaandee) = silver


Mon, 10/25/2010 - 00:07 | 674375 High Plains Drifter
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I know a full blooded Hopi.  He is into the legends, and walks on coals and says he can shape change. Yeh right, says I .

Mon, 10/25/2010 - 01:18 | 674443 goldsaver
goldsaver's picture

I think you've got yer injuns confused.

Mon, 10/25/2010 - 03:31 | 674514 IQ 145
IQ 145's picture

 Yes it's very significant that millions of people have these kinds of linguistic clues in their minds; It hasn't been that long since the Silver Tael was the unit of currency in China, also. This cultural "priming" potentiates the decision to put savings away in silver; and in not in the papers of politicians who will certainly cause it to diminish.

Sun, 10/24/2010 - 22:01 | 674196 Gully Foyle
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Oh regional Indian

Silver needles were used to test for poisons. At least in MA movies. Silver also seems to be an antibacterial, that's why you see Colloidal Silver used in some healing homebrews. It will turn you Blue if overdosed. Unlike those mountain folk who are genetically Blue, the Fugates of Kentucky.




Sun, 10/24/2010 - 22:56 | 674265 robobbob
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use ionic silver. much more effective then colloidal, and won't turn you blue even at X100 normal dosages

Mon, 10/25/2010 - 05:58 | 674578 fiftybagger
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Grrrrr, snap, slept in late.  24 comments later:



Mon, 10/25/2010 - 09:58 | 674845 Drachma
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Hello Gully Foyle:

True silver colloids will NOT turn you blue. Ionic silver solutions on the other hand can (and I am not talking about silver hydrosols).  Colloidal silver is metallic silver (Ag) particles in the range of nanometers in size. Ionic silver is cationic and is reactive in the body. It will combine with chlorine to form silver-chloride and other silver halides and salts (e.g. AgI, AgNO3, etc.), as well as silver-protein complexes. Silver halides are very insoluble in water and your body tends to sequester silver halides and their metabolites in your skin. UV light from the sun will then 'fix' these substances, effectively turning your skin into a photographic plate. This is the cause of Argyria (the blue skin condition you refer to). It is not caused by pure colloids. Also keep in mind that metallic silver (not silver ions) will not react with the hydrochloric acid in your stomach as many other metals will. In other words, huge difference bewteen ionic silver and silver colloids. Problem is most colloidal suspensions contain varying amount of ionic silver, depending on how they were prepared.


Mon, 10/25/2010 - 05:34 | 674573 barkingbill
barkingbill's picture

not too many people have gold spoons. 

Mon, 10/25/2010 - 10:24 | 674916 SheepDog-One
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IMF- '$7 trillion Q/E2 needed' $4 isnt even close. Between a rock and a rockier place is the FED.

Mon, 10/25/2010 - 13:42 | 675520 Ripped Chunk
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Black hole. The velocity of printing must accelerate in order to keep up with the moneterization suck.

Tue, 04/26/2011 - 13:26 | 1208266 william.smith61
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Hmmmmmmmm.......... egregores take a long time to be born. Eh? Worth paying them some attention.

November 3rd might well be the last big Fed meeting of any import. Ever! AC Evaporator

Sun, 10/24/2010 - 13:39 | 673539 Bluntly Put
Bluntly Put's picture

SWR, I followed your comments over at KD's site and found I usually agreed with you. That was a prescient article especially for it's time. 2 trillion stands on the Fed's balance sheet currently, add another $4 trillion and we do in fact arrive at $6 trillion. But that is most likely a low estimate, they will in fact be forced to further devalue the dollar, probably until it just snaps one day in a crisis of confidence. Again, you have stated this over and over in KD's site. Kudos.

Sun, 10/24/2010 - 20:41 | 674088 MeTarzanUjane
MeTarzanUjane's picture

Just curious. Why does Tyler now believe the Goldilox propaganda machine? Usually he says: Fade-ilox on all things published or rumored from this crew.

QE1 has still not been spent, not even close, neither has TARP. Goldilox is trying to get those hot money flows funneled in one direction so they can pounce.

ZH: part of the machine?

Sun, 10/24/2010 - 21:45 | 674164 Gen X Gen Y Hybrid
Gen X Gen Y Hybrid's picture

i've thought this myself from time to time because the crash aint coming.  at the same time, gold has continued up and we did get the big dip earlier in the summer?

u think TD is buying AAPL?

Mon, 10/25/2010 - 00:10 | 674380 High Plains Drifter
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Tyler is buying gold and silver bullion , on the dips and stashing it in one of his many hidden wall safes , in his fashionable upper eastside pad.



Sun, 10/24/2010 - 22:12 | 674192 SWRichmond
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QE1 has still not been spent, not even close, neither has TARP.

Can you provide some justification for this outlandish statement?  QE1 has been spent several times already.

  1. Bernanke printed it
  2. He spent it on MBS
  3. The banks turned it around and spent it on Treasuries
  4. Fed dot gov spent it on unemployment benefits and wars
  5. Unemployed people bought things they wouldn't have bought otherwise
  6. Defense contractors spent it on hookers and blow
Mon, 10/25/2010 - 00:17 | 674391 MeTarzanUjane
MeTarzanUjane's picture

THAT is outright conjecture! You are the one who should be required to prove your deliberately deceptive statements.

Pure conjecture. I don't often interact with you Sir so sorry if I'm out of line saying this but your statements are as mythical as a pink unicorn.

Except for #4, it's not a crime to invest in Treasuries. In fact it's a prudent action on their part based on prior actions. If they plowed it into something that turned out to have very low alpha you would be screaming foul.

Positive risk aware judgment.

But the real story here is how chummy Tyler is with Goldman. With that in mind, please discuss.

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