QBAMCO On The Fed's Exit

Tyler Durden's picture

Authored by Lee Quaintance and Paul Brodsky of QBAMCO,

The Fed’s Exit

The markets have begun to wonder whether the Fed (and other central banks) will ever be able to exit from its Quantitative Easing policy. We believe there is only one reasonable exit the Fed can take. Rather than sell its portfolio of bonds or allow them to mature naturally, we believe the Fed’s only practical exit will be to increase the size of all other balance sheets in relation to its own.

This “exit” will be part of a larger three-part strategy for resetting the over-leveraged global economy, already underway. The first stage is policy-administered monetary inflation – QE in which the Fed is de-leveraging bank balance sheets by adding bank reserves. The second phase will be policy-induced price inflation – hyper-inflating the general price level enough to diminish the burden of debt repayment and gain public support for monetary system change. (Imagine today the Fed proclaims all one dollar bills are ten dollar bills. Goods and service prices would increase 10x, more or less, as would wages, asset prices, revenues, costs, etc. The only item on the balance sheet that would not increase 10x would be the notional amount of systemic debt owed.) We believe the third phase of the strategy will be a monetary reset that recaptures popular confidence following the hyper-inflation.

Below, we list a progression of facts and reason supporting these conclusions:

As the Fed monetizes Treasury debt (or, as it claims, temporarily adds Treasuries and MBS to its balance sheet prior to selling them or letting them mature sometime in the future, thereby draining reserves), the obligations of the US Treasury (i.e., obligations of US taxpayers) to the US banking system are increasing dollar for dollar.


The US banking system is: 1) the largest American creditor to the Treasury; 2) the largest warehouse of US taxpayer wealth (via deposits); 3) the largest (infinitely capitalized) intermediary for public US capital markets, and; 4) the monopoly issuer of US dollars and USD-denominated credit. In short, the US banking system is the issuer of the world’s reserve currency and supports conditions to maintain USD hegemony.


Thus, it seems reasonable to assume that the interests of maintaining a healthy US banking system rise above or are at least equal to the economic interests of Americans, and to a large extent their government.


Significantly higher US interest rates would implicitly harm the Fed’s balance sheet (which is not marked to market) and explicitly harm the loan books (assets) of private bank balance sheets (marked to market), potentially placing bank capital ratios in jeopardy and undermining confidence. (While significantly higher interest rates would ostensibly increase the value of adjustable rate bank loans not near their cap levels, they would also decrease the creditworthiness of borrowers’ loan collateral values, lowering lending activity.)


The Fed’s balance sheet is infinite and the Fed creates the currency with which its balance sheet may grow. The Fed will always have more money at its disposal with which to buy bonds and set benchmark interest rates than the quantity of bonds for sale, sine qua non.


Thus, it seems reasonable to assume that there will not be a sudden rise in US market interest rates unless the Fed wants such a rise. Nominal economic growth or even price inflation will not necessarily act as a trigger for higher Treasury yields (but it may be reasonable to fear higher yields within tertiary bond markets in which the Fed/banks do not have significant exposure).


The relevant issue for Treasury investors is not the risk of capital loss from bond price depreciation, but rather the risk of capital loss in real terms – negative real returns as coupon interest and principal repayment do not keep pace with price inflation (i.e., the loss of future purchasing power of Treasury P&I vis-à-vis consumer goods, services and equity assets).


The mix of economic growth (leading to higher tax receipts) and/or government austerity needed to reverse ongoing debt growth over time is mathematically impossible to achieve within the context of a stable social environment. The US public sector and US households are in a compounding debt trap in which there is no exit. Thus, debt is growing and being shifted presently, not being extinguished, and this portends the likeliest future path.


Real output growth from current debt/leverage levels cannot be generated from a coincident increase in more systemic credit/debt. So, the policy solution cannot be issuing new credit and transferring debt with the goal of generating increasing demand and nominal output growth. (And we further argue that wealth concentration that results directly from asset price inflation is a very relevant and direct constraint on real economic growth.)


The US economy (and all indebted advanced economies) is shrinking in real terms presently and fiscal measures are incapable of providing a sustainable remedy. This is precisely the catalyst forcing today’s aggressive monetary policy action.


The only solution is true systemic de-leveraging (banks, households and governments). Banks are already in the process of being de-levered through QE in the form of bank reserve creation.


There are only two ways to de-lever balance sheets: 1) letting debt deteriorate naturally, which would cause a 1930s style deflationary depression, and/or; 2) creating new base money in the form of bank reserves (first) and circulated currency (second). Both reduce leverage ratios (unreserved credit-to-money available with which to repay systemic debts).


The only two ways for the US government to de-lever without creating a deflationary depression would be: 1) Treasury sells assets (e.g. land, resources, shipping lanes etc.) and uses the proceeds for debt repayment, and/or 2) Treasury has the Fed devalue (inflate) the US dollar against a monetary asset on its balance sheet. The former would threaten US sovereignty and the latter would threaten the purchasing power of US dollars (i.e., the perceived current savings of US dollar holders).


To gain US public and geopolitical support for policy-administered deleveraging through
devaluation and a fundamental shift in the world’s monetary system, confidence in the current regime would have to be lost. The most effective tool for achieving this broadly would be price inflation.


Over the last forty years, the rate of price inflation has been about 2% per year (about a 125% compounded growth rate), which has diminished the purchasing power of the USD by about 55%. In other words, one dollar in 1972 is worth about forty-six cents today. Policy-administered US dollar devaluation would apply the same principle, but the inflation would occur suddenly and, discretely. Following a hyper-inflationary episode, the public would be conditioned for another resetting of the global monetary system (its fifth in one hundred years).


Central banks, led by the Fed, would have to re-price and monetize an equity asset rather than debt assets. The only monetize-able equity asset on official balance sheets is gold (which may explain why central banks of emerging economies are voracious buyers presently).


Re-monetizing gold would be popular within indebted advanced economies and therefore politically expedient. While net savers of US dollars would be harmed from the devaluation, net debtors would be helped. (The burden of repaying existing debts would be greatly diminished vis-à-vis inflated wages and asset prices.) Thus, those holding cash and bonds would suffer and those with mortgage, school, auto, and consumer debt would benefit. On balance, a policy-administered USD devaluation would be greatly welcomed within advanced economies. It would position politicians and central banks as economic saviors.


For the first time in memory all global currencies are baseless, including the lone reserve currency, and there is no other scarce currency that provides an alternative for global savers seeking a better store of future purchasing power. This implies that the Fed, with or without the encouragement of the BIS Global Economic Committee of thirty global central bankers, may unilaterally and effectively expedite a global currency devaluation. A policy-administered USD devaluation would force all other fiat currencies to respond in kind or to adopt the US dollar as its currency (maintaining USD hegemony).


The global system would revert to the gold/dollar exchange standard used between 1945 and 1971 (i.e., Bretton Woods). Currency devaluation against precious metals has long precedent (including the USD in 1933).


As we have discussed in the past, the mechanics for currency devaluation are straightforward and would be simple to exercise.


Global banks, having already been de-levered and finding the quality of their loan books to be pristine following the devaluation, would be eager to lend again. (The fractional reserve banking system would not be altered.) The devaluation would be economically stimulative.

In our view, public arguments by Fed members and observers of future balance sheet reduction using normal asset sales or amortization seem specious. The most visible, politically expedient and most likely path seems to be the path usually taken: inflation. In the case of the Fed and other central banks, we assert the magnitude of the systemic leverage problem will be met with equal inflationary force.

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machineh's picture

'Thus, it seems reasonable to assume that there will not be a sudden rise in US market interest rates unless the Fed wants such a rise.'

So the Fed rules the markets?

Dream on, dudes.

Crash Overide's picture

The Fed’s Exit

It's a fucking DEBT based system, what do you think has to keep happening?


DJ Happy Ending's picture

Thank you.

The Japanese bond market is what our future looks like.

kaiserhoff's picture

These clowns think the Fed is god, but then, so does Ben.

zaphod's picture

The only problem with this is after you get back on the gold standard, all of a sudden there is no magical bailout fairy for the banks because the FED is now limited in its capital creation and the government has to live with a balanced budget because again the FED is limited in its capital creation. This would have negative effect probably greater than everyone clearing their past debts out.

jekyll island's picture

Going back to gold standard, the barbarous relic, will only be done to restore confidence in the Currency after hyperinflation. As for how long we would stay on a gold standard, well that's a totally different question. If the same politicians somehow hold on to power thru this, I would say about two years.

pods's picture

The gold standard would do nothing to stop the cycle of collapse if fractional reserve banking survives.

The counterfitting would just be more out in the open due to the item being counterfitted being gold, not labor (debt=future labor).

There is no solution that benefits the common man if the current infrastructure stays in place.

Just a breather on the assfucking while they silently stalk your unborn progeny.


Payable on Death's picture

The article is insane. The stated excuse for the Bernank's policies is to save / create jobs. There is no way that this "plan" is commensurate with that objective. If Ben's real purpose is to serve his masters, the banks(ters)--well, that doesn't make sense either. The biggest losers in a 10:1 exchange and hyperinflation are lenders.

Ben was trying to save a job--his. If the President is fired, so is he. The rest is all reaction.

SWCroaker's picture

Stated excuses?  You listen?!?     Put the Fed on MUTE, just look at their actions, and it is plain as day that their actions are *entirely* aimed at supporting, saving and shepherding a cartel of global major banks.   Goal one, and only.

Serve the banks as long as possible, and then have them be key in any transition to a future form of control.       Jobs?  I don't think so.

philipat's picture

Assuming, of course, that the Western Central Banks actually HAVE any Gold???

French Frog's picture

I don't think that even ZH's creator(s) would have thought in early 2010 that the Fed and other CBs around the world would manage to hold 'it' together so well (at least on the surface) for another 3 years.

The issues being discussed in this article are profound and I know a lot of it is way above my head and it certainly runs a lot deeper than a simplistic "buy gold and go to sleep for the next 10 years".

I don't know if they really can avoid a cataclysmic deflationary reset for ever but I am in no doubt that we will still be having this same debate for a lot longer than we deem it possible right now.

orez65's picture

"... and the government has to live with a balanced budget ..."

Isn't that the point?

The alternative is the FRAUD that we are living.

grid-b-gone's picture

Devaluation is pretty god-like, but it's hard to judge how the public would react. To keep the citizenry calm, it might have to happen in stages. In any case, depending on what instruments were affected, banks and businesses would get another huge gift at the expense of the middle class.

Along with the instant reduction of federal and state debt levels:  

Banks get mortgage and mark-to-market relief.

Insurance companies get annuity and structured payout relief.

Long-term environmental fines are greatly reduced.

Annuitized lottery payouts get eroded - and on and on

There is not likely to be a requirement for wages to adjust because the "free market" still needs to apply to someone...

The big recent move of hedge funds into real estate is pretty good anectdotal evidence that something more than just the renting trend may be at work. It would also mean stocks are not overpriced at current nominal highs.

Anything short of deflation that discovers a true market bottom is just another middle-class tax. 

The only action that partially protects the individual in any of these scenarios is to eliminate personal debt and have assets that will hold value during a reset (whether Fed or market-based) or that will continue to be productive after a reset.

Either own what the banks own, or avoid the assets they avoid. Expect a power move, not a sensible economic proposal.

slightlyskeptical's picture

 Setting us off into hyperinflation doesn't seem very logical to me. These creeps would sell us all down the river in order to keep their monopoly over money intact.

Print the fiat, pay off the debt, refinance the housing market and let SS fund the mortgage market thereafter. Throw in a little protectionism and reduction of fractional reserve banking and life will be better for everyone. 


Spacemoose's picture

and exactly how would this allow the U.S. to continue to consume more than it produces (which, notwithstanding debt issues, is the real problem which everyone in this country seems to be determined to ignore)?  let me say it loud:


Spacemoose's picture

countries that produce more than they consume are not net debtors.

Liberty2012's picture

Spacemoose, if the dollar were based on a one to one value trade, that would be true. However, fractional reserve banking turns it into a game of stealing influence. It's a con.

That's the real meaning of the term "money changer". It's those who change the nature of money. Money should be work traded for work - a current real-time asset. Instead it's been turned into a scenario of who can exert the most control by issuing and manipulating debt [future labor - see above poster].

Money is based on freedom. Debt is based on slavery.

Fractional reserve banking perverts money into debt, and transforms freedom into slavery - slowly at first, then with accelerating speed.

Liberty2012's picture

The bigger problem with fractional reserve banking is the government enforced monopoly of it. Single banks might be able to do it on a limited basis as long as they kept actual value in focus and could control issuance of their currency.

However, when everyone is forced to use currency that is issued by only a few - it becomes a control mechanism that destroys liberty.

Radical Marijuana's picture

I liked this comment you made Liberty2012:

"That's the real meaning of the term "money changer".

It's those who change the nature of money."

However, I do not agree with your idealized definition of "Money is based on freedom."

In an imaginary world, without violence, where money is a permanent store of value, and the possession of that money is somehow guaranteed without any violence, (and therefore, no paradoxes with respect to the continuing possession of that money manifest), THEN that kind of idealized "money" could be based on freedom. However, there has never been such a world, and there can never be such a world. Imagining society without violence is like trying to imagine physics without force.

My sayings are:

There is no freedom without a force, therefore, money is backed by murder.

There is no enforcement of the any idealized "rule of law" which guarantees the possession of private property that does not generate the inherent paradoxes of enforcement, since nobody guards the guardians. The government is simply the biggest gang of organized criminals, which have nested groups of the better organized gangs of criminals within them, that operate covertly, in order to effectively control the public government, through the application of the methods of organized crime. That is, governments are the overt expression of the history of organized crime on the largest scale, which are covertly controlled by the best organized gangs of criminals operating within them.

Anyway, Liberty2012, while I totally agree with your ideas that "Debt is based on slavery." And that "Fractional reserve banking perverts money into debt, and transforms freedom into slavery - slowly at first, then with accelerating speed." I do NOT agree with any idealized views that somehow there can actually exist any ideal "money based on freedom."

There can be no private property that exists outside of the context of public violence. Violence is self-organizing and self-justifying. Nothing but other violence changes it. The basic laws of physics continue to operate through the energy systems that we call human civilizations.

Overall, I thought that this article above was great, and intellectually stimulating. Unfortunately, I think that its world view grossly underestimates how criminally insane the ruling classes have become. Their systems ARE based on the history of having been the best at deceits, backed up by destruction. Therefore, their social and psychological habits were selected to become more and more criminally insane. Too much triumphant force backed fraud drives that to become more and more completely corrupted and crazy. The same processes that were the selection pressures which enabled those people who were the best at being dishonest, and backing that up with violence, continue to work to drive them mad, and hence become self-destructive, and thus, to eventually destroy the entire civilization that they controlled.

This article above, like your comments, Liberty2012, I regard as based on too much optimism, and on beliefs in impossible ideals, which reflect beliefs in false fundamental dichotomies. The real world is ALWAYS organized lies, operating organized robbery, and the same factors that make and maintain the ruling classes in the first place then drive them mad, until they become self-destructive. Along the way, the same factors that achieve the goals of turning the vast majority of people into debt slaves, or Zombie Sheeple, (dominated by the ruling classes, who are Vicious Wolves), continue to work to keep those Sheeple under control, despite their rulers becoming more and more criminally insane.

The deeper realities that money is backed by murder never go away. Those deeper realities are never replaced by some idealized "money based on freedom," nor ever replaced by any other kind of sound money, nor honest money, because none of that ever escapes from the paradoxical problem of the enforcement of the "rule of law," where nobody guards the guardians.

The theory that a democratic republic has the People as the guardians of the guardians has obviously broken down, since the runaway vicious spiral of the feedback between the funding of the political processes, and the monetary system controlled by those political processes, drives that whole system to become terminally corrupted and crazy. Therefore, all the theoretical checks and balances that should work to enable the People to guard the guardians have been undermined and effectively neutralized by the feedback of the funding of politics taking over the monetary system, in ways which result in the effective destruction of the democratic republic itself. Clearly, the Vicious Wolves DO succeed in turning the vast majority of the People into Zombie Sheeple, policed by the domesticated Dogs, while the few Black Sheep can not do anything effective to resist that.

The only things that ever happen are continual processes of the evolution of different systems of organized lies, operating organized robberies. That evolution has all the traits that evolution tends to typically display, such as relatively long periods of stability, punctuated by rare, radical changes, i.e., the basic theory of evolution through punctuated equilibrium. There are also the even rarer real, revolutionary events in evolution, where the ordinary processes of adaptive radiation may result in a creative convergence of some of those adaptive radiants, to provide a new creative beginning for a renew process of the series of adaptive radiants, then later pruned by more extinctions.

The interesting questions with regard to the evolution of human civilization at the present time are how close we are to some drastic punctuations, and even more importantly, how close we might be to some real, radical revolutions, which could provide the basis for another kind of creative system to begin to evolve ??? The possible "exit for the Fed" should be seen in those contexts. I feel that one should not underestimate how criminally insane the people supervising those processes may have actually become!

Liberty2012's picture

Wow Radical Marijuana - Thank you for the thorough review and response. I'm glad my turns of phrase connected with you. ;)

Money only exists to the extent freedom exists. If work is not traded freely, then it is, by definition slavery.

The stealth nature of a con causes problems with accurate definitions and descriptions. For example, can someone be a slave if they are not aware they are?

Lately, I see more and more that truth is astonishingly simple. Paradoxes and all.

That evil exists does not mean good doesn't exist. A man in chains who defines his own beliefs is more free than the one who walks "free" yet is afraid to have a voice.

As someone once said - the true ideal lies within the real.

The true ideal is not opposed to the real but lies in it; and blessed are the eyes that find it.   - James Russell Lowell

The good guys are out there! We may not be able to see them, but their effects are visible all around the edges. I see glimpses here and there.

As for government, people always consent to be governed, so (in that sense) always guard the guardians. Sometimes they do a good job, sometimes not. They are awakening and remembering that they need to do a better job.

Good does triumph over evil in the end. Evil leads to death and destruction. The void of nothingness. Good creates life.

We are here. We are alive. We have free will.

Truth does exists. It cannot be destroyed. It can be ignored, twisted, and perverted, but it cannot not be.

Nothing can change that. :)

Radical Marijuana's picture

Old comments on Zero Hedge tend to be quickly buried by time ... but, if you ever see this, Liberty2012, thanks for your reply.

Your turns of phrase connected with me, because I think that the language that we use to think so deeply effects the ways that we think that we are barely aware of that. Therefore, I believe that it is extremely important that the "money changers" HAVE CHANGED THE MEANING OF THE WORD "MONEY!" And, I thought your comment pointed that out well.

I tend to agree that there is some truth, but I do not believe than any finite human being is able to ever state that truth in any finite way that is fully satisfactory. But nevertheless, I agreed with all of the ways that you attempted to explain your views regarding the ideal of truth.

Liberty2012's picture

I also agree there is plenty of criminally insane behavior going on. And those are the guys who might otherwise be nice to know if they weren't caught up in a system that generates worse and worse choices to make.

The really bad guys are evil. They fully understand the nature of what they are doing and enjoy it.

Most people don't understand what they are doing, or don't know what to do about it, if they do understand. As the destruction escalates, both of those situations will start changing.

Professorlocknload's picture

Guess the evil Bond Market has been converted. It can never again strike fear into the hearts of politicians and bankers. The only lender left can set rates where ever it pleases, all the way down to the bottom. Then?

disabledvet's picture

the bond market need to VERY little to strike a full fledged panic out of sovereigns and into Sovereigns. the only reason it hasn't happened to the United States (unlike it seems the whole world actually) is i think probably the best run war effort...certainly in American history...probably in all of Western History actually. unlike the seventies "this is REAL faith and credit" and not the mystical kind. as resource "wealth" starts deflating (massively actually) the value of these political/military assets (and that includes alliance systems, trade regimes, "laws of the sea", treaty rights, a "united nations", the list goes on and on and on and on) simple can't have a price put on them they are so priceless. as Microsoft discovered when it tried to rid its internal computing systems of Oracle Database software (took a decade) so the world is discovering with the dollar: "you can't replace it." and no this does NOT give the Fed "some great power." i'm coming around to the view that the Fed can't create inflation here even if they wanted to. the dollar has been weak to worthless for so long it was long overdue for a dead cat bounce...but there appears to me to be a VERY strong case for a secular bottom in "the Bucky" that hasn't been seen since the end of World War II. simply put there is a sudden and very real shortage of dollars in the world (just ask Venezuelans) and no matter how "market competitive" you make the products to get those "depreciating dollars" the value of that same dollar just keeps rising. an ALMIGHTY dollar indeed. all with interest rates "at or near zero...forever." hmmm. go figure. with growth wilting on the vine i fail to see how an outright default by a large State or municipal authority can be ruled out. clearly the case isn't even made here even though we've a record number of defaults to date...with more on the way. we shall see but i have made a bet that an outright deflation is in the offing here. obviously equities haven't agreed with this thesis at all...so it remains an outlier call fer sure. can't say why i'm will to stick with this for a while...but something just doesn't "feel right" in the numbers. anytime a dwindling number of "rich" are suddenly made to "pay for all that inequality" just says to me "there really wasn't that much money to begin with actually." certainly not in the economic sense as we all can see given the exceptionally low growth numbers going on 5 years now.

donsluck's picture

+1 I am with you, although a bit long winded. The article has a big blind spot re the power of the Fed. The author seems to think the Fed, leading the other CBs, can even control the weather. Aint so.

chubbyjjfong's picture

"simply put there is a sudden and very real shortage of dollars in the world (just ask Venezuelans) and no matter how "market competitive" you make the products to get those "depreciating dollars" the value of that same dollar just keeps rising. an ALMIGHTY dollar indeed."

I sort of get what you are trying to say in your post and I agree with most of it, but I can't agree with your above statement. There is certainly NOT a shortage of dollars in the world at present. The problem is that the majority of the vast amount of dollars belong to the wealthy minority. It is true to say that the working class is depleted of dollars, and there-in lies the major problem. The FED and CBs can print dollars until they are blue in the face, however that money isn't gonna do squat for increasing jobs and/or growth if it doesn't flow to the people. The gap between the wealthy few and the poor majority will now increase rapidly and in the process the elite will wrench the last vestiges of wealth out of the middle class. Plain and simple wealth transfer.

Agreed, there will be deflation as the working class are forced to down scale all product selection to make ends meet causing the competition you highlighted. There comes a point though where the common decent people, whose collective jobs are dwindling at an ever alarming rate, face the decision of whether to accept total control by the wealthy corrupt few in exchange for support and handouts, or revolt. That decision point of the masses seems to be getting ever closer... fast. That will be crunch time.

When that day comes I will look forward to saying "Fuck you" to those toilet licking elitist banking maggot fucks as I would rather eat my own shit than take any handout from them. I got seeds, fishing rods, guns ammo, all up in my shit, so come find me in the hills if you want a piece.. banking bitchez!

kalasend's picture

Where have you been the last few years?

rlouis's picture

"The only item on the balance sheet that would not increase 10x would be the notional amount of systemic debt owed.)"


entitlements not 10x?


Spigot's picture

These people are advocating hyperinflation. I have been writing here and elsewwhere for the past 5 years that hyperinflation is their only real end game. And grandma IS going to be eating catfood and paying for her cigarettes with $1,000,000 bills. In that context "entitlement" payments will continually and significantly drop in purchasing power even if nominal numbers increase. At least the elderly have some gold in their mouths.

Yen Cross's picture

 Tomorow and Friday are the 2 biggest POMO days of the week. Just a friendly reminder ;-)

breakyoself's picture

S&P 500 - 1580. Why not, Ben? Give the crashing n burning channel something to talk about all next week while wondering why isn't the retail investor participating a whole lot more in this wonderful and oh so legit market.

Yen Cross's picture

   Remember this chart? http://www.bloomberg.com/quote/MVOLUSE:IND  When any of the MSM (financial illiterates) tell you that retail investors are participating in the markets, just spam them with this link/chart.

Yen Cross's picture

  Try this link. http://www.bloomberg.com/quote/MVOLUSE:US/chart. If it doesn't work google [bloomberg mvoluse]. BBG might have the link I sent gated, but I checked the search link and it worked. Sorry about that.

HD's picture

 Link works Yen. Thanks.

Yen Cross's picture

   Anytime. sorry for the confusion.

Golden_Rule's picture

I can't make sense of the logic of the article (does it have any?), but if $1 becomes $10 as the article hypothesizes that would presumably be deflationary, or at least would be a sign of dollar strength, so the gold bugs would get killed if this scenario played out.  The article doesn't make one bit of sense to me though...

Yen Cross's picture

 It would be inflationary, as a loaf of bread would increase in price X10. Just because you put an extra zero on the dollar bill, doesn't mean said commodity decreases in value by a factor of 10.

Professorlocknload's picture

I'm still trying to figure out what $100 oz (1972 cash price to a gypo miner) gold should be worth today, at 2% inflation over the last 40 years.

donsluck's picture

$220. This means gold may very well be over valued today. However, there is the risk premium etc. My thinking for quite a while has been gold/cash and that's it, long term.

eigenvalue's picture

Gold? NO! The preciious metals bubble has burst. Gold can't even break $1600 and silver $30. Gold and silver will continue the slide until they become arsewipe. The only way to make money is to buy stocks. Nuff said.

NoWayJose's picture

Gold and silver will maintain their purchasing power against whichever currency 'best survives' the currency devaluation wars. It will gain against everything else. Someone holding hold in Venezuela can exchange it for the same number of dollars or Euros as last year-- but they can now exchange it for twice as much Venezuelan fiat. That is the pattern for the future.

Pareto's picture

Fuck.  Aint life grand?  donchya love it when a fucked up plan comes to-fucking-gether?

Total.  Fucking.  Insanity.

Fuck you Ben Bernanke

Biggest Fucktard EVER.

de3de8's picture

I need more gold.

toros's picture

I think he ment $10 would be worth $1

aerojet's picture

I figured more like the $100 would be the new $1 and we might be getting there.  They would do it over a long weekend.  And if the American public has any balls left at all, it would trigger an immediate civil war.  And they know all of this and that is what they are preparing for.  The wheels just can't stay on this crazy hotrod forever.

max2205's picture

Thats a mouthful. ..can we get a recap