Goldman: Real Cost Of Fed “Easing” Will Exceed $2 Trillion

By: Steve Watson
Thursday, Nov 4th, 2010

Endless printing of money out of thin air will continue into 2012

051110dollarsGoldman Sachs anticipates that the real cost of the second round of quantitative easing will be in excess of $2 trillion and will continue well into 2012, while other prominent economists have denounced the Fed’s actions.

The Fed announced yesterday that it would purchase $600 billion in Treasury securities in a statement that left open the possibility of the real cost rising much higher.

“The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.” the statement read.

As pointed out by Tyler Durden at the Zero Hedge blog, Goldman Sachs has predicted that the real cost of the Fed’s plan will sky rocket.

“We believe that the program will grow significantly beyond the initial $600 billion” remarks Goldman’s Jan Hatzius.

“In practice, QE2 is likely to continue well beyond June 2011—at least well into 2012—if our forecasts for unemployment and inflation are close to the mark. We believe that purchases could ultimately cumulate to around $2 trillion…” she continues.

“Under our longer-term projections it is easy to come up with models that show no tightening until 2015 or later.”

In a report last month Hatzius concluded that the projections for QE could reach $4 trillion.

As we reported yesterday, the Fed no longer cares about hiding the fact that it is openly devaluing the dollar and forcing China and other major countries to move away from holding reserves of the currency.

Several prominent economists and even some of the Fed’s own members have warned that the resulting decline in the value of the dollar and rampant inflation could spell disaster for any possible economic recovery.

Meanwhile, influential professor of economics Nouriel Roubini today tweeted that the purchase of debt will continue into a third and fourth round. but will do nothing to revive the real economy:

Watch Alex Jones’ analysis of the announcement to print billions more dollars out of thin air:

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