Does QE Cause Wealth Inequality? • Hacker News Board

Re: Does QE Cause Wealth Inequality?

#281

Post by ardme » Wed, Nov 17, 2021, 11:02 PM UTC

Aunche wrote: post #255

ardme wrote: post #191

Earlier quoted context omitted.

Well isn't the issue here that The Fed enables the reckless behavior of congress by sterilizing the deficits? Yes the root cause is the politicians spending tons of money to get re-elected and running up deficits but they shouldn't be able to get away with it and keep kicking the can down the road. To your last point - of course it's obvious that interest rates are suppressed and if they were allowed to rise it would…

> Well isn't the issue here that The Fed enables the reckless behavior of congress by sterilizing the deficits? Well doctors enable unhealthy people to live unhealthy lifestyles, but nobody blames them for that. They can't just say, "I won't give you blood thinners until you go on a diet." Yes, politicians ought to face consequences, but that is not up to the Fed. It is up to the voters to demand better candidates ra…

> It worked out during the Great Depression because all of our rival powers were completely destroyed by WWII. We won't be so lucky this time. China is poised to overtake the US as the top superpower if our economy collapses. In a couple decades, this might not be the case, as they will be facing severe demographic problems.

Pretty much, yep

Re: Does QE Cause Wealth Inequality?

#282

Post by nathanasmith » Thu, Nov 18, 2021, 12:44 AM UTC

0xcafecafe wrote: post #39

ddorian43 wrote: post #25

Earlier quoted context omitted.

Yep. Source: I'm long TQQQ.

Same. It is hilarious that it is more of an index like investment at this point.

SOXL since April 2020 based on pretty much the same thesis. Imagine how much fun I'm having.

Re: Does QE Cause Wealth Inequality?

#283

Post by theonlybutlet » Thu, Nov 18, 2021, 9:37 AM UTC

rndmind wrote: post #213

theonlybutlet wrote: post #186

Earlier quoted context omitted.

Why do you say 3-6 years, I'm curious?

I'm actually borrowing that from a podcast I listened to, [ a really good listen here, yewtu.be/watch?v=YyprUlzIpog he mentions this point at 20 minutes 10 seconds ... ] He surmises that the government will encourage the FED to preserve QE until the baby-boomers are finally set and retired. Then the FED will 'get religion' and taper down

Sounds interesting, I'll check it out, thanks.

Re: Does QE Cause Wealth Inequality?

#284

Post by imtringued » Thu, Nov 18, 2021, 11:37 AM UTC

andrewdubinsky wrote: post #244

It's pretty simple to understand. If I have a money printing machine, the first people to gain will be my friends. The second group will be my friends' friends. They will go around buying up all the stuff worth having. Pretty soon those items will go up in value. A lot. Anyone outside my circle of friends will quickly find these items very expensive. Boom. Asset Bubbles.

Central bank reserves aren't "legal tender".

Re: Does QE Cause Wealth Inequality?

#285

Post by spiralx » Thu, Nov 18, 2021, 1:33 PM UTC

MisterMower wrote: post #265

whimsicalism wrote: post #64

Earlier quoted context omitted.

> Now if I put a million dollars in the bank, I lose wealth due to inflation, so I'm incentivized to put it in a fund or something now, which is a lot riskier than bank interest. Yes, people investing in productive enterprise is actually better for real output, prices, and generally overall welfare.

Savings does exactly that. You’re money doesn’t just sit in the bank, the bank loans it out to people engaging in economic activity, businesses that want to expand, buy inventory, etc.

No, banks create money when they make a loan, they don't lend out deposits. Loans are constrained by risk and by reserve requirements set by central banks.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

Re: Does QE Cause Wealth Inequality?

#286

Post by medvezhenok » Fri, Nov 19, 2021, 1:30 AM UTC

criddell wrote: post #206

bigwavedave wrote: post #201

Earlier quoted context omitted.

"For the first six months you own it, the Series I bond we sell from November 2021 through April 2022 earns interest at an annual rate of 7.12 percent. A new rate will be set every six months based on this bond's fixed rate (0.00 percent) and on inflation." As someone who's never bought bonds before, how do I know the 7.12% won't change after the 6 months of the locked rate to the 0.00% and whatever pittance they dec…

7.12% is about as low as it's been: https://treasurydirect.gov/indiv/research/indepth/ibonds/res...

That's not what that chart is saying.

That's the coupon rate paid by a bond bought at that time (in the late 90s the bonds paid a real return of 3%, which when added to the current 7.12% inflation rate gives a nominal return of 10.12% for the next 6-months).

The rate of those bonds was 3.5% just a month ago, and historically averages around 2%.

Re: Does QE Cause Wealth Inequality?

#287

Post by [deleted] » Mon, Nov 22, 2021, 9:47 PM UTC

gruez wrote: post #174

criddell wrote: post #131

Earlier quoted context omitted.

The Treasury sells savings bonds that are at 7.12% right now. It's not the same thing as a savings account and you can't put a million dollars in, but you can still get a good interest rate on smaller amounts.

>The Treasury sells savings bonds that are at 7.12% right now. source? yields top out at 2.05% right now. https://www.treasury.gov/resource-center/data-chart-center/i...

[deleted]