Fed Announces Open Ended QE3
reason.com
Fed Announces Open Ended QE3
1–10 of 17 posts
Re: Fed Announces Open Ended QE3
#2Not surprising to see a libertarian-oriented site refer to QE as "money printing". It's not. Monetary policy doesn't increase the net financial assets available in an economy; that's only achieved by fiscal deficit spending. QE is just an asset swap (reserves for tsy's)--it's shifting the yield curve, but not adding anything new.
Re: Fed Announces Open Ended QE3
#3Not surprising to see a libertarian-oriented site refer to QE as "money printing". It's not. Monetary policy doesn't increase the net financial assets available in an economy; that's only achieved by fiscal deficit spending. QE is just an asset swap (reserves for tsy's)--it's shifting the yield curve, but not adding anything new.
I think it is. Before the QE, the government doesn't have the money it buys the bank assets for. It creates some more money to buy them?
Re: Fed Announces Open Ended QE3
#4Not surprising to see a libertarian-oriented site refer to QE as "money printing". It's not. Monetary policy doesn't increase the net financial assets available in an economy; that's only achieved by fiscal deficit spending. QE is just an asset swap (reserves for tsy's)--it's shifting the yield curve, but not adding anything new.
It is effectively money printing which will lead to inflation but that does not mean it is the wrong thing to do. Inflation over time balances out old debt with new income.
Re: Fed Announces Open Ended QE3
#5opposite opinion to the submitted article: http://www.calculatedriskblog.com/2012/09/analysis-bernanke-...
Re: Fed Announces Open Ended QE3
#6Not surprising to see a libertarian-oriented site refer to QE as "money printing". It's not. Monetary policy doesn't increase the net financial assets available in an economy; that's only achieved by fiscal deficit spending. QE is just an asset swap (reserves for tsy's)--it's shifting the yield curve, but not adding anything new.
You would have a point if the 'libertarian-oriented site' referred to QE as "asset printing." It didn't though. QE may not increase financial assets in an economy, but it does increase available money. The money used to purchase the bond did not exist prior to the swap.
Now if you really wanted to argue that this is not money printing, I might accept the claim that the Fed will at some point unwind this position. But even that is highly dubious.
Re: Fed Announces Open Ended QE3
#7I've heard people say that the Fed is deliberately creating inflation in order to sabotage the American and global economy. This makes it easier to consolidate real estate and business assets, so it is beneficial to the wealthiest individuals and companies.
But I'm sure I'm just latching onto a simplified explanation because I am too ignorant and stupid to comprehend the complexities of "economic science".
Re: Fed Announces Open Ended QE3
#8Not surprising to see a libertarian-oriented site refer to QE as "money printing". It's not. Monetary policy doesn't increase the net financial assets available in an economy; that's only achieved by fiscal deficit spending. QE is just an asset swap (reserves for tsy's)--it's shifting the yield curve, but not adding anything new.
You would have a point if the 'libertarian-oriented site' referred to QE as "asset printing." It didn't though. QE may not increase financial assets in an economy, but it does increase available money. The money used to purchase the bond did not exist prior to the swap. Now if you really wanted to argue that this is not money printing, I might accept the claim that the Fed will at some point unwind this position. But…
Yes, the Federal Reserve creates the electronic credits that it uses to purchase the bonds. But this is not "money printing" in any meaningful economic sense because it its just swapping one government liability for another one. There is no functional difference from the govt's persepctive between a reserve deposit and a treasury bond other than the term structure and the fact that the treasury bonds pay interest.
In fact, you could argue that QE ultimately reduces private sector income because it eliminates this interest income.
Re: Fed Announces Open Ended QE3
#9I've heard people say that the Fed is deliberately creating inflation in order to sabotage the American and global economy. This makes it easier to consolidate real estate and business assets, so it is beneficial to the wealthiest individuals and companies. But I'm sure I'm just latching onto a simplified explanation because I am too ignorant and stupid to comprehend the complexities of "economic science".
If you owe someone $1billion bucks and you can't, or don't want to pay it back, inflation is your friend.
It should be clear to all that with the Fed keeping near-zero interest rates whilst printing more money, inflation is the objective and is underway...
I don't know if that equates to "sabotage", but it's certainly not good for folks who aren't in the Asset Class.
Re: Fed Announces Open Ended QE3
#10Not surprising to see a libertarian-oriented site refer to QE as "money printing". It's not. Monetary policy doesn't increase the net financial assets available in an economy; that's only achieved by fiscal deficit spending. QE is just an asset swap (reserves for tsy's)--it's shifting the yield curve, but not adding anything new.
It is effectively money printing which will lead to inflation but that does not mean it is the wrong thing to do. Inflation over time balances out old debt with new income.
Isn't that just a case of input output? Like throwing a bigger boomerang and saying "hey look, a bigger boomerang is coming back, we're making progress!"?