Is another bout of QE a good thing?

  • Thread starter Thread starter morganist
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and that's why mathmaticans call economics the "Dismal Science".

It's no more a science than Freud and all the other psycho analysts.

If a lady with a PHD from Harvard tells you, "You will be happier if you are married." You question it.

But if an economist (which has the same bullshit degree only in another dismal science) tells you qe3 is good you listen, because you figure, "They must know something I don't know."

Every trader is just trying to beat the market, and almost nobody does unless they are lucky.

Well, that's all these economists are trying to do

and 90% will fail, they will just fail
 
Quote from oldtime:

yeah, that's what I never understood. The banks said, "We made some bad bets on mortgages and lost a shitload of money."

So why didn't the government say, "Well that must mean somebody out there has a shitload of money."

If they had spent as much time and energy trying to figure out how the banks lost it as to trying to figure out who made it, we would have much more powerful lobbyists.

And I don't know about you, but I would rather have the government run by people who make money in times of trouble than people who lose it.
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Whoever sold their house at the time the prices were artificially high.
 
Quote from morganist:

Whoever sold their house at the time the prices were artificially high.
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now that would be a good book (or at least an article) for you to write. The world could use a few good stories.
 
Quote from oldtime:

now that would be a good book (or at least an article) for you to write. The world could use a few good stories.
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Yeah I have been thinking about it. I think the main culprit is the central bank with the low interest rates. Which I have written about look on my blog for central bank.
 
Quote from morganist:

No because the price of goods will rise when the money is spent later on in the business cycle.
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banks don't spend reserves into the economy. Reserves stay at the fed in the reserve accounts of banks. Banks need reserves to meet requirements, but as noted earlier the FED will provide reserves on demand to set the rate





"Based on how monetary policy has been conducted for several decades, banks have always had the ability to expand credit whenever they like. They don�t need a pile of �dry tinder� in the form of excess reserves to do so. That is because the Federal Reserve has committed itself to supply sufficient reserves to keep the fed funds rate at its target. If banks want to expand credit and that drives up the demand for reserves, the Fed automatically meets that demand in its conduct of monetary policy. In terms of the ability to expand credit rapidly, it makes no difference."
(1) William C. Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, said in a speech in July 2009

Empirical evidence backs this up as well. You will find that increase in bank lending precedes reserve expansion. In a 1990 paper "Real Facts and a Monetary Myth" Kydland and Prescot found that credit money was created about 4 periods before government money. Banks are never reserve constrained only capital constrained.

You do realize that places like Canada have no reserve requirements. by your logic Canada should be in hyper-inflation decades a go

What's the difference if the fed provide reserves leading instead of lagging bank credit creation?
 
No. Quantitative Easings are not a good thing. Simply giving money to "EASE" the pain? You think that is really good in the long run? It's inefficient and ineffective measures for a long term problem--but it is a short term solution. The US is 17 Trillion in debt, giving more money to the American people does not help. It kills the value of our dollar and is creating inflation.
 
Quote from antitrust:

banks don't spend reserves into the economy. Reserves stay at the fed in the reserve accounts of banks. Banks need reserves to meet requirements, but as noted earlier the FED will provide reserves on demand to set the rate





"Based on how monetary policy has been conducted for several decades, banks have always had the ability to expand credit whenever they like. They don�t need a pile of �dry tinder� in the form of excess reserves to do so. That is because the Federal Reserve has committed itself to supply sufficient reserves to keep the fed funds rate at its target. If banks want to expand credit and that drives up the demand for reserves, the Fed automatically meets that demand in its conduct of monetary policy. In terms of the ability to expand credit rapidly, it makes no difference."
(1) William C. Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, said in a speech in July 2009

Empirical evidence backs this up as well. You will find that increase in bank lending precedes reserve expansion. In a 1990 paper "Real Facts and a Monetary Myth" Kydland and Prescot found that credit money was created about 4 periods before government money. Banks are never reserve constrained only capital constrained.

You do realize that places like Canada have no reserve requirements. by your logic Canada should be in hyper-inflation decades a go

What's the difference if the fed provide reserves leading instead of lagging bank credit creation?
More...

It is not the action of the reserves to increase prices. The inflation from QE comes about as a result of the loss in foreign investment in the country and currency reducing its ability to purchase goods from abroad. The simple of act of QE in the first place will create a reduction in demand for the currency which will result in an inability to goods at the previous price creating inflation from the appearance it makes to the rest of the world about the state of the economy.
 
We have 17 trillion in debt and we the feds are contributing to banks credit expansion.. Debt financed consumption is just digging us into a bigger hole then we are already in. The fed should raise interest rates and tighten the amount of money to prevent inflation, which I can feel every day because the dollar is weak. How are we supposed to pay off back 17 trillion dollars? Fed throwing around fiat money isn't helping. Consumption is the largest part of GDP but it isn't good to consume when we are in debt. Look at WW2, everything was rationed. We are fighting the war on terror and being told to consume more? with funny money? We need to start producing capital so we don't lose 20 billion dollars a month on trade deficits.
 
are banks still in the lending business or can they make more by trading derivatives?

AFAIK, the real insanity of the derivatives market has not been re-regulated.. I can sell a derivative that pays me when your house burns down... what's to stop me from torching it?
 
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