QE punished savers for nothing.

or perhaps... another option.

Almost everything released by the govt and and the Fed is pre spun content released to serve a purpose.

One of the entities who owns the Fed decided they want to taper off the QE. However when the fed floats that idea the markets get hammered. So this time they have stepped it up a level.

They phone over to lead stage actor Bernanke and ask his staff to get someone to write up a paper showing QE had no real effect. They let Ben decide which Fed bank can release the paper.
He likes to spread the love around to each bank. (Note they have been set up as doves or hawks or geeks as part of the plan to look like there is real governance going on. Its beautiful.... every time the Fed is taking heat some new story comes out about a few of the Fed governors agreeing with the contra Fed crowd. The press acts like there is real struggle going on behind the scenes but the steady hand of the Fed chair wins the day)

Next will we see buffet or some pimco person or someone else who has been given a seat at the trough to get on CNBC and some other news channels to support the idea.

Then if necessary we have someone do an interview with Greenspan... acting like he was against the whole idea because he knew QE would never work.
 
Quote from zdreg:

the belief on ET, same as on main street, backed by propaganda from the Fed is that QE saved the economy from a depression.
More...

QE didn't even start until the USA was out of recession, so that is clearly nonsense.

What saved a depression was providing liquidity to the banking system in late 2008 and early 2009, rather than doing a Mellon and letting it all blow up. By late 2009 it was obvious the depression risk was over and so no further action was needed.

QE was/is simply a half-baked hocus-pocus idea that real economic value can be created by adding zeros to a nominal balance sheet. Maybe if we had actual deflation, that would work a bit via offsetting downward wage stickiness. As it is, all QE has achieved has been to drive up asset prices and transfer wealth from the poor (via inflation in several life necessities) and middle class (via low interest rates and asset prices going increasingly out of their reach) to the owners of capital. Fractional reserve banking does that anyway, but at least it takes a decade or two to achieve the desired effects, rather than 3 years.
 
When you have two competing explanations: a convoluted conspiracy requiring coordinated Machiavellian genius across the entire government/business establishment; or plain bureaucratic incompetence and human stupidity - always go with the latter.

Quote from jem:

or perhaps... another option.

Almost everything released by the govt and and the Fed is pre spun content released to serve a purpose.

One of the entities who owns the Fed decided they want to taper off the QE. However when the fed floats that idea the markets get hammered. So this time they have stepped it up a level.

They phone over to lead stage actor Bernanke and ask his staff to get someone to write up a paper showing QE had no real effect. They let Ben decide which Fed bank can release the paper.
He likes to spread the love around to each bank. (Note they have been set up as doves or hawks or geeks as part of the plan to look like there is real governance going on. Its beautiful.... every time the Fed is taking heat some new story comes out about a few of the Fed governors agreeing with the contra Fed crowd. The press acts like there is real struggle going on behind the scenes but the steady hand of the Fed chair wins the day)

Next will we see buffet or some pimco person or someone else who has been given a seat at the trough to get on CNBC and some other news channels to support the idea.

Then if necessary we have someone do an interview with Greenspan... acting like he was against the whole idea because he knew QE would never work.
More...
 
I agree with your post just prior to this one... I wrote pretty much the exact same thing yesterday her on et.

Therefore since you understand how the private central bank transfers wealth I wonder why are you not impressed with their elaborate stage craft.


Finally, I fail to see any Fed incompetence.
I think the Fed executed on the plan. They loosened during a bubble and then credit dried up.



Quote from Ghost of Cutten:

When you have two competing explanations: a convoluted conspiracy requiring coordinated Machiavellian genius across the entire government/business establishment; or plain bureaucratic incompetence and human stupidity - always go with the latter.
More...
 
Quote from RedDuke:

Why are people so surprised?

Through out all human history the elite (what ever it calls itself) always takes advantage of the rest of population.

When they get too greedy or careless, revolutions happen, and then the whole cycle starts again.

The difference now is that it is a bit easier to join their ranks than it was in past centuries.

Nothing is new under the sun.
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+ 2
 
Quote from Ghost of Cutten:

QE didn't even start until the USA was out of recession, so that is clearly nonsense.

What saved a depression was providing liquidity to the banking system in late 2008 and early 2009, rather than doing a Mellon and letting it all blow up. By late 2009 it was obvious the depression risk was over and so no further action was needed.

QE was/is simply a half-baked hocus-pocus idea that real economic value can be created by adding zeros to a nominal balance sheet. Maybe if we had actual deflation, that would work a bit via offsetting downward wage stickiness. As it is, all QE has achieved has been to drive up asset prices and transfer wealth from the poor (via inflation in several life necessities) and middle class (via low interest rates and asset prices going increasingly out of their reach) to the owners of capital. Fractional reserve banking does that anyway, but at least it takes a decade or two to achieve the desired effects, rather than 3 years.
More...

providing liquidity to the banking system is a form of QE.
 
Quote from piezoe:

Very insightful question, I would think. I suppose your question suggests that someone is perhaps wrong. Is it the author(s) of the San Francisco Fed paper, or is it the ET crowd? Or is there another possibility still? Are we, having not read the paper, just, as often enough happens here in ET's hallowed forums, uniformed.

Could it be that relative to where the economy could have been, easy to say, or would have been, hard to say, that the economy is exhibiting a couple of percentage points stronger growth? Is there a misunderstanding because the goalposts aren't where we assume they are? Are we looking at relative measures, but interpreting them is if they were absolute? Where are those goal posts? Are the goal post in motion? And where is Einstein when we need him?
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I intended to poke fun at some on the site that prefer to spin everything negatively.

Personally I believe QE has little direct effect on the economy, and that is what this study is pointing out. QE has a large effect on asset prices, which boosts the economy through the wealth effect, although that is not a huge impact. There are some other small ways in which QE benefits the economy directly as well.

What is much more important is the role QE and other forms of stimulus and support play in restoring confidence. If not for the various government actions after the Lehman collapse, the global banking system may be in shambles, and our economy may still be in a death spiral now. You can't quantify how important that was and I don't believe this study attempts that.
 
Agreed and well said. QE was also very helpful in pushing rates down and holding them down, and Operation Twist worked, in conjunction with QE, on the long bond and thus was effective in pushing down Mortgage rates. That was key in rescuing the housing and building industries which had become roughly 25% of the economy before the crisis.

The Fed has mentioned that they have been disappointed in their efforts to get excess bank reserves to shrink and get banks to lend more. I think the Fed is still paying banks a little interest on reserves deposited with the Fed. Why?
 
Quote from piezoe:

Agreed and well said. QE was also very helpful in pushing rates down and holding them down, and Operation Twist worked, in conjunction with QE, on the long bond and thus was effective in pushing down Mortgage rates. That was key in rescuing the housing and building industries which had become roughly 25% of the economy before the crisis.

The Fed has mentioned that they have been disappointed in their efforts to get excess bank reserves to shrink and get banks to lend more. I think the Fed is still paying banks a little interest on reserves deposited with the Fed. Why?
More...

OK. If you guys keep agreeing and having reasoned discussions on ET we will have to have the moderators step in! :)

Ed Breen said something in a thread months ago that I didn't understand and I have mulled over for a long time. Now I think he was spot on. He said something like ... the reason for no signs of inflation yet was that the FED was sopping up unsellable paper and keeping it off the market.

Perhaps the FED plan all along was to buy the unbuyable (at full price or mark-to-magic) from the international banks and big corporations to get it off their balance sheets. That is to bailout the banks so they would lend again. Perhaps their intent was to sneak it back onto the taxpayers at some point as government debt and taxpayers would write it off.

So what happens then? There is debt deleveraging by default without inflation and magically the economy will just zoom ahead as people feel better and borrow more and more paper from the world banks. Sadly, people have become more aware of the whole dishonest game. There is too much paper and too little assets. Once stung, twice shy.

Banks are saved from their own folly. The fed is saved from its mark-to-magic folly. The people take it up the a... again for the good of the wealth and powerful? And the game can continue for a little while more.

Was that their true plan all along?
 
I don't understand Breen's remark either, but I don't know that it matters. Whatever he said, I guarantee that three aspirin will help sort it out.

If we could pose the question to central bankers they would undoubtedly be able to name the most important factors contributing to their version of low inflation. If we look at the current CPI computed the same way it was in the mid 1980s, then consumer inflation or "headline inflation" is running about 6-8%. Why that is low I don't understand. I would consider it moderately high, but manageable. But because I'm a consumer that number is more important to me then the Feds CPI measurement or their "core" inflation number. And to be honest I don't know how core inflation was computed in the Mid 1980s, if it was computed at all. So I think when the Fed says there is low inflation they mean that particular, and peculiar, measurement we Fed folks follow is low right now. This may have little relevance other than to central bankers, but God Bless then anyway.

There is still high combined un- and under- employment among Romney's 47% -- you know, he's got to get up every morning and say to himself. "I wish I'd never said that!" . That un- and under- employment contributes to lower consumption, and lowered consumption usually has a lot to do with lowered inflation -- that might be a bit of an understatement.

(I'm not interested in this market today, that's why I'm lollygagging over here.)
 
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