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I have a different view. Unfortunately it's not possible to make a real scientific experiment to validate your or my assumption. My thinking is that QE is quit
by nopriorarrests 9y ago
I have a different view. Unfortunately it's not possible to make a real scientific experiment to validate your or my assumption.
My thinking is that QE is quite inflationary.I think that after 2008 crisis we were expected to have a long period of strong deflation (let's say, with prices falling 4% each year, for 8 years straight), but QE reverted that and we had 1% of inflation or something like that instead. So, formally we are in "mild inflation" ground, but in fact the QE effect was quite dramatic. We just can't observe it because we don't have a "control group economy".
- stephen_g 9y agoWell, all spending carries inflation risk - what really matters is what aggregate demand is like and how much spending and taxing alters that. Certainly QE could be inflationary, but as it was it was mostly just buying back securities it was mostly asset neutral so shouldn’t have done much (just like issuing Government securities to match deficit spending (just in reverse) - it doesn’t actually alter whether deficit spending is inflationary or not since there is a quite liquid market for those assets so they’re very similar to cash). It is considered to have inflated prices of certain financial assets though (shares etc.)
- nopriorarrests 9y agostephen_g, if you are interested, then I wrote a very simple scenario of how QE could (and IMHO did) spill over into "real economy" here -- https://news.ycombinator.com/item?id=16606140 https://news.ycombinator.com/item?id=16606140
- danmaz74 9y agoPreventing deflation was one of the main goals of QE, so, I don't think your view is so weird :)