4 ms·
Isn't QE just injecting more money into the system? How can that not result in inflation, eventually and if done excessively? It's the classic "more money chasi
by cobbzilla 9y ago
Isn't QE just injecting more money into the system? How can that not result in inflation, eventually and if done excessively? It's the classic "more money chasing fewer goods." It's not just where the fed pegs the discount rate that drives inflation, it's also the money supply.
- dageshi 9y agoI suppose if the the additional demand instantly translates to near immediate provision of supply? Most manufactured goods would fit in that category nowadays? Only things like housing do not as they can't be easily provisioned to meet demand as quickly.
- rmrm 9y agoCorrect, in that if supply increases you've either increased productivity, or the workforce. It cannot come on line otherwise. I think it generally lags, and does not quite close the gap, outside of other deflationary pressures being present.
- Jeema101 9y ago...and if inflation goes up, so does the cost of borrowing, unless banks are planning on loaning people money at below the inflation rate. There's no free lunch, unfortunately.