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The ECB should just do more QE. Monetary policy solved all the US’s problems following 2008 - should work for Europe too. Printing money to buy bonds definitey

The ECB should just do more QE. Monetary policy solved all the US’s problems following 2008 - should work for Europe too. Printing money to buy bonds definitey doesn’t cause inflation in asset prices or real estate. Furthermore, buying bonds is totally different than simply buying stocks. Additionally, I think people really like when the interest they’re paid on their savings is below the rate of inflation. In fact, they should follow Japan’s lead and start printing money to buy ETFs! This will definitely incentivize the creation of high quality jobs.

slededit 8y ago
It certainly solved a lot of problems, the US is at full employment now. It took over a decade for interest rates to start ticking up with the exception of the housing market and stocks. The money supply is only one factor in inflation, velocity is the other and it has been extremely low for a long time.
- vivafrance 8y ago
  Inflation is rampant in many areas right now. It’s dishonest to claim inflation is low because TVs are still cheap when house prices, healthcare, and education are exploding. Furthermore, if the unemployment rate was as low as is advertised we would be seeing wage growth. The fact that wages are not rising is evidence that the unemployment numbers are fudged. The fact that Trump was elected is evidence that the majority of people are unhappy with the “recovery”.
  - JumpCrisscross 8y ago
    > if the unemployment rate was as low as is advertised we would be seeing wage growth Median usual weekly real earnings for Americans 16 and over were 5% higher in Q1 2018 then they were Q4 of 2007 [1]. From Q1 2014 to Q1 2018, we've seen that statistic grow at about 1% per year (CAGR). [1] https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q
    - deleted 8y ago
      [deleted]
    - markkanof 8y ago
      But that increase in wages does not seem to be keeping up with inflation, which translates to a net loss for the average person. http://www.inflation.eu/inflation-rates/united-states/historic-inflation/cpi-inflation-united-states.aspx http://www.inflation.eu/inflation-rates/united-states/histor...
      - JumpCrisscross 8y ago
        > that increase in wages does not seem to be keeping up with inflation In economics, the "real value of a good or other entity has been adjusted for inflation" [1]. The statistic above is thus inflation adjusted. Nominal wages (i.e. those not adjusted for inflation) are up close to 30% between May 2007 and May 2018 [2], or 2.3% per year [3]. [1] https://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics) https://en.wikipedia.org/wiki/Real_versus_nominal_value_(eco... [2] https://fred.stlouisfed.org/series/CES0500000003 https://fred.stlouisfed.org/series/CES0500000003 [3] (26.9 / 20.84) ^ (1 / 11) - 1
        lifty 8y ago
        Are housing, healthcare and education costs included in the inflation numbers?
        JumpCrisscross 8y ago
        > Are housing, healthcare and education costs included in the inflation numbers? Yes, CPI includes housing, healthcare and education. The only measures commonly stripped out are food and energy, to exclude commodity volatility; that measure is presented as "core inflation" and is more useful when considering things like interest rates than real wages.
        vivafrance 8y ago
  - LargeWu 8y ago
    > The fact that wages are not rising is evidence that the unemployment numbers are fudged. The fact that Trump was elected is evidence that the majority of people are unhappy with the “recovery”. Two things: 1. Unemployment is calculated in a pretty standard way over time, and it's highly unlikely the numbers are being fudged. From what I've read, economists are actually kind of stumped as to why wage growth is stagnant, since it does not fit prevailing theories. 2. Plenty of people voted for Trump because they are racists and bigots responding to his xenophobic rhetoric. In fact it's very likely that Trump's economic policies will have a negative effect on the lower class, yet they support him anyway.
    - markkanof 8y ago
      It does not seem necessary to ascribe racism as a motivation to a very large group of people who you don't know. Especially when the second sentence of your second point is spot on and can easily stand on it's own.
      - s73v3r_ 8y ago
        Given the outcome of things, it seems very disingenuous to pretend that it wasn't a part of his election.
        Reactionary_ 8y ago
        What outcome? You think enforcing border security and enacting a travel ban on countries identified by the Obama administration as terrorist threats somehow shows racism was a significant part of Trump's election? Those are common sense policies for most people and have nothing to do with racism. Law, order and regimented immigration processes are not racist, though people who want open borders for the express purpose of "making America brown" most definitely are racist. You should check your biases. Maybe Clinton was just a terrible candidate and Trump was on the right side of many policy issues? No, that couldn't be the case at all. Must be the racism.
    - watwat1 8y ago
      Your neighbours are racists.
  - s73v3r_ 8y ago
    It's also dishonest to claim that inflation is rampant and that the unemployment numbers are fudged.
    - walshemj 8y ago
      Governments always fudge employment figures and inflation lol You just define your inflation metric to suit normally by ignoring things that have gone up more eg housing and including things that are deflating like say TV's and white goods.
      - s73v3r_ 8y ago
        "Governments always fudge employment figures and inflation lol" Citation needed.
        walshemj 8y ago
        Thatcher's tory government encouraging doctors to put long term unemployed on disability is well known in the UK. An the inflation that's direct from some one who works in the ONS in the UK
      - dragonwriter 8y ago
        > Governments always fudge employment figures and inflation lol Some governments might, but governments actually need this information for planning, so ones with even modest levels of transparency are unlikely to do much of it, because it would be too easy to detect if it wasn't the only count, and because it would foul their own planning if it was. > You just define your inflation metric to suit normally by ignoring things that have gone up more eg housing and including things that are deflating like say TV's and white goods. Yes, one could in theory do that, but what country specifically does that (with citations to specific supporting information)? Many countries report many different inflation indicators some designed to isolate particular contributions that add noise (either because of high seasonality or high-but-irregular volatility), but they tend to also have measures which include those figures, which tend to be the main figure.
- tpm 8y ago
  Some EU countries are at more or less full employment too. I wonder how long that will last. What the article does not mention is that of course many people from Southern Europe have migrated north to find work. We now see for example young people from Spain coming to Eastern Central Europe (V4 countries), I think that's happening for the first time in history.
api 8y ago
> Monetary policy solved all the US’s problems following 2008 I think "all the US's problems" is a pretty extreme stretch. Monetary policy may have prevented a worst case depression scenario but the economy is still wildly unbalanced. Assets re-inflated but wages did not and there's still far too much private debt.
- vivafrance 8y ago
  > Monetary policy may have prevented a worst case depression I vehemently disagree with this claim. The central banks of the world have merely masked a massive default on debt by inflating it away in a coordinated manner. The owners of that debt made out like bandits while the rest of us paid for it through the devaluation of our savings and wages.
  - s73v3r_ 8y ago
    The alternative is allowing everything to crash. The rich bankers wouldn't have had a problem, but millions more everyday workers would have paid a far higher price in terms of unemployment.
    - ithkuil 8y ago
      Honest question: don't the rich also lose during a global crash?
      - CocaKoala 8y ago
        Sure, but if you go from a net work of 7 million to a net worth of 3 million, that's a different type of loss than going from a net worth of ~250,000 to a net worth of ~0 because you lost your house and are in debt up to your eyeballs.
      - Nasrudith 8y ago
        Depends on their reserves vs active business investments and if stability can be maintained. Recessions are good for people with liquid reserves and sufficiently unaffected supporting ability as they can acquire assets at fire sale prices and then reap profits once recovery comes. It sounds exploitative but serves a useful function as without them the liquidating party would be extra screwed.
deleted 8y ago
[deleted]
JumpCrisscross 8y ago
> The ECB should just do more QE To be fair, the ECB has been saying as much. Portugal, Spain, Italy and Greece have needed to make structural changes to their labor markets, pension benefits, and tax and regulatory systems for years. Unfortunately, their voters prefer things like screaming at Macedonia about what it calls itself [1]. [1] https://www.theguardian.com/world/2018/jun/17/macedonia-greece-dispute-name-accord-prespa https://www.theguardian.com/world/2018/jun/17/macedonia-gree...
- deleted 8y ago
  [deleted]
- hidenotslide 8y ago
  Those "structural changes" are called austerity and they have not worked well where they have been tried. There is a very strong argument that the Euro currency is deflationary and is causing many of the various issues like unemployment, government debt crises, etc. See Stiglitz's book The Euro for an in depth argument. Or just look at the unemployment statistics. https://www.statista.com/statistics/268830/unemployment-rate-in-eu-countries/ https://www.statista.com/statistics/268830/unemployment-rate... The countries outside of northern Europe that are on the Euro or pegged to it have much higher jobless rates than those with their own currency. Czechia, Romania, Poland, Hungary are not pegged while Bulgaria, Lithuania, Estonia are. Similarly outside the EU, Bosnia is pegged and doing poorly, Iceland is not and doing fine even though they were very hard hit by financial crisis. It's exactly analogous to the way the fixed gold exchange rate was deflationary during the Great Depression and as soon as countries dropped the gold standard they started recovering.
  - JumpCrisscross 8y ago
    > Those "structural changes" are called austerity These terms have wildly different meanings depending on the context. In my use, structural change refers to revenue-neutral economic rule making. Austerity means deficit reduction. Making it easier to hire and fire employees is a structural change. Making it cheaper to form a new business, or increasing funding to courts, is also structural change. Removing requirements that e.g. hairdressers be licensed [1] is another. Some of these measures may actually increase deficits, at least in the short term. [1] http://thefederalist.com/2015/07/15/texas-supreme-court-strikes-stupid-licensing-law/ http://thefederalist.com/2015/07/15/texas-supreme-court-stri...
nostromo 8y ago
I think people may be missing that the parent comment is sarcastic.
- rashkov 8y ago
  I caught that, but it makes for a terrible post and so I’m downvoting it
sonnyblarney 8y ago
The problem is not some kind of financial malaise or shock that requires 'confidence' to recover - ergo - a financial solution to a non-financial problem is not likely optimal.
lumberjack 8y ago
What the EU is actually proposing is to encourage more migration within the EU. The EU has very abysmal levels of intra-EU migration, around 1/10th of that of the US. Because of this, you have areas with a lack of jobs and other areas with a lack of labour.
- olegious 8y ago
  I would imagine part of the difference is explained by the fact that if you move within the US you'll still encounter the same language and similar culture. If you move from one EU country to another, odds are you'll encounter a different language and culture, so moving intra-EU is a much more difficult proposition.
  - phobosdeimos 8y ago
    Very true. The Netherlands needs a TON of healthcare workers right now. But you can't just hire someone from Greece or Spain who doesn't speak the language.
    - joelbluminator 8y ago
      It depends I guess. Does a surgeon or anesthesiologist have to know Dutch to be successful? Or even a dentist? Btw the Netherlands has quite a few people who don't speak Dutch at all..
      - tormeh 8y ago
        Southern Europeans usually don't speak English very well either. So there's no easy solution.
      - phobosdeimos 8y ago
        Well yes they do. My English is pretty decent, but I think most people would have problems having technical discussions about their health in English. Imagine a 70 year old with dementia in a nursing home. Miscommunication in healthcare costs lives.

slededit 8y ago

It certainly solved a lot of problems, the US is at full employment now. It took over a decade for interest rates to start ticking up with the exception of the housing market and stocks. The money supply is only one factor in inflation, velocity is the other and it has been extremely low for a long time.

vivafrance 8y ago
Inflation is rampant in many areas right now. It’s dishonest to claim inflation is low because TVs are still cheap when house prices, healthcare, and education are exploding. Furthermore, if the unemployment rate was as low as is advertised we would be seeing wage growth. The fact that wages are not rising is evidence that the unemployment numbers are fudged. The fact that Trump was elected is evidence that the majority of people are unhappy with the “recovery”.
- JumpCrisscross 8y ago
  > if the unemployment rate was as low as is advertised we would be seeing wage growth Median usual weekly real earnings for Americans 16 and over were 5% higher in Q1 2018 then they were Q4 of 2007 [1]. From Q1 2014 to Q1 2018, we've seen that statistic grow at about 1% per year (CAGR). [1] https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q
  - deleted 8y ago
    [deleted]
  - markkanof 8y ago
    But that increase in wages does not seem to be keeping up with inflation, which translates to a net loss for the average person. http://www.inflation.eu/inflation-rates/united-states/historic-inflation/cpi-inflation-united-states.aspx http://www.inflation.eu/inflation-rates/united-states/histor...
    - JumpCrisscross 8y ago
      > that increase in wages does not seem to be keeping up with inflation In economics, the "real value of a good or other entity has been adjusted for inflation" [1]. The statistic above is thus inflation adjusted. Nominal wages (i.e. those not adjusted for inflation) are up close to 30% between May 2007 and May 2018 [2], or 2.3% per year [3]. [1] https://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics) https://en.wikipedia.org/wiki/Real_versus_nominal_value_(eco... [2] https://fred.stlouisfed.org/series/CES0500000003 https://fred.stlouisfed.org/series/CES0500000003 [3] (26.9 / 20.84) ^ (1 / 11) - 1
      - lifty 8y ago
        Are housing, healthcare and education costs included in the inflation numbers?
        JumpCrisscross 8y ago
        > Are housing, healthcare and education costs included in the inflation numbers? Yes, CPI includes housing, healthcare and education. The only measures commonly stripped out are food and energy, to exclude commodity volatility; that measure is presented as "core inflation" and is more useful when considering things like interest rates than real wages.
        vivafrance 8y ago
- LargeWu 8y ago
  > The fact that wages are not rising is evidence that the unemployment numbers are fudged. The fact that Trump was elected is evidence that the majority of people are unhappy with the “recovery”. Two things: 1. Unemployment is calculated in a pretty standard way over time, and it's highly unlikely the numbers are being fudged. From what I've read, economists are actually kind of stumped as to why wage growth is stagnant, since it does not fit prevailing theories. 2. Plenty of people voted for Trump because they are racists and bigots responding to his xenophobic rhetoric. In fact it's very likely that Trump's economic policies will have a negative effect on the lower class, yet they support him anyway.
  - markkanof 8y ago
    It does not seem necessary to ascribe racism as a motivation to a very large group of people who you don't know. Especially when the second sentence of your second point is spot on and can easily stand on it's own.
    - s73v3r_ 8y ago
      Given the outcome of things, it seems very disingenuous to pretend that it wasn't a part of his election.
      - Reactionary_ 8y ago
        What outcome? You think enforcing border security and enacting a travel ban on countries identified by the Obama administration as terrorist threats somehow shows racism was a significant part of Trump's election? Those are common sense policies for most people and have nothing to do with racism. Law, order and regimented immigration processes are not racist, though people who want open borders for the express purpose of "making America brown" most definitely are racist. You should check your biases. Maybe Clinton was just a terrible candidate and Trump was on the right side of many policy issues? No, that couldn't be the case at all. Must be the racism.
  - watwat1 8y ago
    Your neighbours are racists.
- s73v3r_ 8y ago
  It's also dishonest to claim that inflation is rampant and that the unemployment numbers are fudged.
  - walshemj 8y ago
    Governments always fudge employment figures and inflation lol You just define your inflation metric to suit normally by ignoring things that have gone up more eg housing and including things that are deflating like say TV's and white goods.
    - s73v3r_ 8y ago
      "Governments always fudge employment figures and inflation lol" Citation needed.
      - walshemj 8y ago
        Thatcher's tory government encouraging doctors to put long term unemployed on disability is well known in the UK. An the inflation that's direct from some one who works in the ONS in the UK
    - dragonwriter 8y ago
      > Governments always fudge employment figures and inflation lol Some governments might, but governments actually need this information for planning, so ones with even modest levels of transparency are unlikely to do much of it, because it would be too easy to detect if it wasn't the only count, and because it would foul their own planning if it was. > You just define your inflation metric to suit normally by ignoring things that have gone up more eg housing and including things that are deflating like say TV's and white goods. Yes, one could in theory do that, but what country specifically does that (with citations to specific supporting information)? Many countries report many different inflation indicators some designed to isolate particular contributions that add noise (either because of high seasonality or high-but-irregular volatility), but they tend to also have measures which include those figures, which tend to be the main figure.
tpm 8y ago
Some EU countries are at more or less full employment too. I wonder how long that will last. What the article does not mention is that of course many people from Southern Europe have migrated north to find work. We now see for example young people from Spain coming to Eastern Central Europe (V4 countries), I think that's happening for the first time in history.

api 8y ago

> Monetary policy solved all the US’s problems following 2008 I think "all the US's problems" is a pretty extreme stretch. Monetary policy may have prevented a worst case depression scenario but the economy is still wildly unbalanced. Assets re-inflated but wages did not and there's still far too much private debt.

vivafrance 8y ago
> Monetary policy may have prevented a worst case depression I vehemently disagree with this claim. The central banks of the world have merely masked a massive default on debt by inflating it away in a coordinated manner. The owners of that debt made out like bandits while the rest of us paid for it through the devaluation of our savings and wages.
- s73v3r_ 8y ago
  The alternative is allowing everything to crash. The rich bankers wouldn't have had a problem, but millions more everyday workers would have paid a far higher price in terms of unemployment.
  - ithkuil 8y ago
    Honest question: don't the rich also lose during a global crash?
    - CocaKoala 8y ago
      Sure, but if you go from a net work of 7 million to a net worth of 3 million, that's a different type of loss than going from a net worth of ~250,000 to a net worth of ~0 because you lost your house and are in debt up to your eyeballs.
    - Nasrudith 8y ago
      Depends on their reserves vs active business investments and if stability can be maintained. Recessions are good for people with liquid reserves and sufficiently unaffected supporting ability as they can acquire assets at fire sale prices and then reap profits once recovery comes. It sounds exploitative but serves a useful function as without them the liquidating party would be extra screwed.

deleted 8y ago

[deleted]

JumpCrisscross 8y ago

> The ECB should just do more QE To be fair, the ECB has been saying as much. Portugal, Spain, Italy and Greece have needed to make structural changes to their labor markets, pension benefits, and tax and regulatory systems for years. Unfortunately, their voters prefer things like screaming at Macedonia about what it calls itself [1]. [1] https://www.theguardian.com/world/2018/jun/17/macedonia-greece-dispute-name-accord-prespa https://www.theguardian.com/world/2018/jun/17/macedonia-gree...

deleted 8y ago
[deleted]
hidenotslide 8y ago
Those "structural changes" are called austerity and they have not worked well where they have been tried. There is a very strong argument that the Euro currency is deflationary and is causing many of the various issues like unemployment, government debt crises, etc. See Stiglitz's book The Euro for an in depth argument. Or just look at the unemployment statistics. https://www.statista.com/statistics/268830/unemployment-rate-in-eu-countries/ https://www.statista.com/statistics/268830/unemployment-rate... The countries outside of northern Europe that are on the Euro or pegged to it have much higher jobless rates than those with their own currency. Czechia, Romania, Poland, Hungary are not pegged while Bulgaria, Lithuania, Estonia are. Similarly outside the EU, Bosnia is pegged and doing poorly, Iceland is not and doing fine even though they were very hard hit by financial crisis. It's exactly analogous to the way the fixed gold exchange rate was deflationary during the Great Depression and as soon as countries dropped the gold standard they started recovering.
- JumpCrisscross 8y ago
  > Those "structural changes" are called austerity These terms have wildly different meanings depending on the context. In my use, structural change refers to revenue-neutral economic rule making. Austerity means deficit reduction. Making it easier to hire and fire employees is a structural change. Making it cheaper to form a new business, or increasing funding to courts, is also structural change. Removing requirements that e.g. hairdressers be licensed [1] is another. Some of these measures may actually increase deficits, at least in the short term. [1] http://thefederalist.com/2015/07/15/texas-supreme-court-strikes-stupid-licensing-law/ http://thefederalist.com/2015/07/15/texas-supreme-court-stri...

nostromo 8y ago

I think people may be missing that the parent comment is sarcastic.

rashkov 8y ago
I caught that, but it makes for a terrible post and so I’m downvoting it

sonnyblarney 8y ago

The problem is not some kind of financial malaise or shock that requires 'confidence' to recover - ergo - a financial solution to a non-financial problem is not likely optimal.

lumberjack 8y ago

What the EU is actually proposing is to encourage more migration within the EU. The EU has very abysmal levels of intra-EU migration, around 1/10th of that of the US. Because of this, you have areas with a lack of jobs and other areas with a lack of labour.

olegious 8y ago
I would imagine part of the difference is explained by the fact that if you move within the US you'll still encounter the same language and similar culture. If you move from one EU country to another, odds are you'll encounter a different language and culture, so moving intra-EU is a much more difficult proposition.
- phobosdeimos 8y ago
  Very true. The Netherlands needs a TON of healthcare workers right now. But you can't just hire someone from Greece or Spain who doesn't speak the language.
  - joelbluminator 8y ago
    It depends I guess. Does a surgeon or anesthesiologist have to know Dutch to be successful? Or even a dentist? Btw the Netherlands has quite a few people who don't speak Dutch at all..
    - tormeh 8y ago
      Southern Europeans usually don't speak English very well either. So there's no easy solution.
    - phobosdeimos 8y ago
      Well yes they do. My English is pretty decent, but I think most people would have problems having technical discussions about their health in English. Imagine a 70 year old with dementia in a nursing home. Miscommunication in healthcare costs lives.