3 ms·

> This is overly simplistic. No, it isn't. Print enough and the currency fails. The lesson has to be learned over and over again, in part because there is an

> This is overly simplistic. No, it isn't. Print enough and the currency fails. The lesson has to be learned over and over again, in part because there is an endless supply of deniers whispering magical thinking into the ears of the powers that be. QE didn't lead to this only because they stopped. That time. We're still left with the precedent however; giveaways like "cash for clunkers," bailing out UAW and public sector pension funds... all those supposedly "good" things done with magic money from Washington, enabled in part by QE funded deficit spending. What evidence can you cite that they won't turn to QE again to try to paper over whatever bump in the road comes next? What assurance do you have that they'll stop printing next time? You don't have either. That's why it's a question.

JumpCrisscross 8y ago
> Print enough and the currency fails. The lesson has to be learned over and over again Another lesson: refuse to print in a deflationary spiral and a recession turns into a depression. > What assurance do you have that they'll stop printing next time? This is a slippery slope argument. Central banks could always print. Deciding how much to print is their entire job. QE simply meant instead of using printed money to buy Treasuries, as the Fed has always done, it would also buy other assets. > bailing out UAW and public sector pension funds... all those supposedly "good" things done with magic money from Washington, enabled in part by QE funded deficit spending QE didn't monetize the bailouts. Buying Treasuries is something the Fed has always done. QE meant buying other assets, e.g. agency debt.
- topspin 8y ago
  > QE had little to do with funding the government deficit. This is demonstrably false. For a time the Fed was buying over $2 billion of long term debt per day [1]; bonds that had no hope of finding buyers on the open market. They were directly funding federal deficit spending with QE. [1] https://www.federalreserve.gov/newsevents/pressreleases/monetary20101103a.htm https://www.federalreserve.gov/newsevents/pressreleases/mone...
  - JumpCrisscross 8y ago
    > For a time the Fed was buying over $2 billion of long term debt per day [1]; bonds that had no hope of finding buyers on the open market. They were directly funding federal deficit spending with QE You're quoting a Federal Open Markets Committee (FOMC) statement [1]. This is the arm of the Federal Reserve which has always bought government debt. Without QE, the FOMC would have been buying huge amounts of Treasuries to keep (a) the money supply constant and (b) interest rates low. QE's novelty was the Fed saying "we aren't only going to buy Treasuries." Complaining about the Fed buying Treasuries is complaining about the Fed per se. Complaining about QE is complaining about the Fed not buying Treasuries, and instead buying other securities. [1] https://www.federalreserve.gov/newsevents/pressreleases/monetary20101103a.htm https://www.federalreserve.gov/newsevents/pressreleases/mone...
    - topspin 8y ago
      > You're quoting a Federal Open Markets Committee (FOMC) statement You're pretending not to see the scale and exceptional nature of that historical event. Characterizing that maneuver as routine is disingenuous and indicative of precisely the sort of thinking that creates the slippery slopes. Will this be the sort of bad guidance our leaders will use to rationalize future decisions? We'll see.
      - JumpCrisscross 8y ago
        > Characterizing that maneuver as routine is disingenuous and indicative of precisely the sort of thinking that creates the slippery slopes It wasn't routine. It was unusually-large FOMC activity directed by Ben Bernanke's study of the Great Depression. (It appears to have worked at keeping the money supply stable.) But all of that is not QE. If you don't know the difference between QE an the FOMC, mightn't the nuances of monetary policy be similarly escaping you?
        topspin 8y ago
        > But all of that is not QE It's a distinction without a difference. QE recipients used QE funds to heal their balance sheets by buying deficit funding Treasury bonds as directed by the Fed. So we have both Fed created money funding deficit spending indirectly through QE and Fed created money funding deficit spending through direct monetization. Dwelling on this minutia misses the point entire, and I suspect that's deliberate. The hazard is that -- as a result of these events -- we are now a nation with a propensity to print staggering amounts of money to deal with economic pressures. The question is; will we control that impulse or not?

JumpCrisscross 8y ago

> Print enough and the currency fails. The lesson has to be learned over and over again Another lesson: refuse to print in a deflationary spiral and a recession turns into a depression. > What assurance do you have that they'll stop printing next time? This is a slippery slope argument. Central banks could always print. Deciding how much to print is their entire job. QE simply meant instead of using printed money to buy Treasuries, as the Fed has always done, it would also buy other assets. > bailing out UAW and public sector pension funds... all those supposedly "good" things done with magic money from Washington, enabled in part by QE funded deficit spending QE didn't monetize the bailouts. Buying Treasuries is something the Fed has always done. QE meant buying other assets, e.g. agency debt.

topspin 8y ago
> QE had little to do with funding the government deficit. This is demonstrably false. For a time the Fed was buying over $2 billion of long term debt per day [1]; bonds that had no hope of finding buyers on the open market. They were directly funding federal deficit spending with QE. [1] https://www.federalreserve.gov/newsevents/pressreleases/monetary20101103a.htm https://www.federalreserve.gov/newsevents/pressreleases/mone...
- JumpCrisscross 8y ago
  > For a time the Fed was buying over $2 billion of long term debt per day [1]; bonds that had no hope of finding buyers on the open market. They were directly funding federal deficit spending with QE You're quoting a Federal Open Markets Committee (FOMC) statement [1]. This is the arm of the Federal Reserve which has always bought government debt. Without QE, the FOMC would have been buying huge amounts of Treasuries to keep (a) the money supply constant and (b) interest rates low. QE's novelty was the Fed saying "we aren't only going to buy Treasuries." Complaining about the Fed buying Treasuries is complaining about the Fed per se. Complaining about QE is complaining about the Fed not buying Treasuries, and instead buying other securities. [1] https://www.federalreserve.gov/newsevents/pressreleases/monetary20101103a.htm https://www.federalreserve.gov/newsevents/pressreleases/mone...
  - topspin 8y ago
    > You're quoting a Federal Open Markets Committee (FOMC) statement You're pretending not to see the scale and exceptional nature of that historical event. Characterizing that maneuver as routine is disingenuous and indicative of precisely the sort of thinking that creates the slippery slopes. Will this be the sort of bad guidance our leaders will use to rationalize future decisions? We'll see.
    - JumpCrisscross 8y ago
      > Characterizing that maneuver as routine is disingenuous and indicative of precisely the sort of thinking that creates the slippery slopes It wasn't routine. It was unusually-large FOMC activity directed by Ben Bernanke's study of the Great Depression. (It appears to have worked at keeping the money supply stable.) But all of that is not QE. If you don't know the difference between QE an the FOMC, mightn't the nuances of monetary policy be similarly escaping you?
      - topspin 8y ago
        > But all of that is not QE It's a distinction without a difference. QE recipients used QE funds to heal their balance sheets by buying deficit funding Treasury bonds as directed by the Fed. So we have both Fed created money funding deficit spending indirectly through QE and Fed created money funding deficit spending through direct monetization. Dwelling on this minutia misses the point entire, and I suspect that's deliberate. The hazard is that -- as a result of these events -- we are now a nation with a propensity to print staggering amounts of money to deal with economic pressures. The question is; will we control that impulse or not?