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Could you even imagine what we could do with $100B every day? My god. They just sit down at the keyboard and print money out of thin air and electrons and give
by situational87 7y ago
Could you even imagine what we could do with $100B every day?
My god. They just sit down at the keyboard and print money out of thin air and electrons and give it to any of the 20 biggest banks who ask for it.
We could literally solve every single problem.
- atemerev 7y agoBanks are there to give capital to businesses, which do solve every single problem from the beginning of capitalism. This is how it works.
- opportune 7y agoWell part of the idea is that they get it back pretty quickly. If the fed just gave it all away it would rapidly expand the monetary supply and cause a lot of inflation Though there is something to be said for longer term QE operations only going through banks rather than through citizens
- simplecomplex 7y agoThey did rapidly expand the monetary supply and it did cause inflation. Assets are sky high (stocks and real estate). Properties are priced 10-20x cash flow. Stocks are similarly trading at absurd earnings ratios. Does anyone remember https://en.wikipedia.org/wiki/Japanese_asset_price_bubble https://en.wikipedia.org/wiki/Japanese_asset_price_bubble ? Massively expanding credit to the point where money is free .... reduces the value of money. But denial is a helluva drug.
- brobinson 7y agoQE does not expand the monetary base so it can't cause inflation. It's also not "printing money" as the media likes to call it. You can't talk about the Japanese asset bubble without talking about the Plaza Accord and the appreciation of the yen.
- simplecomplex 7y agoWhen the Fed monetizes assets (QE) it adds to bank reserves (monetary base) AND adds to demand deposits at commercial banks (money supply) that held those assets. Where does the Fed get money to purchase the assets? They create it. Obviously no “printing” is happening it’s on a computer. When the Fed buys the assets they add credit, giving the banks more than they need in reserves. Banks then seek to make a profit by lending that extra money, thus “stimulating” the economy. The whole point of QE is increasing liquidity by increasing the supply of money.
- brobinson 7y agoQE is neutral to the monetary base. The central bank buys government bonds from banks and pays for them using reserves. You can see a big spike in the money supply, but there is no corresponding increase in inflation.
- driverdan 7y agoI downvoted you because that's not what's happening here at all. These are all short term loans, mostly overnight. No one is giving away money.