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Why is QE a market distortion? Is all monetary policy a market distortion? If we used a gold standard is that not a market distortion? If the price of gold chan
by JamesBarney 7y ago
Why is QE a market distortion? Is all monetary policy a market distortion? If we used a gold standard is that not a market distortion? If the price of gold changes drastically due to gold mines closing/opening changing interest rates is that a market distortion?
- deevolution 7y ago"Government manipulation"
- lmm 7y agoQE is a market distortion because it consists of orders intended primarily to manipulate prices.
- JamesBarney 7y agoWhich basically includes all monetary policy.
- mindslight 7y agoTechnically getting $50 in a Christmas card is a market distortion. What matters is the scale of it. With technology and economic optimization (eg offshoring), we expect the cost of production to continually drop. Yet the Fed has seen fit to declare that the exact opposite should generally occur to consumer prices. How this plays out is obvious if you draw a diagram of the feedback loop that is the CPI. Prices of manufactured goods do go slowly down. To keep the overall average rising other components have to go up, and the natural ones are where consumers have access to newly-created money (debt). Easy credit then prices straightforward cash out of the market, pushing us all to sign up for more overfinancialized monthly payments instead of simply saving for a rainy day.