3 ms·

> They are not buying or rather spending more - that's the problem I think that you might be missing the point of the GP. They're not saying that trickle down

> They are not buying or rather spending more - that's the problem I think that you might be missing the point of the GP. They're not saying that trickle down will invigorate the economy. They're saying that QE is bread and circuses for the wealthy. Asset inflation is precisely the point. This does has some negative secondary effects (the GP mentioned housing, education, and medicine), but as long as consumer goods stay cheap there's essentially no downside to inflating the cost of Veblen goods.

jcfrei 6y ago
> Asset inflation is precisely the point. No it's not. The mandate of the FED is (among others) to maximize employment. The FED hopes to achieve this by stabilizing asset prices, therefore stabilizing pensions and housing prices, which creates consumer confidence and incentivizes spending. However as we can see there are diminishing returns - consumers are not nearly spending as much as the FED balance sheet would make you believe. The real problem I see with FED interventionism is that it lets fiscal policy off the hook. If you want to actually stimulate the economy you need a strong effort by the politicians, increase government debt and let the government massively invest in infrastructure, health, education or even create a universal basic income. However because deficits are already high, lots of politicians (and a sizeable part of the voters for that matter) are not willing to do that. Central banks around the world keep calling for more fiscal measures - but in reality politicians are mostly kicking the can down the road.
- camelite 6y ago
  The commenter you are responding to is positing the hidden mandate of the Fed is to inflate asset prices on behalf of the already wealthy. So to say the feds stated mandate is contrary to that is to say nothing.

3 ms·

> They are not buying or rather spending more - that's the problem I think that you might be missing the point of the GP. They're not saying that trickle down

by lazulicurio 6y ago

jcfrei 6y ago
> Asset inflation is precisely the point. No it's not. The mandate of the FED is (among others) to maximize employment. The FED hopes to achieve this by stabilizing asset prices, therefore stabilizing pensions and housing prices, which creates consumer confidence and incentivizes spending. However as we can see there are diminishing returns - consumers are not nearly spending as much as the FED balance sheet would make you believe. The real problem I see with FED interventionism is that it lets fiscal policy off the hook. If you want to actually stimulate the economy you need a strong effort by the politicians, increase government debt and let the government massively invest in infrastructure, health, education or even create a universal basic income. However because deficits are already high, lots of politicians (and a sizeable part of the voters for that matter) are not willing to do that. Central banks around the world keep calling for more fiscal measures - but in reality politicians are mostly kicking the can down the road.
- camelite 6y ago
  The commenter you are responding to is positing the hidden mandate of the Fed is to inflate asset prices on behalf of the already wealthy. So to say the feds stated mandate is contrary to that is to say nothing.