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No matter how much qe the fed does , there will be no inflation. The money goes to banks and financial institutions. They do not spend it on real goods and serv
by bawana 6y ago
No matter how much qe the fed does , there will be no inflation. The money goes to banks and financial institutions. They do not spend it on real goods and services. Rather they implement financial tools to get higher roi. Thus too many dollars chase too few financial tools resulting in equity inflation (a rising stock market) The real market of goods and services is unmoved and as a result wages and prices are stable (stagnant). The fed only helps banks because they use a system designed in the 1930s. Back then before credit cards, internet banking, before the repeal of Glass Steagall, banks drove the economy by lending to people. (See ‘It’s a Wonderful 𝐋𝐢𝐟𝐞’) To move the economy, the fed has to put money into the hands of people who will spend it. Each taxpayer should get a fed account with a monthly stipend of fed-coin. Fed-coin will have a half-life to encourage people to spend it. Once spent its value will be fixed as it gets converted to regular dollars
- whatok 6y agoThere might not be CPI inflation but there's definite asset inflation which trickles down to real estate which trickles down to rent which trickles down to money in everyday consumers' pockets.
- jsdevtom 6y agoPrinting money is, by definition inflation. Printing money in to the hands of people who spend it is stealing from savers. Effectively discouraging responsible financial decisions in favour of lending.
- defertoreptar 6y agoA recession causes deflation, which costs people jobs and quality of life. When the Fed prints money, it's counteracting the deflation. When the balance sheet is trillions or dollars, there is no worry of inflation. The Fed can easily vanish that money supply by selling assets and unwinding bonds. As you've pointed out, savers lose. In a recession without money-printing, their savings would've been worth much more. As it turns out, preventing job loss and lower quality of life is more politically appealing to decision makers than helping responsible savers.
- bawana 6y agothere will be no inflation because the money is not being spent. It is being invested. As for savings, no sane person would put their money into a savings account. Why lend your money to the bank (if you even have any to spare)?!
- neuromancer2701 6y agoI think it is better to say that there will be no broad based national inflation of the dollar. Cars, homes, stocks will definitely be inflated.
- Rury 6y ago> It is being invested That's where the inflation will lie then. There is no such thing as a free lunch.
- danans 6y ago> Printing money in to the hands of people who spend it is stealing from savers People spending is the foundation of our consumer economy. In times like this the type of spending that is being supported by direct emergency payment measures to people isn't profligate. Regular people aren't taking the money to go to the casino - they're using it to pay for basics like food and shelter. Even if they're using it to pay for video games or movie streaming, at least it keeps some money flowing through the economy. In contrast, a savings glut leads directly to underinvestment in the economy, contributing to economic stagnation and even income inequality in consumer based economies [1]. Printing money to buy bonds from corporations, however necessary in the short term, should come with serious strings attached, like a public stake in the ownership of these corporations. Sadly, that appears to be blocked at the moment on various political and legal fronts. Also, your savings are indifferentiable from someone else's borrowing if they are in cash at a bank or invested in securities like stocks. If it is cash at the bank account, it's backed by the FDIC up to 250k. If it's invested in securities, you get to deduct losses from your taxes. If you really want savings that cannot be used for lending at all, you need to buy land outright, sit on it, and be content with zero to negative returns. 1. https://carnegieendowment.org/chinafinancialmarkets/69838 https://carnegieendowment.org/chinafinancialmarkets/69838
- bawana 6y agoMaybe it’s time to remind the fed of who is in charge. Roll out the guillotine onto the Washington mall. A beheading in effigy.
- thephyber 6y agoI'm curious; what do you think this will accomplish? If the Federal Reserve thinks this is within their dual mandate and you scare them into doing less than their mandate... what do you expect will happen (to the Fed, the economy, monetary and fiscal policy)? In a certain prism, the Federal Reserve is the only national institution in the USA (yes, I'm aware it's technically a private entity) which is still effective at doing its job.
- atomi 6y ago> Fed-coin will have a half-life to encourage people to spend it. You're absolutely right in everything you've said. And if you're looking at stimulating the economy your suggestion is certainly interesting. And I do see the importance of stimulating the economy to maintain peace and make sure the masses are placated and content. But, it's a bit concerning to think what that kind of consumerism will eventually do to the environment.
- segmondy 6y agoYou say this as if the Feds wants inflation, they don't want inflation, that's the entire point of QE.