6 ms·

I wonder who downvotes this and why.

by cft 6y ago

pphysch 6y ago
"Lalala I cant hear you, stonks go UP" probably
diogenescynic 6y ago
Probably someone who actually looked into what QE actually does--it's more deflationary than inflationary. Look at Japan--they've been doing forms of QE for decades. These Fed printing money, inflation trolls are almost never right even though they've been screaming about it for decades.
- kovacs 6y ago
  Trolls? Sounds like YOU need to understand what QE is. From Wikipedia... "Quantitative easing (QE) is a monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity." Sounds pretty inflationary to me. Especially when they buy up illiquid mark to fantasy assets that nobody wants and unloads them on the taxpayer to foot the bill while their buddies get a wad of cash to redeploy, into the stock market as it turns out. How is that not inflationary exactly? Oh, the destruction of those bad assets? Yeah I suppose but the socialization of that across America hides that and what's left is pumped up asset prices that cause the average American to have to work even harder to save up to buy and get worse returns because the fed's buddies got in first and drove prices higher. Have you happened to look at the price of assets since 2008 vs. the actual recovery of the economy? Have you seen that S&P earnings were flat to down for the past 4 years going into this crisis? Yet what's happened to stocks? That's right they've tripled since 2009. Go look at any piece of real estate now almost anywhere vs. 10-20 years go and tell me there's been no inflation. I realize it's different everywhere but the idea that we've had "low inflation" over the last 10 years is completely laughable because the calculation removes the highest cost items. The fed has effectively destroyed any price discovery on any assets. It's taken increasingly larger amounts of QE to goose the fake economy. And now for its encore it has overreacted to save their buddies and decided to lower rates to zero and tell the world that it will never let assets fall. How in the world is that not inflationary when you're flooding the market with free money and enabling those at the top to buy up assets and run up prices? Every single person that works to earn USD and saves USD should be livid and rioting in the streets for the theft that's been, and continues to occur. Also, your example of Japan isn't apples to apples. The US has the world's reserve currency and can print as much of it as it wants, Japan does not. Japan is a nation of savers so getting them to spend is harder than a US citizen. We may have short term deflation and that's what the fed is scared of but make no mistake about it what they've done is inflationary as they will well overshoot whatever deflationary impact any failures have. Hell, they've made it clear that's what they're gonna do.
  - brobinson 6y ago
    "Essentially, the mechanism of QE is that the Federal Reserve and other central banks are buying government bonds - but not directly from the Treasury Department. They’re buying government bonds from banks and paying for them with central bank reserves. Crucially, these cash reserves are held by the central bank and pay an interest rate just as the treasury bonds did. In a sense the Federal Reserve swapped ten year treasury bonds with hypothetical Federal Reserve Bonds. That’s why you can see a graph of the money supply that shows a massive increase, and yet inflation has not spiked. The money never entered the economy - it is being held in a vault at the central bank (or more realistically is just a number in a spreadsheet). In practical terms it was an asset swap, not a true increase in the money supply." https://www.cassandracapital.net/post/quantitative-easing-has-prevented-a-debt-crisis-but-we-re-reaching-the-physical-limits-of-qe https://www.cassandracapital.net/post/quantitative-easing-ha...
    - MiroF 6y ago
      > The money never entered the economy - it is being held in a vault at the central bank (or more realistically is just a number in a spreadsheet) This is just incoherent. The money does enter the economy because now the banks can lend out money without their cash reserves dipping too low. The reason that inflation is not spiking is because of the actual reason that the Fed reserve felt that it was necessary to engage in QE in the first place - huge amounts of deflationary pressure. Without the QE, we would be seeing deflation right now.
      - diogenescynic 6y ago
        >Japan’s QE has been about four times that of the U.S. For the U.S. to do what Japan has done, the Fed would have to QUADRUPLE down and print $12 trillion in addition to the $4 trillion it has already printed. >Try proposing that after the last round of QE finally fails. >But even if the Fed tried to print a fraction of that, it still wouldn’t result in hyperinflation. >Europe has printed almost twice as much as what we have, when compared to GDP, and it has very low inflation and lower growth than the U.S. That’s because our workforce and demographics are flattening, but not declining, as is the trend in Europe and Japan. https://www.economyandmarkets.com/economy/central-banks/japans-monumental-qe-done-nothing-inflation-growth/ https://www.economyandmarkets.com/economy/central-banks/japa... QE is deflationary.
- cft 6y ago
  Japan's never tried printing the global reserve currency. Yen was a much smaller local experiment. There's no guarantee that Brazil will continue paying USD for Huawei equipment indefinitely.
  - toomuchtodo 6y ago
    Let us all embrace the natural experiment about to occur.
MattGaiser 6y ago
QE has been going on for years since 2008. Still waiting on that inflation. https://www.usinflationcalculator.com/inflation/historical-inflation-rates/ https://www.usinflationcalculator.com/inflation/historical-i... QE contains an easy break on inflation. If it starts surging, the market can just have the assets the fed holds added back to it.
- cft 6y ago
  In the past QE was injected from the top (thus coastal real estate and asset bubbles). But now it has been injected from the bottom too (PPP)
  - vkou 6y ago
    The overwhelming majority of QE2020 has gone to the top (Fed purchasing assets.)
- viklove 6y ago
  You're looking in the wrong place. QE doesn't go to families, so it doesn't increase the cost of milk, apples, or eggs. It went to the wealthiest banks and corporations, and wouldya look at that -- asset prices are inflated, "startups" have absurd valuations, and the wealth gap is larger than ever before. The inflation is there, clear as day. You're just not looking in the right place and you think you're so smart because of it.
  - losteric 6y ago
    THIS, so much this ... for years people said bottom-up stimulus plans would inevitably cause inflation. Injecting the money on top changes little, now it's just trickle-down inflation. (and if this doesn't hold, I would love to understand why)
    - MiroF 6y ago
      It doesn't hold because people get the money via loans at low interest rates and then spend more. Fed policy has a clear impact on AD.
Barrin92 6y ago
Because there's no indication of inflation let alone hyperinflation in any economic data or a 'currency crisis' whatever that means. In fact a sharp decline in demand seems to have outweighed reduction in supply leading to if anything, deflation. (which is in line with data as inflation has slowed to about 0.3%, down a percent from last year). Given how large the service sector is in particular in the US, and how strongly it is affected by social distancing measures, disinflationary preasures are very likely to persist for a while.
- cft 6y ago
  "US food prices see historic jump and are likely to stay high" https://abcnews.go.com/Health/wireStory/us-food-prices-historic-jump-stay-high-70969164 https://abcnews.go.com/Health/wireStory/us-food-prices-histo...
  - Barrin92 6y ago
    Sure, but the US economy doesn't just run on food. In that particular sector the price increases make inuitive sense, as consumption is expected to stay mostly steady while supply chains have been heavily impacted. Inflation is measured, for very obvious reasons, by looking at the general price level of goods and services in the economy, not just any given sector.
    - nickff 6y ago
      I agree that there's little sign of unusually high general inflation, but you said "there's no indication of inflation let alone hyperinflation in any economic data", and the sudden rise in food prices is definitely an indication of inflation. You may want to coach/moderate your statements a little more in the future.
      - Barrin92 6y ago
        No, I don't need to do that to be honest. A 2% increase in food prices while the general price levels fall is not an indication of inflation unless someone redefines inflation and cherry picks data to advance their cause. (In this case the annual doomsday prediction about inflation, which is normal on HN with its substantial contingent of people who rant about fiat money).

I wonder who downvotes this and why.

by cft 6y ago

I wonder who downvotes this and why.

pphysch 6y ago

"Lalala I cant hear you, stonks go UP" probably

diogenescynic 6y ago

Probably someone who actually looked into what QE actually does--it's more deflationary than inflationary. Look at Japan--they've been doing forms of QE for decades. These Fed printing money, inflation trolls are almost never right even though they've been screaming about it for decades.

kovacs 6y ago
Trolls? Sounds like YOU need to understand what QE is. From Wikipedia... "Quantitative easing (QE) is a monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity." Sounds pretty inflationary to me. Especially when they buy up illiquid mark to fantasy assets that nobody wants and unloads them on the taxpayer to foot the bill while their buddies get a wad of cash to redeploy, into the stock market as it turns out. How is that not inflationary exactly? Oh, the destruction of those bad assets? Yeah I suppose but the socialization of that across America hides that and what's left is pumped up asset prices that cause the average American to have to work even harder to save up to buy and get worse returns because the fed's buddies got in first and drove prices higher. Have you happened to look at the price of assets since 2008 vs. the actual recovery of the economy? Have you seen that S&P earnings were flat to down for the past 4 years going into this crisis? Yet what's happened to stocks? That's right they've tripled since 2009. Go look at any piece of real estate now almost anywhere vs. 10-20 years go and tell me there's been no inflation. I realize it's different everywhere but the idea that we've had "low inflation" over the last 10 years is completely laughable because the calculation removes the highest cost items. The fed has effectively destroyed any price discovery on any assets. It's taken increasingly larger amounts of QE to goose the fake economy. And now for its encore it has overreacted to save their buddies and decided to lower rates to zero and tell the world that it will never let assets fall. How in the world is that not inflationary when you're flooding the market with free money and enabling those at the top to buy up assets and run up prices? Every single person that works to earn USD and saves USD should be livid and rioting in the streets for the theft that's been, and continues to occur. Also, your example of Japan isn't apples to apples. The US has the world's reserve currency and can print as much of it as it wants, Japan does not. Japan is a nation of savers so getting them to spend is harder than a US citizen. We may have short term deflation and that's what the fed is scared of but make no mistake about it what they've done is inflationary as they will well overshoot whatever deflationary impact any failures have. Hell, they've made it clear that's what they're gonna do.
- brobinson 6y ago
  "Essentially, the mechanism of QE is that the Federal Reserve and other central banks are buying government bonds - but not directly from the Treasury Department. They’re buying government bonds from banks and paying for them with central bank reserves. Crucially, these cash reserves are held by the central bank and pay an interest rate just as the treasury bonds did. In a sense the Federal Reserve swapped ten year treasury bonds with hypothetical Federal Reserve Bonds. That’s why you can see a graph of the money supply that shows a massive increase, and yet inflation has not spiked. The money never entered the economy - it is being held in a vault at the central bank (or more realistically is just a number in a spreadsheet). In practical terms it was an asset swap, not a true increase in the money supply." https://www.cassandracapital.net/post/quantitative-easing-has-prevented-a-debt-crisis-but-we-re-reaching-the-physical-limits-of-qe https://www.cassandracapital.net/post/quantitative-easing-ha...
  - MiroF 6y ago
    > The money never entered the economy - it is being held in a vault at the central bank (or more realistically is just a number in a spreadsheet) This is just incoherent. The money does enter the economy because now the banks can lend out money without their cash reserves dipping too low. The reason that inflation is not spiking is because of the actual reason that the Fed reserve felt that it was necessary to engage in QE in the first place - huge amounts of deflationary pressure. Without the QE, we would be seeing deflation right now.
    - diogenescynic 6y ago
      >Japan’s QE has been about four times that of the U.S. For the U.S. to do what Japan has done, the Fed would have to QUADRUPLE down and print $12 trillion in addition to the $4 trillion it has already printed. >Try proposing that after the last round of QE finally fails. >But even if the Fed tried to print a fraction of that, it still wouldn’t result in hyperinflation. >Europe has printed almost twice as much as what we have, when compared to GDP, and it has very low inflation and lower growth than the U.S. That’s because our workforce and demographics are flattening, but not declining, as is the trend in Europe and Japan. https://www.economyandmarkets.com/economy/central-banks/japans-monumental-qe-done-nothing-inflation-growth/ https://www.economyandmarkets.com/economy/central-banks/japa... QE is deflationary.
cft 6y ago
Japan's never tried printing the global reserve currency. Yen was a much smaller local experiment. There's no guarantee that Brazil will continue paying USD for Huawei equipment indefinitely.
- toomuchtodo 6y ago
  Let us all embrace the natural experiment about to occur.

MattGaiser 6y ago

QE has been going on for years since 2008. Still waiting on that inflation. https://www.usinflationcalculator.com/inflation/historical-inflation-rates/ https://www.usinflationcalculator.com/inflation/historical-i... QE contains an easy break on inflation. If it starts surging, the market can just have the assets the fed holds added back to it.

cft 6y ago
In the past QE was injected from the top (thus coastal real estate and asset bubbles). But now it has been injected from the bottom too (PPP)
- vkou 6y ago
  The overwhelming majority of QE2020 has gone to the top (Fed purchasing assets.)
viklove 6y ago
You're looking in the wrong place. QE doesn't go to families, so it doesn't increase the cost of milk, apples, or eggs. It went to the wealthiest banks and corporations, and wouldya look at that -- asset prices are inflated, "startups" have absurd valuations, and the wealth gap is larger than ever before. The inflation is there, clear as day. You're just not looking in the right place and you think you're so smart because of it.
- losteric 6y ago
  THIS, so much this ... for years people said bottom-up stimulus plans would inevitably cause inflation. Injecting the money on top changes little, now it's just trickle-down inflation. (and if this doesn't hold, I would love to understand why)
  - MiroF 6y ago
    It doesn't hold because people get the money via loans at low interest rates and then spend more. Fed policy has a clear impact on AD.

Barrin92 6y ago

Because there's no indication of inflation let alone hyperinflation in any economic data or a 'currency crisis' whatever that means. In fact a sharp decline in demand seems to have outweighed reduction in supply leading to if anything, deflation. (which is in line with data as inflation has slowed to about 0.3%, down a percent from last year). Given how large the service sector is in particular in the US, and how strongly it is affected by social distancing measures, disinflationary preasures are very likely to persist for a while.

cft 6y ago
"US food prices see historic jump and are likely to stay high" https://abcnews.go.com/Health/wireStory/us-food-prices-historic-jump-stay-high-70969164 https://abcnews.go.com/Health/wireStory/us-food-prices-histo...
- Barrin92 6y ago
  Sure, but the US economy doesn't just run on food. In that particular sector the price increases make inuitive sense, as consumption is expected to stay mostly steady while supply chains have been heavily impacted. Inflation is measured, for very obvious reasons, by looking at the general price level of goods and services in the economy, not just any given sector.
  - nickff 6y ago
    I agree that there's little sign of unusually high general inflation, but you said "there's no indication of inflation let alone hyperinflation in any economic data", and the sudden rise in food prices is definitely an indication of inflation. You may want to coach/moderate your statements a little more in the future.
    - Barrin92 6y ago
      No, I don't need to do that to be honest. A 2% increase in food prices while the general price levels fall is not an indication of inflation unless someone redefines inflation and cherry picks data to advance their cause. (In this case the annual doomsday prediction about inflation, which is normal on HN with its substantial contingent of people who rant about fiat money).