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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 dec

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.

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.