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That's not a fair comparison. QE are loans that get paid back, and bailouts are equity purchases. The government makes money on these programs. Stimulus paym

That's not a fair comparison. QE are loans that get paid back, and bailouts are equity purchases. The government makes money on these programs. Stimulus payments are gifts, and the government loses money on them. To be clear, the stimulus payments are essential for helping people and are a great thing for the wider economy. But you can't compare them dollar-for-dollar, as they are not like each other.

throwanem 6y ago
When was profitability added to governments' remit?
- andrewmutz 6y ago
  The government is not chartered to make money, but that's frequently a side effect of lending and equity. You can see the numbers here from the last bailout: https://projects.propublica.org/bailout/ https://projects.propublica.org/bailout/ The government handed out $634B. The government recouped $390B + $364B = $754B. So, $120B profit. Again, I'm not saying we should bailout corporations and ignore the little guy. The stimulus checks are critical. But you can't compare them dollar for dollar.
- 6gvONxR4sf7o 6y ago
  It's not profitability for profitability's sake. It's a positive number on a budget balance sheet. At the end of the day, they have some kind of budget to spend on stuff. The sum of the expenses has to fit the budget. If this comes out as a net positive, they can spend more elsewhere, like on unemployment benefits or schools or whatever else they're planning to need money for in the future.
  - Armisael16 6y ago
    > The sum of the expenses has to fit the budget. Is this actually the case? They have a money printer. What’s the problem with using it, as long as inflation stays low? I mean, I suppose technically seigniorage is part of the budget but then your statement is just a statement of definitions, not an insight.
andreilys 6y ago
Do you think the government will get paid back for buying junk bonds from companies likely to go bankrupt?
- frockington1 6y ago
  Bond holders are high on the ladder in terms of who gets paid if a company defaults. For the few companies that do go completely insolvent they will still receive most of the principal back
- smabie 6y ago
  Yeah, probably. They won't necessarily get all of the principle, but with the equity holders wiped out, there's probably enough to divy up.
gregwebs 6y ago
QE is much more than loans that get paid back. The fed's balance sheet actually went up by 4 trillion dollars during the 2008 recovery [1], even though the loan program was less than 1 trillion. Much of QE finances government debt. But the fed also still holds more than a trillion dollars of mortgage backed securities. [1] https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
- andrewmutz 6y ago
  Government debt and MBS are loans that are continuously being paid back.
  - koheripbal 6y ago
    Yep - and the US government actually MADE money on the MBS it bought. People who are angry seldom take the time to understand how finance works.
    - gregwebs 6y ago
      That's 1.9 trillion in MBS on the balance sheet now. It seems like you have counted those eggs before they have hatched! If we could really make money on these we would get them off the balance sheet, but that is proving to be impossible to do. I guess you could argue that we're making money, but that's only because we get to print money to buy these for free and de-value everyone else's dollars.
      - jessaustin 6y ago
        It's not really surprising, that the same dumb accounting mistakes that got all these "2B2F" banks in trouble in the first place, are also made by their ardent fans on HN. GP is the same joker who dismisses people as "angry" and "uneducated" elsewhere ITT, but doesn't actually have any idea what happened. Reading Timmy Geithner's book doesn't help... https://www.rollingstone.com/politics/politics-features/2008-financial-bailout-809731/ https://www.rollingstone.com/politics/politics-features/2008...

throwanem 6y ago

When was profitability added to governments' remit?

andrewmutz 6y ago
The government is not chartered to make money, but that's frequently a side effect of lending and equity. You can see the numbers here from the last bailout: https://projects.propublica.org/bailout/ https://projects.propublica.org/bailout/ The government handed out $634B. The government recouped $390B + $364B = $754B. So, $120B profit. Again, I'm not saying we should bailout corporations and ignore the little guy. The stimulus checks are critical. But you can't compare them dollar for dollar.
6gvONxR4sf7o 6y ago
It's not profitability for profitability's sake. It's a positive number on a budget balance sheet. At the end of the day, they have some kind of budget to spend on stuff. The sum of the expenses has to fit the budget. If this comes out as a net positive, they can spend more elsewhere, like on unemployment benefits or schools or whatever else they're planning to need money for in the future.
- Armisael16 6y ago
  > The sum of the expenses has to fit the budget. Is this actually the case? They have a money printer. What’s the problem with using it, as long as inflation stays low? I mean, I suppose technically seigniorage is part of the budget but then your statement is just a statement of definitions, not an insight.

andreilys 6y ago

Do you think the government will get paid back for buying junk bonds from companies likely to go bankrupt?

frockington1 6y ago
Bond holders are high on the ladder in terms of who gets paid if a company defaults. For the few companies that do go completely insolvent they will still receive most of the principal back
smabie 6y ago
Yeah, probably. They won't necessarily get all of the principle, but with the equity holders wiped out, there's probably enough to divy up.

gregwebs 6y ago

QE is much more than loans that get paid back. The fed's balance sheet actually went up by 4 trillion dollars during the 2008 recovery [1], even though the loan program was less than 1 trillion. Much of QE finances government debt. But the fed also still holds more than a trillion dollars of mortgage backed securities. [1] https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

andrewmutz 6y ago
Government debt and MBS are loans that are continuously being paid back.
- koheripbal 6y ago
  Yep - and the US government actually MADE money on the MBS it bought. People who are angry seldom take the time to understand how finance works.
  - gregwebs 6y ago
    That's 1.9 trillion in MBS on the balance sheet now. It seems like you have counted those eggs before they have hatched! If we could really make money on these we would get them off the balance sheet, but that is proving to be impossible to do. I guess you could argue that we're making money, but that's only because we get to print money to buy these for free and de-value everyone else's dollars.
    - jessaustin 6y ago
      It's not really surprising, that the same dumb accounting mistakes that got all these "2B2F" banks in trouble in the first place, are also made by their ardent fans on HN. GP is the same joker who dismisses people as "angry" and "uneducated" elsewhere ITT, but doesn't actually have any idea what happened. Reading Timmy Geithner's book doesn't help... https://www.rollingstone.com/politics/politics-features/2008-financial-bailout-809731/ https://www.rollingstone.com/politics/politics-features/2008...