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I have heard people claim that QE is disinflationary because the dollars are tied up and don't add velocity but I haven't grokked their reasons why.
by 01100011 5y ago
I have heard people claim that QE is disinflationary because the dollars are tied up and don't add velocity but I haven't grokked their reasons why.
- pram 5y agoQE and the repo operations the Fed does are “providing liquidity” to activity that would (presumably) normally happen anyway. I’d assume this would be the reason. You can argue the activity wouldn’t happen if interest rates weren’t kept artificially low. Another thing is these security purchases are largely insulated from what is used to calculate inflation. These are exchanges between banks and funds and similar.