3 ms·

I know "QE with extra steps" is a R&M reference, but keep in mind that R&M was wrong, what they described wasn't actually slavery (you can make anything anythin

by Zetice 4y ago

I know "QE with extra steps" is a R&M reference, but keep in mind that R&M was wrong, what they described wasn't actually slavery (you can make anything anything else if you squint hard enough and/or remove the critical "extra steps"), and this isn't actually QE (as I, random Internet dweller, understand it anyway).

yieldcrv 4y ago
I don't know who R&M is. I don't know anything about the slavery reference. Feel free to explain what you're talking about. I read press releases from the federal financial agencies and look at their balance sheet. The similarity here is that money is being created and injected into the balance sheets of private participants in the economy, money that wouldn't have seeped out to purchase things now will, overlapping in the venn diagram with QE. Another similarity is that additional US treasury bonds are now on the Federal Reserve's balance sheet, in direct exchange, overlapping in the venn diagram with QE. The difference is that the Fed is not acting as direct buying pressure in the US Treasury bond market, as the extra step is that people deposit the bonds as collateral to the fed and the feds will own them if the banks stop repaying. We're focusing on the similarities, you're focusing on the difference. I feel the similarities are a policy pivot in the worst way. I don't find the differences to be relevant.
- Zetice 4y ago
  "<X> with extra steps" is from a show called "Rick & Morty" [0]. Surprising how you picked up on the phrase without even knowing what the show is. As for your comment itself, it seems like you gloss over the similarities and ignore the differences. For example, you say "money is being created" but this is objectively false. As is your claim that this money is "seeping" anywhere; it isn't doing anything other than ensuring bank solvency. Your comment is what I'd expect from someone who wants to call this action by the Fed "Quantitive Easing" but doesn't want to bother actually considering if it is or not. It is not, as you said, because of the critical and relevant differences. This money isn't going back out into the economy as you claim, which is the meaningful mechanism through which QE has its effects. Without that mechanism, calling this QE is misleading at best. [0] https://knowyourmeme.com/memes/well-that-sounds-like-slavery-with-extra-steps https://knowyourmeme.com/memes/well-that-sounds-like-slavery...
  - yieldcrv 4y ago
    My thoughts are that some money was going to be parked at the banks. Some of that money wasn't going to be redeemed, some of it would have been impossible to redeem because the banks were sitting on losses. Now that everyone is woken up to that reality, they want to move it around now into other banks and other assets, and actually can. It is impossible to stop at just ensuring bank solvency.
    - Zetice 4y ago
      But that doesn't track; they may want to move it around, but there's no place to move it to. Nothing not-absolutely-insane would return positive yields in the time it would need to before the loan matured. That's the whole point of the borrowing rate it's set to.

by Zetice 4y ago

yieldcrv 4y ago

I don't know who R&M is. I don't know anything about the slavery reference. Feel free to explain what you're talking about. I read press releases from the federal financial agencies and look at their balance sheet. The similarity here is that money is being created and injected into the balance sheets of private participants in the economy, money that wouldn't have seeped out to purchase things now will, overlapping in the venn diagram with QE. Another similarity is that additional US treasury bonds are now on the Federal Reserve's balance sheet, in direct exchange, overlapping in the venn diagram with QE. The difference is that the Fed is not acting as direct buying pressure in the US Treasury bond market, as the extra step is that people deposit the bonds as collateral to the fed and the feds will own them if the banks stop repaying. We're focusing on the similarities, you're focusing on the difference. I feel the similarities are a policy pivot in the worst way. I don't find the differences to be relevant.

Zetice 4y ago
"<X> with extra steps" is from a show called "Rick & Morty" [0]. Surprising how you picked up on the phrase without even knowing what the show is. As for your comment itself, it seems like you gloss over the similarities and ignore the differences. For example, you say "money is being created" but this is objectively false. As is your claim that this money is "seeping" anywhere; it isn't doing anything other than ensuring bank solvency. Your comment is what I'd expect from someone who wants to call this action by the Fed "Quantitive Easing" but doesn't want to bother actually considering if it is or not. It is not, as you said, because of the critical and relevant differences. This money isn't going back out into the economy as you claim, which is the meaningful mechanism through which QE has its effects. Without that mechanism, calling this QE is misleading at best. [0] https://knowyourmeme.com/memes/well-that-sounds-like-slavery-with-extra-steps https://knowyourmeme.com/memes/well-that-sounds-like-slavery...
- yieldcrv 4y ago
  My thoughts are that some money was going to be parked at the banks. Some of that money wasn't going to be redeemed, some of it would have been impossible to redeem because the banks were sitting on losses. Now that everyone is woken up to that reality, they want to move it around now into other banks and other assets, and actually can. It is impossible to stop at just ensuring bank solvency.
  - Zetice 4y ago
    But that doesn't track; they may want to move it around, but there's no place to move it to. Nothing not-absolutely-insane would return positive yields in the time it would need to before the loan matured. That's the whole point of the borrowing rate it's set to.