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>It’s a loan, not QE QE is literally just funky loans.
by antibasilisk 4y ago
>It’s a loan, not QE
QE is literally just funky loans.
- Retric 4y agoNo QE is purchasing something not a loan. https://en.wikipedia.org/wiki/Quantitative_easing https://en.wikipedia.org/wiki/Quantitative_easing. QE creates money from thin air when distressed assets fail. This doesn’t because the asset is still on the banks balance sheet and can thus cause the bank to fail. Which is a critical distinction.
- antibasilisk 4y agoThe 'something' here being bonds 99% of the time, so... a funky loan.
- Retric 4y agoThe loan was compared to QE, not what was being purchased. > No QE is purchasing something [generally a debt], not making a new loan.
- antibasilisk 4y agoPurchasing a bond is effectively just loaning money. I don't know why your distinction would have any relevency
- Retric 4y agoIt make a huge difference if the bond fails. Bob the bank buys a bond from Alice. Criss at the central bank in charge of QE buys if from Bob. Alice goes bankrupt and Bob doesn’t care. Bob the bank buys a bond from Alice. Criss at the central bank loans Bob money. Alice goes bankrupt and Bob’s bank fails.
- antibasilisk 4y agoExcept that Alice here is the government, and in both scenarios Adam The Average Guy loses purchasing power, which is the whole point. The distinction here is purely nitpicking.
- Retric 4y agoAgain no, the government accepts loans to private citizens as collateral in these loans. As a rule these banks just don’t own that many government bonds the returns suck.