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I agree, but QE is not a dumb idea per se, it's just the way that it's done is severely lacking. What you want is inflation, which means you want to increase th
by tormeh 12y ago
I agree, but QE is not a dumb idea per se, it's just the way that it's done is severely lacking. What you want is inflation, which means you want to increase the amount of money in circulation. A simple way to do that is for the central bank to make money up and give, say, 20000 yen to each citizen every year until deflation went away. This is called a helicopter drop in finance-speak, and seen as very radical. Deflation should be cause for celebration: It means the central bank can print money without hurting the economy. The money thus printed could be used for all kinds of good purposes, but it's not done.
I guess the reason helicopter drops are not done is that it kinda breaks some illusions people have with money. People generally don't know that central banks buy second hand government bonds, basically giving money to those who hold that kind of asset. In short, there's no law of physics that say you have to work for money. I guess they don't think the plebes would respond well to knowing this.
- techdragon 12y agoAustralia did one and it worked wonderfully. We rode out most of the brunt of the impact of the 2008 'GFC' with little disaster. The worst of it for most of us was that getting a home loan got a bit tougher, but really this was more a case of returning to earlier norms than really getting "harder"
- zeyus 12y agoAustralia has just delayed it, we are still letting people borrow more money than they can ever hope to repay (interest only loans on owner occupied places) now with our relationship with China growing tenuous (they're making deals with the USA and Russia instead of Australia), it spells bad news.
- adventured 12y agoTo what extent does Australia's tie to the Chinese economy deserve primary credit for Australia weathering the GFC?
- cylinder 12y agoAustralia did it by increasing immigration which is only a temporary solution. GDP per capita fell in the GFC.