4 ms·

You forgot QE1, QE2, twist, and QE3 where the Fed digitally created $4 trillion and bought up assets. That $4T didn't exist until the Fed conjured it up. Thr

by jhulla 12y ago

You forgot QE1, QE2, twist, and QE3 where the Fed digitally created $4 trillion and bought up assets. That $4T didn't exist until the Fed conjured it up. Through a middleman, it was handed to the US Treasury.

yequalsx 12y ago
I don't fully understand QE but I believe there is a balance sheet. It's not like money was created out of thin air as such. It did not increase M1. I'm guessing it did increase MB but I don't know. Of course my perception may be completely wrong.
- nostromo 12y ago
  > It's not like money was created out of thin air as such. No, it was. Literally. The Fed can and does create money and then buy assets with that new money.
- CyberDildonics 12y ago
  It is the Fed creating money out of thin air buying treasuries and it does increase M1. Here is the fed's own graph of M1. http://research.stlouisfed.org/fred2/series/M1 http://research.stlouisfed.org/fred2/series/M1 You can see where is starts to really skyrocket, which is where 16 trillion was given to the banks in the bailouts (or $53,000 for every person in the USA for scale). This money hasn't even made it into M2 yet.
hnnewguy 12y ago
>until the Fed conjured it up. So in what way would you have money production occur, if not "out of thin air"?
- msandford 12y ago
  Historically it has been people digging in the dirt to find precious metals and then coining those metals. Worked pretty well for thousands of years and doesn't allow people to counterfeit. If you want money to be a store of value there's no replacement to something that can't be faked. Personally I like the idea of my money holding value but from what I hear that's somewhere between "old fashioned" and "retardedly luddite" these days.
  - hnnewguy 12y ago
    >Worked pretty well for thousands of years and doesn't allow people to counterfeit. Did it really? Perhaps you should refer to the original definition of "debasement". >I like the idea of my money holding value but from what I hear that's somewhere between "old fashioned" and "retardedly luddite" these days. Hah, I wouldn't define it as such, but I do question: why? We live in a capitalist society that benefits from capital being put to work. There are many places you can put your money that will benefit you and others financially.
    - msandford 12y ago
      > Did it really? Perhaps you should refer to the original definition of "debasement". You're right of course. I was speaking in broad generalities rather than specifics. Yes the money was debased. But there was some kind of anchor on value because the dilutions had to be small. From what I remember in history the government didn't go from 99% silver to 1% silver in a single re-issuance of money, it took many reissues over many generations to go from 99% to 50% (or something like that) which actually shows an incredible amount of restraint. I'd be rather pleased if that was the kind of debasement we were seeing in recent history but sadly it isn't. The fact that you had to put SOME metal in the coins was what kept debasing "reasonable" but there are no such restrictions on money creation today. Even if you had to literally PRINT the money the Fed can make $100 bills for a few cents. With computers the marginal cost of creation falls further. There is no restraint save but what those in charge put on themselves. > Hah, I wouldn't define it as such, but I do question: why? We live in a capitalist society that benefits from capital being put to work. There are many places you can put your money that will benefit you and others financially. I agree and I do make efforts to put my money to work for exactly the reasons you've mentioned. I guess it boils down to my idealistic nature; I don't think there should be a "stupidity" tax whereby if you're not savvy enough to understand how finance and compound interest works, your life savings can slowly evaporate. The reason for this in my mind is that everyone has expertise and it's a huge drain on the workings of the world that everyone has to spend who knows how much time every year trying to make sure that their savings don't slowly vanish. I think we would all be better off if people could focus on their field fully rather than having to try and be an expert in both their field and finance.
- innguest 12y ago
  Without slavery how will we ever pick cotton? Well I don't know but I do know slavery is wrong and so it should stop regardless of whether there's an alternative. Same goes for money printing. How will we ever have money if not printing it out of thin air? Well I don't know but I do know the sentence "print money out of thin air" sounds like a very bad idea from the start. No wonder we've pressed the reset button every 40 years. With all debasement problems at least the precious metals system lasted thousands of years.
  - hnnewguy 12y ago
    >Without slavery how will we ever pick cotton? It's pretty evident how we can pick cotton without slavery. We do it every day. On the other hand, you want to expend resources digging a heavy, precious metal out of the ground to use as a glorified record-keeper of transactions. Seems like a huge waste. Why not create it "out of thin air" as it is needed, and use the metals (and resources required to dig them up) on something else? The error comes from thinking that money = wealth. >With all debasement problems at least the precious metals system lasted thousands of years. I don't think there's a country on the planet that will accept gold for financial transactions without converting to currency. So, no, it hasn't "lasted thousands of years"; it's gone. >No wonder we've pressed the reset button every 40 years. Pretty sure if you're anywhere in the First World you're part of the wealthiest, healthiest society that there ever has been.
    - DanBC 12y ago
      > Your argument doesn't even make sense. It's pretty evident how we can pick cotton without slavery. We do it every day. We haven't eliminated slavery from cotton farming so I'm not sure we can claim to pick cotton without slavery. We pick some cotton without slavery. http://www.theguardian.com/environment/2013/oct/27/cotton-production-slave-labour-uzbekistan http://www.theguardian.com/environment/2013/oct/27/cotton-pr...
    - innguest 12y ago
      > It's pretty evident how we can pick cotton without slavery. We do it every day. The morality of it wasn't evident to slave owners in the past, it seems. Like the morality of printing money isn't evident to most nowadays. I'm not going to defend gold specifically here because what matters is that there not be a group of people that can issue money. The problem with creating it out of thin air is precisely that some people will be in control of printing it, and will get corrupted by it, endangering the health of that system and of its participants. I'm also not going to defend gold because someone that is against slavery need not defend and explain ad nauseam how machines will eventually take on agricultural work and blah blah blah. Slavery is immoral because it impinges on people's freedoms. Same goes for printing money. > I don't think there's a country on the planet that will accept gold for financial transactions without converting to currency. So, no, it hasn't "lasted thousands of years"; it's gone. You're being intellectually dishonest. The world cared about gold until 1971. It seems to me the world still does care about gold, or central banks wouldn't hoard it like there's no tomorrow, and keep transporting it back and forth. Why do they not keep diamonds? Why not keep Platinum? Why not keep famous artwork? Somehow they seem to love that gold. But you say it's "gone".

by jhulla 12y ago

yequalsx 12y ago

I don't fully understand QE but I believe there is a balance sheet. It's not like money was created out of thin air as such. It did not increase M1. I'm guessing it did increase MB but I don't know. Of course my perception may be completely wrong.

nostromo 12y ago
> It's not like money was created out of thin air as such. No, it was. Literally. The Fed can and does create money and then buy assets with that new money.
CyberDildonics 12y ago
It is the Fed creating money out of thin air buying treasuries and it does increase M1. Here is the fed's own graph of M1. http://research.stlouisfed.org/fred2/series/M1 http://research.stlouisfed.org/fred2/series/M1 You can see where is starts to really skyrocket, which is where 16 trillion was given to the banks in the bailouts (or $53,000 for every person in the USA for scale). This money hasn't even made it into M2 yet.

hnnewguy 12y ago

>until the Fed conjured it up. So in what way would you have money production occur, if not "out of thin air"?

msandford 12y ago
Historically it has been people digging in the dirt to find precious metals and then coining those metals. Worked pretty well for thousands of years and doesn't allow people to counterfeit. If you want money to be a store of value there's no replacement to something that can't be faked. Personally I like the idea of my money holding value but from what I hear that's somewhere between "old fashioned" and "retardedly luddite" these days.
- hnnewguy 12y ago
  >Worked pretty well for thousands of years and doesn't allow people to counterfeit. Did it really? Perhaps you should refer to the original definition of "debasement". >I like the idea of my money holding value but from what I hear that's somewhere between "old fashioned" and "retardedly luddite" these days. Hah, I wouldn't define it as such, but I do question: why? We live in a capitalist society that benefits from capital being put to work. There are many places you can put your money that will benefit you and others financially.
  - msandford 12y ago
    > Did it really? Perhaps you should refer to the original definition of "debasement". You're right of course. I was speaking in broad generalities rather than specifics. Yes the money was debased. But there was some kind of anchor on value because the dilutions had to be small. From what I remember in history the government didn't go from 99% silver to 1% silver in a single re-issuance of money, it took many reissues over many generations to go from 99% to 50% (or something like that) which actually shows an incredible amount of restraint. I'd be rather pleased if that was the kind of debasement we were seeing in recent history but sadly it isn't. The fact that you had to put SOME metal in the coins was what kept debasing "reasonable" but there are no such restrictions on money creation today. Even if you had to literally PRINT the money the Fed can make $100 bills for a few cents. With computers the marginal cost of creation falls further. There is no restraint save but what those in charge put on themselves. > Hah, I wouldn't define it as such, but I do question: why? We live in a capitalist society that benefits from capital being put to work. There are many places you can put your money that will benefit you and others financially. I agree and I do make efforts to put my money to work for exactly the reasons you've mentioned. I guess it boils down to my idealistic nature; I don't think there should be a "stupidity" tax whereby if you're not savvy enough to understand how finance and compound interest works, your life savings can slowly evaporate. The reason for this in my mind is that everyone has expertise and it's a huge drain on the workings of the world that everyone has to spend who knows how much time every year trying to make sure that their savings don't slowly vanish. I think we would all be better off if people could focus on their field fully rather than having to try and be an expert in both their field and finance.
innguest 12y ago
Without slavery how will we ever pick cotton? Well I don't know but I do know slavery is wrong and so it should stop regardless of whether there's an alternative. Same goes for money printing. How will we ever have money if not printing it out of thin air? Well I don't know but I do know the sentence "print money out of thin air" sounds like a very bad idea from the start. No wonder we've pressed the reset button every 40 years. With all debasement problems at least the precious metals system lasted thousands of years.
- hnnewguy 12y ago
  >Without slavery how will we ever pick cotton? It's pretty evident how we can pick cotton without slavery. We do it every day. On the other hand, you want to expend resources digging a heavy, precious metal out of the ground to use as a glorified record-keeper of transactions. Seems like a huge waste. Why not create it "out of thin air" as it is needed, and use the metals (and resources required to dig them up) on something else? The error comes from thinking that money = wealth. >With all debasement problems at least the precious metals system lasted thousands of years. I don't think there's a country on the planet that will accept gold for financial transactions without converting to currency. So, no, it hasn't "lasted thousands of years"; it's gone. >No wonder we've pressed the reset button every 40 years. Pretty sure if you're anywhere in the First World you're part of the wealthiest, healthiest society that there ever has been.
  - DanBC 12y ago
    > Your argument doesn't even make sense. It's pretty evident how we can pick cotton without slavery. We do it every day. We haven't eliminated slavery from cotton farming so I'm not sure we can claim to pick cotton without slavery. We pick some cotton without slavery. http://www.theguardian.com/environment/2013/oct/27/cotton-production-slave-labour-uzbekistan http://www.theguardian.com/environment/2013/oct/27/cotton-pr...
  - innguest 12y ago
    > It's pretty evident how we can pick cotton without slavery. We do it every day. The morality of it wasn't evident to slave owners in the past, it seems. Like the morality of printing money isn't evident to most nowadays. I'm not going to defend gold specifically here because what matters is that there not be a group of people that can issue money. The problem with creating it out of thin air is precisely that some people will be in control of printing it, and will get corrupted by it, endangering the health of that system and of its participants. I'm also not going to defend gold because someone that is against slavery need not defend and explain ad nauseam how machines will eventually take on agricultural work and blah blah blah. Slavery is immoral because it impinges on people's freedoms. Same goes for printing money. > I don't think there's a country on the planet that will accept gold for financial transactions without converting to currency. So, no, it hasn't "lasted thousands of years"; it's gone. You're being intellectually dishonest. The world cared about gold until 1971. It seems to me the world still does care about gold, or central banks wouldn't hoard it like there's no tomorrow, and keep transporting it back and forth. Why do they not keep diamonds? Why not keep Platinum? Why not keep famous artwork? Somehow they seem to love that gold. But you say it's "gone".