Posted: 8/8/2011 3:41:20 AM EDT
| I'm fairly new to this macroeconomics thing. Distilled down to the simplest terms, is quantitative easing anything more than the Fed printing off more money to buy assets? I've been reading through a few different explanations, but all I'm getting out of it is that it's essentially a nice term for stepping into the fast lane to inflation/devaluation. |
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Quoted: I'm fairly new to this macroeconomics thing. Distilled down to the simplest terms, is quantitative easing anything more than the Fed printing off more money to buy assets? I've been reading through a few different explanations, but all I'm getting out of it is that it's essentially a nice term for stepping into the fast lane to inflation/devaluation. Our creditors refuse to buy our debt at low interest rates. The FED creates the money to buy the interest rates bellow prime interest, thus keeping the bond rate artificially low to make selling debt cheap, at near 0% interest. This bypasses another force of the market. If there was no FED, then people who wish to buy our debt would be able to command higher interest rates to reflect the higher risk and higher supply which would stem the tide in government spending. Since the FED opened up the printing presses, the natural biofedback of the market has been diverted. |
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basically what he said.
There's also the free money aspect of the Fed advertising ALL of these purchases in advance - so the Big Money can buy and sell ahead of the Fed's movements, pocketing easy money in the billions of Dollars. Not to mention, the Big Money can borrow even MORE money from the Fed at 0.25% interest, buy short-term securities or other instruments and then turn around and sell them back to the Fed via the above actions and pocket the difference. There's so much money sloshing around at the highest levels, it's amazing we haven't imploded before now. |
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Quoted:
This bypasses another force of the market. If there was no FED, then people who wish to buy our debt would be able to command higher interest rates to reflect the higher risk and higher supply which would stem the tide in government spending. Since the FED opened up the printing presses, the natural biofedback of the market has been diverted. So essentially it's cooking the books, for lack of a better term, to make our debt more attractive and allow for more spending? |
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Quoted:
I'm fairly new to this macroeconomics thing. Distilled down to the simplest terms, is quantitative easing anything more than the Fed printing off more money to buy assets? I've been reading through a few different explanations, but all I'm getting out of it is that it's essentially a nice term for stepping into the fast lane to inflation/devaluation. Think of the Fed as an institution with a magical checkbook with an unlimited balance. When they write a check, they are effectively creating money. The fed controls the money supply through the buying and selling of bonds. When they sell a bond it effectively shrinks the money supply. When they buy one, it increases the money supply. ...so, yes, they are basically printing more money, which is classic inflation. It's dressed up in a fancy suit and with lots of very high-brow sounding terms to avoid calling it that, but that's what it is: A deliberate policy of inflation so that the .gov can keep handing out goodies. The dupes stupid enough to be on the dole get their money and blame evil, greedy corporations for the resulting rise in commodity prices. |
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I came here to post this, lol. |
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Quoted:
Quoted:
I'm fairly new to this macroeconomics thing. Distilled down to the simplest terms, is quantitative easing anything more than the Fed printing off more money to buy assets? I've been reading through a few different explanations, but all I'm getting out of it is that it's essentially a nice term for stepping into the fast lane to inflation/devaluation. Think of the Fed as an institution with a magical checkbook with an unlimited balance. When they write a check, they are effectively creating money. The fed controls the money supply through the buying and selling of bonds. When they sell a bond it effectively shrinks the money supply. When they buy one, it increases the money supply. ...so, yes, they are basically printing more money, which is classic inflation. It's dressed up in a fancy suit and with lots of very high-brow sounding terms to avoid calling it that, but that's what it is: A deliberate policy of inflation so that the .gov can keep handing out goodies. The dupes stupid enough to be on the dole get their money and blame evil, greedy corporations for the resulting rise in commodity prices. <Dave_A>You don't understand basic economics.</Dave_A> |
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Quoted:
Quoted:
I'm fairly new to this macroeconomics thing. Distilled down to the simplest terms, is quantitative easing anything more than the Fed printing off more money to buy assets? I've been reading through a few different explanations, but all I'm getting out of it is that it's essentially a nice term for stepping into the fast lane to inflation/devaluation. Think of the Fed as an institution with a magical checkbook with an unlimited balance. When they write a check, they are effectively creating money. The fed controls the money supply through the buying and selling of bonds. When they sell a bond it effectively shrinks the money supply. When they buy one, it increases the money supply. ...so, yes, they are basically printing more money, which is classic inflation. It's dressed up in a fancy suit and with lots of very high-brow sounding terms to avoid calling it that, but that's what it is: A deliberate policy of inflation so that the .gov can keep handing out goodies. The dupes stupid enough to be on the dole get their money and blame evil, greedy corporations for the resulting rise in commodity prices. This is correct. I would add that the idea of the Fed using its unlimited checkbook to create money is not new in and of itself. The Fed routinely creates money when buying bonds during its usual operations to control the Fed Funds rate. What is different about quantitative easing is that, while typically they only manipulate the overnight borrowing rates (which affects bank borrowing), with QE they are manipulating rates all the way out to 10+ year maturities (which affects government borrowing). Edited because I quoted the wrong post. |
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QE, which is inflation, is basically theft.
It is a hidden tax. It is used to steal the value of your work, the value of your money on hand, the value of your savings, the value of your home. It is an unvoted for tax that steals from everyone. Meanwhile, prices are going up, and the govt has the gall to blame it on you and me for spending too much, we just can't control ourselves, and those greedy capitalist pig businessmen jacking up prices for no reason. In inflationary times you do spend more. You turn your cash, which is steadily losing value, into goods and services now because you know you will lose the value and not be able to afford those goods and services next month, or next week, or tomorrow. You buy that set of new tires now because you know your wages will lag far behind inflation, but prices are going up now. You buy other goods, turning that rapidly turning worthless cash into goods. But your spending does not cause inflation. Only governments can cause inflation. Remember that. You heard it here first. ONLY the government is responsible for this. And they steal from everyone. |