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July 19, 2015, 04:02:43 AM |
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Ha, that's funny. Obviously they're making light of QE.
I didn't hear any misdirection in their comments but they're not really describing QE, they're describing the process by which Governments keep increasing their debt limits and therefor expand their debt.
It does involved governments increasing the money supply and artificially supporting (by keeping down) interest rates by buying their own debt. It implies that this can only build a house of cards which must fall. And I guess since Greece and Cyprus have done so poorly people may think that this is true (or has been proven). But Greece and Cyprus weren't conducting QE, where they? The real thing to watch is the American economy. They've conducted several rounds of QE and have now (in the past 9 months) ended (largely) the process - of buying their own debt. So watching the American economy and rates will help educate others on how governments can come back from this kind monetary fixing...but this is only QE.
The real test is how governments can come back or live with the ever increasing debt cycle that has gotten to a point where paying off the interest is difficult. Either the debt gets forgiven at sometime - causing a reduction in the value of the government's currency and causing inflation in prices OR the government goes bankrupt. The latter can't really happen, so when will the former happen? That's what everyone is worried about.
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