Quantitative Easing

[blackhathasher]

Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective.[1][2][3] A central bank implements quantitative easing by buying specified amounts of financial assets from commercial banks and other private institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the monetary base.[4][5] This is distinguished from the more usual policy of buying or selling short term government bonds in order to keep interbank interest rates at a specified target value.[6][7][8][9]

The most insidious part of all this is that in 1913 when the federal reserve started printing federal reserve notes in exchange for government bonds they simultaneously passed legislation outlawing the use and ownership of gold bullion as legal tender to settle debts, public and private. Americans were required by law to hand over their gold, effectively eliminating all existing stores of value.

And since the FRN's were loaned at interest to the US goverment (vis a vi the people) the federal reserve bank created a permanent debt that could never be paid back.

Increasing the amount of currency in circulation IS IN FACT INFLATION. The subsequent rises in prices of things is simply the visible effect.

The only way the US has been able to sustain this practice has been by forcing the rest of the world to use the USD/FRN as the worlds reserve currency and this has only been accomplished by force and by threat of force. Saddam Hussein was killed because he attempted to sell his oil for Euros rather than for USD's. Thats just one example. There are dozens and dozens.

Now we have the Russians and Chinese trading natural gas in their own currencies rather than USD/FRNs and that cuts at the purchasing power of the USD and the US Government's ability to borrow from other countries which we have been doing at the rate of something like $50B a day.

So enter Quantitative Easing... which is the back up plan for inflation. the FAIL OVER. that which they do when the regular inflation stops working. a rose by any other name... still smells like shit.  

[Trading]

That is your notion of inflation, not the one you will read in most textbooks on economics.

[blackhathasher]

That is your notion of inflation, not the one you will read in most textbooks on economics.

um.. thats not a notion.. that is what inflation is.

In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.[2][3] A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time.[4]

I think that's pretty clear and about as textbook as it gets.

And as facts have already been established Quantitative Easing is the backup plan (Inflation++) when the regular inflation rate isn't producing the desired results.

Inflation and Quantitative Easing are ROOTED in increasing the mass of currency.

[Trading]

I think we can agree at least on the fact that inflation is the actual increase in prices in life, not the conceptual description of it. That is a notion, a concept, a linguistic description.

The notion you pasted is the consensual notion I was talking about.

You saying that inflation is rooted on the increase of the monetary mass is different than saying that inflation is the increase of the monetary mass. On your opinion, one is the cause, the other the effect. But cause and effect are different things.

There are theoretic disputes about inflation being the sole effect of an increase of money in circulation. The first is the question of velocity of money in circulation. The same money can be used to buy more things in a certain period, then the same monetary masse can cause inflation in certain circumstances, but not in others.

But that wasn't my point. My point was, there was no inflation, therefore Quantitative Easing was good, not bad.

[twiifm]

Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective.[1][2][3] A central bank implements quantitative easing by buying specified amounts of financial assets from commercial banks and other private institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the monetary base.[4][5] This is distinguished from the more usual policy of buying or selling short term government bonds in order to keep interbank interest rates at a specified target value.[6][7][8][9]

The most insidious part of all this is that in 1913 when the federal reserve started printing federal reserve notes in exchange for government bonds they simultaneously passed legislation outlawing the use and ownership of gold bullion as legal tender to settle debts, public and private. Americans were required by law to hand over their gold, effectively eliminating all existing stores of value.

Don't be selective about history.  The reason the Fed was created after of the Banking Panic of 1907.  At that time US bankers saw that other European countries had Centrals Banks and more stable economies.  The Fed was created to be "lender of last resort"

The gold nationalization didn't happen til FDR 1933.  The rationale for that is because people were hoarding gold and making the depression worse. 

[Robert Paulson]

not only does the printing steals purchasing power from everyone holding fiat it also distorts the whole chain of production of goods and services because it distorts the price signal of everything.

prices exist to provide information about the supply and demand of things.
if something is expensive that means the demand for it is high relative to supply, it encourages the manufacturing of the things that people want but there isn't enough of.
if something is cheap that means the supply is high relative to demand, it encourages manufacturers to switch to something else and not waste raw material producing things we have too much of.

what the governments are doing by printing money is artificially changing the price signals so that producers can't know what consumers want produced.
this is why communism failed, because the state can not know what people want relative to how much of it is produced and so the central planner always fails due to lack of information.
this is why the global economy will also fail if honest unprintable money like bitcoin is not adopted.

[Trading]

I don't have a clue how the global economy survived all this years, after the golden standard and before bitcoin. It has to be a miracle how it grew so much during all this period and why it is still standing on our days.

[blackhathasher]

I don't have a clue how the global economy survived all this years, after the golden standard and before bitcoin. It has to be a miracle how it grew so much during all this period and why it is still standing on our days.

I'm pretty sure you're intent on trying to be an asshat.

Clearly the "global economy" isnt working ! Its being artificially propped up and the labor of the people is being subjagated to economic slavery.

Cyprus. Greece. Argentina. And those are just in this last year alone.

How about the "banking" crisis in 2008 ? Fine example of curruption.

If you feel the current economic situation in the world is just great then why are you here? Just to troll and try to confuse people who know better?

Send me your bitcoin and I will laugh and point at how in love you are with your quantitative easing.

I mean REALLY.

[jjj0923]

watch this video - I work with this guy - he's an author too of a best selling book on Amazon.

www.jackassinvesting.com

here's the video

http://www.bloomberg.com/video/quantitative-easing-is-a-ponzi-scheme-dever-qm3k_g8xRbyhUGGvYgxIjA.html

[twiifm]

watch this video - I work with this guy - he's an author too of a best selling book on Amazon.

www.jackassinvesting.com

here's the video

http://www.bloomberg.com/video/quantitative-easing-is-a-ponzi-scheme-dever-qm3k_g8xRbyhUGGvYgxIjA.html

This guy is not using the term  "Ponzi scheme" correctly.  As a hegde fund he should know better.  Just sounded to me was bitter not foreseeing the bull rally in equities

The reason Bernanke had to resort to QE because the banks had too many MBS's on their balance sheet.  As a central banker, Bernanke options were to do nothing and deal w liquidity trap or try something aggressive like QE.  I'm sure he studied post bubble Japan and he wanted to avoid the same situation

In the eurozone the ECB (Draghi) resorted to QE after they learned that austerity policies  caused more harm than helped.

QE isn't the end-all solution but it had to be done so it was done.  I'm sure Bernanke was aware of the risks of QE.  The Fed kept telegraphing the plan to taper, but the greedy market kept buying

[jjj0923]

Omg you're such an ass...lol


I'll look for your interview on bloomberg tv where you rebut

[twiifm]

Omg you're such an ass...lol


I'll look for your interview on bloomberg tv where you rebut

Why does it matter whether I'm on Bloomberg or not?  Ponzi schemes have nothing to do w QE, unless you think the Fed is trying to get investors to buy equities so they can run away w the money.  LOL wut? 

The guy is a contrarian investor.  He was probably too early on his short.  Happens to me too. 

I happen to also be a contrarian investor so I know the feeling

[Swordsoffreedom]

Quantitative Easing was never the solution to the financial problems
What was needed is real growth in industry and developments in agriculture
Printing more money does not have any real value unless it builds the economy around it as well
And bailouts are rarely the proper way to address these problems
Some exceptions do occur now and then but they should not be a stop-gap measure to the next crisis but an emergency point from which a reanalysis of the problem and solutions to it are developed and established to avoid a repetition.

[fdiini]

The reason Bernanke had to resort to QE because the banks had too many MBS's on their balance sheet.  As a central banker, Bernanke options were to do nothing and deal w liquidity trap or try something aggressive like QE.  I'm sure he studied post bubble Japan and he wanted to avoid the same situation

Let all the current banks go bust and creating a new bank would have been cheaper.

[Trading]

Of course it is grow that an economy needs in a recession. But how is it possible to get grow in the middle of a banking crisis, a crunch of credit and a negative grow of the monetary mass? QE can't be an easy panacea, but on an emergency and with inflation controlled...

[jjj0923]

Omg you're such an ass...lol


I'll look for your interview on bloomberg tv where you rebut

Why does it matter whether I'm on Bloomberg or not?  Ponzi schemes have nothing to do w QE, unless you think the Fed is trying to get investors to buy equities so they can run away w the money.  LOL wut? 

The guy is a contrarian investor.  He was probably too early on his short.  Happens to me too. 

I happen to also be a contrarian investor so I know the feeling

instead of responding like an exposed nerve you really need to think about what he said because it's a brilliant observation.

[jjj0923]

Quantitative Easing was never the solution to the financial problems
What was needed is real growth in industry and developments in agriculture
Printing more money does not have any real value unless it builds the economy around it as well
And bailouts are rarely the proper way to address these problems
Some exceptions do occur now and then but they should not be a stop-gap measure to the next crisis but an emergency point from which a reanalysis of the problem and solutions to it are developed and established to avoid a repetition.

+1

[twiifm]

instead of responding like an exposed nerve you really need to think about what he said because it's a brilliant observation.

Its only brilliant to you because you don't know about economics.  I never even said I disagreed w what he said.  I only said he used the term "Ponzi scheme" incorrectly

Then I explained why Bernanke probably had no choice but to do QE.  Go back and read my posts

[jjj0923]

instead of responding like an exposed nerve you really need to think about what he said because it's a brilliant observation.

Its only brilliant to you because you don't know about economics.  I never even said I disagreed w what he said.  I only said he used the term "Ponzi scheme" incorrectly

Then I explained why Bernanke probably had no choice but to do QE.  Go back and read my posts

no ...he used the term Ponzi scheme very correctly - I disagree with you vehemently.

[ruletheworld]

If someone's actually interested in learning about QE and money creation in the modern banking system, here's an excellent read:
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf