What if there never was QE?

[hashman]

What if we've been fooled with all this talk of expanding fiat supplies?  After all, I never got any of the checks.  Nobody I knew did.  All I know is what I hear some spokesman say, and that makes me think probably it is false based on past experience.  

So, how would we know if actually there's been an attempted tightening of supply over the last 6 years?  Maybe lower oil prices?  Lower gold?  Stronger dollar?  

It might be impossible to tighten supply, but somehow it has happened before.  Equities say otherwise I guess. What do you think?  

[cafucafucafu]

So much negativity.

[hashman]

So much negativity.

That depends on your viewpoint.  It could be a good thing.  Why do you think it would be negative? 

[DanielT]

It is available for bank reverse purposes.

[odolvlobo]

The main purpose of QE was to provide banks with more capital, in addition to supplementing (or outright replacing) their toxic assets with government debt. It was deemed necessary because the biggest banks owned so much worthless debt that they could no longer meet their capital requirements and would have had to be considered insolvent.

The official story is that QE is needed to get the economy going, but the fact that little of the money makes it back into the economy because the Fed pays 0.25% on reserves tells the true story. The purpose of QE is to support and subsidize failing banks.

If QE never happened, then many of the biggest banks would have failed (as they deserved) and we would have suffered severely for a few years. The result of QE is that we have suffered less, but for nearly a decade (with no end in sight), and the too-big-to-fail banks are now bigger and more vulnerable than ever.

[zimmah]

The main purpose of QE was to provide banks with more capital, in addition to supplementing (or outright replacing) their toxic assets with government debt. It was necessary because the biggest banks owned so much worthless debt that they could no longer meet their capital requirements and would have had to be considered insolvent.

The official story is that QE is needed to get the economy going, but the fact that little of the money makes it back into the economy because the Fed pays 0.25% on reserves tells the true story.

If QE never happened, then many of the biggest banks would have failed (as they deserved) and we would have suffered severely for a few years. The result of QE is that we have suffered less, but for nearly a decade (with no end in sight), and the too-big-to-fail banks are now bigger and more vulnerable than ever.

Oh no, the banks are bankrupt, what a disaster.

So if I make a bad financial decision and am in debt beyond repaying, can I call the Feds to print me several millions too?

I swear I'll pay it back eventually.

Even though I'll probably invest it in even more toxic assets because if I go bankrupt I get bailed out again anyway.

Don't you realize every dollar they print to bail out the bank decrease the value of your dollars? Which decreases the value of your time, since you still get the same amount of dollars for your work.

I'd be happier if they'd just let the banks collapse, we don't need them.

[johnyj]

Banks will fail, and they will be forced to liquidate their foreclosure assets at most unfavorable price, which gives other people a chance to buy cheap houses, $10k houses will be the norm (which also means those debt laiden house owners will all default and buy cheap houses instead)

However, since most of people's money are in a bank, they will lose most of their money when bank failed, so they don't have money to buy cheap houses! Those who have money under his mattress will make a fortune. Then people will learn that never put their money at banks, and survived banks will become just a payment processor at best

In a word, those who don't trust banks will win big and those who trust banks (which is majority) will lose big. So they had to save the banks because many people have become too dependent on banks

[countryfree]

It's quite easy. Governments would have to spend less, banks would have much less money to lend, and getting credit would be more expensive. Overall, the economy would be better, except that with so many banks and countries in such a terrible state, there would be many bankruptcies without some kind of QE.

[Q7]

Would it be any different if QE was not introduced? I'm not sure but given the scenario at that time, a total meltdown of the economy would be possible given the size of the bank debts. The problem wasn't just another liquidity crisis, but rather an insolvency crisis

[Carlton Banks]

The whole point of 2008 was that the banks were not even willing to lend to each other overnight. They knew how badly underwater they each all were from all the various types of packaged-up debt they had bought that had mostly been defaulted on (and the problem was made worse by whatever factor of leverage that was used to try and make even more money from these debt-derivatives).

The choice was:

• pass all the bad debt onto some institution that was not a bank (central banks in 2008, consumers depositers Cyprus onwards)
• or, go bankrupt (and cause worldwide chaos)

To be fair, at least there was an attempt to demonstrate that the most egregious examples of wrecklessness should fail, and so Lehman and Bear Stearns were "permitted to fail". But realistically, they were all bankrupt to one extent or another.  

[NUFCrichard]

Stronger deflation, banks would have gone bankrupt, the world would go on.
Instead of facing the problems of the world economy, QE just pushed everything back until everything collapses. At least the rich got richer though, so it's all good!

[unsoindovo]

So much negativity.

ù
hum..
i think a long long long  stagnant period... it would was...

did you remeber Japan???

on 1990 the nikkey225 was near 40000...
in the last years, japan index touch 8000 more times!!!!

https://it.finance.yahoo.com/echarts?s=%5EN225#symbol=%5EN225;range=my

[odolvlobo]

So much negativity.

ù
hum..
i think a long long long  stagnant period... it would was...

did you remeber Japan???

on 1990 the nikkey225 was near 40000...
in the last years, japan index touch 8000 more times!!!!

It is ridiculous to claim that japan suffered as a result of deflation. During the period of their supposed suffering, their economy has grown to become one of the strongest in the world, second only to the U.S., and only recently third behind China.

Deflation hurts the wealthiest people more than everybody else. The bankers and their lapdog economists claim that deflation must be avoided at all costs only in order to preserve their wealth at the expense of everyone else.

[unsoindovo]

So much negativity.

ù
hum..
i think a long long long  stagnant period... it would was...

did you remeber Japan???

on 1990 the nikkey225 was near 40000...
in the last years, japan index touch 8000 more times!!!!

It is ridiculous to claim that japan suffered as a result of deflation. During the period of their supposed suffering, their economy has grown to become one of the strongest in the world, second only to the U.S., and only recently third behind China.

Deflation hurts the wealthiest people more than everybody else. The bankers and their lapdog economists claim that deflation must be avoided at all costs only in order to preserve their wealth at the expense of everyone else.

mmmmmmmmmmmmmmmmm

nikkey225 don't say the same things!!!!

check it below:

[Inotanewbie]

As mentioned above without QE we would have likely experienced deflation in much of the world. Even modest deflation is very hard for an economy to overcome therefore the world economy would likely still be experiencing deflation, along with likely negative economic growth

[Haruko]

As mentioned above without QE we would have likely experienced deflation in much of the world. Even modest deflation is very hard for an economy to overcome therefore the world economy would likely still be experiencing deflation, along with likely negative economic growth

for EU it is hard to get inflation between 0.00 and 2.00.

http://www.ecb.europa.eu/stats/prices/indic/forecast/html/table_3_2015q1.en.html

for now, where are at -0.6 [2015 Q1]

i hope the BCE forecast become true...

http://www.ecb.europa.eu/stats/prices/indic/forecast/html/table_3_2015q1.en.html

[twiifm]

So much negativity.

ù
hum..
i think a long long long  stagnant period... it would was...

did you remeber Japan???

on 1990 the nikkey225 was near 40000...
in the last years, japan index touch 8000 more times!!!!

It is ridiculous to claim that japan suffered as a result of deflation. During the period of their supposed suffering, their economy has grown to become one of the strongest in the world, second only to the U.S., and only recently third behind China.

Deflation hurts the wealthiest people more than everybody else. The bankers and their lapdog economists claim that deflation must be avoided at all costs only in order to preserve their wealth at the expense of everyone else.

As someone who's been traveling to Japan for the last 15 years.  I can safely say you are full of shit.  The Japanese don't  'suffer' but they are definitely not livin large.  They are just as stressed out about economy as anyone else.  My colleagues are all on a real tight budget paycheck to paycheck.  They have cheap mortgages but thats about all.  

[neurotypical]

So much negativity.

ù
hum..
i think a long long long  stagnant period... it would was...

did you remeber Japan???

on 1990 the nikkey225 was near 40000...
in the last years, japan index touch 8000 more times!!!!

It is ridiculous to claim that japan suffered as a result of deflation. During the period of their supposed suffering, their economy has grown to become one of the strongest in the world, second only to the U.S., and only recently third behind China.

Deflation hurts the wealthiest people more than everybody else. The bankers and their lapdog economists claim that deflation must be avoided at all costs only in order to preserve their wealth at the expense of everyone else.

As someone who's been traveling to Japan for the last 15 years.  I can safely say you are full of shit.  The Japanese don't  'suffer' but they are definitely not livin large.  They are just as stressed out about economy as anyone else.  My colleagues are all on a real tight budget paycheck to paycheck.  They have cheap mortgages but thats about all.  

No one in the world is living it large except the 1%. I dont get this naive notion of some nation existing where most people live a semi luxurious life. Most people are struggling and being able to pay holidays is a luxury these days.

[johnyj]

No one in the world is living it large except the 1%. I dont get this naive notion of some nation existing where most people live a semi luxurious life. Most people are struggling and being able to pay holidays is a luxury these days.

This is the most strange thing in the world. In fact, the human productivity has increased at least 10 fold during the latest 10 years, using various high-tech and automation technology. However, majority people's life just improved a little bit or even go backwards and still live in a very tight budget. Where are all those added wealth? They all went into the pocket of money printers

[hashman]

As mentioned above without QE we would have likely experienced deflation in much of the world. Even modest deflation is very hard for an economy to overcome therefore the world economy would likely still be experiencing deflation, along with likely negative economic growth

Deflation due to bankruptcies?  How is the money supply deflated? 

Prices of some things have dipped a bit, but I think you are talking about something more substantial than what we have seen in oil, gold, and bitcoin over the last year. 

After working in coin for a while it seems so hard to say anything conclusive with fiat because nobody knows the money supply.