Ex-Fed Official: I'm Sorry for QE

[austrianecon]

Conversely, Austro, would you too categorise the substantial increase in energy consumption in Japan to be an exacerbating headwind against Abenomics??

(remember, they used Nuclear power to previously supply their industry, the nucl. reactor companies were private Jap institutions, meaning the money flowed inside of japan. Now that vital sector has taken an enermous hit [are the other plants still closed? I believe Abe Shinzo opened at least a couple])

No. Abenomics will fail no matter what. Japan has gone through several Abenomic periods over the last 15 years. Japan has a demographics problem, Zombie Company problems (companies who only make enough money to service debt), Debt issue and other issues in regulation.

Anybody who has hope "Abenomics" 6.0 is gonna work in Japan hasn't been paying attention for the last 20 years.

 

[washunut]

No. Abenomics will fail no matter what. Japan has gone through several Abenomic periods over the last 15 years. Japan has a demographics problem, Zombie Company problems (companies who only make enough money to service debt), Debt issue and other issues in regulation.

Anybody who has hope "Abenomics" 6.0 is gonna work in Japan hasn't been paying attention for the last 20 years.

Well they have moved the Yen from 80 to 100 for a dollar which will help exports. In addition they have given their stock market a boost just as the Fed has here.

 

[Moot]

And it's done a fine job of continuing that boom bust cycle with greater frequency and worse lows. We've had far worse economic crises with it than we've had without it.

The Fed admitted it made mistakes leading up to the GD but by law it was tied to the gold standard and they couldn't put more liquidity in the market even if they wanted to. But then, they didn't want to even if they could. lol

The boom bust cycle was pretty bad and a lot more frequent before the Fed was created.

The Fed was created so Mr. J. P. Morgan wouldn't have to be the sole financier for bailing out the other banks and financial institutions upon which the entire US economy relied. Which is kind of ironic since it was JPMorgan bank that bought out Bear Stearns which helped to prevent an economic collapse.

 

[RabidAlpaca]

The Fed admitted it made mistakes leading up to the GD but by law it was tied to the gold standard and they couldn't put more liquidity in the market even if they wanted to. But then, they didn't want to even if they could. lol

The boom bust cycle was pretty bad and a lot more frequent before the Fed was created.

The Fed was created so Mr. J. P. Morgan wouldn't have to be the sole financier for bailing out the other banks and financial institutions upon which the entire US economy relied. Which is kind of ironic since it was JPMorgan bank that bought out Bear Stearns which helped to prevent an economic collapse.

Ok, then I'd like to see an example of a more catastrophic crash than the great depression that happened prior to 1913.

 

[Moot]

Ok, then I'd like to see an example of a more catastrophic crash than the great depression that happened prior to 1913.

It was more a series of catastropic panics and depressions that coincided with the industrial revolution beginniing with the Long Depression of 1873 to 1879 which was soon followed by the panic of 1884 during the recession of 1882 to 1885, which was soon followed by the panic of 1893, which was soon followed by the Panic of 1907 and with each successive boom and bust being worse than the last. In other words almost the entire last half of the 19th century was one great big long depression. During the 1893 recession people started petitioning the government for relief (Cox's Army) forcing it eventually to make policies to help the workers and the unemployed instead of just the industrial barons.

Looking at History: What was unemployment in the nineteenth century?

 

[RabidAlpaca]

It was more a series of catastropic panics and depressions that coincided with the industrial revolution beginniing with the Long Depression of 1873 to 1879 which was soon followed by the panic of 1884 during the recession of 1882 to 1885, which was soon followed by the panic of 1893, which was soon followed by the Panic of 1907 and with each successive boom and bust being worse than the last. In other words almost the entire last half of the 19th century was one great big long depression. During the 1893 recession people started petitioning the government for relief (Cox's Army) forcing it eventually to make policies to help the workers and the unemployed instead of just the industrial barons.

Looking at History: What was unemployment in the nineteenth century?

Did you just post a random unrelated link thinking I wouldn't check it?

It is difficult to superimpose twenty-first century notions of unemployment on the mid-nineteenth century labour market. There are no statistics, national or otherwise. Patterns of work were very diverse, varying between different industries and trades but also within the same industry in different parts of the country.

This article says nothing about comparing the severity of the recessions/depressions in the 19th century to those in the 20th century. All it does is talk about unemployment insurance and unions.

Why do you believe that the government giving free money (near zero percent loans) only to rich people is somehow the glue that holds the economy together? There's a reason JP Morgan pushed for the creation of the Fed, it gave bankers like him a huuuuuge service, utilizing not only the government's printing press to provide him near free loans, but also to bail him out when push comes to shove.

 

[Buddha C]

Ok, then I'd like to see an example of a more catastrophic crash than the great depression that happened prior to 1913.

I believe the Valstead Act was established and only used once in 1914, preventing a recession.

The real problem with the Great Depression was lack of technical experience among the Chairman.

Doing exactly what they did at the start of the Great Depression (which severely exacerbated it) actually sped them out of a MUCH milder recession within a decade prior.

Besides, most of the Great Depression was predicated on the Free Market's inability to account for Time Horizons, i.e. How long it would take European farms/factories to come online and how that would affect the Economic atmosphere.

You can take this example back to the Napoleonic Wars, where the U.S. shipping industry actually exploded with re-export commodities from France, sold to America, then sold to England (converse as well) but when the War ended and 1812 came around the entire industry collapsed.

The Free Market is **** at long-term adjustments. The Price Mechanisms is specifically designed to be a short-term adjustment mechanism, and it is the most efficient.

 

[Buddha C]

Did you just post a random unrelated link thinking I wouldn't check it?



This article says nothing about comparing the severity of the recessions/depressions in the 19th century to those in the 20th century. All it does is talk about unemployment insurance and unions.

Why do you believe that the government giving free money (near zero percent loans) only to rich people is somehow the glue that holds the economy together? There's a reason JP Morgan pushed for the creation of the Fed, it gave bankers like him a huuuuuge service, utilizing not only the government's printing press to provide him near free loans, but also to bail him out when push comes to shove.

It is the Glue Rabid.

If it weren't for that re-application of 'Glue' in 2008-2009 the Global Economy would have collapsed. May have been worse than the Depression, possibly. But thankfully we'll never know.

The Fed is good for everybody, for the Banker, for the Layman.

Now we just need to stop Bank-on-Bank Runs. Which we have.

 

[RabidAlpaca]

I believe the Valstead Act was established and only used once in 1914, preventing a recession.

The real problem with the Great Depression was lack of technical experience among the Chairman.

Doing exactly what they did at the start of the Great Depression (which severely exacerbated it) actually sped them out of a MUCH milder recession within a decade prior.

Besides, most of the Great Depression was predicated on the Free Market's inability to account for Time Horizons, i.e. How long it would take European farms/factories to come online and how that would affect the Economic atmosphere.

You can take this example back to the Napoleonic Wars, where the U.S. shipping industry actually exploded with re-export commodities from France, sold to America, then sold to England (converse as well) but when the War ended and 1812 came around the entire industry collapsed.

The Free Market is **** at long-term adjustments. The Price Mechanisms is specifically designed to be a short-term adjustment mechanism, and it is the most efficient.

You're really calling 1913-1929 the "free market"? During that period the fed pumped our economy up with cheap credit via mega low interest rates, which is what caused a lot of the big boom in the 1920's. The problem was that this boom was too much too fast, and the market had to make a correction eventually.

Can you explain to me why the government should be lending to rich bankers at near 0%, so that those rich bankers can loan to us regular folk at 3-6%?

It is the Glue Rabid.

If it weren't for that re-application of 'Glue' in 2008-2009 the Global Economy would have collapsed. May have been worse than the Depression, possibly. But thankfully we'll never know.

The Fed is good for everybody, for the Banker, for the Layman.

Now we just need to stop Bank-on-Bank Runs. Which we have.

Yes, how could our poor economy ever survive if our government weren't giving free money to billionaires!

This is precisely why "high-yield" CD's pay like 1.5% right now. Why would any bank pay me for my money when they can get free loans from the government?

 

[Buddha C]

You're really calling 1913-1929 the "free market"? During that period the fed pumped our economy up with cheap credit via mega low interest rates, which is what caused a lot of the big boom in the 1920's. The problem was that this boom was too much too fast, and the market had to make a correction eventually.

Can you explain to me why the government should be lending to rich bankers at near 0%, so that those rich bankers can loan to us regular folk at 3-6%?



Yes, how could our poor economy ever survive if our government weren't giving free money to billionaires!

This is precisely why "high-yield" CD's pay like 1.5% right now. Why would any bank pay me for my money when they can get free loans from the government?

Pumping Money?

The only 'pumping money' I know of is Time versus Demand Deposit Reserve Requirements (and one 30-day 'time' instrument that was callable and while it had the low reserve req. that banks loved, and thus pushed it, the Fed actually had to force on threat banks to accept calls for them once the Depression hit)

Can you explain to me why the government should be lending to rich bankers at near 0%, so that those rich bankers can loan to us regular folk at 3-6%?

In 2008-2009? Because I'd rather pay 3-5% on a Loan (which is low for an end user) than have the Global Economy implode. Same Problem German/French taxpayers are dealing with (more parochial really) Spain/Italy/Greece/Ireland

----

Yes, how could our poor economy ever survive if our government weren't giving free money to billionaires!

This is precisely why CD's pay like 1.5% right now. Why would any bank pay me for my money when they can get free loans from the government?

You realize that's the ENTIRE point... right?

The Gov't doesnt want you to put that in a CD, they want you to spend it.

Now, while it's continued use it ONLY BECAUSE OF THE POLITICAL CONSTRAINTS OF THE FISCAL BRANCH OF GOVT, it's better than having super high interest rates or worse, deflation.

 

[RabidAlpaca]

Pumping Money?

The only 'pumping money' I know of is Time versus Demand Deposit Reserve Requirements (and one 30-day 'time' instrument that was callable and while it had the low reserve req. that banks loved, and thus pushed it, the Fed actually had to force on threat banks to accept calls for them once the Depression hit)

Can you explain to me why the government should be lending to rich bankers at near 0%, so that those rich bankers can loan to us regular folk at 3-6%?

In 2008-2009? Because I'd rather pay 3-5% on a Loan (which is low for an end user) than have the Global Economy implode. Same Problem German/French taxpayers are dealing with (more parochial really) Spain/Italy/Greece/Ireland

----



You realize that's the ENTIRE point... right?

The Gov't doesnt want you to put that in a CD, they want you to spend it.

Now, while it's continued use it ONLY BECAUSE OF THE POLITICAL CONSTRAINTS OF THE FISCAL BRANCH OF GOVT, it's better than having super high interest rates or worse, deflation.

Then why do only rich bankers get the near 0% loans? If it's so critical, why don't you and me get the 0% loans? Why would we need the banks as middle men sucking off several % in the process?

And I think you nailed it, the government doesn't want us to save money, they want us to remain dependent on them. Only rich bankers should get to save money right? We as the middle class should spend every penny paying interest until we die.

You'll seriously sit there with a straight face and say it's ok for billionaires to hoard billions, but something must be done about the middle class saving money? ****ing the middle class really is the ENTIRE point.

 

[Buddha C]

Then why do only rich bankers get the near 0% loans? If it's so critical, why don't you and me get the 0% loans? Why would we need the banks as middle men sucking off several % in the process?

And I think you nailed it, the government doesn't want us to save money, they want us to remain dependent on them. Only rich bankers should get to save money right? We as the middle class should spend every penny paying interest until we die.

You'll seriously sit there with a straight face and say it's ok for billionaires to hoard billions, but something must be done about the middle class saving money?

Because Gov't is a poor Loan Performance Calculator. It's the entire Reason we needed Fanie/Fred instead of disbursing the Funds directly.

The Rich Bankers shouldn't be saving it. That is no where in the plan. But it's better for them to Hoard it (in case, at least 2010-early2013, of EU collapse) in case of another external/internal shock. The same middle class that shouldn't be saving money, are the same idiots that vote Republican and stop any REALLY POSITIVE FOR THEM fiscal budget adjustments to be made. It's their fault, frankly. So no, I don't feel bad for their idiocy.

The Rich Bankers are PAY A STORAGE FEE in real terms when they do decide to save.

It's just, they're so Rich and so smart, that they buy Stock with the Loaned money, put that Stock Capital on Leverage and earn interest (and borrowing costs for the leverage are concomitantly down too) by putting it in the Stock Market.

Now if I can borrow @ 0%, then earn 10% on Stock why wouldn't I? If I can borrow 1,000 dollars and pay only 10 dollars, why would I not purchase stock with that 1,000, leverage it (I believe the requirements are 2:1 or 5:1) to 2,000 @ 20$, earn my 2200, pay the 20$, pay the 2,000 I borrowed and still have 180$? Now, let's say I hold onto those loans until Inflation kicks in, so that really I may be netting over 200$.

It's just the average person can't/won't do this.

 

[Buddha C]

Because Gov't is a poor Loan Performance Calculator. It's the entire Reason we needed Fanie/Fred instead of disbursing the Funds directly.

The Rich Bankers shouldn't be saving it. That is no where in the plan. But it's better for them to Hoard it (in case, at least 2010-early2013, of EU collapse) in case of another external/internal shock. The same middle class that shouldn't be saving money, are the same idiots that vote Republican and stop any REALLY POSITIVE FOR THEM fiscal budget adjustments to be made. It's their fault, frankly. So no, I don't feel bad for their idiocy.

The Rich Bankers are PAY A STORAGE FEE in real terms when they do decide to save.

It's just, they're so Rich and so smart, that they buy Stock with the Loaned money, put that Stock Capital on Leverage and earn interest (and borrowing costs for the leverage are concomitantly down too) by putting it in the Stock Market.

Now if I can borrow @ 0%, then earn 10% on Stock why wouldn't I? If I can borrow 1,000 dollars and pay only 10 dollars, why would I not purchase stock with that 1,000, leverage it (I believe the requirements are 2:1 or 5:1) to 2,000 @ 20$, earn my 2200, pay the 20$, pay the 2,000 I borrowed and still have 180$? Now, let's say I hold onto those loans until Inflation kicks in, so that really I may be netting over 200$.

It's just the average person can't/won't do this.

FYI, the bolded is pretty much the Private-sector's "pumping money" into the stock market that caused the Depression. (Though in the 1929s the Margin Requirements were MUCH lower)

Big Companies know that if the Stock Market falls, because they all have their money in together at the same time, they will all be 'Too Big to Fail' and will be bailed out.

At least, that's what I believe.

I'm a Segmented Market Irrational-Rational believer (Rich are clearly Rational, lower Proles are clearly Irrational, imo)

 

[Moot]

Did you just post a random unrelated link thinking I wouldn't check it?

I was hoping you would thats why I posted it. doh.

This article says nothing about comparing the severity of the recessions/depressions in the 19th century to those in the 20th century. All it does is talk about unemployment insurance and unions.

Well, if you think about it, where's there large scale unemployment there is usually hard times. There wasn't a Bureau of labor statistics until 1913 and the only reason it was created was to get a handle on the increasing unrest and poverty that had been plaguing the economy since the Civil War. The best guesstimates for the latter 19th century are that unemployment was around 30% to 60% during the peaks of the many recessions.....

http://www.sp2.upenn.edu/america2000/wp2txt.pdf

Unemployment Unknown Until Late 19th Century « Alexandria

Coxey's Army - 1894 March to Washington By Hundreds of Unemployed Workers

Child labor, almost all labor was manual, unfair wages, long work hours, no breaks, no retirement, no unemployment insurance, no health benefits, no job security, unsafe working conditions, life expectancy was 50 years old.......yeah it was a real swell time. If you want antedotal stories of hardship then read Charles Dickens or Upton Sinclairs, The Jungle.

Why do you believe that the government giving free money (near zero percent loans) only to rich people is somehow the glue that holds the economy together? There's a reason JP Morgan pushed for the creation of the Fed, it gave bankers like him a huuuuuge service, utilizing not only the government's printing press to provide him near free loans, but also to bail him out when push comes to shove.

Because our economy is built on credit and borrowing. Businesses can't expand unless they borrow and people can't buy new cars and homes unless they borrow. Thats just the way it is.

JPMorgan didn't cause the panic of 1907 but he did use his own money and convince other bankers to chip in to rescue the economy because they were the only ones that could afford to on such short notice. The government was worried that the next panic there wouldn't be any rich bankers willing to or could afford to bail it out.

You should do a little homework and read about it because it really is interesting if you like history and finance.

 

[RabidAlpaca]

I was hoping you would thats why I posted it. doh.

Well, if you think about it, where's there large scale unemployment there is usually hard times. There wasn't a Bureau of labor statistics until 1913 and the only reason it was created was to get a handle on the increasing unrest and poverty that had been plaguing the economy since the Civil War. The best guesstimates for the latter 19th century are that unemployment was around 30% to 60% during the peaks of the many recessions.....

http://www.sp2.upenn.edu/america2000/wp2txt.pdf

Unemployment Unknown Until Late 19th Century « Alexandria

Coxey's Army - 1894 March to Washington By Hundreds of Unemployed Workers

Child labor, almost all labor was manual, unfair wages, long work hours, no breaks, no retirement, no unemployment insurance, no health benefits, no job security, unsafe working conditions, life expectancy was 50 years old.......yeah it was a real swell time. If you want antedotal stories of hardship then read Charles Dickens or Upton Sinclairs, The Jungle.

Because our economy is built on credit and borrowing. Businesses can't expand unless they borrow and people can't buy new cars and homes unless they borrow. Thats just the way it is.

JPMorgan didn't cause the panic of 1907 but he did use his own money and convince other bankers to chip in to rescue the economy because they were the only ones that could afford to on such short notice. The government was worried that the next panic there wouldn't be any rich bankers willing to or could afford to bail it out.

You should do a little homework and read about it because it really is interesting if you like history and finance.

Then why should only the rich get the sub-market interest rates the fed offers? Why would we need a middle man to suck off cash from the process?

Because Gov't is a poor Loan Performance Calculator. It's the entire Reason we needed Fanie/Fred instead of disbursing the Funds directly.

The Rich Bankers shouldn't be saving it. That is no where in the plan. But it's better for them to Hoard it (in case, at least 2010-early2013, of EU collapse) in case of another external/internal shock. The same middle class that shouldn't be saving money, are the same idiots that vote Republican and stop any REALLY POSITIVE FOR THEM fiscal budget adjustments to be made. It's their fault, frankly. So no, I don't feel bad for their idiocy.

The Rich Bankers are PAY A STORAGE FEE in real terms when they do decide to save.

It's just, they're so Rich and so smart, that they buy Stock with the Loaned money, put that Stock Capital on Leverage and earn interest (and borrowing costs for the leverage are concomitantly down too) by putting it in the Stock Market.

Now if I can borrow @ 0%, then earn 10% on Stock why wouldn't I? If I can borrow 1,000 dollars and pay only 10 dollars, why would I not purchase stock with that 1,000, leverage it (I believe the requirements are 2:1 or 5:1) to 2,000 @ 20$, earn my 2200, pay the 20$, pay the 2,000 I borrowed and still have 180$? Now, let's say I hold onto those loans until Inflation kicks in, so that really I may be netting over 200$.

It's just the average person can't/won't do this.

Exactly, the average person can't get that 0% loan, because the government will only give it to those who are already rich.

The fact that you just called people who save money idiots, I can tell you must be trying to justify your own poor saving habits.

With views like that, there's no reason for us to continue. You applaud the rich bankers for making free, risk free money from the government, then scold those in the middle class who try to save enough to insure their family's future. Disgusting.

 

[Helix]

Ex-Fed Official: I'm Sorry for QE

.....

 

[Buddha C]

Then why should only the rich get the sub-market interest rates the fed offers? Why would we need a middle man to suck off cash from the process?



Exactly, the average person can't get that 0% loan, because the government will only give it to those who are already rich.

The fact that you just called people who save money idiots, I can tell you must be trying to justify your own poor saving habits.

With views like that, there's no reason for us to continue. You applaud the rich bankers for making free, risk free money from the government, then scold those in the middle class who try to save enough to insure their family's future. Disgusting.

Lol, when Reading Comprehension *fails*.

I said because the Poor and Middle Class have the MOST UNUSED POLITICAL POTENTIAL and they're specifically USING IT FOR WHAT BENEFITS THE RICH ALSO, then they're idiots for both the Fiscal actions they allow and propagate their representatives to take, and for saving money when it is stupid to do so. Obviously, the same shoring that stands as a benefit when banks hoards money can be allowed to the individual, except the Individual prole's collapse don't affect every other sector of the economy.

 

[Buddha C]

.....
View attachment 67156818

Poor understanding of the topic at hand.

 

[Helix]

Poor understanding of the topic at hand.

Oh, come on. I'm entitled to a little hyperbole every now and again.

 

[Buddha C]

Oh, come on. I'm entitled to a little hyperbole every now and again.

Haha xP

 

[austrianecon]

Well they have moved the Yen from 80 to 100 for a dollar which will help exports. In addition they have given their stock market a boost just as the Fed has here.

And? Import costs have risen as well. So you negate the export gains by the import cost increases. The Yen for the last 20 years has been in the 100 range, the 100 range isn't the magic bullet that will fix anything. Boosting the stock market doesn't change Japan's problems.

 

[Buddha C]

And? Import costs have risen as well. So you negate the export gains by the import cost increases. The Yen for the last 20 years has been in the 100 range, the 100 range isn't the magic bullet that will fix anything. Boosting the stock market doesn't change Japan's problems.

The import cost of gasoline (which is relatively very low right now) has also increased significantly, creating a heavy head wind as that consumption is no longer recycled inside of Japan as Japanese profits, wages and property appreciation.

 

[washunut]

And? Import costs have risen as well. So you negate the export gains by the import cost increases. The Yen for the last 20 years has been in the 100 range, the 100 range isn't the magic bullet that will fix anything. Boosting the stock market doesn't change Japan's problems.

It moves their economy as they can compete in the export market. Rising stock market helps the economy, at least that is what central bankers think. Why do you think we are on QE infinity here.

 

[austrianecon]

It moves their economy as they can compete in the export market. Rising stock market helps the economy, at least that is what central bankers think. Why do you think we are on QE infinity here.

Couple of things..
1) Japan's export economy (like all countries) is dependent on global demand increase. You can print as many dollars, yens, and euros you want but if global demand for your countries product isn't there, your export numbers aren't gonna increase dramatically.

2) Printing a currency is a feel good policy as it has no effect on global demand. Japan has been printing the Yen for two decades now and the policy didn't work for the last 20 (rounding up) years why do you expect it will work now?

Rising stock market doesn't help the economy as it's not stock prices that increase GDP (as in if they rise in value) or even demand. Central Bankers equate a rise in stock prices as pat on the back for their inflationary policies and proof it's working.

The US is doing the same thing Japan has done in the past. We are going on year six, that's right year six, of QE in the US. Japan has been doing it for alot longer but Japan entered a phase of no return for QE. US is reaching that point now. QE may or may not be a good short term policy. Short term is less the two years. But we have evidence starting with Japan who spend the last two decades in a "Lost Decade" and had policies of ZIRP (Zero Interest Rate Policy) and QE. It hasn't worked in Japan and Japan is doubling down AGAIN after it's doubling down of it several times before. QE led to the rise of Hitler and the end of Weimar republic because Germany couldn't pay back its WW1 war debts without printing more Marks, so they printed away like a good old MMTer (Chartalism) would want you to.. then you have the problems of Hungary and Zimbabwe with it's "QE".

You think those who support that type of policy would look at the instances where it's been used long term and look at the time bombs they create.

 

[austrianecon]

The import cost of gasoline (which is relatively very low right now) has also increased significantly, creating a heavy head wind as that consumption is no longer recycled inside of Japan as Japanese profits, wages and property appreciation.

Umm yeah.. so Japan shuts down Nuclear Power plants because all of them are ticking time bombs and have moved to invest in other energy ideas, it's a head wind? So Japan's massive investment in building Solar plants as an example.. or the fact despite the shut down, Japan is making more GDP per exajoules then it did 20 years ago? GDP vs Energy consumption. It's a head wind?

You are reaching and blaming something that doesn't exist. That money that's "lost" as you call it, is actually being recycled in new energy building programs.