Topic: Quantitative Easing - page 2. (Read 6688 times)

They have already started to taper the rate of QE.

The FED had increased interest rate before and will do it again eventually

As the public discovers that the current system is unsustainable (if they do) you will hear about paying back or at least tapering (expanding the money+debt supply less than that other political fraction would have done, had they won the election).

But both is out of the question really. It is not possible to taper (reducing the rate of expansion), and it is not possible to increase the interest rate.

Look for tapering talk, and at the same time covert debt expansion. Fake companies issuing bonds, loans parked in bad banks. New forms of securities issued. Government guarantees. Implicit government guaranties. Even a political statement like we have to stop global warning increases lending and thus the money+debt supply.

But you can't taper a ponzi scheme which is what this is. But now it is absolutely global. The hot money from countries & governments flows into global RE 'safe' spots (London, Canada, Australia) where the investment monies are at least out of harms way. Us plebs are also enticed into RE: ZIRP for savers, govt led spruiking (UK), FOMO (Aust)

With the stocks more and more people need to join the 'market' as new money makes it go up. As soon as the free money for big investment firms is gone, the music stops. How many chairs are left?

Companies are resorting to share buy backs, mergers, part time employees and margin compression to maintain the illusion.

Japan nothing has worked; an ageing population of savers, a generation not popping out kids, flatlined RE, massive debt overhang. Probably won't change until Japan does.

QE would need to be taken away very gradually.

Even with QE Japan has experienced deflation

That is true but is not always possible if there are not jobs available.

People need to be dynamic and change job to meet market demand. Not the other way around.

In a economy experiencing deflation, there tends to be less work available. Even if your job is "secure" today it is less likely to be secure during a time that an economy is experiencing deflation. You would also face the risk that your employer still needs you to work but cannot afford to pay you as much per hour (or per year) and were to cut your salary.   

The security of my job is relevant as a secure job produces a regular paycheck. If you have a secure income in deflationary environments then your purchasing power increases as your income remains stable.

There is no way out of this QE mess without deflation. Japan has QE'd for 20 years and still cannot shake it (different scenario in some respects and some - Keiser particularly - even argue that QE begets deflation.)

But anyway, there is always room for conflicting opinions. I dont think there is a way to stop QE without deflation taking over, and it cannot continue indefinitely.

Deflation is bad because it leads to lower economic output. It often causes recessions and depressions.

Even if you are not burdened by debt (the security of your job is not relevant) then your income would likely go down or possibly go away and there is a greater chance you will be without work. Most people without debt still rely heavily on their income from working which would be hurt by deflation.

If I am burdened by a large debt (mortgage, toxic MBS's, multiple trillions in national debt) then inflation is the manna from God. It will wipe away my debt by making it worth less.

If I am not burdened by debt (cash in bank, secure job, no mortgage) then deflation is the ants pants as prices decline and I can purchase goods when I believe the price is fair.

I know that mobile phones, TV's etc are going to be much better in the coming years but I still buy them. The model I buy will be much cheaper next year if not next month. I still buy because I want the item. The market would always find a bottom when enough people think it is fairly priced. Shit businesses loaded by debt fail and new ones replace them that figure out how to do things better. I'm not sure I believe that deflation is the devil like you're saying.

Inflation in general is bad, but the opposite, deflation is much worse. With deflation people will wait until "tomorrow" when prices will fall, causing prices to fall even more, causing people to delay their purchases even longer. This results in a decreased level of economic activity.

Inflation needs to be kept at a low level but not so low that deflation is a threat.

A major effect of QE is that it makes it much cheaper to borrow money. It also makes it cheaper to repay money that is borrowed in terms of effort (labor/work)

YEP it is pretty clear that user: "Trading" is a douche Fed lapdog with no integrity.

QE IS INFLATION.

INFLATION IS BAD (no matter how try to justify it)

Banks, manufacturers, governments, currencies and everyone should be allowed to fail. In their wake better solutions will arise.

Look at Mt Gox. They sucked. They failed. Now better exchanges rule the landscape. Bitcoin and a truly free market will prevail.

Yes but the way I understand it is that the game being played at the moment is that the US & China position themselves as lower than the Euro, therefore their exports are cheaper to purchase.

Getting your currency lower is all part of the beggar thy neighbor aspect of QE; if your currency is worth more you will be less competitive in export markets, even though a stronger currency may indicate better 'health'.

Strength of the currency should be view as a good sign as there is demand of the currency at the world stage.

Artificially pushing down the rate will cause import and export imbalance as well as wages distortion.

Sir, this is the worst, manipulative post i have ever seen. The above quote is from Wikipedia, BUT you have intentionally erased a line from the definition. The original looks like this:

"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] It can be defined as too much money chasing too few goods.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."

Money in the above sentence is what QE pours into the economy, issued by the FED.
Source: http://en.wikipedia.org/wiki/Inflation

If money is nothing more, than the numerical expression of scarcity and supply-demand relations, than if we suddenly print 2x money, the prices will just adjust to 2x respectively with time.
An 8 year old kid understands inflation... 10 apples, 10 chocolate, 1 apple = 1 chocolate given they have the same marginal demand (their marginal utility, aka. diminishing return in demand are the same). If suddenly you bring 10 more apples in to the system, and demand remained the same, 2 apples= 1 chocolate.

Fed creating more "apples" than economy creates "chocolates" will result that 1 apple will loose its value in par to 1 chocolate -> inflation.

You can actually buy an interview on Bloomberg if you'd like. Many interviews are simply ads for the business.

It would be so much simpler just to fix the currency, but a strong currency is bad for business when your business is stealing purchasing power.

The ECB negative rate it's also an incentive for banks to lend money to each other. In Europe, there are still some banks that don't trust others, so the ECB is forcing them to remove their money from their ECB accounts and start to lend it to other banks more willing to lend it to individuals and corporations.

It tries to force commercial banks into lending because at the moment they can deposit money with central banks and make a gain with zero risk. Now they'll have to invest and face risk.

I think something similar was noted that in the US they were getting money at 0% and lending it back to the govt at 3%. No reason reason to lend it out to the public.