Does quantitative easing really work?

I think full employment of resources in the market for labor can, "soak up" all of that printed money through unemployment compensation for being unemployed and circulating that money and creating more demand; when coupled with a fifteen dollar an hour minimum wage, gains in productivity and a positive multiplier effect will enable consumers to, "catch up" to the money supply.

 

Now the "loan" is unsecured, meaning the depositor is the last creditor in line to get paid

 

It's funny how the state arranges it so that the bankers always win and the little guys get screwed.

The insidious thing about the whole scam is that people don't even know they're loaning their money. The banks and the government do their best to keep that fact hidden. They think they're depositing it for safekeeping.

How about a regulation that the word 'deposit' can never be used when it's actually a loan. Maybe that would help people wake up.

And how about allowing people to set up legitimate bailment banks that are connected to the clearinghouses (paper and debit) to give people a no-risk alternative. Once those are up and running, announce the future elimination of FDIC, let everyone get their $250,000 of loaned money back, and then allow the market to decide between the two system of banking. And then after everyone's been given a chance to withdraw their money from the fractional reserve banks, shut down FDIC.

 

The multiplying factor fell below 1 as of the 2008 crisis. Less than one dollar entered the economy for every dollar created by the FED.

 

Jamie Dimon and Lloyd Blankfein would be very upset with you

 

Hah, lots of people would be! But not the little guy who wants to keep his money in a safe account.

 

????????you said you wanted consistent application of capitalist principles; now you say you want laws to prevent capitalism????

 

little guy is fully protected by FDIC

 

still pretending many of the big bankers didn't go bankrupt?

 

depositors probably do know their money is being loaned, if you told them directly it would not matter to them as long as they know it is insured and nobody loses their money, except the big bankers in NYC.

 

If you don't like that idea, then I have an alternative idea. Make it illegal to bail out such stupid capitalist depositors when the can't get their money back from their capitalist banker when the loans go south.

 

It's being insured by socialism. And here I thought you were a capitalist and opposed libsocialism.

 

In a recession, people fear losing their jobs, they stop spending, lack of spending causes businesses to decrease production and lay off more workers, and the cycle can intensify. During a bad recession, to mitigate the damage, purchasing needs to be stimulated.

The best way to effect this purchasing is by the government either doing direct purchasing, or by putting more money into the pockets of people who will spend it. This is traditionally done through fiscal stimulus, with either government spending (e.g. jobs programs that get more people having incomes; see also Reagan and Bush military spending) or tax cuts (less effective if they mostly benefit wealth folks who spend proportionally less of their income).

The problem in the last recession is that after the Republicans were elected majority in the House in 2011, they virtually put a halt to any further government spending or jobs programs. They were supposedly concerned about deficits, though, once again, we have seen that when a Republican is in the WH they don't care about deficits at all.

So with a complete lack of government fiscal stimulus, the only other option to stimulate more purchasing was with the Fed's QE program, which injects more money into the economy (i.e. monetary stimulus). The Fed would have preferred fiscal stimulus (and said so) but again, with the Republicans in the House, that was not an option.

Monetary stimulus is not optimal, because most of the folks or entities getting the newly created money are wealthy or big banks/corporations than don't really spend it, proportionally. That was the problem with the great recession, where the Fed created all this new money, only to see banks and big corporations and wealth individuals sit on it instead of spending or investing it. Monetary stimulus also creates a risk of inflation when the economy finally heats up.

Still, while not the best strategy, it probably saved the economy from a further recession with the Republican austerity. Why the Republicans might have wanted a further recession I'll live to your own opinions.

 

1) people are not stupid because they want to earn interest
2) bailed out by capitalist insurance is fine and good for capitalism

Biggest threat to financial system was poor accounting, Fan/Fred, and surprise bubble. Fractional banking was trivial.

 

it could be insured by capitalism too and probably should be.

 

totally wrong obviously. that just creates a bubble that will burst and cause another recession. Sustainable stimulus or economic growth comes from daily decisions made by millions of people, not a wild guess made by a libturd bureaucrat. Do you understand?

Keep in mind a recession is the time it takes the free market to correct for govt interference. What you are proposing is a recession!! See why we say liberalism is based in pure ignorance?

 

Engaging in business ventures is not stupid. However, one must suffer the downside if one expects to benefit from the upside. That's capitalism.

FDIC is socialist, not capitalist.

 

Totally wrong obviously. The recession is why you need to stimulate spending.

When daily decisions made by millions of people involve not spending money and firing workers because people aren't spending money, the result is not sustainable stimulus or economic growth but a deepening recession.

Do you understand?

A recession is the result of overproduction and speculation. Do you understand?

How can I be proposing a recession when there is already a recession? See why we say conservativism is based in pure ignorance?

Do you understand?

 

I'm fine with private banks doing fractional reserve banking and private depositors loaning them their life savings and all of them purchasing private insurance. As long as they don't beg for socialism when the wheels fall off their bus.

 

Good idea. Let's do it like the 1750s. If we want an economy like the 1750s. Who needs loans?

 

actually dear the housing stimulus cased the bubble and recession so why are proposing another stimulus bubble and recession all over again????

 

it will deepen only if govt is making things even worse with another stimulus bubble that will burst. Do you understand now?

 

exactly and in this case the result of the govt housing stimulus bubble. THe only solution is the free market correcting the govt distortions, not another stimulus bubble. Still confused?

 

you are proposing deepening or prolonging a recession exactly as FDR did for 16 years when the free market could have corrected in one year.

 

who cares?? its a trivial matter. If govt partially backstop private insurance its just trivial compared to real economic issues. Why are you stuck on trivia? I think because you are parroting Austrian from 100 years ago.