Quantitative Easing

[ASL Veteran]

Quantitative Easing explained

Here is an article about the same thing

http://www.americanthinker.com/2010/11/bernankes_cowardice_has_sealed.html

I'm not sure how accurate the article is, but it is certainly plausible.

[Stalins Organ]

It's not an explaination - it's a rant against it.

it may be true enough, but it is filled with emotive language hostile to the concept that adds nothing to any factual basis.

[JonS]

+1 to Stalin.

In fact, both links are cut from the same cloth.

[ASL Veteran]

Well I posted the video because I thought it was funny - not because I wanted to start a serious discussion about Quantitative Easing. The article linked is probably a worst case scenario for Quantitative Easing gone bad. Quantitative Easing is pure Keynesian economics so if you are interested in reading articles on it just do a search for Keynesian Economics or Keynesian Quantitative Easing and you can find all kinds of stuff on it. If I find something about Keynesian economics that won't put everyone to sleep I'll put a link up.

[ASL Veteran]

Here is a pretty decent video for you

http://www.youtube.com/profile?user=afq2007#p/u/27/VoxDyC7y7PM

It's anti Keynesian, but he breaks it down in a simple fashion and he hits all the high points. Quantitative Easing is briefly mentioned at the 3:14 mark or thereabouts. I am not a Keynesian so the views in this video are views that I share. Others are free to disagree of course .

[costard]

I think the American Thinker article is cogently argued and well worth reading.

Quantitative Easing is not Keynesian economics - Keynesian economics seeks to expand the market by putting more money in the hands of a broader base of the population. It worked in the thirties because the base it started from was very low: the world had already endured a couple years of economic contraction and the disposable income of some thirty percent of the populace (those who were out of work) was nil. The funding of social security payments, where the money went directly to the consumer, enabled the expansion of the market and the funding of expansion in all tiers of industry ( an expandng market meant that the likelihood of a return on the investment was high).

QE is seeking to create demand for US goods by inflating the US currency. It is aimed at an offshore market for a manufacturing industry that has largely moved offshore in search of higher profits driven by lower labour costs. The money will go to large investors (read banks) who will invest that cash in offshore assets: currencies that will appreciate against the $US and loans for the acquisition or construction of assets that are likely to be repaid (or will generate a return: expect the markets to rise even further.) The correlation between the price of the Stock Market and the confidence of the average consumer will be destroyed by the time this exercise is over: only the ignorant believe that there is any meaning in the correlation in the first place. There is nothing in this for the US taxpayer: in fact, it is the US taxpayer who will pick up the bill for bailing out the banks yet again, for no return.

[Gotta go bath a baby]

[costard]

To continue;

Arguably, the strengths of the US, socially and economically, in the twentieth century came from the Henry Ford model of industrial relations: pay your skilled workers enough so that they can afford to buy your product. Your market grows, demand for your product grows and your profits grow. The thinking amongst the leadership of the US over the last twenty years has been along the lines of: a decreasing employment market forces lower wages and higher (short term) profits. So, profits have routinely been generated by downsizing, rationalising, moving offshore. The decay in relationships between managers and the workforce has followed suit - fraud has increased threefold in companies in Australia in the last two years, and twofold in the fifteen years before that.

You cannot, as a leader, hope to inculcate and engender loyalties and effective team behaviours when your own example is one of sloth, venality and gross disrespect for your workforce. You end up running a slave labour camp, which is fine, because you're competing with China.

The Chinese are having problems expanding their domestic market because the industry leaders there have been thinking along the same lines: they aren't paying their skilled workers enough to get into the market, therefore their market isn't growing.

sigh, nappy time.

[ASL Veteran]

Well it's true that monetary policy may not be where Keynes spent most of his time, but money printing for the purpose of creating inflation is probably more directed at the demand side of the equation and that's why it would fall into the Keynesian area in my mind. Maybe it's "new Keynesian" Obama and all his economic advisors are Keynesians and if you want to know what a true Keynesian thinks just read one of Paul Krugman's articles from the New York Times. However, I'm not really going to debate the point as my expertise is in Finance not Economics. I found another article about Keynes here for those interested

http://www.cato.org/pub_display.php?pub_id=9915

[costard]

Nice one ASL Veteran. Thanks.

[__Yossarian0815[jby]]

American Thnker, CATO?

You won the election, fine, but that doesn´t mean you get to break the forum rules. ->No politics

[ASL Veteran]

;1215385']American Thnker, CATO?

You won the election, fine, but that doesn´t mean you get to break the forum rules. ->No politics

I wasn't running for office in this election :confused:. It's also interesting that you would equate a discussion about economics with politics. Yes, very interesting indeed. That would actually be worthy of a thread all on it's own.