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Thread: QE 1, 2 and 3 explained

  1. #1
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    QE 1, 2 and 3 explained

    QE One and Two
    [IMG]http://dailybail.com/storage/Qe%20Cartoon%202.jpg?__SQUARESPACE_CACHEVERSION=1284105240746[/IMG]


    QE Three
    [IMG]http://dailybail.com/storage/QE%20cartoon.JPG?__SQUARESPACE_CACHEVERSION=1284104948169[/IMG]

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    :bs:

    :jets17

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    there is no QE 3

    these economic policies are fun to bash but were bi-partisan (QE1 started by Republicans under Bush) and probably saved us from a Great Depression.

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    [QUOTE=bitonti;4054314]there is no QE 3

    these economic policies are fun to bash but were bi-partisan (QE1 started by Republicans under Bush)[/quote]

    Bi-Partisan does not = good, right, correct, etc.

    [quote]and probably saved us from a Great Depression.[/QUOTE]

    It must be great to not have to prove anything anymore.

    Is this claim like Obama's "saved or created 100 gigatrillion jobs. Really.....trust me! :)"

    Did you know Bush invading Iraq "probably saved us from 100 9/11's"?;)

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    [QUOTE=Warfish;4054324]

    It must be great to not have to prove anything anymore.
    [/QUOTE]

    you make a valid point about the 'unprovability' of that claim but I would ask what the alternative would be? Abolish the fed and go back to the boom/bust days Pre-FDR?

    there's this idea among gold bugs and others that somehow life was better before currency manipulation. that somehow a currency based solely on commodities is a better system than the fiat system that saw 60+ years of prosperity after teh New Deal. history doesn't support that claim. there used to be depressions every 10 or 20 years.

    Now (because of Keynes) we are able to take what should be a depression and turn it into a jobless recession, that's progress, believe it or not.

    and i bring up the bi-partisan-ness of it all, because you have to believe that this was the last thing Republicans wanted to do. it's one thing to sit in the cheap seats and claim everything is stupid, that democrats love to spend and are perpetually wrong... it's another thing to be Paulson/FED driving the train and see the chasm open up before you... suddenly everyone was Keynesian... and ya know what it worked. In times of crisis it's better to have some tools in the toolbox than no tools and say "that's the free market"

    No warfish we can't prove a hypothetical but bet your bottom dollar if AIG failed, all the banks failed, GM went under, GE and 100 others went under... it really would be alot worse.

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    [QUOTE=bitonti;4054344]you make a valid point about the 'unprovability' of that claim but I would ask what the alternative would be? Abolish the fed and go back to the boom/bust days Pre-FDR?

    there's this idea among gold bugs and others that somehow life was better before currency manipulation. that somehow a currency based solely on commodities is a better system than the fiat system that saw 60+ years of prosperity after teh New Deal. history doesn't support that claim. there used to be depressions every 10 or 20 years.

    Now (because of Keynes) we are able to take what should be a depression and turn it into a jobless recession, that's progress, believe it or not.

    and i bring up the bi-partisan-ness of it all, because you have to believe that this was the last thing Republicans wanted to do. it's one thing to sit in the cheap seats and claim everything is stupid, that democrats love to spend and are perpetually wrong... it's another thing to be Paulson/FED driving the train and see the chasm open up before you... suddenly everyone was Keynesian... and ya know what it worked. In times of crisis it's better to have some tools in the toolbox than no tools and say "that's the free market"

    No warfish we can't prove a hypothetical but bet your bottom dollar if AIG failed, all the banks failed, GM went under, GE and 100 others went under... it really would be alot worse.[/QUOTE]

    But isn't the fact that this is all coming to a head now the result of 60+ years of proping up these companies rather than letting them struggle and or fail in their own time?

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    [QUOTE=Trades;4054346]But isn't the fact that this is all coming to a head now the result of 60+ years of proping up these companies rather than letting them struggle and or fail in their own time?[/QUOTE]

    it wasn't about the companies themselves, or even the mortgages themselves. it was about credit.

    the companies aren't all that bad... nor has the gov't really propped them up. Most of the TARP money was paid back, at a small profit to the tax payer.

    When BearSterns failed the credit locked up. the modern system without credit is a failed system. the QE1 flooded the system with money to get credit moving again.


    yes if we went back to the 1600's when there was no idea of stocks or credit, there couldn't be a credit crunch. But the game becomes much smaller.

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    [QUOTE=bitonti;4054344]you make a valid point about the 'unprovability' of that claim[/quote]

    [quote]No warfish we can't prove a hypothetical[/quote]

    [quote].....but bet your bottom dollar if AIG failed, all the banks failed, GM went under, GE and 100 others went under... it really would be alot worse.[/QUOTE]

    /facepalm.

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    What people seem to be missing is the baby boomers who were putting into SS huge amounts of money were effectively lending that money back to the government at very cheap rates. Those boomers are starting to retire and payback is going to be a *****.

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    It just kept us in a long depression!

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    [QUOTE=Winstonbiggs;4054391]What people seem to be missing is the baby boomers who were putting into SS huge amounts of money were effectively lending that money back to the government at very cheap rates. Those boomers are starting to retire and payback is going to be a *****.[/QUOTE]

    People are missing that point? I thought that was the entire point of the SS discussion.

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    [QUOTE=Trades;4054396]People are missing that point? I thought that was the entire point of the SS discussion.[/QUOTE]

    Yes both parties who borrowed the money from the boomers don't want to pay it back.

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    [QUOTE=MnJetFan;4054394]It just kept us in a long depression![/QUOTE]

    the words recession and depression have definitions.

    we aren't in either, and haven't been for sometime.

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    [QUOTE=bitonti;4054400]the words recession and depression have definitions.

    we aren't in either, and haven't been for sometime.[/QUOTE]

    You can consider this whatever you want. The reality is when economic growth is far below the rate of inflation the country is getting poorer.

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    QE has caused inflation which is one reason the republicans don't want to increase taxes. Inflation is already a tax.

    The low (relative) value of the USD has caused oil, gold, silver etc., to increase in price very quickly. A tax hike could be disastrous for the economy.

    As for QE 3, just a joke here, but I think that it is coming or at least an extension of QE 2. Printing dollars is not cheap

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    [QUOTE=Jetdawgg;4054424]QE has caused inflation which is one reason the republicans don't want to increase taxes. Inflation is already a tax.
    [/QUOTE]

    taxes need to be raised because revenues aren't matching spending. Period. we can talk about cutting spending (and it will be cut) but revenues also must be increased. the math isn't there to marry a 2.2 trillion dollar income with a 3.6 Trillion dollar outflow. there aren't 1.4 trillion dollars worth of cuts in this gov't. there just aren't.

    as for inflation... we actually want inflation. We can control inflation. We can't control deflation (Stagflation). the fed has tried to heat up the economy with inflation. Hopefully it succeeds, cause the opposite is a nasty scenario (lost decade).

    my employer for example, when they didn't give wage increases, they cited a lack of inflation as justification. there was no cost of living increase, therefore no wage increase. if there's inflation they can't make that argument.

    another word about global crisis... orders were canceled because producers/consumers couldn't get lines of credit. without credit, everything freezes up... you can strategically issue more dollars in a Keynesian scenario and hope that the market loosen (which they have)

    the alternative, a commodity based currency, when a bust comes you are totally screwed. The gov't can't issue more gold, and I know that's what the gold bug likes about it... but it's a double edged sword. We'd rather have the benefits and the penalties of having these options... than have no moves at all.
    Last edited by bitonti; 06-28-2011 at 05:26 PM.

  17. #17
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    [QUOTE=bitonti;4054507]taxes need to be raised because revenues aren't matching spending.[/quote]

    So cut spending.

    [QUOTE]we can talk about cutting spending (and it will be cut) but revenues also must be increased. the math isn't there to marry a 2.2 trillion dollar income with a 3.6 Trillion dollar outflow. there aren't 1.4 trillion dollars worth of cuts in this gov't. there just aren't. [/QUOTE]

    Sure there is. Big Govt. folks just won't like it.

    [QUOTE]as for inflation... we actually want inflation.[/QUOTE]

    Speak for yourself. I most certainly do NOT want my money to have less value.


    [QUOTE]my employer for example, when they didn't give wage increases, they cited a lack of inflation as justification.[/QUOTE]

    Trotting that out again.

    Yup, still don't believe it for a milisecond. You may not have gotten a cost-of-living increase if they deemed cost-of-living (which included inflation) had not risen in your locale, but to deny merit increases on that is so laughable, it's just embarassing.

    Which pretty much sums up any thread where you try to discuss economics or environement. Shudderingly embarassing in it's party-line swallowing.

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    [QUOTE=Warfish;4054518]So cut spending.

    Sure there is. Big Govt. folks just won't like it.[/quote]

    you say these things but it's not feasible. just like it's not feasible for me to expect Obama to announce a 100,000 troop pullout. These things take time and are political minefields. You might wish we live in a country where the central gov't can cut 1/3 of it's total spending over crab cakes but it's not realistic.


    [QUOTE=Warfish;4054518]
    Speak for yourself. I most certainly do NOT want my money to have less value.[/quote]

    the choice is between inflation and deflation. things don't stay constant. Inflation is the lesser of two evils. we can control it. We cannot control deflation. in our greatest economic periods we've always had inflation. deflationary spirals are nasty things.

    [url]http://en.wikipedia.org/wiki/Deflation[/url]




    [QUOTE=Warfish;4054518]
    Yup, still don't believe it for a milisecond. You may not have gotten a cost-of-living increase if they deemed cost-of-living (which included inflation) had not risen in your locale, but to deny merit increases on that is so laughable, it's just embarassing.

    Which pretty much sums up any thread where you try to discuss economics or environement. Shudderingly embarassing in it's party-line swallowing.[/QUOTE]

    You may not believe it but that cost of living rationale was brought out in compensation discussions. I come up with my own opinions, if you really think I'm in lockstep with anyone you aren't reading close enough.

  19. #19
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    [QUOTE=bitonti;4054527]you say these things but it's not feasible.[/quote]

    Just because your talking points memo says it's "unfeasable" or "unfair" or whatever other catchphrase it being bandied about today, doe snot make it so my friend.

    Massive cuts are absolutely possible. As is an end to the three (four, six, saw we just attacked in Somalia too) Wars.

    [QUOTE]the choice is between inflation and deflation.[/QUOTE]

    Your grasp of economic, it stuns me.

    [QUOTE]things don't stay constant.[/QUOTE]

    Really?

    Like say, the Climate?

    ;)

    [QUOTE]Inflation is the lesser of two evils. we can control it. We cannot control deflation. in our greatest economic periods we've always had inflation. deflationary spirals are nasty things.

    [url]http://en.wikipedia.org/wiki/Deflation[/url][/QUOTE]

    A. No, we cannot neccessarily "control" inflation. See Wiemer, Republic, for a perfect example, one of many many many of runaway inflation totally destroying an economy.

    Good luck fiding alot of examples where deflation (currency worth more buying power) destroyed an economy in such a way.

    B. Deflation has drawbacks, sure, depending on where you stand and what you want from the economy, but it's hardly the evil doom you claim. Oh noes, my money in the bank is now worth MORE? And stuff (like say, Oil, food or all the over-priced (still) property) is worth a little less?

    Heaven Forbid. Much better that my paycheck is now worth (in buying power) half what it used to. Where do I sign up to the brillaint new world of poverty?

    [QUOTE]You may not believe it but that cost of living rationale was brought out in compensation discussions.[/QUOTE]

    I don't believe it, obviously. It's laughable.

    And I don't believe anyone would be stupid enough and so completely ignorant as to accept that lame excuse for a denial of merit increases.

    [quote]I come up with my own opinions, if you really think I'm in lockstep with anyone you aren't reading close enough.[/QUOTE]

    Lol.

  20. #20
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    [QUOTE=bitonti;4054507]as for inflation... we actually want inflation. We can control inflation. We can't control deflation (Stagflation). the fed has tried to heat up the economy with inflation. Hopefully it succeeds, cause the opposite is a nasty scenario (lost decade).

    my employer for example, when they didn't give wage increases, they cited a lack of inflation as justification. there was no cost of living increase, therefore no wage increase. if there's inflation they can't make that argument.

    [/QUOTE]


    When we were in full employment and people needed workers and my employer told me he was only going to give me a cost of living increase I told them flat out I wouldn't except it. I wanted a real wage increase above the cost of living because my labor was in demand.

    When you have GDP growing at a rate that jobs aren't created employers don't have to give cost of living raises because you can be replaced in about 5 seconds. When you have real inflation on food and energy and wages are under pressure because there is way more supply then demand inflation destroys buying power. Less buying power means less demand and the cycle continues...

    A little inflation in a vibrant economy and wages generally keep up. Inflation in a dead economy is death to the middle class. The fed wanted to create inflation to create demand instead it has reduced buying power and demand is starting to follow, GDP growth is slowing.

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