Quantitative Easing Explained in Six Minutes

[Zoom-boing]

Does this video paint an accurate picture?


[ame]http://www.youtube.com/watch?v=PTUY16CkS-k&feature=player_embedded[/ame]

 

[JBeukema]

informative!

 

[iamwhatiseem]

That is very good.
And this should be on national TV running in a loop for 24 hours.

Maybe then people here, and everywhere, will stop simply playing red vs. blue all day - and instead pay attention to what is really happening.

 

[uscitizen]

GOOD stuff and I agree it should run for 24 hours on all news networks. Sans a couple of questionable words.

 

[boedicca]

Excellent!

A very concise and accurate explanation of how the decisions of The Ben Bernanke benefit The Goldman Sachs at the expense of The American Taxpayer who are suffering from High Prices during The Deflation.

 

[The Infidel]

That was a good video.... great questions.

I love the spot at @ 3:19 or so.... "are you shitting me?"

Thanks for sharing!

 

[Paulie]

This was pretty funny, but a bit misleading.

I wish it would have gone into a little more detail about how the money is created, and the reason why QE is inflationary as opposed to traditional Fed asset buying.

 

[B. Kidd]

Z-boing, a classic OP!

Welcome to Plutocracy.....

 

[Zoom-boing]

This was pretty funny, but a bit misleading.

I wish it would have gone into a little more detail about how the money is created, and the reason why QE is inflationary as opposed to traditional Fed asset buying.

How the $600 billion is created? Isn't the Fed just printing that off?

Is the reason that QE is inflationary important? From the video I got that the Fed is claiming deflation is going on now. Is it? Things I purchase are all up in price . . . how is that deflation? And why would they want things to be more expensive now, when folks are out of work and all?

 

[JWBooth]

Thanks much!

 

[JWBooth]

[ame]http://www.youtube.com/watch?v=wpmlHTeVG9A&feature=related[/ame]

 

[peach174]

Yep. Very good. Well done !!!
This is why we all should be shouting to audit the Federal Reserve. And to stop him from doing this insane thing. He should be fired.

 

[Paulie]

This was pretty funny, but a bit misleading.

I wish it would have gone into a little more detail about how the money is created, and the reason why QE is inflationary as opposed to traditional Fed asset buying.

How the $600 billion is created? Isn't the Fed just printing that off?

Is the reason that QE is inflationary important? From the video I got that the Fed is claiming deflation is going on now. Is it? Things I purchase are all up in price . . . how is that deflation? And why would they want things to be more expensive now, when folks are out of work and all?

The Fed doesn't actually print physical currency. If there's a need for new paper notes, the Bureau of Engraving and Printing does that, at the behest of the Fed.

When the Fed creates money, they do so by electronically entering a sum of money onto the liabilities side of their balance sheet. When the Fed buys the asset, that money increases bank reserves. Conversely, when the Fed sells an asset, it decreases bank reserves as the bank buys the asset from the Fed.

The quantitative easing process is a bit different from the traditional way they would typically buy assets. With QE, they don't sell assets on the open market to offset the purchases they make. In normal economic circumstances, the Fed would prefer to "sterilize" their purchases with ~equal sales of assets so that there's not actually any "new" money being created. A sterilized purchase would not be inflationary, for that reason. But with this route, this is $600 billion of new money that is now created.


As far as deflation, I don't see it anywhere. Food and energy are going up, and those are the most important expenditures for people.

The reason prices are going up is because the Fed has created about $2 trillion since 9/2008. Even if banks aren't lending out much money, people know that the possibility of inflation is huge, so instead of correcting with the recession, prices are artificially increasing.

The Fed simply hopes that if enough new money is created, money velocity will pick up and people will spend again. The problem with it, is that they have never gotten that to work and also exited their asset purchases to drain bank reserves in a timely enough manner that the money supply doesn't grow too large to control inflation.

These are scary times.

 

[Paulie]

To clarify about QE2, they are actually buying $900 billion in Treasuries, but $300 billion of the purchases will be from reinvestment of money earned from their MBS holdings.

So that 300 billion is not inflationary.

 

[midcan5]

Some day this will be known as the Age of the Whiners. Or maybe the Age of the Finger-Pointers? This video is equally odd and partly right or is that wrong. One wonders why Economics is even considered a subject of study? What is it it studies, since no one seems to know much about anything. How does a nation become confident enough again to spend, when all the people do is complain, and whine about an Administration that inherited a nightmare that will eventually through revisionist thought become the good old times?

[ame]http://www.youtube.com/watch?v=Q0EC14YP4gA[/ame]



Go To YouTube For Quantitative Easing Explained - Robert Lenzner - The Bottom Line - Forbes

QE2 Means A Lower Dollar and Higher Gold Price - Robert Lenzner - The Bottom Line - Forbes

 

[antagon]

The Fed doesn't actually print physical currency. If there's a need for new paper notes, the Bureau of Engraving and Printing does that, at the behest of the Fed.

When the Fed creates money, they do so by electronically entering a sum of money onto the liabilities side of their balance sheet. When the Fed buys the asset, that money increases bank reserves. Conversely, when the Fed sells an asset, it decreases bank reserves as the bank buys the asset from the Fed.

The quantitative easing process is a bit different from the traditional way they would typically buy assets. With QE, they don't sell assets on the open market to offset the purchases they make. In normal economic circumstances, the Fed would prefer to "sterilize" their purchases with ~equal sales of assets so that there's not actually any "new" money being created. A sterilized purchase would not be inflationary, for that reason. But with this route, this is $600 billion of new money that is now created.

this was a more effective explanation than the video, though not as entertaining.

As far as deflation, I don't see it anywhere. Food and energy are going up, and those are the most important expenditures for people.

The reason prices are going up is because the Fed has created about $2 trillion since 9/2008. Even if banks aren't lending out much money, people know that the possibility of inflation is huge, so instead of correcting with the recession, prices are artificially increasing.

The Fed simply hopes that if enough new money is created, money velocity will pick up and people will spend again. The problem with it, is that they have never gotten that to work and also exited their asset purchases to drain bank reserves in a timely enough manner that the money supply doesn't grow too large to control inflation.

These are scary times.

i see deflation in the housing market. service prices are being suppressed by low demand too. this is effected by a failure to spur lending through all of this liquidity. there has been some inflation, but i've found most of that to be in the markets, like commodities and other currencies, not on the street. banks are taking this easing cash and using it elsewhere, like on these markets, buying and selling commodities and currencies with their computers.

the problem with claims about inflation on the street is that this will have to happen because of high velocity cash on the street, while that has yet to be realized. many of the price hikes have been very specifically centered around shortages in supply (like cotton) but indications are that there's less cash moving on the street and less credit being offered for bigger purchases. the result has been the deflationary effects in some of the bigger tickets on the CPI, and supply-side causation backing other increases like clothes.

its not only money that is staying in the marketspace. high-priced oil and gold are not communicating inflation to the street because their durability is supporting a glut on the market, while low demand on the street persists.

strange days, indeed.

 

[Paulie]

I don't need to be entertained when learning something as serious as this.

I get what you were saying though.

 

[iamwhatiseem]

There is a lot of deflation, but not so much where average citizens will see it.
Especially in manufacturing and the housing market.

Take printing, my industry, you can buy printing from the same printer by and large less than you could 5 years ago, or even 2 years ago. This is a result of diminished demand, with the same supply.
Which would explain why you don't see deflation at the grocery store and the gas pump etc. - because the demand in these industries are about the same.

I think these videos should be played on regular TV...often.
They are obviously simplified and not completely accurate, but nevertheless there are several "WTF?" moments people will have when they see them.
And that is good. Even if the finer details are not so accurate.

 

[loosecannon]

agreed.

 

[antagon]

i think the world's better off with voluntarily-informed constituents. i've never been a fan of half-assed informed people. there's plenty enough of those.