Quantitative Easing for Whom?

[georgephillip]

According to Michael Hudson, QE doesn't live up to its cover story of relieving unemployment by encouraging banks to lend money to companies to invest and build equipment and hire people.

"But that's not what banks do.

"Banks lend money to real estate.

"They lend money to corporate raiders.

"They lend money to buy assets.

"They don't lend money for companies to invest in equipment and hire.

"Just the opposite.

"They do lend money to corporate raiders, and when they take over companies, they outsource labor, they downsize labor, and they try to squeeze out more from the labor force, and they try to grab the pensions."

Quantitative Easing for Whom 1 2

 

[georgephillip]

In the second part of his TRNN interview, Michael Hudson contrasts the behavior of today's central banks with how the banks were originally designed to function:

"HUDSON: Well, because central banks originally were designed to monetize government deficits. Government were supposed to spend money into the economy. And the idea of spending money into the economy is that that helps economies grow. Well, in Europe, the Lisbon agreements say governments can't run more than a 3 percent of national income as a deficit. And the role of the central banks is not to give a penny to governments. They say that if you give a penny to government, you'll have hyperinflation like you had in Weimar.

"So the central bank can only give money to banks to invest in stocks and bonds, but not any government spending at all.

"So the result of this policy of not funding government deficits is that the economy, to grow, has to be entirely dependent on commercial banks for credit..."

What are the consequences when central banks lend with these restrictions? Privatization and a new strain of class warfare.

"So, in that sense quantitative easing and the refusal of central banks to fund governments, but only to fund commercial banks, is a new kind of class war.

"And it's not the old kind of class war, which was simply between employers and their workforce over what wages will be.

"It's by the financial sector trying to take over the economy, and especially to take over the public sector, to take over the public domain, to take over public utilities, to take over whatever assets a government has, and to force governments to--essentially, if governments cannot borrow from central banks, they have to begin selling off property."

Quantitative Easing for Whom 2 2

 

[georgephillip]

What has six years of quantitative easing done for the US economy? Which segments of the economy have become richer? Stock and bond holders have done well since 2008 due to the "largest monetary inflation history--$4 trillion of QE by the Fed."

Since the overwhelming majority of stock and bond ownership doesn't trickle down below the richest 10%, QE hasn't helped 90% of Americans because the Fed is chiefly concerned with helping its constituency, which are the banks.

That's why economic inequality and wealth distribution have worsened in the US since Hope and Change came to town.

Quantitative Easing for Whom 1 2

 

[EdwardBaiamonte]

That's why economic inequality and wealth distribution have worsened in the US since Hope and Change came to town.

worsened because liberals taxes, liberal unions, liberal deficits , and liberal schools, and th eliberal attack on the family drove all the jobs away.

 

[Mr. H.]

QE is a waste of paper and ink.

 

[georgephillip]

worsened because liberals taxes, liberal unions, liberal deficits , and liberal schools, and th eliberal attack on the family drove all the jobs away

Are stock buybacks liberal?
"As economic power has shifted from workers to owners over the past 40 years, corporate profit’s take of the U.S. economy has doubled—from an average of 6 percent of GDP during America’s post-war economic heyday to more than 12 percent today.

"Yet despite this extra $1 trillion a year in corporate profits, job growth remains anemic, wages are flat, and our nation can no longer seem to afford even its most basic needs. A $3.6 trillion budget shortfall has left many roads, bridges, dams, and other public infrastructure in disrepair. Federal spending on economically crucial research and development has plummeted 40 percent, from 1.25 percent of GDP in 1977 to only 0.75 percent today.

"Adjusted for inflation, public university tuition—once mostly covered by the states—has more than doubled over the past 30 years, burying recent graduates under $1.2 trillion in student debt.

"Many public schools and our police and fire departments are dangerously underfunded."
Stock Buybacks Are Killing the American Economy The Atlantic

 

[georgephillip]

QE is a waste of paper and ink.

 

[EdwardBaiamonte]

What has six years of quantitative easing done for the US economy?

prevented another depression of course!! Fed policy was pure genius.

 

[georgephillip]

prevented another depression of course!! Fed policy was pure genius

Why has Fed policy primarily benefited the richest 1% of Americans?

 

[EdwardBaiamonte]

prevented another depression of course!! Fed policy was pure genius

Why has Fed policy primarily benefited the richest 1% of Americans?

dear, fed policy prevented another depression which would have been deadly to the poor.

Also, its important to understand the the rich did well only because the liberals drove all the good middle class jobs away with highest taxes in the world

 

[georgephillip]

dear, fed policy prevented another depression which would have been deadly to the poor.

What did QE do for the poor's pension plans?
"One of the problems is that quantitative easing hasn't even helped one class of investors in particular, pension funds.

"And it's done just the opposite.

"Pension funds have made the assumption a few years ago that in order to break even with the rate of contributions that corporations in states and municipalities are paying, they have to make eight and a half percent, eight percent a year rate of return.

"But quantitative easing lowers the interest rate."
Quantitative Easing for Whom 1 2
Why do bankers hate the poor?

 

[EdwardBaiamonte]

What did QE do for the poor's pension plans?

pension money is invested in the stock market which haas fully recovered thanks to QE

 

[georgephillip]

pension money is invested in the stock market which haas fully recovered thanks to QE

Pension funds need an 8% rate of return to succeed and QE lowers interest rates on risk-free debt to 1%-2%. Can you spell hedge fund?

 

[EdwardBaiamonte]

Pension funds need an 8% rate of return to succeed

too stupid they don't succeed or fail they invest your money and hope for the best

 

[EdwardBaiamonte]

QE lowers interest rates on risk-free debt to 1%-2%.

QE lowers interest rates in short term to save economy from depression, then rates go up as economy recovers. Do you understand now?

Its always like talking to a 5 year old.

 

[georgephillip]

QE lowers interest rates in short term to save economy from depression, then rates go up as economy recovers. Do you understand now?

But what about pension funds, Grandpa?

 

[EdwardBaiamonte]

QE lowers interest rates in short term to save economy from depression, then rates go up as economy recovers. Do you understand now?

But what about pension funds, Grandpa?

as economy recovers so do pensions. Do you understand??

 

[georgephillip]

as economy recovers so do pensions. Do you understand??

This economy isn't recovering for 90% of Americans which include those who depend on their pension plans.

 

[EdwardBaiamonte]

as economy recovers so do pensions. Do you understand??

This economy isn't recovering for 90% of Americans which include those who depend on their pension plans.

too stupid where do you think pensions invest their money??

 

[georgephillip]

too stupid where do you think pensions invest their money??

Hedge funds.