I still don't get it! Quantitative easing

Discussion in 'Off-Topic' started by praondevou, May 1, 2013.

  1. praondevou

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  2. #12

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    There is a certain number of people that dedicate their lives to accumulating money without making any products. They have been very successful at getting all the money into a large pile at the expense of people that actually make products. The fact that there isn't much left to milk out of the workers and the belief that they must always accumulate more money this year than they did last year forces them to print more money.
     
  3. MrChips

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    Money is created out of nothing. Humans can create as much money as they desire. Banks do it, governments do it, the Federal Reserve (a consortium of private bankers) does it and counterfeiters do it.

    Once the money is put into the system it is only a matter of time when the money is amassed by the financial savvy. Then they have control over the working population.

    Laws, guns and money are all human fabrication and instruments of social control. Those who have it control the rest of the world.
     
  4. Brownout

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    That's my understanding. It's a way to stimulate the economy.
     
  5. Papabravo

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    In order to understand the current system you might want to review the state of the economy from the Revolutionary War up to about World War One and ask yourself what was the problem; why was there so much periodic economic distress?

    BTW the last time we were debt free was just after the Mexican American War.
    on 1/1/1836 it was $37,513.05
    If I had a time machine I could write them a check!
     
    Last edited: May 1, 2013
  6. MrChips

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    You have to seriously consider what is the meaning of "debt free".
    Money is debt and and a human fabrication. The only thing we are indebted to is the planet earth.
    That is, we have consumed more of the planet than we ought to have.
    One day it is going to be pay back time and we all are going to suffer for it.
     
  7. praondevou

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    Guys, I know about the rich wanting to get richer etc and virtual money and fiat currency and everything connected is a bad thing etc.


    I want to know how quantitative easing is "supposed" to work.

    What is achieved by increasing the money supply? Why did it not (yet) lead to higher inflation?
    Does it only increase government debt? Because I personally don't see a difference neither in salary , nor in living cost in the last few years.

    If it's to buy government bonds than it would allow increased government spending, is that the purpose? How does this jumpstart the economy in general? ( I mean how is it supposed to jumpstart the economy)
     
  8. loosewire

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    It may keep it from getting worst,you live in Canada there is a difference. In the

    U.S. people are paying more taxes for less,we had a payroll deduction that allowed

    a bigger paycheck for the average worker. They did away with that,so working

    Americans take home less money,more taxes.
     
  9. #12

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    Apparently we have a lack of financiers here. Makes sense. If we were filthy rich from manipulating paperwork, we'd either be too busy piling up money or too busy having fun to volunteer on this site.
     
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  10. loosewire

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    WE could be just sitting on a nest egg that don't need any attention. What are

    you going to do count your pennies every day,,you only have so many. I am told

    the most single question you can ask your advisor....are you working to protect my

    investments,he won't yes if he is doing foolish things with your money. Maybe you can

    state that quote better,be my guest . Most advisors can do a weekend course

    waste your investments away and be legal.
     
  11. loosewire

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    They say never attend one of the free weekend seminars on making more

    interest on your money. Whole insurance pays well if you have had for

    years.
     
  12. loosewire

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    I did a post on the gold bubble,look where gold prices are now. If you watch the the

    gold ads close ,you can't find prices on coins. You can click on pictues of coins,

    but value amount..in the text gold for sale the word clad shows up. You could order

    a coin and end up with a gold plated coin at a very high price and handling fees.

    If some can find a gold coin link with prices next to the coins, please post it.
     
  13. Wendy

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    Gold is not housing, if that bubble bursts very few people will notice.
     
  14. praondevou

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  15. Brownout

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    When the government buys up debt, it puts more money into the system. People spend the money on housing, food, transportation and durable goods. As more orders are placed, factories ramp back up and new businesses are formed. All businesses, old and new, need capital, but banks aren't lending. Putting more money back into financial institution "should" loosen up lending practices.

    At least that's the theory. Consumers aren't spending becuase of fear that they won't have a job. The idea from the government's prespective is to instill confidence.
     
    Last edited: May 2, 2013
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  16. MrChips

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    1) Fiat money has no intrinsic value and is totally dependent on public trust. Banks have lent out ten times more money than the amount customers have deposited. That is the fractional reserve requirement. The vast majority of the value of those loans are either inflated (housing bubble), worthless (dodgy investments) or gambled away (stock market and derivatives trading). Notice that current stock market indices are hitting record highs while the global economy is going nowhere.

    If there is ever a loss in public confidence, depositors will withdraw their money and there would be a run on the banks. Banks would have to close their doors and declare bankruptcy.

    Quantitative Easing (QE) bails out the bankrupt banks and banks too big to fail.

    2) The US dollar is global reserve currency, that is, it is used internationally for global trading. China and Japan hold the largest amount in US$ reserves totaling $4.5 trillion. The US continues to grow a trade deficit without causing hyper inflation with QE.

    http://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves

    3) In theory, pumping more money into the system is supposed to encourage consumers to spend more. The current monetary system is dependent on growth otherwise the whole system collapses. The system is dependent on consumers producing and consuming more stuff, destroying the planet and at the same time repairing it. All effort of humanity repairing what we have destroyed is counted as positive growth in GDP. The system thrives on waste. The more we consume, the more we waste, the more money we can pump into the system.

    Hence QE generates more wanton waste. Wanton waste demands more money. That is how the system grows.

    QE is supposed to stimulate the economy. Without QE the system would have collapsed back in 2008. QE only delays the inevitable collapse of the global financial system. It is already underway in Europe. Watch for it to hit the US coming soon.
     
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  17. Papabravo

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    Nobody has mentioned the manifest problems surrounding a growing economy in the 19th century and the periodic panics and runs on the banks prior to the creation of the Federal Reserve. There has not been a run on any bank since the 1930s. Most of what you hear on this subject is pure Bravo Sierra, and you do have to make an effort to get your arms around it. BTW it is probably best to ignore the talking heads on cable TV. The demonstrable fact is that they know less than nothing.
     
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  18. killivolt

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    And Derivatives are still apart of the Venture Capital Investments. They have not changed their tune in spite of the fact that (Derivatives) were at the core of the recent economic failures world wide.

    The gov. hid this (dark) corner of the Market and deregulated it, an agency could have had over site , but it was disbanded, thus to allow the market, which Greenspan said, to self regulate.

    You shouldn't put the fox in the Hen House and yet they bailed them out and release the fox again?

    It fooled the public once, maybe they think they can do it again.
     
  19. praondevou

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    Seems it does not make sense to keep money on the bank. Banks will just close like in Cyprus to prevent a bank run.

    I wonder if it makes even sense to keep money at home or if it was better to just spend most of it.

    The Wiki article on QE is helping a little too.
     
  20. praondevou

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    This whole thing has become so complex that even economists don't see the outcome. So many different opinions on QE.
     
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