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Quantitative Easing (Also Known as Printing Money)

January 5th, 2009

Paddy Hirsch explains the logic behind the bailouts, low interest rates, and the Fed injecting liquidity into the banking system.


Quantitative easing from Marketplace on Vimeo.

Hopefully banks start lending money and the rampant inflation, crashing dollar, and needing a drink thing doesn’t happen.

Author: Derek Clark Categories: Finance Tags:
  1. January 6th, 2009 at 01:20 | #1

    Sorry, Chairman Ben S. Bernanke, But Quantitative Easing Won’t Work.

    In a Liquidity Trap although Saving (S) is abnormally high investment (I) is next to 0.

    Hence, the Keynesian paradigm I = S is not verified.

    The purpose of Quantitative Easing being to lower the yield on long-term savings and increase liquidity it doesn’t create $1 of investment.

    In a Liquidity Trap the last thing the Market needs is liquidity.

    Quantitative Easing does diminish the yield on long-term US Treasury debt but lowers marginally, if at all, the asked yield on long-term savings.

    Those purchases maintain the demand for long-term asset in an unstable equilibrium.

    When this desequilibrium resolves the Market turns chaotic.

    This and other issues are explored in my tract:

    A Specific Application of Employment, Interest and Money
    Plea for a New World Economic Order

    Abstract:

    This tract makes a critical analysis of credit based, free market economy, Capitalism, and proves that its dysfunctions are the result of the existence of credit.

    It shows that income / wealth disparity, cause and consequence of credit and of the level of long-term interest-rates, is the first order hidden variable, possibly the only one, of economic development.

    It solves most of the puzzles of macro economy: among which Unemployment, Business Cycles, Under Development, Trade Deficits, International Division of Labour, Stagflation, Greenspan Conundrum, Deflation and Keynes’ Liquidity Trap…

    It shows that no fiscal or monetary policy, including the barbaric Quantitative Easing will get us out of depression.

    A Credit Free, Free Market Economy will correct all of those dysfunctions.

    The alternative would be, on the long run, to wait for the physical destruction (through war or rust) of most of our productive assets. It will be at a cost none of us can afford to pay.

    A Specific Application of Employment, Interest and Money
    http://www.17-76.net/interest.html

    Press release of my open letter to Chairman Ben S. Bernanke:

    Sorry, Chairman Ben S. Bernanke, But Quantitative Easing Won’t Work.
    http://www.prlog.org/10162465.html

    Yours Sincerely,

    Shalom P. Hamou
    Chief Economist & Master Conductor
    1776 - Annuit CÅ“ptis.