What is quantitative easing?

Following the Federal Reserve's latest round of quantitative easing, The Economist's Buttonwood columnist Philip Coggan explains how easing monetary policy works
Subscribe NOW to The Economist: econ.st/1Fsu2Vj
Get more The Economist
Follow us: / theeconomist
Like us: / theeconomist
View photos: / theeconomist
The Economist videos give authoritative insight and opinion on international news, politics, business, finance, science, technology and the connections between them.

[@taylorcasale680]

You know you're procrastinating when you find yourself watching a youtube video about quantitative easing. I should get back to work now.

[@maciej.ratajczak]

Actually, I'm reading the free e-book "Organized Crime The Unvarnished Truth About Government" and listening on KZbin to: "Organized Crime | Chapter 33: How the Fed Creates Unemployment". It's all part of the KZbin channel 'MisesMedia'

[@eliudkay2127]

Hi you didn't have to call me out like this

[@artielukas888]

This is actually pretty useful to know . Totally not a waste of time

[@AlexandreSchwarz]

ouch, man, that hurts!

[@angelaleman8755]

HHAHAHAHAHHA

[@Discovery_and_Change]

0:09 Quantitative easing is the creation of money to boost the economy 0:29 QE involves the creation of new money (but not necessarily printing it) 0:38 When investors sell bonds or assets to the Central Bank, the investor gets new money (from the Central Bank) 0:48 The goal is to encourage investors to get out of/sell bonds and to invest in things like stocks 0:55 QE is also to stimulate lending in the economy through the use of low interest rates 1:30 Commercial banks can "destroy" money by shrinking their balance sheets

[@ArChi285]

Central Bankers' SCAM?

[@antoniociavolella4600]

Hi thanks for doing this video. I am confused: so if the CB buys an asset in the books of a bank (an MBS or some other loan) then the debtor pays directly the Central bank? thanks

[@eml9147]

This is a piece of history

[@Ozee316]

Lowering taxes across the board and making up this difference with QE injection to the treasury makes much more sense because it will directly go out to all corners of the economy. It will still stimulate business investment since future taxes are lowered. Banks are not using the QE money as they should. They are hoarding it and corporations are using it to buy back stocks.

[@HoaNguyen-su6th]

so touching for an excellent video

[@guriqbalmahal4086]

Gold 75% Bitcoin 25% Might look amazing in 30 yrs from now.

[@maciej.ratajczak]

I'm reading the free e-book "Organized Crime The Unvarnished Truth About Government" and listening on KZbin to: "Organized Crime | Chapter 33: How the Fed Creates Unemployment". It's all part of the KZbin channel 'MisesMedia'

[@eastonanderson1497]

That 25% must have tripled by now at least.

[@paviapenn]

good stuff

[@maciej.ratajczak]

I'm reading the free e-book "Organized Crime The Unvarnished Truth About Government" and listening on KZbin to: "Organized Crime | Chapter 33: How the Fed Creates Unemployment". It's all part of the KZbin channel 'MisesMedia'

[@ToxicVaccines_HivHoax]

How long it takes for the effect of Quantitative Easing to be felt by the consumer and cash having reduced purchasing power?

[@paulchristopherlittle]

Soon

[@ToxicVaccines_HivHoax]

@@paulchristopherlittle - Can you be more specific?

[@josephpostma1787]

@@paulchristopherlittle like 1 month, a week, half a decade? What;s "soon" mean in this case.

[@mariusbleek]

QE definitely did not prevent a deep recession. It just delayed a deep depression.

[@chingyuewtan7881]

Delayed till now

[@user-ns1mk8fv8i]

@@chingyuewtan7881 Until now*

[@c.marquez8821]

Let's see March 2020 global scary times

[@Yoshsterpalooza]

ブルースブランドン the reason a recession exists as it does is because state gov want to stay shut down🤷🏾‍♂️it has nothing to do with inflation

[@kevinswift8654]

Still waiting for the deep depression.

[@mdjihad3946]

Nice

[@hongvantruong296]

how did you do it can you share with me , thank you

[@aertybhujm1]

I have finished watching this video completely. (我看完這部影片了) I am a Taiwanese who cares about the global affairs. (我是一個關心全球事務的台灣人) And, sadly, most of my fellow Taiwanese don't really care about the world. (但是，很不幸地，我大部分的台灣同胞不那麼在意世界。) Hopefully Taiwan can become increasingly globally-aware and globally-competitive. (希望台灣可以越來越有全球意識與全球競爭力。) God bless Taiwan. (天佑台灣。)

[@ChallengeTheNarrative]

I'm British and I love you 😊 Neither do I care. Can not wait for the whole system to collapse.

[@andrewjones5973]

Hi Mr. Hsu. I lived in Taiwan for 6 years, and I can very much confirm what you say is true. Taiwanese are such lovely people. But I distinctly remember during 2011, when the civil war in Libya happened and Gaddafi was captured and killed, none of my friends new about it. In fact, none of my friends or coworkers knew that Libya even existed. And moreover they didn't even care :). In fact, pick any ongoing conflict at random (maybe South Sudan civil war?) and they might not even know that South Sudan exists :P. To this day I don't know what makes Taiwan so insular and inward looking.

[@Wkeje]

Woww the full video? thats pretty impressive.

[@toro64xxx]

Caring for global affairs so you can be competitive you are sending a mixed messages. You really need to stay away from this system it will absorb your country like drinking a "milkshake".

[@Gerrardsoccer]

@@andrewjones5973 East Asian trait. People here just mind their own business.

[@jaakkooksa5374]

Question: If QE simply means that the central bank is purchasing bonds from the open market to increase the money supply, what warrants it to be called by a special name, since this (purchasing assets from the open market to increase the money supply) is a STANDARD monetary policy instrument which is ALWAYS used by central banks? There has to be something special about QE compared to the regular monetary policy tool, but what?

[@leetaituha1467]

QE is simply electronic spreadsheet entries. Typing a lower electronic number in savings accounts (Treasury Securities) and typing a corresponding higher electronic number in cheque accounts (Reserve Accounts), all at the Central Bank of your country. Thats all. "Economist" knows nothing about Banking.

[@syedadeelhussain2691]

Inflate-> Deflate-> Reflate-> Stagflate Cycles

[@aadisurjuse3412]

nice

[@Shubham-gm3bt]

You said investor sell government bond and goverment give them money. So investor should have the bond with them so that they can sell ? How can investor sell if they do not have bond ?

[@jdthompson123]

When the Bank of England buys government bonds via QE does the government still have to pay the interest on the bond to the B of E and does the government have to pay the bank back when the bond reaches maturity? Or is the interest and debt wiped out for the government?

[@leetaituha1467]

B of E works for the Government of England. B of E is a Government Agency. The same as every other country and their central bank.

[@annihilationHaven]

But is it true that QE only works if there is massive unemployment, because if nobody has an income, there can't be massive inflation, and if there can't be massive inflation, nobody notices any difference in prices or in the world in general.

[@luutuanthanh72]

Character In the video It's great, I like it a lot $$

[@sabaqureshi9644]

QE delays but does not prevent depression. But now Corona can blamed for everything and the show will go on

[@Diverse73]

So they gave them a word for something weve been doing

[@noprofitmaximierung]

Question: from which funds do the commercial banks destroy money, how are they selected?

[@leetaituha1467]

If taxes are collected as cash, all cash is destroyed, shredded to be specific. If taxes are paid electronically, the electronic number simply disappears after the payment ie smaller electronic number in your bank account, higher digital number in your tax account, and then 0 in your tax account to signal your tax account is now 0 or paid.

[@chrislambert1617]

In Science lessons I was told that matter begins at -273.15 that is 0 degrees Kelvin, not 0 degree Celsius perhaps they will begin Bank lending interest rates at -274.15 or 0 degrees Kelvin that matter begins at -273.15 that is 0 degrees Kelvin, not 0 degree Celsius perhaps they will begin Bank lending interest rates at -274.15 or 0 degrees Kelvin

[@trifio5242]

i still don't get it. The balance sheets are shrinking, and the central banks create money, but those money is a loan, not money per se

[@MTCoblivsicas12345]

So it starts with Commercial Banks have Government debt (Treasury Bonds) the Central Bank says we will take it off your hands and give you money for it so credits their accounts with new money created electronically. Now the Central bank hopes the Commercial Banks uses that money to lend to businesses and people. But the Commercial Banks are worried because after 2007 they started to and continue to reduce their risk portfolios (amount of risk they are willing to take.) not their balance sheets.

[@agronewsnigeria8669]

@@MTCoblivsicas12345 well explained

[@leetaituha1467]

@@MTCoblivsicas12345 QE is simply electronic spreadsheet entries. Typing a lower electronic number in savings accounts (Treasury Securities) and typing a corresponding higher electronic number in cheque accounts (Reserve Accounts), all at the Central Bank of your country. Thats all. "Economist" knows nothing about Banking.

[@user-vn2jd8br2e]

macam mana nak buat?

[@Luke-qp9fd]

Someone answer this coz im confused. So with quantitative easing and the dollar being a fiat currency which is backed by debt not by assets or physical materials such as gold or oil why do we pay so much tax ? Is it not 100% profit for the governments ?? Just like the interest on a loan ? Th interest is 100% profit for the bank which created the loan from nothing. Thats why the banking sector makes billions quarterly. Someone shed some light for me plz ...

[@deesus1085]

QE is an asset swap. Fed takes partner banks reserves and exchanges them for federal reserves that are “printed” from thin air. But there is no actual printing or money. It’s a ledger transaction. FED then lowers interest rates which should allow these private banks to want to lend, but they don’t. They hold onto the reserves and earn risk free fed interest. So they’re making free money from nothing and then buying back shares, mortgages/houses, and etc. Example; Money doesn’t go into real economy. Assets inflate, but inflation stays relatively the same for consumers when it comes to wanting cheap things like electronics, but buying things like a house becomes expensive because they own a large supply and they’re not lending. So there is less “money” available because retail is all fighting for loans at reasonable rates that are in “short” supply for houses that have been inflated by the banks buying them up.

[@markivosevic3282]

“Business banks have been destroying money by shrinking their balance sheets” - could someone please explain what this actually means in and why commercial banks are doing it ?

[@ssmeech]

I was wondering the same thing.

[@leetaituha1467]

It doesn't mean anything because he's wrong.

[@wiljam12345]

Printer go brrrrr.

[@LouMontana-wc7nr]

We would never need quantitative easing if we had more balanced wages. The wealthy take money out of circulation by hoarding it. Put the money in the pockets of wage earners with pay increases and the economy flows.

[@donkalzone6671]

I agree 100%. The actual system creates a waterhead of wealth. It's a defect in the world economy and governments, which benefits a few on the top while the rest has to carry the problems it causes.

[@dickiller2199]

Rich are not stupid, they hold their money in a bank, which then puts this money back into circulation by lending it in form of loans.

[@LouMontana-wc7nr]

@@dickiller2199 The wealthy could become wealthier if they learned circulation.

[@i3d3]

With inflation at 2%, the wealthy are losing money by hoarding it. Despite your misconception, they aren't hoarding money, they hold assets like bonds and other securities which return an interest for them. It's really the middle and lower classes who hoard money saving up for a house or a car.

[@jaighter]

@@i3d3 so we go make brrr haha

[@houmanmilani]

Wages and tax balance would have solved the problem...I think

[@profeconomia]

What is true is that we didn't get any extra inflation, neither in Europe or the USA, and measures should have been far more radical in aggressive fiscal policies. What we all have is a problem of governance, with those who were to blame for the crisis being untouched by its effects and reinforcing their wealth and power, and those who were the victims (workers, small businesses and taxpayers) in a far worse situation than at the beginning and without any hope of achieving any political or economic power.

[@AAscension]

We didn't get any extra inflation you say?

[@profeconomia]

@@AAscension Yes, we didn't get it then. That was in the 2007 crisis. You mean current inflation comes from the QE of that period?? More than ten years after??! You may have not noticed, but there has been a bit of mess meanwhile, world pandemic and so, with loads of QE in a completely opposite situation: low unemployment, offer constraints, skyrocketing oil prices... Same measure in opposite situation gets opposite result. What's the point you are trying to make here?

[@edmai6451]

Australia is joining the "Q.E." Club

[@thaliawilusz9900]

Memerlukan lebih ramai orang jadi sebarkan video ini lebih banyak

[@hai101277]

Khi ngân hàng nhà nước in nhiều tiền thì bán trái phiếu cho ngân hàng giảm lạm phát

[@Smallwitz]

Hi

[@jonathanvoth1404]

So this money only exists on a computer?

[@cancelled_user]

Most of it.

[@leetaituha1467]

QE is simply electronic spreadsheet entries. Typing a lower electronic number in savings accounts (Treasury Securities) and typing a corresponding higher electronic number in cheque accounts (Reserve Accounts), all at the Central Bank of your country. Thats all. "Economist" knows nothing about Banking.

[@mileskane100]

Can someone help me? There’s something I don’t understand. How does a bank benefit from this?

[@cancelled_user]

Which bank? The central bank or commercial banks?

[@mileskane100]

Kyle Butler the central bank who’s ‘printing’ the money

[@Nick21012]

The banks benefit, because more people will try to get loans from the banks. Due to QE, the overnight rates decrease causing ordinary banks to hold more money. They then decrease their interest rates so that consumer will ask for money from them.

[@OolTube02]

Basically QE takes money out of the economy in the form of treasury securities and puts money into the economy in the form of reserves. So ultimately it's not really an increase in money supply at all. It's just a shifting around of assets by different names, which are of the exact same value. How about some fiscal policy instead?

[@abhisheksm9726]

I have to talk to you Can I get your mail id

[@Alfie-ni7lx]

They are buying up debt so people who sell them the debt can then buy more debt and sell it to them again. how does that not cause issues?

[@Themoneygurus]

This process creates new reserves, which can be lent out in the form of purchasing power. Usually in the form of monetary inflation in assets like housing, but it can definitely increase inflation in an economy through demand of real goods.

[@ct847]

Well, money supply is basically the money circulating in the economy. By doing quantitative easing, they basically give loans to government bonds holders. Therefore, it's basically injecting into the economy because it moves safe assets into liquid assets (cash) for the holders where they can spend this money. As a result, an increase in the supply of money. What you understand money supply is the amount of printed money but that is not what he is referring to.

[@OolTube02]

@@ct847 But that would only make a difference if bondholders were poorer people, who'd have access to more money as a result of being able to prematurely cashing in the bonds. But that's not the case. Just as with stocks it's mostly a rich man's investment tool. And the banks'. So rich people suddenly holding more money as actual money doesn't mean they're going to spend it on something that circulates it far and wide. If anything they may buy more bonds or invest it in stocks, making the stock market soar. And banks won't give out more loans, either, if they don't think they can make a profit with it that's greater than just sitting on the cash.

[@medabdel1486]

Well it has been tested so many times in the history of humanity , it just had other names ! And it never worked

[@Kyle_Schaff]

*mohammed EL-ABDELLAOUY* Before the Fed was established, there were 7(?) recessions/depressions over the previous 10 years, 2 or 3 were very serious. Before then, they were about as frequent. Since its establishment, the only notably bad economic recessions were the Great Depression, a few years in the 1980s, and a couple of years for the Great Recession in 2008 (so short due to aggressive monetary policy from the Fed). None of these were related to inflation rates. That’s only 3 notable recessions in the past nearly-100 years. In fact, the Fed is the only reason those recessions didn’t experience rapid inflation nor deflation which allowed the markets to stabilize themselves.

[@Kyle_Schaff]

@Keenan Yoseph In the 20 years before the establishment of the Fed, there were half a dozen distinct recessions adding up to more than 10 of those 20 years being in a state of recession. Before that, there were at least three a decade. Yes really, things have stabilized. The average inflation rate since 1980 is about 2%-which is the target goal of every developed economy (but the dynamic of currency has so drastically changed since the Nixon shock in 1971, so our relationship with inflation has necessarily changed too). In 2019, it was 1.81%. In 2010, the first year after the Great Recession started and after great amounts of stimulus spending, 1.6%. Wages are waaaaaay more complicated than this convo is gonna go, so I ain’t touching that one. As for bankruptcies, the dynamic of credit, taxes, profit, and a million other things have fundamentally changed over the 106 years since the Fed was established. So I don’t know where to even begin with that one either. We can talk more if you want, it’ll just be me writing essays at you, though. Dunno if you’d want that. Hope that wasn’t too negative or whatever. More than that, I hope you’re doing okay with the pandemic and are staying safe out there. Wishing you the best EDIT: I just read what I originally wrote. It’s nice for me to see me remaining consistent over a year later lol

[@chrisd6736]

Everyone buy gold before it’s too late!

[@badboaz7290]

bitcoin would be better imo.

[@turbospeed08]

too late now

[@Chaesunbak]

they already knew

[@daniel-fd9ih]

Give QE to the students and take their loans, or give it to any low wage worker in debt... they spend their money or public works projects... the private sector deleverages thus the money and economy shrinks while a few get wealthy.

[@KingRupert69]

Nice bolshevik propaganda. Was the source for this was the communist manifesto?

[@jaighter]

@@KingRupert69 why should a few get wealthy when nobody can get wealthy? amirite fellow americans/????

[@lancsFrogger]

according to Ben Dyson of PositiveMoney, QE - essentially - gave the top 5% £128,000 each. in the supposed hope this would stimulate bank lending - which it supposedly hasn't done. not a big leap of logic to think this enrichment of the few was the reason for doing it all along

[@ibejibenson6065]

Money machine goes brrrr

[@spacewalktraveller1]

This is why you wouldn't waste your time reading The Economist. QE is a reserve swap. The reserve bank buy the bonds off primary dealer banks and credit their reserve account at the Fed. The money does not go into the system, that's why we didn't get all this hyperinflation that people were screaming about when they first started QE. QE was used in the 1930 after the great depression, they just keep changing the name of it. Richard Werner was the guy who came up with the name QE and his version of QE has nothing to do with the QE that central banks do now.

[@victoriaoshea4865]

I do not understand and I'm trying

[@leetaituha1467]

QE is simply electronic spreadsheet entries. Typing a lower electronic number in savings accounts (Treasury Securities) and typing a corresponding higher electronic number in cheque accounts (Reserve Accounts), all at the Central Bank of your country. Thats all. "Economist" knows nothing about Banking.

[@MsFatpigs]

And look where we are now!?!? We be f*cked.

[@whiskywillie]

QE is like CPR on a dead person

[@GabrielDoesThings]

More like a dead person and a person who's barely alive laying next to each other and trying to resuscitate the dead one while stabbing the living one

[@patbateman2088]

Okay, understood everything. But what's wrong with a shrinking money supply?

[@chillchillpill]

Rodney Gold Could be wrong, but my understanding is that it makes capital more difficult to access which makes money harder for business to access for new projects etc., drives up interest rates and generally slows an economy down.

[@patbateman2088]

chillchillpill but deflation encourages savings which are used for capital investment. There might be fewer investment projects in the short term but with real savings in the economy, not artificial credit supplied by the government, people would make more realistic investments and look for dividend yields rather than speculating on stock market inflation

[@chillchillpill]

Rodney Gold Really? I don't understand - how would deflation encourage savings?

[@Ezio17a]

chillchillpill Inflation creates an incentive to SPEND, and deflation is the opposite - an incentive to save.

[@c0p13dn4m3]

+Rodney Gold In the beginning, yes, deflation can have some positive effects. Then people and businesses start figuring out that they can save money if they just wait, which means consumers stop consuming, therefore businesses lower production and possibly fire workers to lower costs and they stop investing. More people out of the workforce further lowers aggregate demand in the economy. It's a vicious cycle. Or rather a downward spiral.

[@ASLUHLUHCE]

Where does he explain how it benefits the richest the most

[@badhombre7247]

well its quite the opposite actually, QE pushes banks to lend money at lower rates due to them sitting on stocks of uninvested cash. What financial institutions would like more would be a lower policy interest rate without QE pessuring them on their assets side so they get money at a lower rate and still ask borrowers a higher rate (especially when their forecasts are pessimistic). QE is basically like pushing somebody in a cold pool when he said he would jump but became reluctant once in front of it.

[@thembanitheone]

Boom.

[@rm688]

IBanking been creating money out of thin air forever.

[@Ozee316]

There are certainly other options. If the concern is too little money and not enough spending that still doesn't mean new money has to go to banks that made bad decisions. Taxes could be lowered stimulating the economy and this amount of lower taxes made up by QE directly to the government

[@MTCoblivsicas12345]

Amount of QE done by ECB by the end of September 2016 (1.1 Trillion Euros) Amount of QE done by Bank of England by end of September 2016 (£435 Billion) Amount of QE done by Federal Reserve by end of September 2016 (4.35 Trillion Dollars)

[@OolTube02]

Ultimately it just means, "we took a few trillion dollars of bonds out of circulation while putting a few trillion dollars of reserves into circulation." It's basically just a zero-sum-game. Nothing really increases or decreases much that makes any difference.

[@OolTube02]

@Kargadan But it's not like there's a finite amount of bonds out there and if the government buys them back there are no more. There are as many bonds available as the government chooses to be and people will still be able to buy them. Also the problem I see with bonds is that it's mostly rich people who own them, so the interest paid out is just extra money in the hands of the haves anyway. The reserves looking for a place to be parked by the banks leading to speculation and investment bubbles I agree with. Even while they're not bursting they're already causing mayhem, such as in the overpriced real estate market, leading to lots of empty luxury real estate next to rampant homelessness.

[@OolTube02]

@Kargadan Yes, but the limitation is completely arbitrary and could be changed by the government on a whim. I'm not saying bonds are meant for rich people but most bonds end up owned by rich people. Anyone who uses the word "portfolio" is probably nowhere near the bottom 30% of income earners. If people think all other investment opportunities are even riskier then they might want to park their money in bonds even if they yield negative rates. Because they're afraid they might lose even more in other ventures.

[@jimba6486]

To dumb it down. It is like the manager at a fast food restaurant who decides to give away free food to please customers for bad quality control, because he wants to make his boss look good. The boss needs to pay bills and is noticing his senior ranking managers are getting laid off... so he encourages this behavior by other managers. In the short term they eat the cost to a systemic problem by doing the best they can today to make them and the company perform well. This is how the economy and government function on a large scale in global markets of billions of people and trillions of dollars. A store having a bad day(s) isn’t felt as bad of entire country(s). People in high positions in the world motivated and act in the same exact way as people in lower positions of society. Obviously certain peoples actions have larger consequences and more to gain than others.

[@charmocampo4814]

당신은 매우 아름다운 이미지를 만들고 Nghia Tui는 그것을 정말 좋아합니다.

[@idrissberchil25]

Money printer go brrrr

[@berthaphiri5796]

printing money at the expense of curbing inflation without boosting the goods may not be a best solution

[@nicosoccer225]

It’s the legal term for money laundering.

[@thewanderer6174]

Well, the critics were correct.

[@CJ-du3wm]

Who is here in 2023?

[@arremztife871]

17 November 2021. Inflation 6.2%

[@feathersandtarmac6456]

Welcome to 2023

[@hookdup1927]

quantitative easing? its A euphemism for inflation.

[@Kyle_Schaff]

Yeah? That's literally the point. Do you think having slight inflation is a bad thing? Hahahahah

[@Kyle_Schaff]

*HOOKDUP* I’d suggest you look up and watch a couple of videos on macroeconomics, the purpose of central banks, and how national inflation is needed to have a health economy. In developed nations, the target is ~2% inflation. For example, Japan has created 3x more yen than was in circulation 13 years ago, has set their interest rates in the negatives, and have engaged in a lot of quantitative easing in order to combat deflation.

[@hookdup1927]

Kyle Schaff if inflation was great and in printing fiat currencies

[@hookdup1927]

@@Kyle_Schaff Its not needed It does not work . If it did work Zimbabwe would be the richest country in the world.

[@Kyle_Schaff]

*HOOKDUP* Do you think that the economy of a developed country, especially America, is comparable to Zimbabwe? Do you think that our economic history is at all similar to Zimbabwe’s? Do you think that the USD has the same international importance as the Zimbabwean dollar, or the new and still hyperinflating RTGS dollar? Also, what you just did was lie to me, or you didn’t know any better because you didn’t understand me. I quickly googled the inflation rate of Zimbabwe, the earliest data goes back to 1980 and it was at 7%, and it only got higher: it was at nearly 60% 20 years ago, and has been estimated to be above 75 sextillion percent (they stopped keeping track in 2008) over the past 10 years. I said a healthy rate was 2%; I very, very clearly said a *small* inflation rate is healthy, not that more and more inflation was healthy. Edit: It’s also dishonest to delete your first reply.

[@jacobstromburg5803]

Quantitative easing is creating free helicopter money. :)

[@TierraSurNow]

YEAP!! We are in April 2020 now and helicopter money is in full mode now everywhere. They are giving money to almost everyone.

[@leetaituha1467]

QE is simply electronic spreadsheet entries. Typing a lower electronic number in savings accounts (Treasury Securities) and typing a corresponding higher electronic number in cheque accounts (Reserve Accounts), all at the Central Bank of your country. Thats all. "Economist" knows nothing about Banking.

[@SmilingJack100]

Austrian economics is economics like geocentric astronomy is astronomy.

[@based6950]

QE is antithetical to Austrian economics...

[@OolTube02]

It's also antithetical to MMT because in the end you're just destroying bonds and other treasury securities in order to create reserves, so you're not really increasing the amount of money at all. Ultimately the bonds are money, too.

[@Rob-fx2dw]

The problem not addressed and which is happening is QE means that there is pressure on lenders to be borrowers because of the effect on would be lenders.This effect is the flow on of new money at a lower cost to banks (lower interst rate) than would otherwise be available from other lenders in the market (this new money from the Fed Reserve). This in turn reduces the interest rate that lenders would otherwise have gotten and in turn dicourages savings and encourages borrowing and debt. As a further consequence investment in production by individuals reduces. The re adjustment to this form of society tends to widen the gap between those at the high end and those at the bottom simply because those at the top get first access to cheaper credit. The middle class is also left out so the middle calss will be pressured to reduce in size. The statement "keeping interest rates low " is an interesting one particularly in the US economy where there is a lack of investment mostly because interest rates are too low. This is bad since the exchange rate is affected by the lack of investment inflow which is bad for the balance of trade. The stupidity is the domestic money supply inthe 1930's did not fall as a result of less money printing. It shrank because the Federal Reserve started buying up more and more gold and at the same time allowing a third of banks to collapse since it changed the rules for banks making them stay with a too tight ratio of gold to dollars. The loss of money expansion caused businesses to collapse. The fact that QE is untested makes its bad thing to "try" because the outcome most likely would cause further damage rather than improvement. This damage has been the case in the USA where there is no real evidence QE has worked. What it has done is increased debt levels and had the aforesaid effects. The rich to poor gap has widened and so has the number of middle class incomes reduced. The moral of the whole mess is "Don't muck with the currency you will only cause more damage" but this appears too complex for the policians to grasp and the alternative of covering things up by QE is too tempting for them."

[@michaelporter3519]

A lot of them understand full well that the budget can't be balanced. They're using these tactics to forestall the inevitable and get in their last rounds of money grubbing.

[@Rob-fx2dw]

Michael Porter I agree that the budget can't be balanced as a result of the government spending too much because they promise more than they can give (typical politicians). However after a lot of financial constraint the budget can be balanced. But given present circumstances of policians not having the right attitude and shirking the issue when it comes to accountability then you are right. The real problem lies in politicians not being financially responsible and that is only going to change if people insist on it by voting irresponsible policians out of office. It has come to the circle of dependence that was created when people started believing that government could fix things in the economy when the reality is government is most of the problem because too many politicians and upper lever government administrators are corrupt. They are the white collar criminals of society.

[@floopy312]

Wouldn't it be a better idea to give money directly to the working class that we know will spend it? If central banks print new money and transfer it to the working class you solve two problems at once, you help the unemployed people keep up during hard times, and in the other hand their spending pushes aggregate demand up which helps business and helps create more jobs that further sustain demand. And it also creates inflation which is good because it deflates salary bubbles which reduce operating costs and improve business margins which translates into more jobs and more economic growth at the end.

[@floopy312]

It seems to me that creating inflation through temporal populist spending is the quickest way to get out of bubble-caused recessions. It pushes aggregate demand up and real salaries/operating costs are pushed down thanks to inflation.

[@c0p13dn4m3]

+floopy312 Why would you want to lower real wages? I don't think you have thought this through.

[@floopy312]

George Costanza Just temporarily for a few years. Remember bubbles inflate salaries and after bubbles burst salaries lag behind as a high cost companies have to deal with in a moment of low consumption which translates in layoffs which in turn is inefficient because layoffs kill consumption even more further pushing the economy down, plus every worker out of work is an economic resource that's not being utilized for economic output (they don't produce any goods or services for the economy), a GDP going down destroys confidence in the economy so companies don't make new investments and families avoid spending all the money they earn during moments of uncertainty, this further kills more consumption and feeds that vicious and destructive cycle even more, the trick is to "flood" the economy with money enough so to avoid the GDP fall below 0 therefore breaking the cycle. Once consumption is sustained with enough money flooding, investment confidence of the private sector is restored, they proceed to do their needed investments and hirings to keep their businesses running. Once the economy starts growing organically again the money flooding can be stopped gradually. An increase in the real purchasing power of salaries will always be a natural consequence of a recovered economic growth, so that's why it's temporal. This strategy can create some inflation for a few years but that's much better than a negative GDP. This is what the New Deal was all about.

[@sirurugly]

floopy312 we shouldn't do that because the American economy hasn't been about selling goods to its citizens since the 1970s. It's a "service-based" economy that derives most of its wealth through the financing of debt and foreign businesses. Compared to this, what the citizenry spends is a pittance. Ntm that the Fed's job is to maintain the value of the monetary base, not to stimulate spending.

[@sirurugly]

floopy312 though there is something to be said for implementing a universal basic income

[@luke8329]

QE1, QE2, QE3, The Titanic.

[@luke8329]

Sailing a paper boat into the fiery debts, with 7+ billion on board. I'm sure this will all end swimmingly.

[@vBotics]

Oh now I get it, so this is how banks strong-arm governments, now it all makes sense. Let it all collapse then! Down with banks and government, stupid systems!

[@john-blair]

Disappointing explanation. I would like to see a worked example e.g. the government issues £1 billion in Q/E - and show a workflow as to how that ends up as an extra billion in the economy as new money being lent out. Thanks.

[@leetaituha1467]

QE is simply electronic spreadsheet entries. Typing a lower electronic number in savings accounts (Treasury Securities) and typing a corresponding higher electronic number in cheque accounts (Reserve Accounts), all at the Central Bank of your country. Thats all. "Economist" knows nothing about Banking.

[@vineethkarri6263]

Who after Lockdown extension?

[@MM-uz5nv]

Monetary roach motel Peter Schiff calls it.

[@arthurheidt6373]

this was basically the biggest scam the american capitalist system did so far and it will continue till it falls appart. they print money and continue focus the economy on themselves..

[@donaldderp1602]

Society traded in for profit. This system will kill us.

[@todoldtrafford]

This isn’t even capitalistic. We never had a central banking system for most of our history.

[@Nick21012]

This has nothing to do with capitalism, because under capitalism nobody regulates the economy. The Fed is literally regulating/controlling the economy, which has nothing to do with capitalism.

[@wellayurfianila5975]

「どうやってやるの？」、

[@dananshen2423]

Looks like 2000 video

[@jeffrosencutter5200]

Wouldn't it better to not have a fiat currency.

[@that_llama_in_a_tuxedo4584]

We don't have enough gold or silver in the world to actually back the currencies of the world to actually allow to have a gold backed or other precious metal backed currency. This gold standard actually caused the great depression. While everyone would probably like to have a backing of gold or other assets for currency it just isn't possible in this day and age.

[@vexxevxevvex2622]

That_llama_in_a_tuxedo Forget gold, how about Bitcoin? Unlike fiat monopoly money, it doesn't carry any debt and would operate for the entire world to use, plus it's completely digital so robbery would be tougher.

[@OolTube02]

And who's going to be in charge of increasing and decreasing the amount of Bitcoin in circulation depending on demand?

[@matrixman8582]

@@that_llama_in_a_tuxedo4584 No the Smoot Hawley tariff did

[@kevinriordan188]

CRYPTO CURRENCY removes the need for a fed and individuals do not need to use banks

[@FirstNameLastName-fv4eu]

He definitely did not know what to say !!!!

[@helenamoniqueclarke8135]

And what happens when everyone catches on to the fact that none of that money being mouse clicked around is real?

[@trollface1994]

when is money ever real?

[@imhopelesslyaddictedtofent4266]

@@trollface1994 when its a non changing store of value

[@thembanitheone]

It's not untested. Not at all.

[@Chewy427]

you didn't explain it at all

[@jendeh1000]

I wish all bankers the best, although history tends to repeat itself. e.g. when "POOR" people have nothing to lose, they become criminals.

[@michaelporter3519]

Don't wish bankers the best. They really don't need your well wishes. They're fucking everybody with their money scams like QE.

[@FromAsheville]

Lots of poor people do not become criminals- even in desperate time.

[@mvmv-pn8zt]

So no explanation....

[@johnnyrocker7495]

Poor explanation.

[@dr335]

seeing what "real" economists have led us to i might aswell trust a guy who studied dog shit all his life.

[@Soneoak]

Barely mentioned anything worth knowing

[@_l735]

Financial assets to GDP says you're a fraud.

[@nzshareman]

No final solution given useless

[@leetaituha1467]

QE is simply electronic spreadsheet entries. Typing a lower electronic number in savings accounts (Treasury Securities) and typing a corresponding higher electronic number in cheque accounts (Reserve Accounts), all at the Central Bank of your country. Thats all. "Economist" knows nothing about Banking.

[@kvio3321]

Disgusting

[@dailydata903]

poorly explained by Mr. Bozo.

[@indydude3367]

Capitalism has to be bailed out by Socialism every ten years. Ha Ha!

[@jamesgoodwin7742]

And then capitalism has to bail out socialism

[@alhamdleallah]

وَلَقَدْ خَلَقْنَا الْإِنْسَانَ وَنَعْلَمُ مَا تُوَسْوِسُ بِهِ نَفْسُهُ ۖ وَنَحْنُ أَقْرَبُ إِلَيْهِ مِنْ حَبْلِ الْوَرِيدِ It was We Who created man, and We know what dark suggestions his soul makes to him: for We are nearer to him than (his) jugular vein. quran islam

[@jamirahamed6023]

Propaganda vedio

[@JesseMaurais]

"Watch Peter Schiff on the SchiffReport and learn some real economics." Ya, because the best way to learn economics is from a guy who's not even economist, but who can loudly assert the same old Austrian nonsense.

[@frederick6650]

He is an economist, and an educated one for a change.

[@Nick21012]

He is an economics. He knows a lot.

[@pedrozaragoza2253]

Let’s be honest, quantitative easing is manipulation (lies) and lies never work.

[@svo232]

buy bitcoin

[@kalt7990]

Quantitative easing, does it work? That isn't the right question, fiat currencies never work, period. Even those who benefit the most from it eventually loose the ability to manage it and cause a collapse. The economic boom is just a calm before the storm, the Age of Decadence is almost concluded and no major world power has ever survived past this age, I do not believe the US to be an exception. In fact, I believe the US collapse will be, historically the most devastating, since it's impact on the rest of the world is greater than any other in history.

[@OolTube02]

Fiat currency doesn't work if you don't do fiscal policy actually getting the new money into circulation. After all, this quantitative easing is just destroying treasury securities while creating reserves. Ultimately the same amount of money is on the books as before. It's just different books, at the same banks. That's why QE was supposed to create inflation but in reality it did nothing. Because it wasn't really increasing the amount of anything.

[@thucnguyen-qg7xz]

so touching for an excellent video