What is Quantitative Easing?

[@ThePlainBagel]

Happy Friday! Visit skl.sh/theplainbagel 5 to try Skillshare premium for two months free!

[@mjolnir1981]

The Plain Bagel can you do a video on buybacks and the S&P500? Buybacks have doubled over the past couple of years in the US

[@michaelsemper1044]

Nice sonic and metal gear sound effects!

[@sonnyfung5135]

Using the simplest English, it means "printing more money".

[@TheChiefCoin]

-------A future video idea-------The real cost of owning a new car every 3 year on financial or lease and compare that to investing that same amount in a Vanguard S&P 500 account over the same timeframe.

[@german2507]

This video came out the year the fed used QE.

[@dankghoul1438]

"With the central bank simply crediting themselves funds" Must be fckn nice

[@jamesmorton7881]

Dump trump, then we can get serious. END SPECULATIVE INVESTING. as in re regulate TAX ALL WEALTH TRANSFERS, as in slow things down, FORM BANK OF AMERICA WITH 100% RESERVES ON HAND. as in responsible loans $22 MINIMUM WAGE. as in pump up the REAL economy TAX THE WEALTHY 99% as in they can afford it

[@jacobday3826]

@@jamesmorton7881 Oh yeah great idea, tax people unreasonable amounts because they've earned it. You're probably where you are because you blame the wealthy for all your problems, whereas your pessimistic attitude and laziness is why you're not getting anywhere.

[@jamesmorton7881]

@@jacobday3826Key word is EARNED Pendejo. Roads and bridges have value, STOCKS not so much, check the market. retired LOL

[@jacobday3826]

@@jamesmorton7881 Stocks better have value with the over 20% I made with this market drop.

[@jamesmorton7881]

@@jacobday3826 The house has the odds, good luck.

[@Devinfrbs]

It's at such an extreme amount now that the stock market looks exactly like the chart for QE

[@actualideas8078]

Devin Forbes exactly. And the GDP just represents inflation cuz they underestimate it in the CPI. Or the C-CPI-U is an even worse estimate. Opens the door to tax bracket creep so they can covertly tax us more

[@hannessteffenhagen61]

@Justin Dean Those holding onto their assets were fine. The problem was that a lot of people either couldn't or chickened out.

[@westcoaststacker569]

Hannes Steffenhagen They are only fine because of QE 1-xxx. What happens when the cards stopping moving and are revealed.

[@Ian-hn8ty]

QE brings lots of inflation on everything like stocks, property, food. which means if stock index is 15000, after QE is equivalent to 20000. It does not mean economy has turn good although it did brings an illusion for people to start spending and bring in the velocity of money. Its a scam that will kill middle class off and make the rich richer. Inflation suck off your purchasing power for people who dont invest to fight inflation off. Wages stagnant while everything rises due to inflation.

[@davesmith3289]

@@Ian-hn8ty "QE brings lots of inflation on everything like stocks, property, food." It's been a year since you made that comment and I'm still waiting for the 'lots of inflation on everything' that you predicted. When will it happen? People on the internet like you keep tell us that printing money will cause hyper-inflation and simply can not work, meanwhile, in a place called 'reality', it WAS working, IS working and the hyper-inflation never arrives! Don't you guys ever get sick of being wrong?

[@nachannachle2706]

That was a superb overview. You went beyond the technicalities straight into the ACTUAL ramifications of the QE process. As usual, it is great to have a presentation that strives to be impartial at all times. And those animations...

[@kevinbyrne4538]

Thank you, Richard, for this explanation of "quantitative easing". On a number of occasions, I've tried to explain this subject to people -- usually unsuccessfully. Henceforth, I'll refer them to this video.

[@noahschmartz2354]

boy oh boy what a clear concise video that predicts all your questions and answers them in short order.

[@ccerrato147]

"Nothing is so permanent as a temporary government program." - Milton Friedman

[@armandodelossantos736]

Negative income tax

[@jamesmorton7881]

Old Milton was dead WRONG. GREED is NOT GOOD. 😒😒😒😒😒

[@dr.nosborn6330]

BRRRRR

[@nikolaiyezhov7250]

the Federal reserve is not a government institution, it is a private company. It is a prime example of neoliberal economic wrecking.

[@ivofena83]

@@nikolaiyezhov7250 Independent agency.

[@FrankCirillo94]

In my graduate program, one of my professors, who works for the Fed calls QE, Large Scale Asset Purchases (LSAP)s because the name is more reflective of what QE actually is. Love the channel, use it as a reference for a lot of Stock related questions! See you in the financial world soon when I graduate next week!

[@bunk95]

You check to find out if that slave can speak?

[@notacook1061]

Who’s here after the fed launched quantitative easing?

[@michaelmendez9423]

Me

[@PatNeedhamUSA]

Me tooooooooooooooooooooooo

[@pnwcruiser]

Everyone should be allowed to log into their bank account and add zeros. That would solve all problems...right?

[@metas1779]

Me

[@Alejandr01836]

Came here to see if the comment section was full of people calling it like it is. Glad it seems to be the case. I've never heard someone have QE explained to them and think it's a good thing.

[@MrWardWide]

“4 Trillion balance sheet is a lot!!” One year later: FED balance sheet 7.2 trillion

[@xrpmaxi8839]

AND GROWING

[@MasterCoD124]

Literally thought the same thing

[@michaelkavanagh5947]

It’s too much the clock is ticking. Bitcoin hedge is a must. It’s deflationary. 5% hedge will not be a bad thing. Get to the next halving you will be cooking. Even the big banks advise it knowing what is coming. The tsunami of inflation will put a knife in the economy. Already US unemployment is hitting 7% adjust for make it look good stats that’s 10% of people on printed welfare who want a job and can’t get one. This is reflected in all nations including China who lie. That does not count the elderly or sick or in education or volunteering workers or school children. So this economy is heading for dark days and the hammer of printing will just bash it into a worse state. Stock will go first only a fool is not hedging their stock portfolio with Bitcoin and Gold.

[@monsterhunter445]

@@michaelkavanagh5947 assuming bitcoin is alive that long

[@cameronmcgehee]

@@michaelkavanagh5947 Bitcoin chart not looking good right now...Hopefully if recovers but it's looking like another hype and drop like the last spike...IMO it's not a very sound investment, it's very hard to value it and it's not worth anything other than itself until it is almost if not more widely used than the dollar/pound/euro etc. There are also fundamental flaws in using it as a regular currency, like the fact that the transactions take forever to clear. Just the way I see it.

[@Radnally]

Running low on money? Printing more money will ease your problem.

[@nachannachle2706]

Well, you need to keep in mind that the more you money you print/supply NOW, the less scope for growth (i.e the bigger the contraction) you will have 10-15 years DOWN THE LINE. The reason US investors went into panic mode in 2019 is because they knew they had reached the 10-year anniversary of QE1 (launched back in 2009). When you know that there have been at least 2 follow-up QEs (i.e QE2 in 2010-2011; QE3 in 2012-?) since then, you don't need a crystal ball to predict that the next decade is going to abound with economic contractions/crunches at regular intervals. Bottomline: Print, but only at your own (country's) risk!

[@kaibaCorpHQ]

It's great, I can't wait till the next economic disaster....I'm sure Trump is hoping he's not in office when it happens. Thanks Bill clinton for repealing glass steagall and replacing it with ( kzbin.info/www/bejne/g2a0eJ6FfL-omLMm04s )

[@seanhartnett79]

rrobertt13 in short, it is when the central bank wants to help a recession. They launch major bond purchases. Buying government bonds. They usually also cut interest rates to encourage more loans.

[@John-vm2zi]

@rrobertt13 With digital money that they create out of nothing.

[@sst1mm221]

So the Central bankers are teaching everyone to Spend Spend Spend, Buy Buy Buy Consume Consume Consume Refund Refund Refund !😂🤭😌 With Credit cards = Credit Economy = Virtual GDPs ! After maxed out 1st Credit Card ceiling limits, Fiscal Cliffs. next Try to max out 2nd Credit card with QEs and Selling US Treasury bonds ! Next Try to raise Govt Debt ceiling limits and continue spending in Military Offense & Defense Spending, Over Consume Thanksgiving and Christmas Black Friday sale to clear inventory at the Warehouses & Stalls !😂😌 Next QE + REPO Operations to Repossess bad debt ! Cut interest rate again and QE further !😂🤭 Hold on ! Why US Fed, US Treasury, NY Central bankers and Corporations didn't reduce and repay their National Debt and GDP continue Rising from $9 Trillion to now $29.5 Trillion ???😂

[@elliotalderson4873]

Who’s here to prepare for the unprecedented financial crisis we’re entering in

[@tayrobinson73]

We maybe looking at the impending collapse of the American financial systems. Great segways into the new world order. 🙄

[@gabrielavila2884]

It's basically a flash sale, on a Monday. 20% off SPY and 60% off airlines. If you have cash, tour all set to weather this storm.

[@paulomeara5465]

Buy bitcoin

[@florinmoraru3113]

Just binge watching economic videos and preparing for the worst case scenario.

[@pnwcruiser]

Four decades of monetary distortion are going to be wrung from the system, and the Fed can't stop it this time. But they will conjure up mind numbing quantities of fiat trying to paper it over.

[@sharkyblue8192]

One of the most underrated financial literacy channels out there! Always great content 👍🏼👍🏼

[@UltimateBargains]

Q: What is Quantitative Easing? A: Legalized counterfeiting.

[@actualideas8078]

UltimateBargains US Constitution Article 1 section 8 Clause 6: To provide for the Punishment of counterfeiting the Securities and current Coin of the United States

[@TheTrueAdept]

That is so false that it is insane.

[@actualideas8078]

Aaron Neumann who you talkin to? Only gold and silver are money in the USA. Read the constitution.

[@actualideas8078]

The printing press was invented by a goldsmith. Look it up

[@TheTrueAdept]

@@actualideas8078 that was never the case, as greenbacks were and always will be the principal tender of the US since it's inception. It's just until the gold standard was gotten rid of, it was legal to use said greenbacks to exchange for their value in gold and silver. Also, I was talking to UltimateBargins.

[@YetiMama]

QE is literally adding zeros to your account that had $1. Then having the Gaul to purchase real estate and other asserts with that fake money that you made up, competing with businesses and individuals who worked hard for that money.

[@bunk95]

Fake accounts arent accounts even if lied about as/with accounts.

[@JackMajor]

I'm still wondering if the Japanese flag was just a transparent png of a red dot and no white background at all. Jokes aside, very straightforward and explanatory video :)

[@dustinarroyo8005]

Jack Major lol shit. We are some big brains

[@TheGGreggs]

Thank you, Plain Bagel. Best explanation I have read or seen-- especially on why bond yields fall when QE is in motion. The presentation is balanced, fair-minded, and lucid. Nicely done.

[@tren-y2m]

At 8:55 you brush over the fact that QE continues till markets recover or inflation starts to increase. How exactly can markets recover if the central banks expect everyone to take on debts And at the same time spend more than they were spending before? Not to mention that in times of uncertainty people with money (i.e investors and rich people) tend to save money rather than spend it. I don't know if I have some wrong understanding of the economy but something just doesn't add up here... Also, great video! @The Plain Bagel

[@xJonasVB]

Good point! Generally, I think the money that is put into the markets by the Fed will be used by people to take on credit, that is correct, but interest rates will go down (borrowing becomes cheaper), asset prices will increase (easier to get an asset-backed loan), there will be more investment, more consumption, more jobs and thus the economy will slowly take off again. That is, of course, given that the banks are not reluctant to lend out the money they have at their disposal. History remembers times, such as the 2008 crisis, when huge supply of money was available to banks, which they only used for reserves rather than to lend out.

[@aryapatel7615]

it does not add up

[@Twotter54]

Thats a good question, one thing though: Having gone through the great financial crisis of 2008, the government actually has no idea what they are doing. They are reactive only.

[@Ian-hn8ty]

yep every money printed is a borrowed time from the future and throw the debt and burden to the next generation. QE only accelerates it and not solve it. It did trick the dumb citizen on the font end that economy is great. but sooner or later middle class citizen will get squeeze by inflation and higher tax due to national debt to the point where they start rioting against some of the super rich people who receive the money first from the new easy money.

[@trogdorstrngbd]

It "adds up" only if you trust that the Fed/govt has correctly predicted that their expansionary monetary policy will eventually pay for itself by growing the economy. It's not impossible, but perhaps unlikely.

[@fishtherapy100]

If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.

[@FollowerOfChrist_PX]

Lmao. That got a chuckle out of me

[@SriYantraMandala]

They're using sand to make solar panels in the desert. So, you're kind of right. But, do you approve?

[@nicosoccer225]

**Milton Friedman

[@backflipsaresweet]

This aged surprisingly well, and surprisingly quickly.. *cough cough* Oh excuse me, I have coronavirus

[@heymikey6793]

💯!!!

[@heymikey6793]

Some knew it was coming!!!

[@brockbah2048]

Round 2 shaping up nicely... wonder how many trillions round 3 will print?

[@alejandropreciado1814]

@@dariuschong4574 not if Pelosi gets her way 🤔 she wants a 3 trilli deal

[@Polyester_Avalanche]

In the US, it should be called CE: Continuous Easing.

[@mathieupowell8828]

Excellent explanation on QE. I noticed someone said "legalized counterfeiting", and I would agree IF the government doesn't unwind their QE programs... which both the US and CAD Feds have not done.

[@75pdubs]

If they ever do I’ll eat my shoe

[@ridafurrukh8963]

Love how everything is broken down so beautifully! Thankyou for such elaborate explanations!!

[@troypresley]

Nice video, but a couple of things are off. QE can only increase reserve cash for banks and (as you mention) effect yield/interest rates, but has no direct, and in fact, no real long term impact on money in circulation (the “lower interest rates lead to more loans” theory makes logical sense, but never plays out in the real economy except in the short term) Because QE doesn’t increase money in circulation, it never causes significant lasting inflation. Ultimately QE is just an asset swap for banks which, in the case of treasuries, doesn’t change the size of bank balance sheets, only the proportion of assets in cash reserves. In recent years many central banks have admitted that interest rates don’t reliably or significantly impact the circulating money supply. This, in combination with the previous points, means modern central banks have almost zero control over the amount of money circulating. Only new bank loans, fiscal spending, and trade surpluses can add to circulating cash and therefore have the potential to cause inflation. The Fed could literally buy every financial asset from every bank (the theoretical maximum QE) and inflation would stabilize to basically where it was before they did it within a couple of months. In fact, since in theory the banks would be losing all the interest payments on the financial assets, inflation would likely end up a bit lower than before. The true crime of post 2008 QE is that the Fed bought bad or worthless assets from the banks at full face value, while making non-banker “normal people” eat their losses. The banks then often took advantage of their improved balance sheets to seize distressed assets at way under fair market price... ultimately this was a massive shift of wealth from the poor to the wealthy. As you pointed out, the banks also chose to issue a significant portion of new loans to overseas projects at the cost of delaying the US recovery. As long as the FED restricts the assets it buys and sells to treasuries, there is no real danger to the normal economy. Banks today are never restricted in the amount of loans they can issue (and so the amount of new money they can inject into the economy), and will always loan to match their appetite for risk. Economic collapses happen primarily when banks systemically underestimate the risk on loans and reality finally sets in. QE, as long as assets are bought/sold at market prices, is mainly just an accounting operation whose main purpose is to make bank balance sheets match solvency and reserve requirements. The government could just as effectively change the banking requirements or even simply exempt banks from meeting the requirements temporarily, but those options are ironically less politically feasible than swapping billions of dollars in assets around.

[@ThePlainBagel]

I appreciate the points of clarification!

[@conors4430]

I would highly advise looking into the economist prof richard werner who actually coined and developed the method of quantitative easing. He is very clear that all the countries who have used it have not used it the way it was intended or have used it in part while missing some important steps. He was also a leading economist in japan in the early 90's and has said that there is much more to the japan situation than quantitative easing policy. the idea coined by werner is that during a bust a country would keep things circulating while governments and banks fixed what caused the boom bust cycle in the first place. the policy is meant to circulate money while the banks and central banks deal with bad performing assets and make structural changes to ensure it doesn't occur again. This is where every country has stopped. The QE was never meant to be used for asset inflation because it is asset inflation and speculation that causes boom and bust cycles. The USA and europe etc use QE to re-inflate the bubble that just popped rather than using it to give the economy a breather while structures are put in place to make sure lending goes into productive means not speculative means like house prices, stock prices etc. check out the book princes of the yen by him, explains what happened in japan and why most of what we consider about banking to be true is false. particularly the notion that banks are intermediaries when they are credit creators and the notion that economies follow interest rates when interest rates only change in relation to economies and not the other way around. central banks have many more tools at their fingertips but they just won't use them for idealogical purposes. they don't need to use secondery bond markets, they don't only have to tinker with interest rates. these are all choices they make and don't make. Greenspan said it himself. its about "making people feel like they are getting wealthier so they will spend money", it's not about actually doing it because that might effect some of the big boys who expect their gambling to always pay off

[@mattmobile7882]

in this context could you explain the concept of the "liquidity trap", which apparently is the reason why there is no rising inflation in Japan and the Euro zone.

[@zekevfab]

The way I understand it, the problem of Japan is that of an aging and shrinking population. Even though the central bank tries to stimulate the growth with aggressive QE, the money supply fails to grow (1,000 trillion yen M3 money supply in 2000 and 1,300 trillion yen now). The reason is that even if credit is very cheap, if the economy cannot take on more credit (for aforementioned reasons), as credit is the principal money creating system, money supply does not grow. Don’t forget that QE do not increase the money supply in the economy, it only helps lowering credit costs which entails more credit to be taken and in turns increase money supply. But if no one wants more debt, the supply does not grow more.

[@zekevfab]

Now if you look at a growing economy, the US, the money supply M3 grew from $5T in 2000 to $18T now, the economy responded to both growth and stimulation to take on more credit. This could be done as the US has had a growth of population and also in its businesses earnings. So in theory there is a devaluation of the US Dollar’s value (divided by almost 4 in 20 years). But the dollar being the main currency used for exchange, it still retained value internationally. But you can see the USD devaluation when you compare against an oz of gold ($250 in 2000 and around $1500-$2000 now).

[@Thomas-wn7cl]

QE distorts price discovery of assets. Compare the employment rate to the labor participation rate to see the amazing post 2008 jobless recovery era.

[@kevincosgrove948]

Thomas Exactly what i say. Price discovery is clouded

[@confusedcaveman6611]

politicians are so concerned with their image and they want to appear be "doing something" they never stop to consider that doing nothing may actually be better

[@NYCMarkus]

Much appreciated! So my question (for anyone that may know), is why hasn't the US (or other countries) started to reverse this policy? If the Central Banks are independent, this should be a no brainer. Is it that Central Bank leaderships are now becoming intertwined with politicians?

[@hongyang3620]

Great illustrations to explain a boring subject to the majority of people.

[@fourtweeni]

its not boring most people are just too dumb to care

[@zelmiracholevova184]

tn , you are right,it is not boring at all. But, most schools do not teach basics of financial processes, and I-think purposefully, so it is difficult for many people to understand terminology and definitions.I am one of those and I would like to study finances. If you are educated in this field, good for you.

[@nicholasb4071]

I’m a visual learner, I find a video much easier to understand than reading a dry article.

[@terryhasan]

Great video. Only issue I have is, lowering interest rates and QE are, as you rightly point out, supposed to be for weak economies. So why do we need these policies now when we have a strong economy? If it's a precautionary thing, then why not always have these policies and refer to them as precautionary policies, rather than policies for a weak economy? Second quick point: If you have a reserve currency in a global fiat currency system, as the dollar is, how can it lead to inflation?

[@seanhartnett79]

Well everyone is scarred of a recession now. So the US cuts interest rates for no reason. Instead of increasing rates to get ready for a new recession. Several reasons. Brexit and the breakup of the UK. Japan and Europe’s economic weakness. China’s insane debt. Of 550% for total debt. China’s GDP figures being a lie. And debt figures being hidden so well, Enron would be proud.

[@frenchonion4595]

Because we are addicted to it. It's like telling a crack addict to only use crack once in a while.....good luck. FIAT currency was supposed to be temporary too and here we are 50 years later still doing it because it's allowed the government to print ton's of cash which it couldn't do on the gold standard. We get addicted to debt like charging a credit card

[@bloodyorphan]

When printing money didn't work the first time.

[@lowescottage]

This is an excellent overview. And dear viewer you can see the consequence: rampant inflation.

[@kristiankho]

Thanks! I finally understand this QE scam better.

[@tilarmeister]

(in words) So QE Is when Central bank print money to buy up securities (in other banks) These banks would have more money to lend out to consumers. Effect 1 - Leads to decrease in cost of borrowing (bcos more money in banks to lend out, more competition to drive interest rate down) Effect 2 - Lowers yield of financial assets (The buy out of govt bonds from these banks also cause the bonds to rise in price. Rise in bond price = fall in yield) 2a effectively, this allows govt to issue bonds at the market rate (which is now lower), meaning lower cost of borrowing for the govt as well! This allows govt to pursue more fiscal policy. 2b - it encourages investment on riskier assets. financial assets from corporates are now more attractive as the yield on low risk asset (govt bonds and bills) became so low. Downside and risks of QE Most likely lead to inflation. May also accidentally lead to hyperinflation Central banks also cant force banks and businesses to use their newfound liquidity Eventually, QE has to be reversed. (Quantitative Hardening) So CB has to sell assets back to the market, reducing the money supply, unwind its balance sheet, and ultimately sterilizing the money it had created from the alternate dimension in the first place. Much like QE, key is to do QH at right time. Many countries have yet fully reversed its QE program since the 2008 financial crisis

[@MengerMania]

Hey, this is great. My life has become a lot easier and more comfortable since I started eating, wearing, and living in dollars. Thanks for the advice.

[@Straga_Severa]

Which dollar bill is the tastiest one, in your opinion? ;-)

[@trogdorstrngbd]

Great video! I like that it quite specifically addresses the distinction between QE and standard expansionary monetary policies, something which even a number of news articles do not.

[@bunk95]

Printing fake money and lying about it isnt marketed to you with the fiction standard?

[@doomyman]

best overview in QE by far.

[@jean-charleslavigne1298]

It doesn't causes inflation if you manipulate inflation number.... "insert roll safe meme"

[@piratesmanX]

A QE under proper guidance could benefit the entire financial flow, by putting in consideration of the increasing population (demands and supply) it eased down the gap between the working classes, but one misstep could end up becoming countries like Venezuela, currently facing hyperinflation issues. As long as the authority is not an idiot to simply print monetary paper like some sort of a toilet paper, it brings more beneficial effects to the overall economy.

[@jean-charleslavigne1298]

@@piratesmanX I’m no economist but the way the system works is that QE goes to the financial economy first which and create inflation in asset classes such as real estate and stocks. Theses further increases the wealth gap and it doesn’t serve to boots the real economy at all. In my opinion currency is just a representation for labor. Typing more numbers in computer will never help the general population and especially if the first people to receive those numbers are big banks, corporation, and the wealthy in general…

[@ryanwalker3509]

@@piratesmanX the currency supply has quadrupled in 10 years

[@westcoaststacker569]

To me it seems that by inflating the asset classes they have driven their yield down like they do with the bonds. Also has allowed a lot of poor business ideas to be tested.

[@jean-charleslavigne1298]

@@westcoaststacker569 I think you are right. And by lowering yield, it pushes investors (fund manager in particular) to look for higher yield in riskier assets and financial products. This just makes the whole financial sector even more unstable and prone to rapid collapse (house of card).

[@MartinSage]

Richard, I am an old guy 71, yet today you taught me about something I hear bounce around a lot like my mentor Stan Druckenmiller …ie. QE. With your help explaining QE I have a better handle on how QE works. Stan feels the Central Banks have been doing some manipulation with QE that they have never done before. What exactly? He doesn’t say.

[@baharuddinbuang8480]

Quantitative Easing = Print more money and put into market circulation.

[@m.morininvestor9920]

Not backed by real wealth. (No longer backed by gold)

[@pauldandurandboots]

The problem with this video and many others about QE or QT is that they exclude half the picture. In summary, QE is just an asset swap. QE is not expanding the money supply of the economy if you look at the whole picture. Banks hold two accounts at the Central Bank (CB). One account is the cash reserves, which we call Bank Reserves. This is mainly used to settle overnight bank-to-bank transactions. These actions do nothing to the market money supply, nor is it used for lending money. The other account banks have at the CB is their term deposit accounts, which is their holdings of government bonds. Think of their cash reserves as their checking account at the CB and think of their term deposits (bonds) as their savings accounts at the CB. The bank's "capital reserves", or net worth doesn't change when they move money from their savings accounts to their checking account during QE or visa versa during QT. The Plain Bagel's explanation, like many others, forget to include the term-deposits in the picture. When you do that, you will see there is no new net money in the economy. You're just trading a one kind of apple for another kind of apple. The one thing that QE does is to help drive down long-term interest rates down to match the short-term interest rates. Market fund managers may switch their portfolio holdings from fixed income to the more risky equity stocks because the higher risky rewards could be better than the tiny return on investments that bonds and treasuries provide. This could be part of what kept the stock market climbing during QE. As we have seen around the world, QE doesn't do anything to drive economic growth. The only tool we have to do so is fiscal spending. That's real money being injected into the economy. QE or QT pretty does nothing to inject new money. They are just asset swaps. To learn more about how money works, check out Steven Hails podcast episode called "Everything you wanted to know about banking, but were afraid to ask" at bit.ly/3vYSBHd.

[@iridescentsquids]

This...7 months old. We have QE round 2 happening now.

[@Soneoak]

For the asset buying part, you forget to add that when there’s less buyers, prices will also drop, eventually, even with same amount of savings, you may be able to buy the house.

[@JoshInvests]

Awesome video, plain bagel! I feel like you did a great job explaining QE and some of the nuances involved!

[@masaeffy]

And putin is blamed for the inflation 🤡 people are stupid smh 🤣

[@mogeconomics]

This is a very amazing lesson. Thank you very much.

[@eXWoLL]

"Quantitative Easing is not just printing money and dropping it from an helicopter" It´s more complicated. Then: Is printing money and giving it in exchange for pieces of paper that are valued in older printed money. LOL I stopped there. Thanks for the info.

[@anotherpovx468]

3:40 the central bank is actually creating the money through buying itself (when a bank, no matter which one, buys assets, it's create new money for this assets in return) and not creating it pre-emptive and then spend it; just to add although it doesn't change the core of whats being done.

[@jules7926]

Isn't it buying the treasury bonds so just buying assets from the treasury? So basically the banks buy those bonds, then the Fed buys back these bonds with money the Fed created out of thin air

[@rock3tcatU233]

But when my uncle tries to print money he gets his ass thrown in prison, how fair is that?

[@krishkansara5673]

We're at a point where that doesn't even read as a joke, and that is scary

[@theboringprogrammer4444]

​@@krishkansara5673 Banks were always allowed to print money, this isn't news...

[@emailbenbenson]

When citizens manipulate $GME stock it's market manipulation with a jail sentence, when hedge funds do it, it's business as usual. kzbin.info/www/bejne/mXy4kqR8r79_rrc

[@seneca983]

@@emailbenbenson I'm quite sure no one will end up in jail over GME stock.

[@notKhalid]

Banks use reserves, not cash, to transact with each other. When a bank needs more reserves, it borrows from others with excess reserves, paying the overnight lending rate (OLR). This rate influences the interest rates banks offer to their customers. Through conventional monetary policy, central banks create reserves to buy short-term securities, affecting the OLR. This approach struggles when OLR is near zero during crises. In such cases, unconventional monetary policy, like quantitative easing (QE), involves central banks creating reserves to buy long-term securities, lowering their yields and encouraging borrowing and investment. While QE can help stimulate the economy, it doesn't necessarily lead to inflation.

[@NorthHollywood]

I just want everyone to know that QE is in effect today and will be till next year. Look up the "repo market". Its just QE under a new name.

[@ryanwalker3509]

The balance sheet has been expanding since September.

[@anthonyvaccaro]

The repo market is how banks lend to each other along with other interbank lending markets. That’s not at all what QE is, QE is the process of buying assets from banks at an expanded rate, some of which occurs on the repo market but also includes many other purchases. Repo’s are just a type of short term security

[@NorthHollywood]

@@anthonyvaccaro So when the FED says its raising its repo market operations from $xxbillion to $xxxbillion, that only refers to how much money banks lend between each other?

[@anthonyvaccaro]

@@NorthHollywood Yeah the repo is a short term contract so the Fed will be paid back in a defined period vs QE which they decide when they unload the assets they buy.They are increasing how many repos they buy to make sure banks have enough liquidity in the short term. USD demand is high right now because money isn't flowing as freely.

[@NorthHollywood]

Dario Vaccaro they are trying to prevent a credit freeze essentially.

[@Healthandwealth9422]

Quantitative easing is basically printing money to help the economy. And lower interest rates Quantitative tightening is the opposite: quantitative tightening is raising interest rates to slow the economy and also not printing money. The reason why quantitative tightening would need to be used is to slow inflation because of Quantitative easing

[@congli8934]

Thanks for the great video! Just curious would you think Fed's recent operation in repo market considered as QE too, since they're also buying a bunch of treasuries?

[@phuphugad]

Very good didactic of the video! Most of the concepts are very well explained, except for a few: 1) in modern day economy, there is no such thing as hoarding money. There is no point in a bank holding the exact thing that it profits. 2) Quantitative easing does NOT lead to inflation, except in theory. There are no empirical evidence of a increase in general prices because of a expansionary monetary policy.

[@mikemay9939]

With a couple years of hindsight...would you say there is empirical evidence now? Or has the inflation we've seen over the last year or so been caused just by supply chain issues...or something else?

[@matthewrutters6842]

@Mike May Don't listen to proponents of modern monetary theory. QE does cause inflation in assets (stocks, home prices) that aren't accounted for in the cpi. The supply shocks are what is most responsible for the increase in prices of everyday goods and services though.

[@AbeOrtiz88]

"the printing of more money" in this day and age just adding more digital money further inflating money lol

[@jondavis2032]

Richard you explained it very well...Thanks!

[@barrytschirpig9328]

1:31 That looks kind of like Australia...

[@blueflamingo70]

It is

[@razorblade7408]

Especially W.A 😅

[@RahulGupta-ug8qr]

Explained very well , Love from India

[@kevinescobar8102]

I just hope we don’t end up like Venezuela were people can buy a tank of gas for 2 bananas 😅

[@codymiller3762]

That actually sounds like a really good deal.

[@salem-p3l]

can i trade a tank and a half for 3? (asking for my ancap monkey)

[@Tubeofbeans]

The heck with stocks. I’m investing in banana.

[@Shiva555-g5h]

One thing I learnt... Channel sponsored by skillshare are good

[@mrslcom]

If it applies to us, we call it QE. If it applies to our competitors, we call them currency manipulators.

[@manisadeghi8078]

great video. you used economical terminology yet you managed to keep it simple. nice job🤝🤝

[@MrWessiide]

Why couldn't you have made this 2 months ago when the fed started not-QE QE? Would've def helped my investment decisions if I truly understood what was happening lol

[@Redeyejedi808-u9g]

The QE money given to banks was meant to be held in reserve in the case of a bank run, and when they lend it out their reserve isnt enough to cover overnight loans... just something to point out

[@God-yr9rs]

Subsiding bubbles of stocks and assets.

[@nachannachle2706]

Circa 2008. :)

[@vloh168]

At the 1:53 mark he says: “By lowering interest rates they pay on their deposits that they receive from other banks, the central bank applies downward pressure to other interest rates within the economy.” Can someone please explain how this works to me? I believe he says that a lower cost of borrowing encourages spending, but I don’t understand why lowering interest rates on deposits accomplishes this. If Bank of America receives less money on deposits with the federal reserve, that seems to me that Bank of America makes less profit, and thus needs to raise interest rates on everyone else to make up for it. My understanding is clearly wrong, so if someone can explain it to me, I would appreciate it.

[@everybodyhateskrys6425]

So explain to me where the “free market” component lies in this scheme?

[@J.futch97]

This guy got a video for everything

[@WhiteBoardFinance]

The only thing keeping the United States dollar afloat is the petrodollar.

[@bangbangliu2146]

Not an expert, but isn't the US dollar also supported by people buying bonds?

[@vaagmikaelian9078]

Lmao U don’t know shit

[@isawaturtle]

Lol

[@panico9114]

Best finance KZbin channel hands down!

[@portraitofyun]

Love the video, straight forward and I informative. I implemented recent strategies and was able to increase my Robinhood account a total of 33% in one day. I made a video displaying my experience as a complete beginner. Hope you find it insightful🙏

[@MARKCRASTO]

This video was released exactly 3 days after China reported it's first Covid-19 case. Damn, who could've known, how relevant this video would become in just a few months.

[@beaviswealth]

Would love to see a next video on Negative Interest Rates rich! Great vid man

[@ThePlainBagel]

Thanks Brandon, I actually already have one! (kzbin.info/www/bejne/pomWkGaEgr-UZs0). Making that video actually led me to want to cover this topic, since they're all related haha.

[@PassiveIncomeTom]

*This is not QE! That's what I heard someone say a few months ago.* 🤣

[@jackofthecoke]

Probably heard it from your pal Jerome. Can't trust anything he says, sketchy fellow!

[@stevenhunter553]

Man such a good teacher, have learnt so much!

[@belygorod8368]

Quantitative easing 🤔 In Serbia, Hungary, Germany... we call it hipper inflation

[@chuck6962]

No matter how much people complain, the USA along with a few European countries still have the greatest opportunity to make good money and have a high standard of living.

[@Feelthefx]

I don’t know why money isn’t worthless yet

[@SpontaneousProcess]

Feelthefx Mostly because economics is complicated, and the fact that “Printing more money is always bad” and “Inflation is always bad” are false statements.

[@ogp12]

This video summarizes the prevailing understanding of what QE is and how it works. A lot of the points made here are wrong. - QE is a an asset swap where the central bank swaps one asset for bank reserves. Bank reserves however are not money, they are an accounting aid. - low interest rates are a sign that money has been TIGHT, not abundant. ( see Milton Friedman's interest rate fallacy) The common belief is that low rates will encourage borrowing, the realoty is that low rates discourage lending. If you had 1M in the bank and the interest rate went from 5% to 1% would you a) go out and spend the money on a car because its not earning you interest b) carefully try to safeguard it, save more and avoid taking any risks - QE started in Japan 20 years ago, not in the US in 2008 - the market usually lowers the interest rates long before the central bank decides to do anything, central banks are reactionary.

[@cedurick]

"it's not that simple" then proceeds to show that yes, it is that simple.

[@voyagerstarship]

I think you should have mentioned what QE does to savings and debt holders.

[@CSqrdX]

This algorithm is timely. Trump’s pump and dump scheme was just announced today.

[@---un5mt]

Just FYI, Obama (and now Biden) did the exact same thing.

[@souravghosh1283]

It’s so helpful to understand. Satiate about QE

[@arthur78]

Bitcoin fixes this.

[@karthikeyanm.v8381]

True bro. Bitcoin is like gold

[@seanhartnett79]

Arthur78 Bitcoin is literally a scam. It isn’t backed by anything even a promise. It keeps going up for no reason. It is a modern pump and dump.

[@gregapple9426]

@@seanhartnett79 As long as people give it value, and people will continue to do so, Bitcoin has value.

[@DarkTutoxt]

@@seanhartnett79 Some day people will understand money is a convention of value, not what you use to pay taxes, still there are some properties to make some things better money than others, educate yourself before is too late.

[@oliverizzard8751]

@@DarkTutoxt yes they will, and when they do they will see how much of a scam bitcoin always was. Either way nobody is gonna take your bitcoins to buy your morning espresso and pay your electric bill or rent. And yes I do understand the concept of the ledger.

[@Steven-wq8tx]

The FED creates bank reserves and gives it to private banks in return for treasury bills and other fixed income. The FED does not print actual money nor does it insert cash into the private banks. When the FED buys, or "bids up" the treasury bills/fixed income assets from private banks, the yield of the assets decreases. This decrease in yield conversely affects the overnight lending rates for the private bank. Which in turn results in the private banks decreasing their interest rates for business loans/individuals.

[@rozzo8639]

Haha money printer go brrrrrrrrrrrrrrrrrrr

[@bobd2028]

STOP DEVALUING MY MONEY REEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE

[@doomyman]

the problem is that QE is never reversed and becomes permanent. That is killing mid to low income earners around the planet and assets are being hoarded by the wealthiest basically leading the world to a new modern era of feudalism. An effective way to distribute the wealth from the poor to the rich.

[@User-z3d]

You aren't reminding the viewer that your money printing euphimism QE is theft, devaluing the savings from people that sold their labor.

[@renato360a]

you are right about the devaluation of savings, but to call it theft is too much of a categorical statement. There isn't a direct connection between the workers losing money and another entity getting the workers money. They are getting the money "from the void". Also you would have to prove intent, which is impossible in most cases (e.g. it is possible in the case of Venezuela, but I guess Maduro didn't do QE). Furthermore, the people are not the only target of inflation - "everything" has its money devalued at the same rate, including any entities that would benefit.

[@mickmickymick6927]

You'd much rather a recession.

[@User-z3d]

@@mickmickymick6927 it is inevitable. Our choice is to deal withbit sooner as a smaller burden or later as a greater catastrophe. By the way, we're already way past the burden only stage.

[@ryanredsox3475]

Stable inflation is good for the economy. Calling it theft is simply incorrect.

[@elv3a424]

Criticising the consequences of inflation (

[@bobdole57]

So I'm not saying you said anything wrong. but there is one point I'd like to make generally. Recessions have a fundamental "purpose" as it were to restructure capital in more efficient ways. Business that are unprofitable fail, assets get sold to parties that can make them more efficient. Jobs that are unproductive are lost and the workers transfer to more economically productive jobs. Risk taken on by investors gets re-evaluated and priced according. Investments that are speculative are re-priced according. Debts that are assumed are paid down. All of these things are painful and but are legitimate economic processes. There is a certain amount of "create destruction" that must occur. On a micro-econ level most people intuitively understand this. Businesses that lose money don't do it forever. The problem is that most macro analysis deliberately fail to take this into account. Most macro theories sort of assume the economy is a black box with money moving around and that as long as money moves and markets grow everything is fine. In some macro theory there is some hand-waving that tries to address this but I think overall it is ignored and at great peril. Central bank easing essentially always tried to maintain the status quo. Employment, asset prices etc are all attempted to be carried higher and higher while avoiding the clearing process. There is ample data that it leads to growing income inequality, higher debt, speculative bubbles and more. As such, I don't think the Fed's dual mandate makes a lot of sense. Maintaining price stability is a good goal, and certainly high employment is a good goal too; however, trying to maintain high employment is not sensible goal for the Fed's monetary toolbox to achieve. There is not a good way for monetary policy, be it interest rates or QE, to maintain employment without causing massive distortions in the micro-economic world. Central bank based macro theory breaks down here. Personally I broadly accept Austrian Business Cycle Theory as correct, but I think even if one does not believe ABCT to be correct there are obvious issues with the idea that you can take an economy provide some stimulus and good things pop out the other side.

[@roshansundar6618]

bobdole57 Precisely this. Inflation is bad, but the price distortion (and thus capital misallocation) caused by central banking almost never gets talked about. ABCT was right about the Great Depression, right about 2008, and this new panic.

[@James-vj5hz]

Socialism for the wealthy

[@dbRaZoR]

So should I refinance a car loan if interest rates become lower?

[@indydude3367]

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

[@Tuppoo94]

Socialism doesn't need a bailout, because by that time it's already too late.

[@bassoskat]

@@Tuppoo94 ok zoomer

[@sheldonpopesp]

cash is also a financial asset.. so its a net 0 financial asset change. They just move the bond to the treasury books instead of a bank. it's nothing like printing money, it just makes the bond more liquid without changing the overall amount in the market.

[@memyselfimemyselfi4788]

The next great recession....how about giving every tax paying citizen a million dollars each ....think about how stimulated the economy would be ....

[@Summerwood777]

In theory: "It encourages more investment in riskier assets. Investors might look to buy higher yield corporate bonds" In practice: Bitcoin at over $50k

[@thegameoflife2040]

Quantitative easing is a scam.

[@kwesiattasakyi4978]

QE It is a way the Central Reserve Bank prints money and sells it to government to use for redeeming Treasury Bills and Government Bonds through Open Market Operations (OMO) when a recession is looming. It is a way of kick-starting an economy through Keynesian multiplier concept to raise Aggregate Demand.

[@XxBrian22]

No one is gonna see that i write poop

[@David-dw2iq]

Rapscallion I have seen it

[@owenwalker1774]

🙈💩

[@sahanglp3i-271]

I have a bad "feeling" about this kind of method, yes it is kind of monetary policy. But in my opinion, the printing money (for me QE = printing money and throw it into public) is better as the result of the demand for money not printing the money it self. the important figure is to "stimulate" businesses, corporations, and industries to do their job well rather than "giving" them money. 🙄

[@whatshappening3327]

Even though I learn more and more nuance of QE, i still come to the same conclusion: inventing money out of thin air has to lead to Problems eventually and bailing out banks leads to problems eventually