tag:blogger.com,1999:blog-8764541874043694159.post4525131510802199355..comments2024-03-29T10:48:38.142+00:00Comments on Coppola Comment: Inflation, deflation and QEFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger47125tag:blogger.com,1999:blog-8764541874043694159.post-51501076842702362852014-12-22T13:17:31.691+00:002014-12-22T13:17:31.691+00:00مكافحة حشرات بالمدينه المنوره
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Betting on this is as insane as running an economy on fumes and leverage so the investing public are left to suffer the consequences of a ruinous monetary policy...!!!vimax canadahttp://goo.gl/nHIIs9noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-38682900894860689262014-05-22T05:19:57.881+01:002014-05-22T05:19:57.881+01:00the solution is to reverse the flow of funds...to ...the solution is to reverse the flow of funds...to get the CBs out of the savings/collateral business [by lowering the remuneration rate & thereby narrowing the corridor (& arbitrage opportunities), thus reducing the NB’s core retail & wholesale funding liabilities costsปฏิรูปประเทศไทยhttp://xn--g3cpmb6ai2jtb1f.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-66157599677754360292014-04-28T09:47:20.096+01:002014-04-28T09:47:20.096+01:00check my simple model of island economy. When peop...check my simple model of island economy. When people start to save a lot, the required money supply could be magnitudes higher than normal transaction needs, so 4x money supply is quite small amount of easing. QE had some effect, but not enough<br /><a href="http://goo.gl/5FBJLG" rel="nofollow">Prediksi pertandingan bola terbaru</a><br /><a href="http://goo.gl/R0VfKh" rel="nofollow">Timnas Indonesia</a><br /><a href="http://goo.gl/lfoZrG" rel="nofollow">gambar payudara</a><br /><a href="http://goo.gl/Lfjzy1" rel="nofollow">Berita Jambhu</a><br /><a href="http://goo.gl/xcdCEk" rel="nofollow">foto gadis pamer payudara montok</a>Anonymoushttps://www.blogger.com/profile/10931215125821583946noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-81201365846544742292014-03-24T04:16:47.654+00:002014-03-24T04:16:47.654+00:00think too. it maybe will be in the midst or afterm...think too. it maybe will be in the midst or aftermath of a deflationary crash that federal and monetary policymakers step in to assist. Betting on this is as insane as running an economy on fumes and leverage so the investing public are left to suffer the consequences of a ruinous monetary policy.organichttp://www.kasetorganic.comnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-44431529397814636712014-01-30T10:22:14.794+00:002014-01-30T10:22:14.794+00:00Maybe it will be in the midst or aftermath of a de...Maybe it will be in the midst or aftermath of a deflationary crash that federal and monetary policymakers step in to assist. Betting on this is as insane as running an economy on fumes and leverage so the investing public are left to suffer the consequences of a ruinous monetary policy. jolthttp://www.joltmediagroup.comnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-36184845022730192372013-07-25T19:23:39.575+01:002013-07-25T19:23:39.575+01:00Entwerfen effektive Websites für Lead-Generierung
...Entwerfen effektive Websites für Lead-Generierung<br />Eine Website machen ist eins, um sicherzustellen daß Menschen die auch besuchen diese, ist etwas komplett anderes. Oft gibt es Surfer die ihre Website schnell verlassen, wenn die Website nicht ihren Erwartungen entspricht. In diesen Fällen ist der ganze Aufwand für nichts um über ihre Website <a href="http://www.virgoleads.de/akquise" rel="nofollow"> Akquise </a> zu tun. Wenn Unternehmen um Besucher anzuziehen zu ihren Websites, müssen sie aktive Förderung von diese Websites durchführen in Print, Radio und Fernsehen sowie durch Werbung und klick bare Links auf anderen Websites. Sie sollten genug Wert und Begeisterung zu schaffen, so daß die Verbraucher auf die Website kommen, bleiben eine Weile und kommen zurück. Dies bedeutet, das Unternehmen ihre Website ständig aktualisieren müssen, damit es frisch, mit den richtigen Themen und spannend wird und bleibt. Für einige Arten von Produkten ist es einfach, um Besucher anzuziehen. Verbraucher, die ein neues Auto, einen Computer oder Finanzdienstleistungen zu kaufen haben, sind offen für Anbieter von Informations-und Marketing-Initiativen. Für Anbieter von Produkten, die weniger Engagement erfordern, ist es schwieriger, um Besucher anzuziehen. Ein Veteran stellt fest: "Wenn Sie einen Computer und möchten einen Banner, der sagt:" Wir haben die besten zwölf Computern, die Sie in einer Reihe kaufen sollen', können Sie auf diesem Banner klicken Aber was wäre ein Banner dentalfloss.com geben. ein Grund für einen Verbraucher zu besuchen? " Sie werden das übrigens ohne Problem auf der Website Smell-Well.net tun. Für Produkte, für die wenig Interesse, muß das Unternehmen eine Business-Website, um Kundenfragen zu beantworten und guten Willen. Die Website ist eine Ergänzung zum Umsatz Aufwand durch andere Marketing-Kanäle. Eine zentrale Herausforderung ist die Gestaltung einer Website, die auf den ersten Blick attraktiv und interessant genug, um sich wiederholende Abfragen zu fördern. Der Text der ersten Stunde auf Websites in den letzten Jahren weitgehend durch graphisch fortgeschrittene Websites, Text, Ton und Animation bieten ersetzt. Bei elektronischen Anbietern neue Besucher anzuziehen und um sicherzustellen, daß sie zurück kommen, sollten sie die Aufmerksamkeit auf sieben wichtigsten Faktoren der effektive Website-Design zu zahlen ..<br />Zumindest muss eine Website einfach zu bedienen sein und körperlich attraktiv. Der Fachbegriff dafür ist die Benutzerfreundlichkeit. Darüber hinaus muß eine Website sein, interessant, nützlich und anregend. Letztlich bestimmt der Wert der Inhalte Material seine Attraktivität für die Besucher, so daß sie länger bleiben und für mehr zurückkommen. Effektive Websites enthalten nützliche Informationen in mehreren Schichten, interaktive Tools, die Kunden helfen, finden Sie interessante Produkte und auszuwerten, Links zu anderen Websites, wechselnde Sonderangebote und Entertainment-Funktionen auf relevante Weise erhöhen die Attraktivität.<br /><br />website : http://www.virgoleads.de/akquise<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-56138704525757347832013-07-01T01:17:16.564+01:002013-07-01T01:17:16.564+01:00My view is that QE1 was the correct action at the ...My view is that QE1 was the correct action at the time. Asset prices were in freefall in the aftermath of the Lehman failure, and QE1 propped them up. I'm less certain about QE2, and QE3 I think is worse than useless. I regard QE as a crisis measure - hence my endorsement of its use in 2009. But we are now using it to offset the effects of political gridlock (in the US) and self-inflicted fiscal pain (in the UK). To my mind that is misuse of what under the right circumstances is a useful macroeconomic policy tool. I wrote about this in another post that you may not yet have read:<br /><br />http://coppolacomment.blogspot.co.uk/2013/06/qe-myths-and-expectations-fairy.htmlFrances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-42150985519221005972013-07-01T00:41:13.603+01:002013-07-01T00:41:13.603+01:00And just one more thing: I appreciate the acknowl...And just one more thing: I appreciate the acknowledgment of correlative/causative differences and how to best make the proper inference (counterfactuals and all) but aren't we forgetting one other important thing here? <br /><br />"So QE cannot possibly offset the effects of fiscal tightening in the lives of ordinary working people - the largest part of the population."<br /><br />Perhaps it can ameliorate the tightening to some degree (if this is somehow discernible is another debate I suppose) but are we focusing too much on the Fed and not enough on legislators that choose to ignore their end of the bargain? We are criticizing the Fed for opting to act because those actions may not be working and/or be counterproductive but I salute the Fed for acting when all other institutional bodies have failed miserably. <br /><br />Any Macro level analysis of the Fed's effects on market dynamics cannot be isolated from an act or a distinct lack of action on Congress' part. This is especially apparent if the transmission mechanism is faulty and Congress does nothing on its end. I do believe that QE is as much a message to the broader market participants as it is to the Congressional body itself. They have ignored these calls sans the 2009 ARRA and a few members have sought to rebuff such actions by the Federal Reserve. <br /><br />Perhaps the Fed sought not to act as it has purely to effect that which it cannot but instead to buy banks time and to give legislators room for action that they haven't followed through yet? It's all speculative which is maddening but I simply cannot adopt the notion that QE1 or QE2 had no affect at all or that it's perpetuating a disinflationary environment. Those are consequences of circumstance throughout the world, not causal connections to the actions of the Fed.Kanehttps://www.blogger.com/profile/08516415194928733247noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-67773065887772394292013-06-30T20:18:34.071+01:002013-06-30T20:18:34.071+01:00I have previously asked you not to use the acronym...I have previously asked you not to use the acronym "CB" for commercial banks as it is confusing for my readers, for whom "CB" means "Central Bank" - since they do not come exclusively from the US. <br /><br />You focus exclusively on the US. Banking systems in other countries work differently and it is important to recognise this both in posts and in comments. I also feel that you are abusing my hospitality in using this site to grandstand your campaign for the return of Regulation Q legislation. <br /><br />Regretfully therefore I must ask you to re-post this comment without the confusing acronym and without any further references to 1966 or regulation Q. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-20488069046960891182013-06-30T20:11:53.638+01:002013-06-30T20:11:53.638+01:00Cross post from SA:
This is déjà vu (à la mode de...Cross post from SA:<br /><br />This is déjà vu (à la mode de 1966 S&L crisis). Commercial bankers [CBs] pay for what they already own (distributing reserves [IBDDs] across the geography) - then the non-banks [NBs] get the "left overs". <br /><br />Excess reserves grew as OMOs were consummated. The money stock would have grown only if OMOs were conducted with the NBs. But it didn't. Only reserves grew. Ergo, the FRB-NY (central bank) bought virtually all of the "specials" [HQAs] from the CBs.<br /><br />Gov'ts & reserves can't be "perfect substitutes". SOMA held gov'ts aren't "more liquid" or more "fungible" (as they're impounded by the Reserve Bank via one-way flows). The "arbitrage opportunity" is buying T-Bills at "repressed" rates & then selling them to the FRB-NY for their higher policy yield. Only the CBs can arbitrage this way. <br /><br />I.e., the Fed withdrawals liquidity by buying gov'ts - then replaces them with idle, unused, illiquid (non-tradable), & contractionary: IBDDs. I.e., you can't take money nor reserves out of the CB system (unless you hoard currency). <br /><br />No, the solution is to reverse the flow of funds...to get the CBs out of the savings/collateral business [by lowering the remuneration rate & thereby narrowing the corridor (& arbitrage opportunities), thus reducing the NB’s core retail & wholesale funding liabilities costs]. <br /><br />I.e., the elimination of Reg Q ceilings was literally a conspiracy (economists are STUPID). The lending capacity of the CBs is determined by monetary policy & not the savings practices of the public. The CBs could continue to lend even if the public ceased to save altogether. <br /><br />Note that the pledging & repledging of "specials" doesn't add to the supply of loan-funds (nor the money stock), rather it supposedly "secures" a debt (backing trading & borrowing). <br /><br />This course of action would not reduce the size of the CB system, the volume of earnings assets held by the CB system, the income received by the CB system, nor the opportunities of the CBs to make safe & profitable loans. <br /><br />Quite the contrary in fact. By promoting the welfare & health of the most important lending sector of the economy (the NBs), the health & vitality of the whole national economy will improve. The aggregate demand for loan funds will expand, the volume of CB “bankable” loans will grow, & so will the CB system, - the Federal Reserve being willing.<br />Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-80888792920219978882013-06-30T19:22:18.346+01:002013-06-30T19:22:18.346+01:00Have we considered the notion that QE has been est...Have we considered the notion that QE has been established more or less with the ultimate goal of ensuring the survival of the banking system? All other concerns are ancillary? It would seem to me that this single focus, getting the balance sheets healthy enough for the broader economy should any recovery get under way, is justification enough for any QE thus far. <br /><br />The only question is to what degree QE has impacted all other facets (negatively or positively) and whether on those grounds QE wasn't worth it at all. I can't fathom any situation in which the issues stemming from "main street" are improved by a banking system allowed to fail. The leverage is simply in the financial sector's hands. The transmission mechanisms that we continue to talk about reflect exactly that, banks unwillingness to lend to riskier entities. Imagine insolvent banks impacts on existing corporates.... Kanehttps://www.blogger.com/profile/08516415194928733247noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-51462071675243842582013-06-03T19:01:00.390+01:002013-06-03T19:01:00.390+01:00There is so much wrong with your comment I don'...There is so much wrong with your comment I don't know where to start. Firstly, as QE is a monetarist policy you have to read up on Friedman and on the modern-day market monetarists such as Scott Sumner and David Beckworth. Commenters like you also don't grasp that nearly all money in circulation is created by the private sector, not the public sector, and that therefore QE does not increase the amount of money in circulation unless bank lending increases. And there is zero evidence that it increases consumer prices, either. Though you don't like the term used in that way, I was specific that what I meant by "inflation" was consumer price increases - not asset price increases.<br /><br />It is also wrong to describe the creation of new base money by the central bank to buy up assets held by the private sector as "counterfeiting", since the central bank is the only institution that can LEGALLY create base money. You clearly don't like the central bank creating money, but that is the central bank's job. <br /><br />What I find truly amazing is that after saying I am completely wrong, you then agree with my conclusion - which is that QE only really benefits people with substantial holdings of financial assets, i.e. the rich. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-32389507871832663862013-06-03T18:25:57.917+01:002013-06-03T18:25:57.917+01:00There is so much wrong with your article I dont wh...There is so much wrong with your article I dont where to start. Firstly you have to read up on 'Austrian economics''Mises'<br />Inflation is NOT rising prices and deflation is NOT falling prices. When QE creates, prints 85 billion a month, how could this possibly be 'deflation'?(your definition falling prices) When the Fed creates money, somewhere in the economy prices will rise. Writers like yourself don't grasp that prices increases will be disorted. Some prices will rise a lot some a little and some will drop.If the price rise was uniform across the board the gig would be up for the Fed and everyone would know to just look at money supply figures and ask for raises in wages, pentions ect. to cover purchase loss. So bottom line counterfeiting only benifits banks,goverments and the super rich, the people that get direct QE money and those super rich that are in the 'know'. I'm getting a few crumbs from following the super rich.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-51481317409723482552013-05-29T16:34:49.330+01:002013-05-29T16:34:49.330+01:00I doubt there will be an inflation spike when QE e...I doubt there will be an inflation spike when QE ends after unwinding swollen central bank balance sheet. It spikes interest rate, and negatively impacts equities markets. It is a reverse money redistribution effects to fixed-income assets. It does not provide incentives for more productive goods/services demands for inflationary economic growthpliu412https://www.blogger.com/profile/06404437429487666914noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-79150983110209837492013-05-29T16:09:12.913+01:002013-05-29T16:09:12.913+01:00QE is a policy for money redistribution without in...QE is a policy for money redistribution without incentives for more productive goods/services spending for economic growth.<br /><br />It is crucial to have right incentives associated with a policy. Individuals making rational choices on redistributed money can aggregate into efficient GDP outcomes. Now, the rational choices from private sectors is saving or purchasing financial assets.<br />Thus it is a policy flaw rather than human behavior flaw.pliu412https://www.blogger.com/profile/06404437429487666914noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-75916682695078243972013-05-29T15:29:20.940+01:002013-05-29T15:29:20.940+01:00Regarding possible alternatives, I think you answe...Regarding possible alternatives, I think you answered your own question. Real interest rates need to go up. Way up. If real interest rates are substantially higher, working people and fixed income people do not need to save as much because they can instead count on their future interest income. In the current ZIRP environment risk-averse savers need to set aside as much as they can.<br /><br />Of course a spike in interest rates causes a lot of short term pain, which is why it is always going to be unpopular. But that's the choice we're offered: Car accident or cancer? Bankruptcy or zombification. Repentance or perpetual economic purgatory. <br /><br />People will say that we cannot endure high interest rates because the debt load is now much higher than it was when Volcker increased rates in the early 1980s. They're right. It would overstress and collapse the system, forcing a reset of epic proportions. <br />Roberthttps://www.blogger.com/profile/06440125454817518056noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-50613974876657379172013-05-29T12:21:03.855+01:002013-05-29T12:21:03.855+01:00Hi Frances,
Is there a possibility that QEs or s...Hi Frances, <br /><br />Is there a possibility that QEs or similar expansionary monetary policies (but we might be less aware of its existence) were not only initiated in times of economic recessions following the 2008 financial crisis, but far earlier during economic booms pre-2008? Perhaps it's fair to say that in order to sustain economic booms, most nations during the good times, would be and could be reluctant to withdraw their monetary and fiscal stimulus, therefore much of the excess money flew straight into higher prices causing inflation rates to rise. Then when the economy busted, people started to get panicky of inflation more than they were during the good times.<br /><br />(I know it's unfair to use the US data, and not a global average of inflation rates to make a comment that refers to "nations", but hopefully there is no a great deal of harm in making hypothetical assumption for the sake of discussion?)<br /><br />As we can see from the first graph you presented above, the inflation rates in the US before 2008 were generally higher than after the 2008 financial crisis. Albeit there was a peak in between '08 and '09 during the crisis, the rate generally fell steadily from '09 to '11. The period when the inflation rate was declining, I think (though I could be drastically wrong), was due to inflation targeting by nations, because governments feared stagflation (high unemployment + high prices), which historically had ended many political careers. Controlling inflation is naturally almost every government's top policy objective, most notably China, Germany, and other emerging markets.<br /><br />So yes, maybe QEs and its variant policies may theoretically be inflationary, but central banks accompanied by government fiscal policies committed to controlling inflation, are why we see the inflationary effect of QEs is cancelled off.<br /><br />On top of that, current slowing down of global economy usually drive up the unemployment rate, rather than the inflation rate. Hence, the overall effect of QEs + fiscal tightening (which include reduction of public spending, capital flows control) seem to be deflationary.Anonymoushttps://www.blogger.com/profile/12383106945596722414noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-30195196830894800642013-05-29T12:16:10.423+01:002013-05-29T12:16:10.423+01:00This comment has been removed by the author.Anonymoushttps://www.blogger.com/profile/12383106945596722414noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-32279829428399260432013-05-29T08:04:53.410+01:002013-05-29T08:04:53.410+01:00TBTF companies will be so cash rich from QE that t...TBTF companies will be so cash rich from QE that they would either 1)retain the money 2)innovate (better technology, less labor needed) 3)buyback shares 4)higher paycheck/compensations 5)donate 6)exit by getting physical real assets 7)get greedy & speculate<br /><br />As of current there's two failing systems that's reaching the end of their shelf life. First is the government as a business. Second would be the unfocused education system. <br /><br />The problem about the government is that they have yet to develop a method to stop companies from hoarding cash and then redirect the cash back to them. Thus, the cash flows out through the financial market into the hands of other countries which receives the investment from these companies. The only clue the government knows is that they have to find ways to generate higher revenue, enough inflow to balance with the outflow of cash of the country. By not generating enough revenue, government would fail as a business. But even if a balance of cash flow do happen, interest expenses would still destabilize the balance in the long run. <br /><br />Education of the current financial environment would turn more citizens to be asset dependent and less income dependent. This would lead to a change of paradigm where getting pay-per-hour would be a thing of the past and people can earn independently through entrepreneur and other financial endeavors. There would also be a huge migration away from the country with a draconian government to a country with more incentives to live in.<br /><br />You can see that there is not just the outflow of cash but of citizenship too. This would be the possible scenarios if either system could solve their problem, especially the education system. The financial system which runs on interest wouldn't be called a problem but a predicament already. When the only possible direction interest rates could go is north, the debtor country have to face the music.<br /><br />Worst case, both systems could not reach a solution in time. The mass public would have a rude awakening to the surfaced mess that lay before them. Currency gets debased. Failure of everyday businesses. Nevertheless, there's always a faster path towards this outcome. It's when big companies get greedy and lose on their speculation. People won't know where the money disappear to, all they will know is that they've lost money. Compared to this, getting a fine from government seems like a more pleasant experience. <br /><br />QE is definitely inflationary unless countries collect those currencies to burn them into ashes. You're making something out of nothing. Even energy can't be created but can only be converted into other forms of energy. I don't see how money is more invincible than energy. Haha.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-80570556138178780692013-05-29T01:31:07.623+01:002013-05-29T01:31:07.623+01:00Much have been written about QE, but this article ...Much have been written about QE, but this article certainly is one of the better ones. I view the QE as follows;<br />Primary objective ; bail out banks from severe difficulties or default as a result from bad decisions, secondary provide states with the option of issuing bonds at a low coupon, partly used to bail out the troubled financial firms. Any pretext to pretend that QE is designed for anything else is flawed as the central banks are in place to assist banks and ultimately to fund its own government at least temporary. Deflationary/inflationary?, it depends, as all currency is fiat it is the relative values that are relevant. As the velocity of money drops during economic downturns, deflation results from no end demand, reduced income, eventually savings are exhausted etc. QE probably excacerbates this by causing inflation in necessities (energy, food) which benefits from the excess liquidity created. As seen with Japan, these actions lasts for a long time, bad demographics, high and increasing government debt, QE, low interest rates creates a viscious cycle where deflation is the prominent feature. Ultimately the fork in the road will appear, one scenario is where a loss of faith causes a precipitous drop in the currency exchange rate or as a result of currency debasement increased prices of all imported goods (inflation bit) causes distortions which cannot be contained.<br />Note* Inflation calculations are often altered, and usually results in lowering official inflation numbers. Common sense dictates that actual inflation as observed by citizens is the price of same basket of food,staples,energy,taxes,healthcare etc. from one year to the next. <br />QE is competitive devaluation (alter relative fiat currency values) it does not however work if everybody is doing it. That does not mean they will stop doing it, the effects just slowly but surely disappears but for countries to actually admit that they have been living beyond their means is politically unpalatable so a slow inome/living standard deflation and slow but steady necessities inflation is the method of choice.<br />If however the excess liquidity finds it way from bank reserves and out into the real economy, velocity of money roars out of the gates, currency value plummets, no sane investor buys souvereign bonds, prices go parabolic and Hyperinflation Weimar or Zimbawe style has arrived.<br />Alternative solution, let failed financial institutions wipe out their stockholders,junior and ultimatly senior bond holders. The government with the assistance of the central bank, protects deposits and maintain a functioning bank system. The recession will possibly be deeper, but likely shorter and organic growth reemerges when the system has been reset and monetary/investment misallocations corrected. If countries can couple this with not thinking they can live beyond their means, much will have been accomplished. Given the existing scoreboard I would not keep my breath. <br />As a final remark, if QE is the panacea of the world devised by phD's in economics and if I remember correctly indefinite growth is another, how could this possibly go wrong when planet Earth is most certainly a definite planet with definite resources?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-38771193053138591202013-05-29T00:12:03.509+01:002013-05-29T00:12:03.509+01:00Creating money which is not matched by increased e...Creating money which is not matched by increased economic output does cause inflation, if it is added to the demand side of an economy then it produces inflation of the price of goods but if it is added to the investment side as the government have done with their programme of quantitative easing [QE] then it causes asset price inflation which may be the reason why the stock market indices are rising. The financial bubble itself was a product of the creation of unsound credit which produced asset price inflation and which led to a sudden correction of asset values when the market realised the nature of that credit the government have simply replaced that unsound credit with QE and problematic levels of deficit spending.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-30444858184294894352013-05-28T19:18:03.468+01:002013-05-28T19:18:03.468+01:00For all the talk of Keynesians gone wild, the trut...For all the talk of Keynesians gone wild, the truth is that the TPTB are still believers of the outmoded Reagan era supply side economics model-returns to capital at the expense of labor will lift all boats...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-20845826114881935252013-05-28T16:55:06.106+01:002013-05-28T16:55:06.106+01:00There's a whole industry dedicated to talking ...There's a whole industry dedicated to talking up the risks of inflation. And there is evidence that QE does raise inflation expectations at least in the short run. I agree that people do seem to get bored with waiting for inflation that never happens, though! <br /><br />I'm more interested in why policy-makers apparently think Ricardian effects would apply to short-term fiscal stimulus but not to short-term monetary stimulus. Seems illogical to me. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.com