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The Quantitative Easing Explained 4 U
Topic Started: Nov 14 2010, 11:11 PM (432 Views)
ivorythumper
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I am so adjective that I verb nouns!
clicky



P*D? Brenda? Jon? Comments?
The dogma lives loudly within me.
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Mikhailoh
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If you want trouble, find yourself a redhead
:lol2:
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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jon-nyc
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Cheers
Very funny.

But I will say 'the Ben Bernank' knows a bit more about the causes of the depression and preventing its recurrence than any plumber or economist I know of.
In my defense, I was left unsupervised.
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Piano*Dad
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Bull-Carp
You make it sound like Bernanke isn't an economist. I'm hurt.

:lol2:
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John D'Oh
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MAMIL
jon-nyc
Nov 15 2010, 04:00 AM
But I will say 'the Ben Bernank' knows a bit more about the causes of the depression and preventing its recurrence than any plumber or economist I know of.
How about any cartoon teddy bears you know of?
What do you mean "we", have you got a mouse in your pocket?
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jon-nyc
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Cheers
Piano*Dad
Nov 15 2010, 05:08 AM
You make it sound like Bernanke isn't an economist. I'm hurt.

:lol2:
I meant any other economist. (not to say there aren't some out there, im sure he didn't have a momopoly on the study of the depression, i just don't know of any)

His selection was pretty fortuitous. That and Paulson.
In my defense, I was left unsupervised.
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Piano*Dad
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Bull-Carp
Quote:
 
im sure he didn't have a monopoly on the study of the depression, i just don't know of any


Well, here's one:

Investment During the Great Depression

:whome:


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jon-nyc
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Heh. So you've been collaborating with your co-author for some time now!
In my defense, I was left unsupervised.
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Piano*Dad
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Bull-Carp
That was actually our first paper together. I had sponsored a conference at W&M titled "The Challenge of European Integration" that occurred, magically, in September of 1992. Our timing was perfect. One the the guests I invited was Barry Eichengreen. He is perhaps the best economic historian of things monetary on the planet. (One of his books is Golden Fetters, a magnum opus about the Depression). Well, Barry argued that the Smoot Hawley tariff may very well have been stimulative. I reacted negatively to that notion, and argued that the whole S-H process could have been a causal factor in the 1929 crash, working through an option-price mechanism. Increased political uncertainty increases the firm's option value of waiting instead of immediately investing in plant and equipment. This effect could have triggered the crash that other factors then exacerbated into the Depression (like Bernanke's debt-deflation hypothesis). Well, Barry responded by saying there wasn't "a shred of evidence" for my claim. This paper was my ultimate response.
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jon-nyc
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Good story.

FWIW, I've read his book on financial crises, which I thought was pretty interesting.
In my defense, I was left unsupervised.
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jon-nyc
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Back to the video - while this is funny and all, the sad thing is that this will actually influence many people's thoughts about what is happening. THis video was released thursday, and it has 425k views. How many have read Bernanke's 2002 speech on deflation?


Read the comments - lots of this type:

Quote:
 
This is F%#KING awesome! Funny, sharp and more important FULL of information and TRUTH. EVERYONE in the U.S. with a brain, and we know that's a limited amount over the last 30 years, should watch this about say um... 20 times. Thanks so much for posting.
In my defense, I was left unsupervised.
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Axtremus
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HOLY CARP!!!
jon-nyc
Nov 15 2010, 06:03 AM
His selection was pretty fortuitous.
I thought Greenspan saw it coming when he selected "Helicopter Ben."
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brenda
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..............
Funny stuff.

Yet, there is a serious downside to "the deflation" as people postpone purchases in hopes of further price reductions. As more people jump on that bandwagon, more businesses lose sales, cut jobs, and close. A recession becomes a depression. This is pretty basic stuff to the folks here at TNCR, but to the general public it's not so obvious.

EDIT: It's the postponement of purchases that becomes the problem. I love a bargain, too. But as people wait and wait and wait for even better bargains, postponing purchases longer and longer, ........ that becomes a problem. Japan has had trouble with this.
Edited by brenda, Nov 15 2010, 09:27 AM.
“Weeds are flowers, too, once you get to know them.”
~A.A. Milne
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JBryan
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I am the grey one
You mean people paying lower prices to buy stuff is not always good?
"Any man who would make an X rated movie should be forced to take his daughter to see it". - John Wayne


There is a line we cross when we go from "I will believe it when I see it" to "I will see it when I believe it".


Henry II: I marvel at you after all these years. Still like a democratic drawbridge: going down for everybody.

Eleanor: At my age there's not much traffic anymore.

From The Lion in Winter.
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brenda
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..............
JBryan
Nov 15 2010, 09:18 AM
You mean people paying lower prices to buy stuff is not always good?
If they will buy, instead of playing the waiting game. It's the wait that gits ya.
“Weeds are flowers, too, once you get to know them.”
~A.A. Milne
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brenda
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..............
BTW, I'm not saying I agree with the approach of the Fed. The Fed says this won't lead to inflation of any significance. I'm not convinced of that, not at all.
“Weeds are flowers, too, once you get to know them.”
~A.A. Milne
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Axtremus
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HOLY CARP!!!
brenda
Nov 15 2010, 09:24 AM
BTW, I'm not saying I agree with the approach of the Fed. The Fed says this won't lead to inflation of any significance. I'm not convinced of that, not at all.
If you run the Fed, what would you do?
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brenda
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..............
Axtremus
Nov 15 2010, 09:26 AM
brenda
Nov 15 2010, 09:24 AM
BTW, I'm not saying I agree with the approach of the Fed. The Fed says this won't lead to inflation of any significance. I'm not convinced of that, not at all.
If you run the Fed, what would you do?
I don't have all the data available to the Fed at this time, so I will use the info that I have seen, which is no more than what is available to you.

If there are truly signs of recovery, and that's another thread unto itself, it makes sense to take more modest steps in monetary policy. Continue to gradually ease the money supply, not dump a load as is being proposed. I think the current proposal is extreme.

Bank lending has tightened up significantly for both commercial and personal loans. The Fed can help there. Granted, we don't need to encourage loans to people or firms with bad credit, but people with good credit ratings are getting turned down for loans right now. Some easing there would help, while still maintaining prudent standards.

The Fed should also be speaking out against tax increases. Consumer demand is dampened as families face uncertainty about future tax increases. Just as businesses hold off on growing or adding employees during times of uncertainty, families postpone purchases, too. Potential for future tax increases has both families and businesses hunkering down and avoiding any longterm payment increases.

“Weeds are flowers, too, once you get to know them.”
~A.A. Milne
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Mark
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HOLY CARP!!!
Axtremus
Nov 15 2010, 09:26 AM
brenda
Nov 15 2010, 09:24 AM
BTW, I'm not saying I agree with the approach of the Fed. The Fed says this won't lead to inflation of any significance. I'm not convinced of that, not at all.
If you run the Fed, what would you do?
Shut it down.

Return to real money.

Embrace the free market.
___.___
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o 0
When I see an adult on a bicycle, I do not despair for the future of the human race. H.G. Wells
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Axtremus
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HOLY CARP!!!
Just saw the video (parts of it anyway) ...

Re: the Fed buying the Treasury from the Goldman Sachs (instead of from the Treasury)

Is that true? Why is that?
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jon-nyc
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Cheers
Its not literally true, they're buying them in the open market, with Goldman being just on of many participants in the market.

Why? The *whole idea* is to effect market interest rates and bank reserves. THe idea isn't to own treasurys per se.


Buying the debt directly form the treasury would in fact be that banana-republic-fund-your-deficit-by-printing-money behaviour that this very much isn't.
In my defense, I was left unsupervised.
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Axtremus
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HOLY CARP!!!
OK, buying on the open market makes sense.
"Buying (just) from the Goldman Sachs" doesn't.
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ivorythumper
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I am so adjective that I verb nouns!
Axtremus
Nov 16 2010, 04:31 AM
OK, buying on the open market makes sense.
"Buying (just) from the Goldman Sachs" doesn't.
I think the Goldman Sachs is metonymic.
The dogma lives loudly within me.
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Aqua Letifer
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ZOOOOOM!
ivorythumper
Nov 16 2010, 10:45 AM
Axtremus
Nov 16 2010, 04:31 AM
OK, buying on the open market makes sense.
"Buying (just) from the Goldman Sachs" doesn't.
I think the Goldman Sachs is metonymic.
The ivorythumper has a point.
I cite irreconcilable differences.
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jon-nyc
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I think the ivorythumper is giving the author of this piece too much of the credit.
In my defense, I was left unsupervised.
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