More explanation of QE - Sm Posted: Jan 18th, 2019 - 3:43 pm In Reply to: The funding comes with a cute name called "quantitative - easing." We've been hearing about
Actually, MMT argues that QE was essentially a worthless/ineffective policy maneuver
Let’s summarize QE this way. You have a checking account and a saving account at your bank. Your bank makes you an offer you cannot refuse to shift some funds from your saving account to your checking account. (Let us say they will give you a toaster as a reward—and you really like toasted bread.) Will this shift of funds induce you to run out and spend more? Probably not. Especially if you are worried about the future, your spouse was recently fired, and you are underwater in your mortgage. You might even spend a bit less because you earn less on interest in the checking account.
QE essentially amounts to shifting funds from a bank’s saving account at the Fed (Treasuries) to its checking account at the Fed (Reserves). It reduces bank earnings by a hundred or two basis points.
And that is supposed to simulate the economy?
LINK/URL: More explanation of QE
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