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It is that simple. QE starts and the gap between the wealthy and middle/lower classes increased by leaps and bounds. What is it that you are not sure about?
Cause does not always equal effect. we're inferring a causal relationship where one may not exist. Income inequality has been rapidly increasing, even before this. I hesitate to involve myself in discussions of this complexity without understanding things much better then I do currently on this specific topic.
Im one of those, but I've been hesitant to get too involved in the QE easing discussions as...to be completely honest....Im not completely sure the end result is going to be whats expected. IE theres a lot going on here and without spending a LOT of time understanding it all I'm not sure I can have a valid opinion. For those saying "they're giving money to the rich!" Its not that simple. Or "They're printing money!" Well...no...but sort of. Its not that simple.
They are actually propping up the markets by buying assets and other instruments from finanical institutions verses the normal bonds.. So what they are esstentially doing is paying them back for the losses they would/did have during the crisis. What has happened is the financial institutions keep getting these monthly injections of cash propping them up when they no longer need it.. It's like a heroin addict, once you start shooting up you can't stop because it feels good and you need it..
Sadly, a lot of folks really do believe that Obama is brillant and his policies actually have strengthened the market when, in fact, that is far from true.. More people have dropped out of the job market, records on disability and welfare.. If anything, I struggle to find a single policy his administration has implemented that had any value. While the media and others refuse to bring this forward because he is the first black or half black or whatever President I doubt history will be as kind.
The moment the Fed's stop pumping is the moment you will see all the earnings folks made disappear. This is exactly why they haven't stopped.. The herion is flowing and the dealer can't cut off the addicts.
Worse, when and if they ever get the addict off the heroin and the interest rates start to rise the amount of money we borrowed will have to be paid back at a higher interest rate.. I read once that if the interest rate was 6.5% we wouldn't be able to pay off our debt until 2045 or something.. That's IF we didn't print any more money.
Add to this Russia, China, Brazil and other countries are working toward taking the dollar down as the reserve currency and it makes for a bad situation. If you think the great recession was bad wait to see what happens if we would loose reserve currency status and can no longer print money like water flowing from a stream. For those doubters look at England and the Sterling that was once the reserve currency before WWII (19th century)..
Folks don't have a clue how we are standing on a razor thin edge..
Cause does not always equal effect. we're inferring a causal relationship where one may not exist. Income inequality has been rapidly increasing, even before this. I hesitate to involve myself in discussions of this complexity without understanding things much better then I do currently on this specific topic.
I see your statement as a veiled attempt to deflect the harm done by QE. If you truly hesitate to involve yourself into a discussion like this, you wouldn't have.
They are actually propping up the markets by buying assets and other instruments from finanical institutions verses the normal bonds.. So what they are esstentially doing is paying them back for the losses they would/did have during the crisis. What has happened is the financial institutions keep getting these monthly injections of cash propping them up when they no longer need it.. It's like a heroin addict, once you start shooting up you can't stop because it feels good and you need it..
Sadly, a lot of folks really do believe that Obama is brillant and his policies actually have strengthened the market when, in fact, that is far from true.. More people have dropped out of the job market, records on disability and welfare.. If anything, I struggle to find a single policy his administration has implemented that had any value. While the media and others refuse to bring this forward because he is the first black or half black or whatever President I doubt history will be as kind.
Not saying you are suggesting otherwise, but McCain and Romney would have done the same thing.
Quote:
The moment the Fed's stop pumping is the moment you will see all the earnings folks made disappear. This is exactly why they haven't stopped.. The herion is flowing and the dealer can't cut off the addicts.
Worse, when and if they ever get the addict off the heroin and the interest rates start to rise the amount of money we borrowed will have to be paid back at a higher interest rate.. I read once that if the interest rate was 6.5% we wouldn't be able to pay off our debt until 2045 or something.. That's IF we didn't print any more money.
Add to this Russia, China, Brazil and other countries are working toward taking the dollar down as the reserve currency and it makes for a bad situation. If you think the great recession was bad wait to see what happens if we would loose reserve currency status and can no longer print money like water flowing from a stream. For those doubters look at England and the Sterling that was once the reserve currency before WWII (19th century)..
Folks don't have a clue how we are standing on a razor thin edge..
Dear Steve Liesman: Here Is How The US Financial System Really Works | Zero Hedge
quote: We know that in the aftermath of Lehman, the Fed's reserves were the source of the money used by banks to boost their deposits, either by traditional or shadow bank transformation pathways, even as loans remained stagnant, and are now, nearly 4 years after Lehman, at a lowerlevel than they were in late September 2008.
The amount of money created in 2008 to fight the abyss was much much more than this. Just Google ''29 trillion''. And by those numbers the amount being created today is relatively quite small. As our economy has begun to recover and stabilize these sorts of central monetary shenanigans are simply less useful.
quote:
"This is fantastic for every rich person," he said Thursday, a day after the Fed's stunning decision to delay tightening its monetary policy. "This is the biggest redistribution of wealth from the middle class and the poor to the rich ever."
IMO it is not so much the redistribution of wealth, but that the bulk of the newly created money has found its way into the pockets of the rich.
Im one of those, but I've been hesitant to get too involved in the QE easing discussions as...to be completely honest....Im not completely sure the end result is going to be whats expected. IE theres a lot going on here and without spending a LOT of time understanding it all I'm not sure I can have a valid opinion. For those saying "they're giving money to the rich!" Its not that simple. Or "They're printing money!" Well...no...but sort of. Its not that simple.
QE is not printing money in any conventional sense. It is indeed money created out of thin air by the Fed, but that money is exchanged for investment paper in the private banking system, dollar for dollar. And the whole shebang resides in and stays within the Fed/banking system. The money is not circulated, and is designed to lower interest rates.
IMO QE has helped lower interest rates. And if one was/is in a position to financially benefit from this, there has been some very good money made since 2009. More than likely the richer folks with the timely and proper economic understanding, along with the resources to benefit. Borrowers and investors especially leveraged or on margin have benefited the most.
QE is not printing money in any conventional sense. It is indeed money created out of thin air by the Fed, but that money is exchanged for investment paper in the private banking system, dollar for dollar. And the whole shebang resides in and stays within the Fed/banking system. The money is not circulated, and is designed to lower interest rates.
IMO QE has helped lower interest rates. And if one was/is in a position to financially benefit from this, there has been some very good money made since 2009. More than likely the richer folks with the timely and proper economic understanding, along with the resources to benefit. Borrowers and investors especially leveraged or on margin have benefited the most.
You have no idea what you're talking about.
The Fed is using more than half the printed money to buy treasury bonds so the Obama regime doesn't have to sell the debt on the open market. Where is that money going? To the Democratic base in the form of welfare, that's where.
The moment the Fed's stop pumping is the moment you will see all the earnings folks made disappear. This is exactly why they haven't stopped.. The herion is flowing and the dealer can't cut off the addicts.
Worse, when and if they ever get the addict off the heroin and the interest rates start to rise the amount of money we borrowed will have to be paid back at a higher interest rate.. I read once that if the interest rate was 6.5% we wouldn't be able to pay off our debt until 2045 or something.. That's IF we didn't print any more money.
Add to this Russia, China, Brazil and other countries are working toward taking the dollar down as the reserve currency and it makes for a bad situation. If you think the great recession was bad wait to see what happens if we would loose reserve currency status and can no longer print money like water flowing from a stream. For those doubters look at England and the Sterling that was once the reserve currency before WWII (19th century)..
Folks don't have a clue how we are standing on a razor thin edge..
As the Fed unwinds there are bound to be periods of instability and corrections made within the markets. But this situation is nothing as precarious or potentially severe as in 2007 for several important reasons. Firstly, it will mainly be the richer stock investors that take the brunt of any correction. Sure the middle class has their 401-k, but the general wealth of the middle class is in and surrounded by housing, not stocks. In 2007 the whole housing and middle class took a huge hit. This was a much broader, serious and much more affected class than the potentials today. Today we might see the richer become less rich. Or maybe even not as it is simply too soon to know. Secondly QE is not an all or nothing scheme. It can go up or down as the Fed sees fit. The unwinding can last a very long time. Easily years or more, and by than the more 'natural' course and recovery of the economy may be occurring, where QE is even less influential down the road.
Russia, China and Brazil can do all they want, but they are a very long way off time wise to be in any position, if ever, to dominate over and beyond the USD. Roughly 2/3 of all international transactions take place involving the USD. And that relative amount has only risen since the 2008 crash. Meaning more demands for USD, not less after the most major of currency stress tests of our generation.
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