At this point is different from when QE2 was enacted. Part of the reason that the threat of deflation is so low is ... QE2. This article, written in October, said oil prices could go to $83 this year if there was QE2. At the time it was written, the price of oil was ... $83.21? Hmm. But that increased core inflation was the purpose of QE2. It's not a cause of concern for the Fed because it's exactly what the Fed was trying to do. Sorry - my point with the tornadoes was that there was NO correlation. There's nothing at all to suggest QE2 caused economic contraction. None. This article was written in early February. What it doesn't account for is that over the next several months of QE2, food prices came crashing rgiht back down. Hard to connect that to QE2... Again, prices of food are basically the same as they were before QE2. Certainly the money supply expanded - that's the definition of QE2. Clogging implies something negative. What was the negative of that? Except bank lending levels are now at the highest rates since 2007 and 50% higher than a year ago. http://www.cnbc.com/id/43656157
when China wants us to buy more of their products, they'll buy more of our debt. same with the oil shieks
Yeah, and how long should America be beholden to their currency-pegging, protest-shooting overlords? It's getting to the point where America needs China more than China needs America.
I don't think I've ever heard someone argue the position that China doesn't own enough of our debt. Most people seem to think it's dangerous for them to own as much as they do, because it gives them economic leverage over us. But that said, it's not clear they are actually divesting long-term debt. Year-over-year, Chinese holdings of US debt has increased: http://www.businessweek.com/news/20...-trillion-of-u-s-debt-caps-rise-in-rates.html They might have dropped a bit over a few month period, but that doesn't remotely make a trend. These things fluctuate and it depends on China's expenditures and other reserves. They are constantly moving money in and out of dollars/euros/etc - there's no evidence of any type of trend here as of yet. It also doesn't help that China sometimes works to buy US debt quietly and behind the scenes in a way that can't be tracked: http://www.economyincrisis.org/content/reuters-china-clandestinely-buying-us-debt
Wait - do you want China to hold more US debt or less? You seem disturbed that they might be selling our debt, but then don't want us to be beholden to them?
Deflation was never that big of a threat before QE2 was enacted, HeliBen was all up in arms about a Japan nightmare scenario. You all are too. Just realize that when you and Sam are criticizing inflation hawks for pounding their spiel, you look equally as bad purporting that deflation is the biggest threat ever to a debt-ridden economy. Stagflation is worse, for one. Hyperinflation is DEFINITELY worse. None of them, however, are worth completely hijacking policy choices over, because they're all extreme bogeymen. QE2 was like contracting the money supply by raising rates to combat hyperinflation. It's a bit like giving a guy who might get the flu sometime in the future, a dose of 30 different drugs "just in case." Further quantitative easing by the U.S. Federal Reserve could push oil prices to an average of $83 next year even if demand remains weak There's nothing at all to suggest QE2 caused economic growth. Nothing. The Fed is overseen by HeliBen. Of course he would have more concern for deflation than inflation. look, citing the Fed as you and Sam have done are lost on me. I'm against QE2---therefore I'm against what the Fed has done...so why are you bringing up the Fed's view? Obviously they're more qualified than I am and bla bla bla, but there are others who are just as qualified who oppose it. I am entitled to my own opinion on which group of qualified economists I support in this regard. Definition of an asset bubble--- bubbles always burst. Regardless, the correlation between food inflation and the initial announcement of QE2 is certainly striking. one thing at a time. I'm too tired to expand multiple reasons. Expanding the money supply tends to lead to the devaluation of the currency among other things, especially if a lot of the money goes to foreign investments. I've already gone over why devaluation is bad for America. [/QUOTE] Seriously, Major, I'm sorry, but you posit this and that, and make me scratch and kick about correlation not being causation, than you bring this as evidence of...what? QE2 ended before this. Also, the title, suffice it to say, should tell me and you enough.
Well, sadly, China holding US debt is the lesser of two evils at this juncture. Without a country like China financing American debt, God knows where we would be right now. But yes, in a perfect world, I'd rather America not be dependent on China. The problem is, America is dependent...and as such, any indications China are shifting away is a bad sign. Here, I'll put it this way. As someone trained in economics, I am mortified at the concept of China pulling less weight on the American debt. As someone who has a leaning towards human rights advocacy, I am mortified at the concept of America being dependent on China. Unfortunately, we're not in a world where things are black and white, and everything fits together nicely.
Except we don't equally as bad. Inflation hawks said we'd have run away inflation with QE2, but we don't. Deflation hawks said we wouldn't have deflation with QE2, and we don't. Only one of those was clearly wrong. Yes - read that again. QE by the Fed could push oil prices to where they already are even if demand remains weak. So if demand stayed where it was, QE would cause oil prices to go from $83 to ... $83. I never suggested there was. You are certainly welcome to support the economists you want. Just understand that they claimed there would be runaway inflation and there wasn't. No it's not - because food prices were already going up BEFORE QE2 as well. They just continued to go up when QE2 was announced and then, like you said, a bubble popped and they went down. But there was never any connection to QE2 in there. That bubble was forming and popping independent of QE2. QE2 didn't end before this - lending doesn't go up overnight. It's been increasing over time. And the money that QE2 pumped in is still there. Nonsense. It says they aren't lending to people who are unqualified (unlike 2000-2007) or people who don't want loans to expand. Neither of those are bad things. Money is available for people who need it and have good credit.
The point is, both groups are proposing drastic policy solutions and ways of implementing policy based on worst-case, boogey-man scenarios. That's no way to govern. You don't react passionately to every nightmare scenario. Sure, you need to keep these things in mind, but to have them as the central facet of any policy decision...is sheer madness. No. With lagging demand, oil prices should have fallen. Instead, they are pushed back up by QE2. That's how that works. Well, therein lies the problem. Even if we can conclude that all the correlation to a faltering economy doesn't lead us anywhere in terms of contraction, one is forced to conclude that the same applies for economic expansion. Nominally, if one of QE2's goals was visible growth, you can obviously say it failed on that mark. If you're doing these measures and nothing happens, that's a failure in my books. You realize it's not just inflation hawks that are against this, right? http://www.cnbc.com/id/40125556/Quantitative_Easing_Won_t_Work_Stiglitz Stiglitz is about as far from a inflation hawk as you can find in economics. To argue this point requires complex analysis that might nigh be impossible---to find direct causation. Suffice it to say the correlation looks bad, and the theoretical implications of QE2 have been largely realized. I'll throw your correlation/causation bone at you over this, especially since the time frame is off. wait, so all American citizens/"consumer units" are unqualified?
