https://en.wikipedia.org/wiki/Nixon_shock The Nixon shock was a series of economic measures undertaken by United States President Richard Nixon in 1971, in response to increasing inflation, the most significant of which were wage and price freezes, surcharges on imports, and the unilateral cancellation of the direct international convertibility of the United States dollar to gold.
The Fed can't print money. Treasury prints money and they're separated on purpose to prevent Banana Republic style money printing. QE is really an accounting gimmick where it forces banks to buy reserves at the expense of other investments. Because of Basel requirements, banks technically can't hold much cash because they're counted as debt obligations to depositors. So they take treasuries as reserves to count it back as an asset. These treasuries can also be collateralized and treated as liquid assets to the greater shadow banking system, but its affects are mostly and intentionally deflationary (with incredibly small ROI and utility). It's very counterintuitive and beyond what most people care about. Except most people are wrong and the Fed gets away with their poor results and misinformation...
true that. but Fed policies, such as QE / interest rate changes have more direct impact on the money supply in circulation; Treasury actions/policies have little / negligible impact on the money supply no, it is not an accounting gimmick. QE ( called Primary Dealer Credit Facility during FDR's tenure ) is a monetary policy, from the Fed's monetary tool box, to put more money supply in circulation---effectively lowering the cost of borrowing--- as a means to stimulate economic activities, aggregating demand for goods and services.
on the flip side, In Biden's first year as POTUS, GDP growth reach a 37-year high, stronger than expected despite the Pandemic, https://www.cnbc.com/2022/01/27/gdp...ger-than-expected-despite-omicron-spread.html
If they had any semblance of controlling the money supply, maybe their policy of pure interest changes would make a difference, but they've long given up counting M1 and M2 because there's plenty of dollar printing happening outside our borders. Treasury doesn't have the active hand in printing but Congress through printing can totally affect fiscal policy. However, our current rates of indebtedness makes these bumps very short lived with the net result of more debt becoming deflationary in the longer term. There really isn't much the Fed can do except act as a cheerleader to prime or goad markets. That's partly why spotting yield curve inversions are a consise way of forecasting recessions as the rates are set on the market through bond traders comprosed mostly of bankers, foreign nationals and large monied institutions. It's also why they spread the hokum that QE is "inflationary" and seen as "a massive stimulus"...so people like Peter Schiff and Ron Paul bought it the first time around and brought up hyperinflation doom scenarios with Gold or apocalypse seeds as the answer. Every time the Fed raised or started QE, the dollar didn't spike as the inflationists expected. It went down. What QE did was allow/force banks to park their spending capacity in a low rate jail (as the reserves were only traded among banks and couldn't enter the money supply), but the insidous part of this was that as long as rates decrease, banks could make a profit on the books because of the higher bond price. Instead of chasing dumb 1% yields, they greedily collected on the convexity of the bond price. Thats why there are "sucker banks" collecting negative coupons in Europe and Japan. It's absolute madness masquerading as a success by virtue of the lights staying on. Well then you rationalize "they did it for a reason...to stimulate economic activity" except when the banks do this and choose to park money reserves, it takes away money intended to be loaned to people. It steals from depositors who are now making 0.1%APY. The most real question you can ask a banker is whether they'd loan $300,000 to Joe the Plumber at 3% interest for a new non-recoure loan. Hell ****ing no, but that's what the idiots at the Fed are selling in order to mask high indebtedness levels across the corporate and public sectors...a rate hike like 3.5% would cook too many BBB rated investment grade companies and wash too much blood on the streets. This risk aversion coupled with ultra low interest rates is why you see asset bubbles because rich have collateral to borrow buy more of the same assets priced out the poor. We call this "stimulative" yet inequality mounts, the economy stagnates with poor governmental receipts, and birth rates remain low at Depression era levels. What a great success...to digitize those breadlines into a ******* credit card.
It is if they mislead Americans that the Fed is adding to the money supply and Powell make money go brrrr. QE is still not money printing. Fed's charter won't allow it, yet the notion persists. You can call it what ever, but it's been a failure to the point where people now expect it, while not knowing what it really does.
What is the main purpose of the Federal Reserve System? influence monetary policies / credit conditions in pursuit of full employment and stable prices ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers maintain the stability of the financial system and containing systemic risk that may arise in financial markets. In view of Fed's charter, the QE policies have been effective
that's because QE has proven to be an effective economic stimulus, as evidenced by its ability to lift the US economy out of the Great depression during the FDR years and the bankruptcy of the financial system during W's 2nd term so, what is your point ? by they, you mean the Fed. i have a different perspective on QE, more wide range. it has enabled consumers to pay off more of their credit card debts, afforded tech co (established ones and upstarts) to borrow $ (at a very low interest rate) to fund their R&D efforts leading to the creation of many high-paying job, expedited young upstarts (such as Tesla/Space-X/Twitter/Zoom, etc.) to launch their value propositions to society/economy, afforded more Americans to buy homes, etc. i didn't rationalize; i just point out / describe the economic stimulative effects of QE high indebtedness level, relative to whom? not as compared to the EU, nor China, nor Japan, nor the UK is there a reason that you have omitted to mention the middleclass, who has benefitted immensely from QE dispense w this meaningless blather, and focus on the charter of the Fed Reserve. when you do, you'll come to the realization that QE has been effective.
ur mixed up. the immediate effect QE is to lower interest rate, which has the effect of lower the value of the USD, if all other things remain unchanged, relative to other currencies. the Fed expects the US dollar to go down immediately after QE, which it has invariably.
Always a pleasure with the correspondence adoodoo. The facts are out there with QE. You are free to tout superior models that have led nowhere. Bottom line, Fed can't print money, fools the markets into thinking they're raising the money supply to the point where people talk about QE whenever inflation comes up. Their "toolbox" is nearly run dry of ideas as interest rates hover near the zero bound. I still remember you couldn't distinguish near zero with zero interest rate policies. What adootard.
yip, i have pointed out the facts / egs of the effectiveness of the QE, during FDR's time and post GWB's financial industry meltdown if only you understand !
. just the facts! QE during FDR's time, then called Primary Dealer Credit Facility, lifted the US economy out of the Great Depression QE implemented post the financial industry meltdown during W's 2nd term stabilized the economy towards increased employment and GDP growth. Invisible's claim that QE has been a failure is divorced from economic reality / facts. you are projecting ur lack of understanding of the Fed monetary expansion policies, as well as their multiplier effect , ur projecting ur lack of understanding of monetary policies. , if only you can rebut my assertion that QE has been effective.
just off the top of my head, to lessen the effect of / do the opposite of QE, these tools are available: tapering, lessening of the purchase of marketable securities from financial institution, which the Fed has done since late 2021, raising interest rates, raising the reserve requirements, etc. btw, all these monetary tools have been used before, in particular during the Nixon/Ford/Carter years. recommended reading for Invisible, Money and Multiplier Effect https://en.wikipedia.org/wiki/Money_multiplier
If the economy's so great, why do we feel so lousy? https://theweek.com/talking-points/1009538/if-the-economys-so-great-why-do-we-feel-so-lousy in a word . . . precarity : But econometrics and survey data paint an incomplete picture of the situation. Even if it doesn't show up in the numbers, many Americans' experience of the economy over the last year and more has been defined by what sociologists call "precarity." A term of art for the absence of psychological security, unpredictability, and vulnerability to technological change, the concept of precarity first caught on in Europe, where it designated the consequences of deregulating the labor market in the 1990s. But it's since been adopted more widely to describe a pervasive feature of modern life. Constant anxiety that your job will be outsourced or automated is one form of precarity. But so is fear that you'll get sick, that your children's school will close, or that goods you count on vanish from the shelves. more at the link
We're still nowhere near the 2019 growth levels pre-covid. Maybe the "5.7%" number looks great after losing so much. It is comparatively great in relation to Europe or even China, but it's being thrown around as if we're much better off than before. So much better, in fact, that inflation...inflation is everywhere!!!11!!. People on the ground generally have a better take on the feel of the economy than the lies being fed and thrown around. This ranges from what they're earning, how much that buck spreads at the pump or the grocer and where their friends are in terms of their small businesses. Much easier indicators to feeling what CPI numbers can and can't be trusted, and what liquidity is available in the overall system.
It could be considered an unfair comparison when the US economy contracted 19% during covid, but it's mostly a reminder that we aren't in a full recovery nor are our employment levels resuming its growth from before. A similar and more ghastly comparison would be the post 2008 crisis, where trillions of GDP were wiped off the map and hasn't come back ever since.
that did happen from its peak in the fourth quarter of 2019 through the second quarter of 2020. IIRC, re-openings ( sporting events, restaurants, concerts, air travel ) started ~ mid-year 2020; as a result, for the entire year, in 2020, while the US economy grew just a tad, it didn't shrink
the same reason that Repubs describe the 6 Jan insurrection as a bunch of friendly guys on a toursit visit refuse to accept the will of 80 millions American voters who voted for President Biden refuse to hold accountable those fake electors (GOPers who had signed fake documents)
