October 19, 2019 at 5:01 pm #191092
Two actions by US financial authorities this week indicate that the United States will respond to a looming downturn in the global economy by providing, once again, unlimited amounts of cash to financial markets.
On Wednesday, the Federal Reserve began an operation, lasting at least six months, to purchase around $60 billion of Treasury bills a month in response to sharp spikes in interest rates in overnight markets. The following day, in a separate action, the New York Federal Reserve injected $104.15 billion into financial markets to boost liquidity.
PS For information and discussion purpose, it is not the opinion of the SPGB/WSMOctober 21, 2019 at 6:01 pm #191103
“quantitative easing” is just another name for hyper/inflation. There’s already trillions of the stuff somewhere? However, I know where there is none: in my back pocket.October 21, 2019 at 6:48 pm #191104October 22, 2019 at 9:07 am #191112
I don’t think quantitative easing can be described as hyper-inflation, at least not in the sense of leading to a huge rise in the general price level. This hasn’t happened because the extra money is made available not to the general public but only to “financial markets”. Here it does have an inflationary effect, raising the price of stocks and shares which has the effect of reducing their “yield” (the income they bring in as a percentage of their nominal value). The aim is to reduce the rate of interest more generally and to make more money available (by buying bonds off them) for banks to lend and so kick-start an economic revival that way.
The trouble is that bank lending is demand-led not supply-led. So, making it easier for banks to lend will have no effect if there is not a demand (from creditworthy borrowers) for loans, which in turn depends on profitable production prospects. In the absence of this, all QE does is increase the price of stocks and shares. It doesn’t lead to an economic revival. You can bring a horse to water but you can’t make it drink. Which seems to be what’s happened. Pouring more water into the drinking trough want make any difference if the horse doesn’t want to drink.October 22, 2019 at 2:47 pm #191115
That is the reason why I published the Marxian theory of inflation because that measure taken by the USA Federal Reserve Bank will not produce any type of inflation or economic revival. Any reform made to the capitalist society will conduct to the next crisisOctober 22, 2019 at 6:59 pm #191120
“quantitative easing forever”
What ever else it means, it’s Hyper-inflation on a grand scale, and since they abandoned the universal equivalent – Gold – the sky’s the limit for “quantitative easing” , hence the world is drowning in – “quantitative eased – currencies. Not millions, or billions – but Trillions: so far. What’s next, quadrillions, or whatever description they can come up with? But you can bet one thing for sure: it cannot be good for the Workers…October 22, 2019 at 7:20 pm #191121
It is not hyperinflation in the proper economic sense which is an increase in the level of prices
It is the same old conspirative theory that some groups are spreading around the world, that the problem of this society is the monetary system, and that the only solution is to come back to the gold standard, but money can be converted into any form and it is a product of the economic exploitation.
I think Adam has given a good explanation that quantitative easing is not going to produce any type of hyperinflation, it is just a measure to decrease interest rate, and to have more money available.
It is part of the belief that the high level of the stock market it is a sign of a healthy economy, it is just fictitious capital, the same thing took place before the Great Depression, capitalism is an economic system that is unstable and any reform always brings the next crisis, there is not any economic magician who can hold the bull by the hornsOctober 23, 2019 at 11:22 am #191126
I think I will stick to my original comments, after all, it’s a mega amount of money where ever it is, and whatever it’s used for?
Again there is no benefit: for the Workers…October 24, 2019 at 4:05 pm #191137
Again there is no benefit: for the Workers…
Capitalism was not created in order to benefit the workers, capitalism is the economic system of the capitalists. Money as a commodity is used to buy the labour force and to transact among the capitalistsOctober 24, 2019 at 6:58 pm #191138
Hi Marcos, you’ve got it in a oner, nae argument there…
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