Thursday, Aug 12, 2010
Hyperventilating hyperinflationists
Quantative Easing the Greatest Monetary Non Event: Pragmatic Capitalist
Pretty simple stuff
Posted by bellwether @ 09:19 AM (798 views) Add Comment
14 Comments
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1. Amos said...
The arguement that it is merely an asset swap ignores where the central bank got the funds from to swap with.
The funds were created on a computer.
Its true though that if banks do not lend the extra money then nothing will happen until they do and thats when the inflation will start.
Strongly suggest people read "when money dies".
2. techieman said...
Sadly this will only be read by those that understand what its saying. Those very people that dont actually need to read it. The people that do need to read it wont or will dismiss it. Their loss really.
Thanks for posting b/wether - hope everything is good with you.
3. mark wadsworth said...
Seems a fair summary, but what it boils down to is that QE is just paper shuffling.
4. growler said...
Which comes back to real basics surely techie? Demand is "desire, backed by willingness and ability". If you don't want something at the price offered then either the seller keeps the product or he tries to induce you to buy. If he's offered you zero credit and you're still not interested, then eventually the price is going to have to fall if he wants to shift the goods. The fact that the shelves are full must surely mean that when you do decide you've got to sell come what may, the price is going to have to drop big time.
5. techieman said...
growler - i think that was a rhetorical question wasnt it? Maybe you should ask my mate HPW ? :). No argument here.
6. techieman said...
Amos - i asked you on a previous thread "when" will this happen - so the question stands - when do you think inflation and hyperinflation will happen in the US and UK economies? No and not being a smart ar5e, just really interested what you think.
7. growler said...
techie: indeed.
And I see the asset bubbles in various items - like houses, classic cars and art - as people holding on hoping that people will keep on demanding goods. "Monetary indigestion". Prices are easing in these areas. It won't need much for people to see that the smart money is to get out quick. We must be there - or near to it.
8. sj032 said...
When money dies. $10 on Amazon. Still no release date but I cant wait to read it. I've just ordered a copy
9. Amos said...
Techieman @5
I think the problems will start if we get deflation and persistantly high unemployment, the policy has the potential to be abused by those in power if they get desparate. My guess would be in a couple of years time if it were to happen.
Thats why I suggest people read "when money dies" as it shows what stupidity quite intelligent central bankers and politicians are capable of when under extreme pressure.
10. matt_the_hat said...
This is the sAme financial crap usually rolled out. Look at the correlation between qe in the uk and the gov deficit. We are printing money to employ people in the public sector to spend - all this does is just save on helicopter fuel
11. mark wadsworth said...
MTH 9, that is something completely different, if the govt runs up large debts to fund current waste/expenditure, then that is A Bad Thing of course, but they can do this with or without QE.
12. hpwatcher said...
Demand is "desire, backed by willingness and ability". If you don't want something at the price offered then either the seller keeps the product or he tries to induce you to buy. If he's offered you zero credit and you're still not interested, then eventually the price is going to have to fall if he wants to shift the goods
Seems logical to me.
However, there are far more than just two people in this equation. What if a third person, really wants you to buy. They, in turn, will find ways to induce you to buy. Either force you to spend your money - because if you don't buy now, your money will be worth a lot less - lend you the money - at next to nothing interest rates - or just give you the money.
13. growler said...
HPW - that's back to the elasticities. At a moderate level, a consumer would have price in a degree of fear - which if he really doesn't want the product won't make him buy.
A supplier of the good would also need to be confident that soemone will buy the product - or he won't make it in the first place.
If you have piles of cash and REALLY think that unless you buy something, it'll go up in smoke - then you'll get defensive. You'll look at the thing that is most stable over time AFTER you've sorted out your essentials. The people that got rich in Germany in the late 1920s where the ones dealign in coal and potatos.
14. hpwatcher said...
HPW - that's back to the elasticities. At a moderate level, a consumer would have price in a degree of fear - which if he really doesn't want the product won't make him buy.
That's getting into specifics. Here I just wanted to make a general point about certain central banks.