patrick.net

sbh says

The Fed influences the primary market for its debt during QE, but once QE is over it's the secondary market that tells the tale. There is no evidence of a change in falling yields.

I agree but must clarify that falling yields were interrupted when we hit the zero bound. Volcker ran the rates up high enough, that the FED got away with 30-years of subsequent rate lowering stimulus. But now that all of Volcker's candy has been eaten, the FED needs a new cannon to blast us out of the liquidity trap. We most likely agree the amount of QE put forth hasn't the power to trigger a sustained rate trend reversal, given the current economic conditions.

That said, the fact that we are still stuck at the zero bound is not evidence that the pumping had zero affect on inflation. We're still seeing the effect of having printed, but it is relative to where we would be had we never printed in the first place.

sbh says

But, ask yourself, why would we have interest rates that high?

This is what these assclowns cant figure out. Yes, yes, please give me a higher return on my treasuries. Yeah, 5-6% sounds good.

Well, how about 10-12%?

No, no, no, not that fucking high.

control point says

The given scenario was the correlation between M and P. Given V is non-constant (and also non-linear) MV = PQ only proves my point. (and is what I said: Money supply * money velocity = GDP.)

In other words, the statements do not conflict.

If I'm not mistaken, you also said, "Money supply and price increases are not correlated." Perhaps I'm misunderstanding your intention with the statement, but on the surface it appears to say that M and P have no correlation what-so-ever, despite being on opposite sides of the equation.

moldhaven says

If I'm not mistaken, you also said, "Money supply and price increases are not correlated."

Yes, hence "The given scenario was the correlation between M and P."

moldhaven says

Perhaps I'm misunderstanding your intention with the statement, but on the surface it appears to say that M and P have no correlation what-so-ever, despite being on opposite sides of the equation.

There are other non-constant independent variables in the equation.

The Federal Reserve System creates debt that cannot be repaid. It creates a debt supply rather than a money supply, and if the former is paid off, liquidity disappears entirely. The interest on the debt however cannot be escaped. Eventually it will destroy stability. It is useful to them at the moment, however. It is the primary tool by which government keeps the majority as perpetual slaves to debt. Eventually, it will create, at best, the death of cash (a state which cannot be controlled or sustained)

It also pushes employment away from the private sector and toward the government itself, which should always be the last resort.

At some point, by definition, the private sector is meant to step up and reverse the debt trend. 17.5 Trillion and counting. It appears to me that the private sector is, instead, dependent on the stimulus.

Look for bubbles where none are required, and don't try to blame the 'free market' when you hear the popping sound.

deepcgi says

The Federal Reserve System creates debt that cannot be repaid. It creates a debt supply rather than a money supply, and if the former is paid off, liquidity disappears entirely. The interest on the debt however cannot be escaped. Eventually it will destroy stability. It is useful to them at the moment, however. It is the primary tool by which government keeps the majority as perpetual slaves to debt. Eventually, it will create, at best, the death of cash (a state which cannot be controlled or sustained)

It also pushes employment away from the private sector and toward the government itself, which should always be the last resort.

At some point, by definition, the private sector is meant to step up and reverse the debt trend. 17.5 Trillion and counting. It appears to me that the private sector is, instead, dependent on the stimulus.

Look for bubbles where none are required, and don't try to blame the 'free market' when you hear the popping sound.

The Federal Reserve system does not create US National Debt. Look to your Congressmen and Presidents. Nor does it create private debt. I'm not quite sure what you are trying to say.

The reason debt is growing and interest rates are low is because of wealth disparity. All the money is with the 1% and they are all too happy to loan it back to the rest of us and rake in the unearned income. Eventually the system will blow up, however, like you said. Not because of the Fed--but because the 99% won't have the ability to pay back the loans any longer. At that point the SWHTF.

control point says

There are other non-constant independent variables in the equation

No matter how you wish to spin it, a change in M can influence a change in P. Proof: If V remains constant, and M increases, then PQ increases. If the economy isn't at full employment, both P and Q can increase. Otherwise, only P will increase (highly inflationary). A correlation exists between M and P. QED

The FED pumped M in order to offset the fall in V, which helped stop a debt liquidation spiral. This resulted in a relative increase in P and Q. So far, the banks have not lent their excess reserves (R). If/when they choose to lend, it will result in an increase in V, at which point, the FED will work to decrease M in order to stabilize PQ. This is easier said than done (especially if they respond late).

The actual fate of R remains unknown. In the current climate, lending is risky compared to potential ROI.

marcus says

It was a strong green light to the one percenters (and their money managers) in the know.

yup, 1933 was off the table in 2H08/1Q09

https://research.stlouisfed.org/fred2/series/FDHBFRBN

moldhaven says

the banks have not lent their excess reserves

http://research.stlouisfed.org/fred2/series/EXCSRESNS

I'll say!

There is inflation, read the thread I posted earlier.

Of course there is, and it's raging. Stagflation is brutal.

moldhaven says

QED

HEHEHE.

If V remains constant, what is its value? I missed that one. I know pi, and c, and e. Dont seem to remember the value of V.

I can do it too. If P remains constant, then it never increases. Any change in MV only results in a change in Q. Therefore M and P are not correlated. QED.

control point says

I can do it too. If P remains constant, then it never increases. Any change in MV only results in a change in Q. Therefore M and P are not correlated. QED.

Your proof is incomplete and unworthy of QED. My proof by counter-example disproves your assertion that M cannot affect P. :)

We are saying the same thing in different ways. This is why I used the term Federal Reserve 'System'. That system is the enabler and the root cause. The Federal Reserve Banks hold about 12.5 percent of the U.S. Debt on paper, but they can't be audited, so we don't know for certain the true numbers.

My local congressman or senator couldn't get the Fed's books unlocked for a peek even if George Washington himself tagged along for the house-call with his trusty hatchet.

Raise your hand if you believe the Fed has been operating within the bounds of US Federal Law - let alone within the bounds of international law. Anyone...anyone?

moldhaven says

Your proof is incomplete and unworthy of QED. My proof by counter-example disproves your assertion that M cannot affect P. :)

We've made the same faulty logical mistake. This is not a single variable expression. Further, my assertion was not that M CANNOT affect P. It was merely that it DOES not.

BY the way, BS Actuarial Science, though Abstract Math was my lowest math grade ever.

deepcgi says

bounds of US Federal Law - let alone within the bounds of international law

The Fed was the System's idea -- loose Congressional and White House oversight, but not control.

as for international law, LOL, Kuroda would be a Class A War Criminal if such a thing existed, and the PBC should be sent to Nuremberg.

All we have to do is keep claiming that there is no inflation, even though our favorite asset class in constantly inflating. We fight over the definitions of the terms inflation and deflation, but we certainly know that when those assets get hurt, that they are most definitely DEflating (having never INflated in the first place). BB. you are right. There being no rule of law with the Central Banks. That is why there can be no oversight, but also why we are headed for Bastille Day and mass defaults. Multimillion dollar real estate holders hiding their powdered wigs, carrying pitchforks and shouting that they need their deflating asses covered by the man. Take from 'the rich', give to 'the banks', make the poor subservient to the banks, let entire asset classes inflate while screaming 'there is no inflation'. That mantra stops working when the poor realize they ARE 'the man'...The man of last resort.

It's better for everyone if we keep the secret that the Picasso hanging in the corner is a fraud, right? If word got out...think of all the horrible "deflation".

The interest on all of the debt must be dealt with. That is the 17 trillion pound gorilla which can't be ignored. The fatter he gets, the more difficult it is to hide him. (don't tell anyone that the gorilla painted the Picasso. sshh)

There has been a ton of oil money flowing through Canada over the past 6 years. That must sting a bit right now, yes? Maybe a little 'deflation' pressure? Yep, time to short those Canadian financials.

deepcgi says

The interest on all of the debt must be dealt with

The endgame is MMT.

So yeah, buy land.

You mutts need to get your story straight.

Japan is on QE 27 as well

"QE is supposed to create inflation"

I dissagree. It doesn't affect the degree to which money is lent out for normal business ventures. Especially at such low rates. Maybe it could be seen as warding off deflation.

Negative interest rates aren't really an option, so they try to do what they can. . .

marcus says

Negative interest rates aren't really an option, so they try to do what they can. . .

Yes they are...

Inflation by definition is an increase in the money supply.

Price increase is a manifestation of inflation. Inflation has manifested itself in housing and the stock market and art

indigenous says

What exactly do you think this graph is saying? Prices of some things rise faster than others--that's certainly earth shattering.

indigenous says

Yes they are...

Inflation by definition is an increase in the money supply.

Price increase is a manifestation of inflation. Inflation has manifested itself in housing and the stock market and art

Inequality has manifested itself in those assets that the 1% buys.

That there has been inflation especially in tuition,medical care, and energy.

tatupu70 says

Inequality has manifested itself in those assets that the 1% buys.

Wrong, those are the areas that government meddling has removed price discovery from the market.

QE is the practice of the Art at saying "Inflation be damned, there is no Inflation!".

How can you ask such a rhetorical question.

indigenous says

Wrong, those are the areas that government meddling has removed price discovery from the market.

Government meddling has removed price discovery of art?

tatupu70 says

Government meddling has removed price discovery of art?

That's right

Call it Crazy says

Where would the population be if vaccines, antibiotics, chemotherapy, antivirals, cardiovascular, and a whole slew of other developed drugs if the pharmas weren't able to recoup their costs of development/research and were forced to sell at the prices you wish?

Big Pharma made $84 billion last year in PROFITS. Maybe, just maybe, they would be OK even without protection?

http://thinkprogress.org/health/2013/04/08/1835991/big-pharma-billion-profits/