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Ultimately, the QE Solution
Posted:
Fri Aug 28, 2015 8:42 am
by IdahoCopper
This is how I think it will resolve.
The Fed has pumped a whole lot of money into the economy these last few years, and they probably aren't done yet.
All that money must go somewhere. It has been ending up in equities in the stock market.
How do they keep hyperinflation from taking hold? By evaporating all that money in a stock market crash.
Yup, that is likely the plan.
Re: Ultimately, the QE Solution
Posted:
Fri Aug 28, 2015 8:15 pm
by plus1hdcp
Interesting angle, I haven't been able to think of a way for the Fed to head off hyperinflation.
Re: Ultimately, the QE Solution
Posted:
Fri Aug 28, 2015 8:35 pm
by wheeler_dealer
My understanding was QE was the vehicle the government used to recapitalize the banks. Create credit to loan to banks, once banks were stable ( government loans at zero %), banks then used these funds to buy government debt at market interest payable to banks. These government treasuries became secured assets on banks books.
Banks were saved by taxpayer guaranteed loans. Excess capital was available for banks to make loans which were only available to credit worthy customers.
Net result-banks were saved by government/taxpayer. There really wasn't huge amounts of cash created.
Re: Ultimately, the QE Solution
Posted:
Sat Aug 29, 2015 9:07 pm
by franklin
The banks had to have benefitted from it since there is a branch popping up on every corner here in SE Texas. Anc I am usually the only one inside whenever I visit, leaving me to wonder what the employees do all day.