Metal Sludge Gossip Board

Well

QE2 is upon us. "quantitive easing round 2" , in unencrypted terms, this means "printing more money", (and handing it out to the insolvent banks ).

QE1 didn't work first time around, so lets try it again says the administration, only this time, more, more, more.



Printing money, ehem, 'quantitive easing', didn't work in the Weimar Republic, in Hungary, in Zimbabwe, or basically, anywhere, ever. It just buys time, and ends badly.



What is it that makes grown adults believe that placing different symbols on their countries' units of currency makes them richer, or will improve the economic outlook and/or activity ?

All I can think of is the sovereign debt will be able to be payed back by the US with useless dollars printed by the trillion. I doubt this debt problem could ever be successfully addressed legitimately. http://www.usdebtclock.org/.

This US administration is economically retarded. They're indirectly confiscating peoples' wealth & hard earned savings through inflation.

You're contradicting yourself when you say "it didn't work" and it will weaken the dollar (create inflation).

If QE1 worked, why do we now need another round of it ?
In no way will printing more money strengthen it's value buddy. It's just a simple law of supply & demand.

greedy wrote: This US administration is economically retarded.

You're in no position to call anyone retarded. One of the causes of the great depression was tight monetary policy. FDR turned the economy around by devaluing the dollar by 41%.

Course I am, this is a free country, how does that free speech line go again ? FDR confiscated the peoples gold (real wealth) for just under $21 an ounce, then turned around and revalued it @ $35. He basically stole the peoples wealth and gave it to the FED. Hey, whose tight monetary policy was that anyway ?

They're making it easier for people to pay off their debt.

Yeah, mainly the national government debt, but the creditors aren't happy about it.

It does transfer wealth from savers to debtors.

Great, penalise the earners savers and those financially responsible and have them pay for the goods and services others used when they couldn't afford it. Why don't we all just spend $1 million we don't have, then print the money to pay for it all ? That sentence is almost as bad as the way these morons running the country think.

Deflation would be a disaster. QE 2 is appropriate now.

Yes deflation could be, but when QE2's effects run out, will we have QE3, QE4 until we're all millionaires, spending $100,000 notes on a tank of fuel ?
I'm not saying there isn't one, but I couldn't find a case anywhere where a countries' economic woes were fixed by printing more currency, it has ended badly every single time. What makes anybody think it will be different in the US ? Maybe it's just me that thinks these debt problems need to be fixed permanently rather than printing our way to another 12 month reprieve. No, it's not, these guys are retards.

Edited typo

Quantitative easing lowers the real interest rate and prevents wage deflation.

Hey EYU can you explain this part a bit further?

I understand the real interest rate part but I'm confused on the uh "real" results regarding the wage deflation part.




Edited to add: Ugmo is a fag.

is it weird that I'm learning so much about economics from Sludge? I never studied the subject intently but I've gotta work to understand everything EYU is saying.

In other words, I have no idea if Q1 is good or bad, I'm personally convinced everything to do with the big money is controlled by super smart mathematicians who's job it is to make the rich richer through recession without dumping the poor on the street like in the thirties.

vanitybinge wrote:I'm personally convinced everything to do with the big money is controlled by super smart mathematicians

That's true and that's part of the problem. For a layman's understanding of the illogical foundation of modern finance read, "The (Mis)behavior of Markets" by Benoit Mandelbrot (A mathematician's mathematician). He explains in a surprisingly simple manner why the Gaussian ("normal bell curve" if you covered it in high school math) bell curve (fantastic for "hard" sciences such as physics, chemistry, and even biology) is a poor indicator for anything related to economics (econometrics, if you're so inclined). You don't need a math background to get the gist of it. Take what you pick up from the book and look at the analysis and computation behind risk management. Proceed to shit your pants. Again, you don't have to be a math dork to understand the book. If you're so inclined, you can take what you learned from "The (Mis)behavior of Markets" and follow it up with the even more mainstream oriented "The Quants" by Scott Patterson ("quant" is the word used for the math geniuses who work on Wall Street). This book is written as a typical narrative (i.e. for retards) so there is no way you'll not get it. Even if your interest is mild I recommend these books (in that order).

vanitybinge wrote:...who's job it is to make the rich richer through recession without dumping the poor on the street like in the thirties.

The rich (like the poor) are not a set group of people. Some people make shit loads of money and lose it. Bad investments, poor business decisions, poor investments, hookers and blow, etc. Some poor people work their way up. Education in a high demand field, living below their means and investing wisely (this is why rich people tend to be old, if you work for 40 years and aren't a tool you'll probably be promoted to higher paying positions or jobs as you age), being a professional athlete, winning the lottery, piercing Ugmo's eyeball with a rusty truck (I will pay you 50 G's. Must be on video).

That said, Ugmo is fag.

THAT said, the Fed (I know you're mildly familiar with this institution) fucked up in the 30's by taking a burst credit bubble (sound familiar?) and raising interest rates to "protect" the currency from becoming useless. We are doing the opposite now, hopefully not making our currency TOO useless in the process.


Personally, I have no faith in any of the assholes at the Fed or in our gov't despite their best intentions; seeing as they don't have a crystal ball.

Great post.

Wealth is almost always inherited.

I certainly don't judge the Carter administration on one terrorist action alone. He was a kick ass guy.

Thanks for that explanation EYU.

See if I'm viewing the whole picture correctly.

Stimulus injections give a temporary increase in spending, and this temporary increase is good because it tides over unemployment to some degree for the time being. Producers on the other hand do not view this spending as a viable means of increased demand, thus rather than committing to expanding production and increasing labor and other inputs, any profit they get from the temporary boost is saved for the proverbial rainy day and not reinvested. This lack of spending is keeping inflation low.

From this I gather what you're saying is, keep spending to inflate the currency so people and businesses can pay off their debt. Once their debt is paid off, money that was spent paying off the debt can now be used to buy new goods and services thus expanding the economy.

Is this more or less correct?


Could use explain further the part about import/export and the effect inflation has on it?

EYU and Scoundrel, thanks for the explanations.

EYU, you say we got an extra $100B coming in from outsourcing, and I get that it's importing services and that it's working well, but isn't the argument over outsourcing that we're losing factory jobs in the US because of it? Sure no one wants to work in a factory, but I bet a lot of the 'new' jobs during the Carter administration were in factories.

Like this:
You design a new game system. It goes into high demand and everyone wants it for x-mas eve. With increased demand in a good or service the company & investors involved can spend to produce more games, newer systems, and better products and services. These days the work done here in the US is mostly R&D, drafting, marketing, transporting, warehousing, and sales.

How many jobs are there in producing the plastic case, wiring the circuits, cutting the styrofoam, running tape, printing labels? This is more than just factory jobs too. Production, packaging, testing, and a good deal of R&D is done overseas nowadays. Each little part of the puzzle you give to the Asians you take away from a hundred or more Americans.