Debt Bomb?

[Hoonose]

Originally Posted by TRex2

Government or central banks, dumping large quantities of money into the economy, whether it is by "Quantitative Easing," Zero Interest Rate Policy, Covid Relief, debt forgiveness or Guaranteed Basic Income (the worst of the worst) are inflation drivers that cannot be overcome by hiking interest rates. At most they can blunt the effect, but they will also drive us deeper into an undeclared recession.

Almost all "debt forgiveness" programs are also unconstitutional.
(Frankly, several of those other things are, as well.)

Massive QE moneys were not so much an inflation driver as predicted by conventional economists. Because so much of that newly created money stayed in banks as excess reserves. There were simply not enough qualified borrowers at the time. QE did tend to lower rates as intended to counter the recession.

[TRex2]

Originally Posted by Hoonose

This is just not true. Interest rates do not control the prices of so many items in our lives and businesses. High rates do tend to suppress borrowing and business, but they are not the be all end all. For instance, rates have about nothing to do with my life or reduce my spending. And I surely cannot be alone. About all I get is more return on my fixed income. So I have more money to spend. And that doesn't sound deflationary.

Higher rates have been a benefit to much of the middle class and in some ways helping to drive our economy.

https://www.msn.com/en-us/money/mark...de7633aa&ei=31

You do not seem to understand the forces at work, which is not surprising, since many of the pseudo experts of today fail to understand them also.

The article you site does not support your assertion, BTW.

Originally Posted by Hoonose

Massive QE moneys were not so much an inflation driver as predicted by conventional economists. Because so much of that newly created money stayed in banks as excess reserves. There were simply not enough qualified borrowers at the time. QE did tend to lower rates as intended to counter the recession.

If you are talking about the QE used in 2008-2012, you might have a case (although there is a counter case, that it just prolonged the problem), but the various stimuli dumped into our economy had a synergistic effect of driving inflation, especially with the bank deposit reserve requirement set to zero. This means, essentially, everybody has an unlimited amount of available cash to invest. The odds of some sort of market bubble are 100% in favor.

https://www.federalreserve.gov/newse...g20231127a.htm

https://cepr.org/voxeu/columns/money...ating-evidence

https://www.investopedia.com/article...arry_trade.asp

Excess monetary stimuli is one of three primary inflation drivers. The other two are energy (especially fossil fuels, the effect of which is exacerbated by the push towards "renewable" energy) costs and government spending (which will soon be driven by excessive government debts).

.

[Hoonose]

Originally Posted by TRex2

You do not seem to understand the forces at work, which is not surprising, since many of the pseudo experts of today fail to understand them also.

The article you site does not support your assertion, BTW.


If you are talking about the QE used in 2008-2012, you might have a case (although there is a counter case, that it just prolonged the problem), but the various stimuli dumped into our economy had a synergistic effect of driving inflation, especially with the bank deposit reserve requirement set to zero. This means, essentially, everybody has an unlimited amount of available cash to invest. The odds of some sort of market bubble are 100% in favor.

https://www.federalreserve.gov/newse...g20231127a.htm

https://cepr.org/voxeu/columns/money...ating-evidence

https://www.investopedia.com/article...arry_trade.asp

Excess monetary stimuli is one of three primary inflation drivers. The other two are energy (especially fossil fuels, the effect of which is exacerbated by the push towards "renewable" energy) costs and government spending (which will soon be driven by excessive government debts).

.

https://www.cnn.com/2024/05/01/succe...lds/index.html

I was referring to post 2008 QE. Post Covid QE was as you described had a more more conventional outcome.