I’ve seen a number of things about “Quantative Easing” around the Internet recently. I’ve been told that it’s totally not just printing money, but it still sort of looks like printing money. These bears agree:
(via Matt Taibbi).
Judge Posner calls the term “Quantitative Easing”:
a pompous, uninformative term for a central bank’s buying debt (bonds, mortgages, commercial paper, etc.) in quantity in an effort to depress interest rates in order to stimulate economic activity. Recently the Federal Reserve began buying $600 billion (for starters) worth of long-term Treasury bonds. It is buying them with money that it creates by a computer stroke. That money will expand the money supply relative to the output of the economy and thus (depending however on how rapidly the money circulates) increase inflation, which in turn will reduce the burden of fixed debt and, it is hoped, thereby encourage people to spend more.
Taibbi notes the aspect of the process that looks an awful lot like a subsidy to Goldman Sachs. Among other thing, instead of using the new money to buy Treasuries directly from the Department of the Treasury, it goes through Goldman Sachs under conditions pretty much guaranteed to have the Federal Reserve buying them for the worst possible price.
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