What has Trump done now?

[onetrack]

Now, all we need, is to get Nomadpete to do proofreading on his posts! 😄

[red750]

If I post large tracts of text, it's most likely copy and paste.

[facthunter]

My NEW Keyboard is too sensitive and  I always have to edit it. Funny? This time I didn't.  The Bl@@dy thing started reading the Posts about 10 Minutes Back. Nev

[nomadpete]

1 hour ago, onetrack said:

Now, all we need, is to get Nomadpete to do proofreading on his posts! 😄

What ?

You poor misguided man.

[red750]

1 hour ago, facthunter said:

My NEW Keyboard is too sensitive

I hope your shift key is not too sensitive. We GET enough UPPER case letters when NOT necessary.

[Marty_d]

4 hours ago, pmccarthy said:

Jerry is either a skilled typist or he has mastered voice-to-text. Good on him!

He is a cunning linguist.

[nomadpete]

2 minutes ago, Marty_d said:

He is a cunning linguist.

Doesn't that just 'roll off the tongue!'

[Jerry_Atrick]

2 hours ago, Marty_d said:

He is a cunning linguist.

I do try..

 

 

[Jerry_Atrick]

15 hours ago, nomadpete said:

But the seemed to loint out that quantitative easing, when added to the interactions you listed, can bring about some big financial swings

QE is a monetary policy lever that is uysed by central banks. It is where the central bank authorises printing of money to purchase the government debt already issued and usually held by private institutions. It is used to, in a more controlled manner than printing money and sending it straight into the hands of people to spend, increase the money supply in a drip feed way and stabilising the financials system.. It works well when done in moderation, but the deployment post GFC was, in the end, maintained for too long; well after the financial systems stabilised and credit markets flowed nicely again.

 

The problem was they bought the bait that the financial markets become dependent on QE and the new money should still flow. Once stabilisied, you can withdraw QE in a gradual basis and allow the system not to rely on new money after a while. 

 

But what happened is that, after a while, when it was no longer needed to stabilise the money markets and other elements of the financial system, it became just another stimulus package and it contributed to inflation. 

 

Hindsight is wonderful.

Edited 7 hours ago by Jerry_Atrick

[onetrack]

I was always under the impression, anytime you printed a lot of notes without the necessary asset or productivity backing, you would only end up with a bad dose of inflation.

[Jerry_Atrick]

Normally, it does. It is when, why, and the way it is used that makes the difference. 

 

In the case of the GFC, the banks were largely on their knees. They had burned through their capital ratios and hand nothing left in the banl (a capital ration is the ratio of cash and cash like securities held compared with loan and other exposures on the books - more or less). There was a cred crunch at the time, which meant the money wasn't flowing between the banks. Banks need money to survive and the money markets help the banks manage their cash flows amongst other things. 

 

So, banks were burning though their cash at an alarming rate and a few did fold. 

 

So, QE was used to purchase government debt (and some high grade commercial debt) from the banks. The money to the government had already been lent, and the money provided to the banks helped them stabilise their balance sheets not increased their lending capacity. I think the RBA went one further and slowily cancelled the federal government debt that it purchased, but don't quote me on that.

 

Because the banks needed the cash to stabolise the system, while money was added to the money supply through quantiative easing, nothing was really done with it that created a credit multiplying effect.  However, it only lasts a certain time before it does create a credit multiplier effect (a lot longer in this case than many economists projected).  Part of this is because the divisions of the banks that were the beneficiaries of QE by selling their government debt in the open market were parts of the banks that don't really lend to individuals nor small/medium business enterprises. It is usually very large corporate grade stuff and mostly government lending. This meant the government had a ready supply of cash available, partly to cover the cost of the bank bailouts (I know Australia didn't have them), but also to lond to those where eother the spend budget is already known (government) or where they will invest rather than consume. 

 

But, as you could see, time eventually runs out oin that space as well, and the dollar devalued (which is what happens with inflation).

[nomadpete]

6 hours ago, Jerry_Atrick said:

I do try..

 

 

Do it right or it might be in bad taste.