Posted on 10/13/2013 4:24:18 PM PDT by whitedog57
Take it where?
$85 billion per month in checks that are being written to “somebody”;
Checks are being written to the banks.
They get cash earning 0.25% and give up, bonds earning 2%-4%. Sounds like the banks are losing here.
all of a sudden “somebody” isn’t getting $85 billion per month - they’re going to notice.
Yes, banks will notice more interest income.
Why does ending QE put us into depression?
Thanks.
I enjoyed our banter.
5.56mm
Yes, it’s always fun when you make silly claims.
The loony left only wants people to see only the doom'n'gloom in your post so as to believe Obamanomics is business as usual. It isn't. Before '09 people worked less and less because they could --they were earning more and more. Since '09 the reason they're not working is they can't. There are no jobs.
The loony left has presented a situation entirely different from what we've had in the past, this is something posters on a conservative forum need to remember.
Somehow it's hard to believe that you're really grateful the Fed's printing $85B/mo and keeping us safe from a depression. My bet is maybe you're saying the Fed & wallstreet's our problem and not the loony left's war on business.
If that is your point, then it's crazy.
“you explain why the end of QE puts us into a depression within 3 months”
Removing $85b/month from the GDP (Fed spending) reduces yearly GDP by..... (1020/15893) -6.4%.
2.5 - 6.4 = -3.9% GDP growth.
Healthy recession, not depression.
Removing QE just takes the lie out of the ‘recovery’.
Excluding recipients of QE the 2008 recession never ended. Time for reality to return.
Fed bond buying doesn't add to GDP. If it did, it would have added 6% to GDP when it began.
If the Treasury cut spending by $85b/month, I agree, it would reduce GDP.
The negative GDP growth from removing QE is only the beginning. Once banks are no longer receiving Fed infusions they will need to raise interest rates to make up the loss of income. Adding that to the QE recession would likely cause the depression Kehoe speaks of. Furthermore, when QE is no longer devaluing the dollar there is nothing to prop up the markets, the banks’ balance sheets and suppress interest rates, ergo the markets will tank. No recovery, no credit, crashed markets and lots of debt.
So there will be no end to QE until the dollar is fully discredited and destroyed.
I see your point. However I consider Treasury’s issuance of bonds as deficit spending.
I'm not sure you understand how these "Fed infusions" work.
If you get a chance, tell me how they give a bank income.
The Treasury finances deficit spending, whether the Fed buys a bond from Citibank or not.
“tell me how they give a bank income.”
By giving Fed banks a pretense for issuance of their fiat currency directly to the Tresury which repays them with interest when the bonds mature. The interest on the repayment guarantees the Fed banks profits, ergo it is their income.
Yeah, the Fed makes big money. But we're talking about the profits of regular banks, not the Fed.
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