Why QE Didn’t Cause Hyperinflation

[2centsworth]

No one in this thread is speaking any English tbh. For the slow guy here:


What I'm gathering is that China is acting as an effective buffer to hyperinflation and it is one of the reasons why we will likely not see any?

Oversimplified I'm sure.

I would argue, yes, in the short-term. However, china's own battle with inflation and pressure on the chinese yuan may eventually lead to inflation here. Not to mention, oil prices ing is naturally inflationary.

Lastly, and to answer El Nono's question, there are currently no viable alternatives to the us dollar considering the dollar is the worlds reserve currency. We shouldn't take our reserve status for granted or abuse its privileges.

[RandomGuy]

I would argue, yes, in the short-term. However, china's own battle with inflation and pressure on the chinese yuan may eventually lead to inflation here. Not to mention, oil prices ing is naturally inflationary.

Lastly, and to answer El Nono's question, there are currently no viable alternatives to the us dollar considering the dollar is the worlds reserve currency. We shouldn't take our reserve status for granted or abuse its privileges.

Yup.

Oil acts as a "tax" on moving things around.

At some point it is far cheaper to simply move the raw materials to a factory that is very close to the source of consumption.

That will mean a rebound in manufacturing that is precisely what seems to be currently happening, and projected to continue, for a lot of reasons, some of which are unrelated to oil, but related to higher labor costs in China.

[Winehole23]

http://pragcap.com/why-is-there-defl...tion-forecasts

[Capt Bringdown]

Michael Hudson: America’s Deceptive 2012 Fiscal Cliff – Part 3

The Federal Reserve’s three waves of Quan ative Easing since 2008 show how easy it is to create free money. Yet this has been provided only to the largest banks, not to strapped homeowners or industry. Ben Bernanke’s helicopter only flies over Wall Street to drop its money. An immediate $2 trillion in “cash for trash” took the form of the Fed creating new bank-reserve credit in exchange for mortgage-backed securities valued far above market prices. QE2 provided another $800 billion in 2011-12. The banks used this injection of credit for interest rate arbitrage and exchange rate speculation on the currencies of Brazil, Australia and other high-interest-rate economies. So nearly all the Fed’s new money went abroad rather than being lent out for investment or employment at home.

U.S. Government debt was run up mainly to re-inflate prices for packaged bank mortgages, and hence real estate prices. Instead of alleviating private-sector debt by writing down mortgages in line with the homeowners’ ability to pay, the Federal Reserve and Treasury created money to support property prices – to push the banking system’s balance sheets back above negative net worth. The Fed’s QE3 program in 2012-13 created money to buy mortgage-backed securities each month, to provide banks with money to lend to new property buyers.

For the economy at large, the debts were left in place. Yet commentators focused only on government debt. In a double standard, they accused budget deficits of inflating wages and consumer prices, yet the explicit aim of quan ative easing was to support asset prices. Inflating asset prices on credit is deemed to be good for the economy, despite loading it down with debt. But public spending into the “real” economy, raising employment levels and sustaining consumer spending, is deemed bad – except when this is financed by personal borrowing from the banks. So in each case, increasing bank profits is the standard by which fiscal policy is to be judged!

Part 1 | Part 2

[Winehole23]

So, five of the seven deflation types are in place today. In addition to worker dismissals, cuts in wages and hours worked are being used to reduce labor costs (wage-price deflation). Commodity prices continue the decline that started in early 2011 (commodity deflation). Excess inventories threaten even lower housing prices (tangible-asset deflation). Stocks are overdue for a decline when investors realize that weakness in global economies can’t be offset by huge injections of liquidity by central banks (financial-asset deflation). And the dollar appears to be reasserting its traditional role as a haven (foreign-currency deflation).


If persistent excess supply and weak demand for goods and services cause the CPI and the producer-price index to fall 2 percent to 3 percent per year, as I expect, those who predict inflation will be in for a big shock.

(A. Gary Shilling is president of A. Gary Shilling & Co. and the author of “The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation.” The opinions expressed are his own. This is the fifth in a five-part series. Read Part 1, Part 2, Part 3 and Part 4.)

http://www.bloomberg.com/news/2013-0...aken-hold.html

[boutons_deux]

http://www.bloomberg.com/news/2013-0...aken-hold.html

right-wing assholes here were hyping hyper-inflation, along with Repugs, as why not to support/increase Barry's stimulus.

They were and are still wrong on that and other economic stuff, like the deficit being an immediate problem that needs immediate, extreme austerity, the govt can't create job and wealth, etc, etc, etc.