The hope was to lower interest rate to boost investments into productivity and growth, but companies just took out cheap loans to issue dividends and buybacks instead, inflating the financial markets; consumers took out loans to buy houses, inflating the housing market.

@19billdong96

2 жыл бұрын

Yep the companies just took the money and transferred it to shareholders instead of building plants or investing in R&D

@baronvonlimbourgh1716

2 жыл бұрын

This is an issue created by the masive deregulation and tax reform that has been going on the last 40 years. These things should simply not be possible, and if they wheren't posible it would have flowed into the regular economy.

@azmodanpc

2 жыл бұрын

How can banks buying bonds, stocks and other financial assets be inflationary? It only makes the 1 per cent even richer and that's it. It creates stock bubbles and buybacks that have no effect whatsoever on the real economy. Japan learned it the hard way.

@rowinrowinson8455

2 жыл бұрын

Gross fixed capital formation in the US is at record highs and has increased from 1.136 trillion dollars before the pandemic to 1.268 trillion in Q4 2021

@joecurran2811

2 жыл бұрын

@@azmodanpc I think that's what they meant when they said 'inflating'.

At this point it's no brainer to click your videos. Hoping to see more of them and educate ordinary people like me😄

@rexmann1984

2 жыл бұрын

This is justification of money printing. Not sure I'd call it education...

@thecallankids4718

2 жыл бұрын

@@rexmann1984 enlighten us

@henk-3098

2 жыл бұрын

Yes, but remember that there are always multiple ways to look at things and one channel doesn't hold all the answers.

@Aaron565

Жыл бұрын

@@thecallankids4718 Its an outright farce that deflationary economies slows the velocity of money. Gold was the standard, and a far more successful standard for far longer than inflationary economies have existed.

QE is still absolutely terrible. Asset prices go up... nothing else ever had such a terrible effect on wealth inequality. It's a giant wealth transfer from the lower to the upper classes. And that only because governments got hooked on low interest like drug addicts and now can't get off without withdrawal symptoms.

@generalsalami8875

2 жыл бұрын

Absolutely true! Inflationary credit expansion has many *MANY* consequences. It misallocates resources to undemanded/lesser demanded ventures, & at the same time as higher order production (thereby distorting the structure of production, through heightened time preference). Monetary expansion also creates a dependency on continuous overvaluations. Not to mention distorts price signals; because of relative price stickiness, unequal velocity within different sectors, circular demand within scarce demanded goods (assets), & the cantillon effect (which outpaces wages). Speculation also increases as lesser educated consumers spend & borrow, thereby exacerbating volatility & the misallocation of resources. When these ever-growing malinvestments inevitably must end, & the spigots of cheap credit are cut, a _'deflationary death spiral'_ must ensue. You *have to* allow resources to be freed up, consumption to be detered, & then properly allocate them to where they're demanded. If not, you're only exacerbating the inevitable. Market set interest rates & a scarce divisible currency naturally fix this. Lenders & borrowers must compete for *scarce* savings. Through sound credit standards, based on proper price signals, these funds are allocated to demanded ventures. In direct proportion to how demanded they are & how much consumption is detered through saving. Since there's no inflationary effects, our time preference of consumption & production is balanced, thereby allowing projects to reach their full potential. Artificially cheap inflationary credit interferes with needed corrections & exacerbates structural issues. We need to raise rates (default if need be) & let the market properly restructure. Building up our productive capacity is the only way to viably get demanded goods & services. *There's no shortcut.* Mmters also define 'inflation' differently, which leads to a lot of confusion in the debate over their stupid policies. They define it as the *cpi,* & a *terrible* measure of it at that. There's obvious problems with this, as different (numerical) prices can be affected differently by monetary expansion. Prices could drop, rise, or stay in various sectors. What you're not factoring in is *opportunity cost & foreign investment.* Prices would've been lower had we not intervened. Foreigners finance our reckless spending. We get most of our produce from imports & don't produce much of anything, especially that the world demands. Nor do we have any plan to in the future. Our trade & budget deficit is only going up. In other words, our entire economy is a bubble built on inflationary credit, at the world's expense, & we have no surplus coming anytime soon. The world would abandon us...if their job markets weren't built on fueling consumption. Plus they have a huge amount of public & private dollar-denominated debt, & will get sanctioned out of the global economy if they don't comply with the US's wishes. That or we pull Bush & invade in the name of _'fweedom'._ It's a global monetary order that should break down. Since it's conception real wages have relatively stagnated, productivity has worsened, & the only way out of further global deterioration is to swallow the painful medicine of a credit crunch & freer markets. The longer we wait, the harder it will be to correct these malinvestments & put us on a better path.

@cs21uncc

Жыл бұрын

@@generalsalami8875 yep! ...since 2020 march..the fed dropped the reserve requirements for banks to zero. Banks do not need money to lend...they are creating money from nothing. ...media wants to blame governmetns...but its really the banks causing massive inflation.

The massive financialization we're seeing today is really concerning. With such a small portion of all created wealth going into productive economy it calls into question the current economical orthodoxy. With the decoupling of financial markets and the real concrete economy we should raise the question "why aren't the financial markets more controlled?" afterall the real economy will bear the damage when the casino goes under... It would also be a good source of direly needed taxes that could in turn be spent for example on fighting climate change, something the financial market will never do.

@paritoshdaurwal9484

2 жыл бұрын

Is that your real surname Bcz your comment is savage 👍

@joecurran2811

2 жыл бұрын

Political incentives

@whaha

2 жыл бұрын

Yes, monetary reform is needed.

@disser3849

2 жыл бұрын

Financial market never really "decoupled" in the sense. When interest rates go down present value of discounted cash flows go up > valuations go up. But I am interested in how you measure the "wealth" that is going into the "productive economy"?

@AmySavage6

2 жыл бұрын

@@disser3849 Perhaps I should've noted my European perspective. Noting the stagnant investments and growing financial sector would to me indicate a loosening connection between the financial and productive sectors of the economy. I'm also approaching this at a national level, so flatlining investments don't mean that corporations aren't investing at all, just not locally. If we take a global view the connection is of course stronger, however I'd still argue that purely speculative financial instruments are siphoning funds that would otherwise be invested productively.

Great video! Already 2007-2008 some very good economist said that the effect of QE will be small, but it was one of the few tools that central banks had and have. The problem was that governments were not willing to engage proper(huge) fiscal stimulus to stop the regression and crisis. Central banks were trying to do governments jobs in order to save the economy.

@SomeoneCalledJoshua

2 жыл бұрын

Exactly this and this is also why QE is actually deflationary. It makes it easy to borrow to buy financial assets which people will do because they believe stocks and real estate only ever go up (based on 20th century trends), but it only makes the real economy more fragile because people's deposits get lent out to underpin investments with rapidly deteriorating fundamentals. This will not end well. One 2008 style market correction and we are probably entering high deflation that won't be addressed by anyone in the current framework. But hey, the money printer go brrr meme is too convincing for people to want to understand the farce QE is deeper.

@baronvonlimbourgh1716

2 жыл бұрын

@@SomeoneCalledJoshua deposits do not get lent out though. QE is designed to keep fhe money supply from deflating since major economies did engage in masive austerity during and right after the crash.

@rowinrowinson8455

2 жыл бұрын

the current inflationary episode is to a large degree caused by the reckless crazy lockdown stimulus. Retail sales in the US rose by 17% in 2021 of course there is inflation and shortages everywhere

@stnbch3025

2 жыл бұрын

The problem is that the theory and principles are swiss cheese.

@baronvonlimbourgh1716

2 жыл бұрын

@@rowinrowinson8455 i's more a shift in expenditure i reckon. People spending more on physical goods. Stimulus really wasn't enough to cou t for 17% of extra retail spending, especially since it replaced a lot of peoples income instead of adding to it.

Yes, but…; Housing is both an asset and a basic need backed by debt (and then indirectly by QE). Interest is a financial cost, but the price hike in property must also be covered by the property owner. The owner can be a company OR an individual with wage income only. Given very different accounting and taxing practices between companies and individuals, how can QE *not* still contribute via property debt and differences in income taxation models? Greetings from 🇳🇴👍

@RaphaelAltieri

2 жыл бұрын

Good point...

@SerifSansSerif

2 жыл бұрын

More than that, loans only help those that can get them... Meaning the people who are already asset heavy.... Which is probably exacerbating the K shaped recovery that was talked about before, and also might be why all the damned headlines ask "Why are americans unhappy? The GDP is up, there's residual savings, and wages are up and...." ...... And they are all forgetting that the disparity amongst the classes has been skewing the data for decades now.......

@musiqtee

2 жыл бұрын

@@SerifSansSerif Good point. That’s why I mean my country Norway has a “luxury” problem - since the wage taking class is “wealthy” hence well educated with student loans, the debt spread is huge. Still, as of now a median wage person can no longer afford to own housing. Until 1990 it took ca 2.5 X wage to buy, today 5-10 X wage. To the point, this was before the general inflation started last year.

@markdin2988

2 жыл бұрын

@@musiqtee is there a supply problem?

@musiqtee

2 жыл бұрын

@@markdin2988 Yes, but not much due to lack of logistics workers locally. Govt. has lifted all restrictions (like Denmark). We have very little domestic goods production except basic raw materials (oil, fish, stone, timber, now electricity etc.). Agriculture dwindles, but imports are walled out (tariffs). Locally inflation is also driven by new cables exporting electricity. This has never happened before, so our world-low hydro e-prices are record high, and will remain so. People are “told” to blame EU, not profiting international companies - and drift towards voting right. It’s unexpectedly precarious, but then just like most other countries. Major difference is that many home economies are financialised (create holding company to buy property and fin. instruments). Wealth is therefore very uneven, also fairly new in our “rich” country…

The concept of asset price inflation vs consumer price inflation very well explained to me how QE barely impacted its economic target (consumer price inflation), while it did create a massive, arguably negative economic byproduct (asset price inflation). I would love to see more on how these concepts are interconnected and influence the performance of an economy. Thanks for your video!

Keep up the good work! The bottom line is that governments, banks, financial institutions and business do not trust each other and are not honest and responsible and mostly looking after themselves and their interest caring little about the well being of others. The way modern money systems are designed and structured, the money will always be devalued over time. It is a lot of “smoke and mirrors” with some “linguistic acrobatics” to invent terms like “Quantitative Easing” which are just some words which really mean “Loan Forgiveness”. It does not matter if the inflation rate is high or low or what caused inflation, the money will always be devalued over time or you can also say the money will have less purchasing power in the future. Even if some items go down in cost, overall, the money will always have less purchasing power in the future until there is some type of reset and the cycle is repeated. The solution is to eliminate corruption in the system and criminal activity in the economy which is easier said than done and I am not even sure if this can ever be accomplished but we should not give up trying.

@cs21uncc

Жыл бұрын

Occupy walstreet tried to do this...Only very few politicians are willing to stand up to the Oligarchy that run the system. Its not about we the people.its about we the corps/banks. Ron Paul and Bernie Sanders are the only ones that have said audit the fed..and they get laughed at.

Well said as always. Would love to here your thoughts on central banks ‘floating’ interest rates and taking a step back from market intervention

Hey Joeri, do you know anything about Japan's supposed "hidden inflation." Basically, companies are embarrassed and shamed into not increasing prices. So instead, they pull a product line, make it more cost-effective (smaller quantity, cheaper materials, higher price, etc.), then rebrand and rerelease it. If this is true, how would it effect inflation figures from that country?

@astroNexx

2 жыл бұрын

Boom

@Aaron565

Жыл бұрын

It would simply delay the true inflation rate from being immediately noticed. Much like the historically quoted "2%" inflation, it never existed in actuality and was always much higher.

Thank you for posting this.

I think the mistake that central bankers made is by assuming a closed system. Consumers won't spend more than they have to, and consumer / financial asset spending are opposites. So someone who buys an expensive house has less to spend on other stuff. So they buy cheaper stuff. And that cheaper stuff comes from China. And businesses react to demand, shuttering all the "higher quality" products that are made locally. And this all happened because china was absorbing the inflation by depreciating the currency (cheap exports) and preventing Chinese citizens from investing overseas. Now they have an overheated housing market (and government) because they've been blackholing inflation with no outlet.

You also have to take into account that the USA can have much more money mass in circulation than any other country since oil is sold exclusively in dollars

The simple fact is that QE inflation didn't affect prices for goods, services and labour, affecting CPI, because the money being injected out of central banks never got out of the asset market. What you got was an asset bubble, just like the last asset bubble. You only get price inflation when the volume of fiat currency dumped on a market exceeds the ability of that market to meet the demand generated for actual consumable goods, labour, etc. And during the long recession after 2008, the problem was never insufficient productive capacity, it was insufficient *demand*. Consumers couldn't afford to buy all the things that were for sale in the market. We're now in the opposite situation. Demand is strong, for labor, goods, and services, but the ability of manfacturers to meet that demand is severely hampered due to two years of COVID lockdowns, and the resulting bankruptcies of many businesses which might have been able to help meet that demand. In both cases, Central Bank policy never had a prayer of addressing the underlying problem, because Central Banks can't dispense money to households back when demand was slack, and Central Banks can't build container ships or silicon fabs or train truck drivers or tap oil wells now. The tragedy here is that we continue to expect the Central Bank rain dance to fix problems which are simply beyond its power to affect, and always will be, and the only force and effect iis to pad the wallets of the investor class, because that's who has the most influence on Central Bankers and the elected officials who appoint them. The Fed isn't raising interest rates because they think it will help businesses scale up production to meet rising demand. Theyr'e raising interest rates to protect the bottom line of lenders.

I love the channels you recommend, they are such gold, thank you my friend.

Wow that was a GREAT video thank you for your research. More people need to watch this.

The CPI is not accurate in any way, shape or form. You're not making the average pay in the US if you don't see it.

@joecurran2811

2 жыл бұрын

It doesn't even include house prices ffs.

@Junebug89

2 жыл бұрын

@@joecurran2811 Because houses are (somewhat regrettably) an asset. They are "consumed" differently than general consumer goods.

@joecurran2811

2 жыл бұрын

@@Junebug89 it's doesn't include mortgage repayment or council tax either.

I agree with almost all points. In western economies, it is clear, as you've mentionned, that the financial sector has become much more dominant that the goods one, and the financial market is very clearly inflated and well above it's actually market value. In my perspective this means that a recession is eminent as the market seeks to balance itself around it's real value, but the central banker tell us this is terrible as it will lead to debt deflation, which is obviously terrible but the alternative which is huge inequality and the inability to purchage assets for almost everyone is in my opinion worst. I wonder what areyour thoughts on this

@jakeb6703

2 жыл бұрын

I think we agree that on financial market over importance and general crappyness for anyone that doesn't sit on a private equity firm, but I am not sure that "the market seeks to balance itself around its real value" at this point, it certainly SHOULD if you assume it's a functional market, but imho we have been watching market value detach itself from reality for a decade in stocks, real estate and generally speculative assets, culminating in bitcoin, a pure expression of artificial scarcity and "line goes up" being the most important factors

@karimchaffai5922

2 жыл бұрын

@@jakeb6703 That is basic economic, an asset obey the rule of demand and supply which means that the assets will should hover around it's stable point, it's real market value. But as you've stated that is not the case and that is quite simply because the market is not allowed to function properly. Goverment intervention has resulted into the situation we find ourself in, and for example when the market attempted to correct itself in 2008, the goverment implement further inflationary policy to stop the 'recession'

@whaha

2 жыл бұрын

This inflation will be followed by deflation. Like others are saying too.

@stnbch3025

2 жыл бұрын

@@karimchaffai5922 Basic economic theory is swiss cheese. Real world economics is manipulative. The fact you paint a picture that the market has any agency to correct itself or that supply and demand is a rule that assets obey is proof of how manipulative basic economic beliefs are. The market is a thing with no agency. The underlying idea of market forces is a lazy conceptualization of actual human behavior and relational dynamics between actors in the political economy, market and supply chain.

@tacomonkey222

2 жыл бұрын

Deflation isn’t inherently bad, goods become cheaper as technology/productivity improves

Love it. If you want to improve the sound a bit you can add some sound absorption panels stuck with double-sided tape to the surfaces behind and in front of the mic - sound is very good with good tone but there are slight room resonances (which no-one will notice unless they've worked in sound).

Great video

Thanks for the video, I'll have to watch other videos as I am curious what happens when people exit the financial assets and use it for consumer goods..

@iDuelZzz

2 жыл бұрын

I don´t think this is of any concern, the foremost i would expect to happen when people liquify their financial assets en masse, is a deflation of such. Additionally if they don´t end up unable to sell their assets, they also need a buyer reducing the ability to consume of others. At last i would assume it´s questionable that someone after spending years of building wealth just starts spending it all.

@baronvonlimbourgh1716

2 жыл бұрын

Most of it is institutional. And that simply needs to keep generating yield. The consumer part in the asset market is negligable.

In my simple minded way I look at it like this. The central bank created money and gave it to the financial institutions by buying paper assets off them. We in the 'public' out in the economy though, had to borrow this money at commercial interest rates on bank overdrafts and credit cards. During this period of historically low interest rates my high street bank actually doubled the interest on overdrafts from about 20% to about 40%, and also raised the rate on approved overdrafts up to the same as unapproved ones (!), while as much as 40% on a credit card became more common than it used to be! So how can QE really help the public to spend more when they still have to pay very high, even increasing interest rates to use the money? To me it just looks like the abuse of power to profiteer. The banks get the money for free, then charge us even higher interest than before, while moaning that life is tough for them and they need more QE. Meanwhile the big financial institutions by all piling into asset markets at the same time actually push up the value of assets creating a positive feedback loop and potentially a bubble. The interesting thing to me is what happens when QE stops? Why hasn't it caused the bubble to collapse? Does QE become a necessity to prevent financial a crash? Incidentally governments were not allowed to get any of this freshly printed money direct from the central bank as this is now illegal, so they also had to borrow at interest from the financial institutions. Hardly surprising it does not cause inflation. It really looks as if the 2008 financial crash just turned society into a servant of the banks and the central bank into their private money printing press. Still they moan business is too tough for them.

@legallyfree2955

2 жыл бұрын

Yes, I agree with this. The central bankers release public statements about inflation and trying to help the economy but really what they want to do is make themselves rich. Being allowed to buy up assets with money created out of thin air is insane to me. I too wonder what will happen when they stop buying, in the USA they said they would do it last November, yet they have done no such thing the balance sheet is still growing.

Great video! Thanks!

Hi Joeri, i love your economic content. There's numerous studies that quantify QE with asset price inflation. Could asset price inflation with a larger cohort of investors (ie, retail investor dirge during the pandemic), lowering interest rates (both corporate bonds/mbs purchases instead of just treasuries) resulting in records amount of refinances cause an enormous wealth effect unprecedented in previous QE? Wealth effect, freed up capital, driving an upward mobility/ability to increase agregate demand? We are no longer only seeing inflation in products, or the shift there of, but the inflation has spread/broadened to services/wages. Thoughts?

@generalsalami8875

2 жыл бұрын

Cheap credit misallocates resources to undemanded/lesser demanded ventures, & at the same time as higher order production (thereby distorting the structure of production through heightened time preference). It also creates a dependency on continuous overvaluations. Not to mention it distorts price signals, because of relative price stickiness, unequal velocity within different sectors, circular demand within scarce demanded goods (assets), & the cantillon effect (which outpaces wages). Speculation also increases as lesser educated consumers spend & borrow, thereby exacerbating volatility & the misallocation of resources. When these ever-growing malinvestments inevitably must end, & the spigots of cheap credit are cut, a _'deflationary death spiral'_ must ensue. You *have to* allow resources to be freed up, consumption to be detered, & then properly allocate them to where they're demanded. If not, you're only exacerbating the inevitable. Market set interest rates & a scarce divisible currency naturally fix this. Lenders & borrowers must compete for *scarce* savings. Through sound credit standards, based on proper price signals, these funds are allocated to demanded ventures. In direct proportion to how demanded they are & how much consumption is detered through saving. Since there's no inflationary effects, our time preference of consumption & production is balanced, thereby allowing projects to reach their full potential. Artificially cheap inflationary credit interferes with needed corrections & exacerbates structural issues. We need to raise rates (default if need be) & let the market properly restructure. Building up our productive capacity is the only way to viably get demanded goods & services. *There's no shortcut.*

Do you plan on making a video about EU sanctions on Russia in the wake of the Ukraine situation? How these sanctions could affect the Russian economy, what they do and don't do, how would Putin's war chest help him circumvent these sanctions? Thanks for your content!

Wages dont keep up with inflation

@baronvonlimbourgh1716

2 жыл бұрын

That is a regulatory problem.

@axelnils

2 жыл бұрын

Just get a trade union lol

Could QE be roughly equated to stock buybacks, but for government bonds instead if equities?

Did I get your logic right: QE only increased some prices therefore QE failed to increase prices?

@baronvonlimbourgh1716

2 жыл бұрын

Yes. Inflation is calculated by folowing certain prices of certain things. And none of these things where impacted by qe.

@Junebug89

2 жыл бұрын

Inflation is based on the CPI which doesn't include asset prices as those behave differently.

Could you do a video about the Phillips curve?

I think we need an update video on inflation.

Just wondering what you think of Jeff Snider and how he describes the eurodollar system and quantitative easing.

Isn't the problem that the 2% target is only on consumer goods and not a 2% target on everything?

What is the conclusion on who benefits the most from these policies? I guess people with capital, but are there studies about this?

@Money & Macro Hi Joeri! Any chance you will ever make a video on market socialism as a concept (I. E. A worker self-managed economy)? Also, if you can make a video diving into the implications of bounded rationality as opposed to perfectly rational actors when it comes to things like insurance, government negotioned prices, rationing, etc.

The main claim of mmt is that "the only thing to worry about is _inflation_ when offering cheap credit" Which is simply not true. Cheap credit misallocates resources to undemanded/lesser demanded ventures, & at the same time as higher order production (thereby distorting our time preference/the structure of production). Monetary expansion also creates a dependency on continuous overvaluations. Not to mention distorts price signals, because of relative price stickiness, unequal velocity within different sectors, circular demand within scarce demanded goods (assets), & the cantillon effect (which outpaces wages). Speculation also increases as lesser educated consumers spend & borrow, thereby exacerbating volatility & the misallocation of resources. When these ever-growing malinvestments inevitably must end, & the spigots of cheap credit are cut, a _'deflationary death spiral'_ must ensue. You *have to* allow resources to be freed up, consumption to be detered, & then properly allocate them to where they're demanded. If not, you're only exacerbating the inevitable. Market set interest rates & a scarce divisible currency naturally fix this. Lenders & borrowers must compete for *scarce* savings. Through sound credit standards, based on proper price signals, these funds are allocated to demanded ventures. In direct proportion to how demanded they are & how much consumption is detered through saving. Since there's no inflationary effects, our time preference of consumption & production is balanced, thereby allowing projects to reach their full potential. Artificially cheap inflationary credit interferes with needed corrections & exacerbates structural issues. We need to raise rates (default if need be) & let the market properly restructure. Building up our productive capacity is the only way to viably get demanded goods & services. *There's no shortcut.* Mmters also define 'inflation' differently, which leads to a lot of confusion in the debate over their stupid policies. They define it as the *cpi,* & a *terrible* measure of it at that. There's obvious problems with this, as different (numerical) prices can be affected differently by monetary expansion. Prices could drop, rise, or stay in various sectors. What you're not factoring in is *opportunity cost & foreign investment.* Prices would've been lower had we not intervened. Foreigners finance our reckless spending. We get most of our produce from imports & don't produce much of anything, especially that the world demands. Nor do we have any plan to in the future. Our trade & budget deficit is only going up. In other words, our entire economy is a bubble built on inflationary credit, at the world's expense, & we have no surplus coming anytime soon. The world would abandon us...if their job markets weren't built on fueling consumption. Plus they have a huge amount of public & private dollar-denominated debt, & will get sanctioned out of the global economy if they don't comply with the US's wishes. That or we pull Bush & invade in the name of _'fweedom'._ It's a global monetary order that should break down. Since it's conception real wages have relatively stagnated, productivity has worsened, & the only way out of further global deterioration is to swallow the painful medicine of a credit crunch & freer markets. The longer we wait, the harder it will be to correct these malinvestments & put us on a better path.

Please do a video on evolution of leverage of markets vs rates and QE. Another interesting topic would be growth of options trading in the last few years. (Not unlike the derivatives rush before 2008)

Joeri I like your videos alot but i can not agree with you saying that QE did not result in consumer price inflation. yes if you look at the metrics used by the central banks there was no inflation. but every person will tell you that everything has gone up in prices the last 10 years. the central bankers dont want to see infaltion because it will make them stop the free mony. you cant see if you dont look

Ah yes, I too remember those Economics explained/crypto channel videos. Praise Bernanke.

Could you give your opinion on the ideas of Mark Blyth? He is a very popular economist on the internet, so curious to your view

That was a pretty good analysis and most of the time I'm nearly infuriated by anything this channel puts out there. Yep, pretty much, the money did not went where the Central BankS expected it to go. They wanted banks to lend that money, but who's gonna lend money to anything that isn't a Silicon Valley unicorn in 2016+? Why take a risk when you can just dump it like everyone else in the stock market and watch the numbers go up? This perfectly explains the situation of Japan too. You can pump any amount of money you want, if you have a people who are notorious for never changing their ways and who are more inclined to save than consume, unlike their consumption-addicted American counterparts, well of course you gonna have no inflation, but that doesn't mean that money won't end up somewhere else..

@BigHenFor

2 жыл бұрын

Have you ever considered that as the money did not go directly to consumers that in the West at least that it was actually destructive? All it did was flow into the Stockmarket and pump up share values. Colour me surprised? Who did that benefit the most? We have to admit that if, as Mark Blyth suggests, that the Global Economy is like a computer with bad software, that QE was tinkering that made the software worse. Although a significant amount of the inflation is down to shortages arising from the Pandemic, and will ease once production resumes, that there are serious problems in the Global Economy that remain unaddressed. Just giving money to banks won't fix anything. Give the money to consumers to pay down household debt, as financialization is killing consumer demand.

@DF-ss5ep

2 жыл бұрын

Japan had a massive bubble. It is said that at one time the value of the property on which imperial palace was placed was worth more than the entire real estate of California combined.

@TheControlBlue

2 жыл бұрын

​@@DF-ss5ep that was waaaaaaaaaaaaaaaaaayyy before QE, my dude.

@TheControlBlue

2 жыл бұрын

@@BigHenFor Just switch to a currency that politicians, bankers, and lobbyists can't touch, and that can freely expand and contract around the world (unlike traditional currencies), and you will be done with 90% of those problems. **cough** Bitcoin *cough*...

@GreenLarsen

2 жыл бұрын

@@TheControlBlue Yep, lets swap to a MLM.. /s

Exactly right at the End, but you missed the bit where Bernanke stated the main aim of QE was to create a wealth effect, and the secondary aim was to force institutions out the risk curve, and lower the yield curve... If anyone is interested in whats really going on with QE in depth and what it does and doesnt do, you should watch Professor Richard Werner, or read his book the Prices of the Yen.

Event studies assume that the market is perfectly efficient. It doesn't allow for the feedback loops and behavioral biases you've previously discussed on this channel. It also might not sufficiently control for everything else going on in the economy during those specific periods. Economics is hard. What's concerning to me is when inflation is below target they say lowering rates will help combat that, but now that inflation is above target the link is suddenly unclear. Being a central banker is hard and I know they're working hard but the logical inconsistency is troubling to a constituent like me. Howard Marks writes about how policymakers are people too, subject to the exact same biases. Prolonged inflation above target will lead to affordability issues if wages can't keep up. It also penalizes those who save in fixed income assets, exacerbating issues such as the pension shortfall. I hope the inflation is transient.

Thanks for this video. One aspect that differentiate pre pandemic and post pandemic monetary manipulation is that governments started giving money to companies and people as they are not working (or working less). This sounds like the perfect recipe for inflation : inflate currency quantity and give it to non producing, consuming people. In France, the government has created an "inflation handout", that is we give around 100 euros/month to poor people who suffer from rising energy, oil and food prices. There again, sounds like pouring fuel on a fire. I assume the currency is freshly "printed" and the government throws it at already rising prices, without stimulating production and it encourages people to keep spending on these items rather than looking for way to reduce their consumption.

Would you consider doing some what-if kind of videos? Time frame is between now and 2100. Thank you! 1. Eventual global fall in population's impact on wages, prices and supply of goods (say 5-6bil by 2100). 2. Long term sustainable economy with no growth (end to consistent tech improvements) 3. Long term close to 0% inflation (no tech growth, ineffective stimulus)

I'm just here for your calm voice. This guy could tell me the world financial system is about to collapse and I'd be at ease.

I was wondering what you think about the youtuber "Kraut"s new video on "the origins of the Greek debt crisis", could you make a video or comment on that?

Another brilliant video

QE probably even had a deflationary pressure on consumer prices, since asset price inflation of stuff like houses causes people to spend less to afford a down payment on a mortgage.

Can you point out the correlation of Unit Labor Cost and Inflation? Which is totally ignored in mainstream economics

Hey Joeri! Do you know any article about how QE affects climate change? In my opinion QE has worsen climate change as it makes cheaper for companies to invest in resources extraction and to build more goods. On the other hand, it's also true it allows the investment in cleaner technologies at lower cost but at the end if technologies are not matured enough you cannot speed up them as we can see with renewable energies or electric cars.

@dinsel9691

2 жыл бұрын

Our financial wellbeing and our negative environmental impact parallel each other.

What about the increase in the buy now pay later businesses such as square, upstart, shop pay etc? Are the increase of these subprime loans also due to QE and low (0) risk free rates? These businesses allow regular consumers to increase their buying power of consumer goods massively, which is a driving factor of inflation in my opinion.

QE works, but losses its efficacy, so more and more is needed. Housing inflation is real, no matter how much the government miscalculates and ignores it.

Proper time preference requires people to to deter the consumption, acquisition, & utilization of land, labor, & capital in the present for them to be properly bidded off freely on the open market. Savings are usually lent out as well. Depositors, who aren't specialized in the efficient allocation of funds, tend to lend their money to other lenders. These lenders (banks) lend to productive ventures. They pay interest to the banks, & the banks pay interest to their lenders (the depositers). If they're not lent & instead sit under a mattress, then all they've done is freed up land, labor, & capital onto the market & withdrawn monetary units. Since the ones with the most monetary units are demanded ventures, they accumulate more resources (in direct proportion to how demanded they are). Money is divisible. It's value can be split practically infinitely for ever more people increasing in the population, at a sustainable degree. People must compete for those resources & provide value to others. It's value as a currency is represented by the quality & quantity of the goods/services you can buy, & can buy at a later date. This deflation increases people's purchasing power & encourages savings. It's healthy! Saving is good. It frees up land, labor, & capital to be used by demanded ventures through sound lending. You deter consumption today for future production, & thereby more consumption. This stupid idea that nobody would spend has no evidence or logic behind it. People need to spend on necessities. Would you not buy a new game just because it's price will go down in the future? What's the point of money if you never spend it? Each person is at a different point in their lives. The old want to spend the savings they've accumulated over the years, while the youth are encouraged to save. There's still a continuous circular flow of the currency. Necessities are prioritized. This is good. Let's say, for the sake of argument, that nobody ever spent, what do ypu think that does? It hurts business, they're forced to raise prices to have any chance of surviving, & it creates shortages. This encourages people to spend. Even in the most extreme unrealistic scenario it's self correcting. Natural deflation is good.

Great, per usual. I'm curious what you make of the MMT claim that the natural Fed funds rate is 0%, and that it is only higher because the Treasury chooses to issue bonds (which is a policy choice, not necessity). I.e, if the Treasury did not issue bonds to match its deficit spending, the supply of reserves would continue to expand, driving the overnight rate to 0%. You note in the video that natural interest rate on money is 0%- this is MMT's point about reserves. For MMT, Treasury bonds constitute a 'basic income' from the government for the financial sector. You note in your video that low interest rates have caused asset price inflation. Under this framing, what we are doing by issuing Treasury bonds is effectively paying off the financial sector with a safe, interest bearing asset so that they don't invest in riskier assets instead. Just curious on your thoughts.

@thebreadtable4880

2 жыл бұрын

Damn I always felt that way about bonds myself, never knew MMT experts had the same view. Awesome!

@rutessian

2 жыл бұрын

There is no such thing as a "natural interest rate of 0%" just as there is no "natural minimum wage". Ideally they would continually change due to free market interactions.

@thebreadtable4880

2 жыл бұрын

@@rutessian”natural” can maybe be swapped with “most effective.” Nothing in the economy is technically natural, it’s a system we collectively design and shape.

@rutessian

2 жыл бұрын

@@thebreadtable4880 Natural means it arises through interactions between actors in a free market. Artificial means it's set by some central planner.

@thebreadtable4880

2 жыл бұрын

@@rutessian the “free market” is planned. There is not some dichotomy where you have planning socialism vs non-planned capitalism. Life is complex, full of variations and dimensions. There are different degrees of planning and economies have relied on some level of government intervention since before capitalism. There’s a movie on KZread that’s free on KZread called inequality for all. I suggest you watch it, it touches on the whole “planned vs free market” idea while also going into more interesting stuff.

I quick did a regression on US corp rates over 2008-19 and saw a declining slope of 17.5 basis points per year, suggesting QE did reduce long-term rates. QE had the desired effect of pumping up financial markets. Look at the big round of QE in March 2020 made in response to a sudden decline in financial markets. Markets rapidly recovered and went on to create the highest stock market and real estate valuations in US history.

If you are reading this make today an amazing day and keep moving towards your goals. success comes to those who never give up.

@leroyboucher463

2 жыл бұрын

Yeah! Always remember to set a goal in life. That’s the rule

@jacquesfrederic

2 жыл бұрын

Remember its never too early or too late to become smart with your money. Save invest, work do whatever you need to do to grow your wealth.

@flourishmorales5200

2 жыл бұрын

My mother thinks she got a great deal because she gets 0.05% in a money market account through Navy Federal, and get Fiddle Faddle buy 1 get 1 free at Aldis this work so she thinks she’s smart with her money. while I made 25% last year on 750k portfolio investing, I don’t have the heart to tell her she is clueless.

@guntherdietrich7139

2 жыл бұрын

@@flourishmorales5200 Wow that’s cool, I have been looking to start investing recently watching self-tutorialc videos on KZread can you share some tips to start investing for newbie.

@Monikaestor

2 жыл бұрын

@@guntherdietrich7139 Buy stock and hold

Get it going

@Money & Macro Goeie video's! Economisch gezien, op wie kan ik het beste stemmen in Maart (en bij de volgende 1ste en 2de kamer verkiezingen) volgens jou? Heb mijn eigen keuze al gemaakt, maar ben benieuwd.

Clickbait title since all the inflation hawks will swoop down only to find out you meant to say consumer price inflation rather than asset inflation lol. Also I would argue that QE does not cause 'immediate' consumer inflation but instead is a slow drip poison that causes inflation over the long term as assets are eventually converted back into consumer spending when they are sold. It's kinda like giving a billion dollars to a billionaire, he's just going to buy more real estate and property, hence driving up those asset prices first rather than consumer prices. Whereas the opposite happens if you give that same billion dollars to regular consumers, they're all going out to spend it on consumer goods, hence driving up consumer prices first before it trickles back into the hands of the manufacturers and real estate muggles and driving up asset prices. Even so if you gave it to a billionaire, the people he buys the properties from are eventually going to (partially) use the profit they made on their sale to buy consumer goods (though proportionally less so). Hence why it is a slow drip poison that takes longer to settle in. QE does really cause consumer price inflation, it's just a much much longer and slower process that is obscured by the method in which it is used. It eventually slowly drips out of the assets that were bought with it. What you're really doing with QE is dumping money over a very long period rather than a short period because the assets that you buy with it are long term goods that can take decades to cycle in and out. So what's really happened with QE is guaranteed low inflation for decades to come. You've sold the financial stability and health of the future generations for the greed and corrupt financial policies of the current elite. Genius ... but absolutely disgusting and reckless.

@baronvonlimbourgh1716

2 жыл бұрын

But assets do not get converted into consumer spending. At least not enough to make a difference. Most money in asset markets is institutional and that simply needs to keep generating yield. It will never be converted into spending. And most of that yield goes to shareholders and executives who again put nearly all of that yield into markets to generate yet more yield. There is simply a limit to how much billionaires can really spend into the economy. Most of the problems originate from deregulation and tax reform. Not from central bank actions.

@BrutusAlbion

2 жыл бұрын

@@baronvonlimbourgh1716 As I said, it's a slow poison trickle process and not as evident as with regular cash dumping into the direct goods market. "At least not enough to make a difference." Here you make a mistake. Eventually this money 'will' seep back into consumer spending over time, we're talking a really long time here, something like 20 to 40 years. It is ridiculous to think it will always continue to accumulate only in assets. Even if it did only stay here, it would be disastrous because normal housing and assets would be overpriced and unaffordable for normal consumer for the next decades. That's hardly a good thing and will severely depress their savings potential. Where normally there would be 0% inflation, QE would cause just a small bit of inflation in only a few percentiles per year at best. However ... this is going to be long-lasting for the next 20 to 40 years in which case there will be a lot of inflation over time as well as the inability for new comers to join any kind of asset market. When you get irradiated a little for a short time, it's not so bad, but when you get irradiated for a long time even if it's a little, it starts to accumulate and produce cancer. So when you say the inflation is not enough to make a difference, you're only looking at a yearly basis but if you look at it from a generational perspective. You're just creating the hotbed for a cancerous financial system.

@joecurran2811

2 жыл бұрын

@@BrutusAlbion Aren't central banks windong down QE now which will wind down this problem? Why would they do that if it's in the interests of the elite?

@joecurran2811

2 жыл бұрын

@@BrutusAlbion Aren't central banks windong down QE now which will wind down this problem? Why would they do that if it's in the interests of the elite?

@baronvonlimbourgh1716

2 жыл бұрын

@@BrutusAlbion ofcourse it will stay in assets. Where else will it go? That money is the resource for the company, usually banks, that is applied to make a profit. It will either keep making money by collecting yield on it's resources or it will go bust. Companies do not need to retire, they simply get a new ceo and keep going. And if it causes a little inflation that is not a bad thing. Just raise interest rates .1 percent and it has been offset by the central bank. Plus somebody needs to keep the party going anyway. If the borowing stops the money supply starts deflating and we'll run out of money. It is better for governments and central banks to have that on the books then the public.

Forgot to mention a few things. One .The effects of outsourcing manufacturing to countries like China which made goods much cheaper. The second is demographics. Aging populations in the industrialized countries have different spending habits than those where there is a younger population. Older populations spend less and save more.

@SladkaPritomnost

2 жыл бұрын

No one saves if interest rates are 0 and prices soaring

@inferno0020

2 жыл бұрын

people like you are exactly the same people who that whine higher wages for US workers will bankrupt the US and a younger population leads to moral decay and crime spree.

Is there competition between money/lending going to asset markets and money/lending going to consumer markets? So that If asset prices rise sharply due to QE, it disincentivises lending to the real economy because the latter feels unattractive/unsafe (especially when real world is behaving particularly unpredictable, like in a pandemic)? Thereby actually causing deflationary pressure in the real economy? That gets masked by price hikes due to shortages?

@whaha

2 жыл бұрын

Yes, yes, yes, yes!

@hieronymuslarsson1388

2 жыл бұрын

@@whaha Then they should instead penalize lending to asset purchases in times of crisis. What if there was a big war? It becomes more obvious then that it would not be the time for easy-money backed frivolous bidding on stocks and real estate but that actual production needs to happen. Meaning that bank lending/money creation as well as money allocation needs to get seriously focused on productive investments. Even discriminating within the real economy (no luxury car production). So that lending shouldn't only be directed towards real economy, but to the most important parts of it.

you are saving my bachelor thesis with the sources

But couldn‘t a case be made for the current, obviously supply and demand induced inflation being only possible because of the years of QE that came before it? Maybe QE in itself is not effective, but combined with supply and demand shocks it makes the impact of them more pronounced?

Of*

Thanks for the video Joeri. Could it be possible that asset price inflation is linked to consumer price inflation? I personally know of someone that is taking a year off work (sabbatical) and they were only able to afford that because their house went up in value so much. Their employer needs to find someone else to cover for that person and that would put upwards pressure on wages and eventually upwards pressure on the price that is charged to consumers. There is little need to work when it seems that you can buy almost any financial asset and have it increase in value perpetually (of course we both know that asset prices can also go down, not everyone believes that though). Those are my thoughts. I also think that central banks should do more to include asset price inflation in their inflation indexes because housing for example is often one of the largest expenses that many people have, so not including it in CPI seems a bit silly when it has a massive impact on the cost of living for most people.

Its all about the destination of the money, if most loans goes to big companies and already rich people (that wont raise wages) then its not going to be reflected on the price of a pear, a orange or an apple... well maybe in Apple will (badum tssss).

I don't understand what you mean by 0% interest rates causing a 'run on the banks'. Surely the whole idea is to get people to take money out of the banks and spend it?

I think we have to take into account the difference in money base and money stock to understand these days inflation, the money base (money in circulation) increased significantly more than the money stock. This decline in multiple has everything to do with the liquidity trap. Banks accumulate reserves because of liquidity injections, but their risk appetite is still averse, so they don’t invest this in bonds rather hold on the balance sheet, therefore money stock m3 does not increase much but the money base does. This means there is a risk of inflation in the future when the economy starts booming again. This extra liquidity could be used to expand credit. I think what the central bank should have done is redraw liquidity by selling government bonds or increasing minimum reserve requirements to temper inflation.

Why are property prices so high then?

You should move some of these onto Spotify. Then I won’t have to have my phone turned on while I listen to these in the car or at the gym. Great content by the way :) thoroughly enjoy it.

@MoneyMacro

2 жыл бұрын

Thanks. It is on my wishlist as well. It might take some time for me to get all of that in order though.

This is precvisely what Michael Hudson was saying years ago, bailing out wall street not main street. At most QE creates a wealth effect in raising asset prices, though arguably by making asset prices more attractive that could even be deflationary to general consumption.

@gorkyd7912

2 жыл бұрын

I don't understand this video. QE creates rising asset prices. This is the same thing as inflation. QE creates inflation. "Some smart guys say it doesn't." is not an argument.

@schumanhuman

2 жыл бұрын

@@gorkyd7912 In one sense you are right. But when house prices and stocks go up in value a majority of people are happy about it (not renters or 1st time buyers though), as long as it appears sustainable at least, and we don't measure this asset price inflation in CPI etc When, for example, energy prices go up, most people are not happy. But even there, the energy companies and their stock holders might be doing very well. Basically, there are always winners and losers. I think it is fair to distinguish between different types of inflation and point out QE was not inflationary in the way it was presented, which supposed it would increase bank reserves and lead to more general lending to the real economy.

@gorkyd7912

2 жыл бұрын

@@schumanhuman Well I don't know that it had no effect on general lending because the situation is more complex than just QE go up = lending goes up. QE has always been used during a recession, so lending is already going down as institutions realize they are vulnerable and risk off / deleverage. At the same time as this market collapse there was also changes in the regulatory environment requiring that loans no longer be handed out like candy to any willing participant and that banks keep larger reserves on hand to avoid a future liquidity crisis. So all of this added together means that QE is going into a headwind and it might be unreasonable to expect an immediate change in lending just because bank reserves are being artificially boosted. For a micro look at it, if you were looking at housing in 2008 while houses are dropping you probably wouldn't buy a $350,000 house if you thought it would be down at $300,000 in 6 months even if the interest rate was 0, so the effect on actual real-world lending amounts is not immediate and the market takes time to adjust. If you look at the price of corn for instance, this is a subsidized commodity that the US produces in steady, massive amounts that change very little from year to year so you would expect the price to be somewhat stable agains the dollar. In the early 1970s with Nixon's QE-like policies the price more than doubled and remained roughly that high for the next 30 years. Then in 2008 with the new round of QE the price doubled again and remained around the new level. It's too soon to say but right now the price has been another 50% higher than it was 2009.

I have a video idea for you! Recently someone in a discussion I was in said the US wants a war to boost their economy. I am pretty sure that wars aren't used for that purpose, but I am very curious what an economist would say about this question. "Is war good for a flagging economy?" or something like that, feel free to reframe.

My software disables links to other videos pasted 'on top' of the video so I ask you please consider also adding the referenced videos to the text section, just like you did w the sponsor.

@MoneyMacro

2 жыл бұрын

They are linked in the text on my blog which is linked in the description. Would have added them for you now... But, I am skiing at the moment :)

@iDuelZzz

2 жыл бұрын

@@MoneyMacro Happy Skiing

Point of QE wasn't inflation itself, as the inventor of QE said

Who made all the subtitles btw?

@MoneyMacro

2 жыл бұрын

I did with auto translate. Hope they are not too poor

@DerPoto

2 жыл бұрын

@@MoneyMacro Well I can comment on the Japanese one which should be the language the furthest away from English: It wasn't great but it got the point across I think, although I might be biased obviously because I hear the original text in English at the same time

7:00 I don't think the "sanity check" argument here works. Firstly, the years in the upper and lower graph don't line up, but that's not super important. More importantly, the upper graph ends too soon. In the lower graph we see the biggest (at least in absolute terms) sudden balance sheet expansion in 2020 but the upper graph ends at 2020 so its effects are not shown here. It's not a stretch to believe that the subsequent high inflation was due to Fed policy. 7:25 Regarding Japan, we can at least see a temporary increase in inflation in 2014. This came soon after Abe appointed Kuroda as the governor of the Bank of Japan.

The only inflation QE produced was to the financial market's assets.

So QE is insider trading for central banks. Niiiiice.

I've watched almost all of your videos, they're very well explained for a layman like me, and I greatly appreciate it. I wish basic economics had been taught in high school, now I feel very interested in going to pursue further education in economics. It's so frustrating... Economics is driven by human behavior, and all the smart people in the world can't stop an economic crisis caused by short-sighted greed and stupidity. Invest in the asset bubble, surely there will be no negative consequences when it pops!

@matthewrutters6842

2 жыл бұрын

Smart people? There's so much more to this argument than what is laid out here...This guy is simply another clown who has cosigned the current system.

@genb4374

Жыл бұрын

@@matthewrutters6842 Exactly, he tries to explain everything by his economics education.... The same education that got us here in the first place. Economists are narrow minded and detached from the reality of how complex the real world actually is. Sure, you can stick to your "economics" and explain everything in a way that makes sense- but only because it makes sense relative to what you've been taught. Economics isn't a science, treating it as such has created a disconnect between how the world works in reality vs on paper

Then how come higher prices do not lead to higher wages? PS I tought you were wearing a Star Trek shirt.

Im Ready for another reality check about economic rn

Surprising!

1:03 why is he blowing Mars' shield and spear?))

I think the bottom line is that central bankers don't really have the power to reverse rising inequality and stagnant economic growth in developed nations, which is much more about fiscal policy, tax policy, and regulations. Central banks lower interest rates (short and long term), but that doesn't change the dynamics encouraging speculation in assets over productive investment or consumption. It's like trying to use the gas and brakes to steer left and right, it just doesn't work. All the information I've consumed on this topic points to that being the reason inflation has stayed low despite low interest rates: very little of that money has been productively invested in the real economy. This applies to both public and private investment. Unfortunately, making debt cheaper just pushes the problem down the road, it doesn't change the fundamental dynamics limiting economic growth right now. Central banks absolutely can and should temper financial cycles and attempt to protect monetary stability, particularly in times of crisis like 2008, but eventually actual governments have to take responsibility for the economy by investing in productive infrastructure and regulating industries prone to unproductive speculation. If they don't, the real economy will decline or stagnant, and then it doesn't really matter if CPI is inflating or not, quality of life will decline, which is what matters to most people.

Yeah, sure, you need a deep dive into the inflation because basic Supply and Demand tools are not enough to understand basic Supply and Demand....

Price controls, because earnings reports suggest a fair bit if the inflation is driven by pirate captains of industry. I would consider record profits as very suspicious for an apparently procarious situation. I also findnit a bit strange that from about 1964 and on there is also a spike in corporate profits that preceeds inflation rising. I’m beginning to become very suspicious.

My question is: if they wanted to increase consumer prices, why not just print helicopter money? Wouldn't it have been more direct than this inequal inflation of asset prices, which only furthers the divide between the wealthy and poor?

Japanese yen is what backs most southeast Asian country's money. Those countries are still developing rapidly and experiencing growth. SE Asian country then have a need to expand their yen reserve, exchanging yens with their product. Hence the newly printed yen have southeastern Asian country to back them up, whereas the USD doesn't.

QE was never done for inflation control it was done to save the European debt crisis. Countries like Italy needed lower interest rates on their bonds, so central bank bought a lot of old bonds on secondary market, approximately 25% of european debt. By this way, the 10 years bond rate fell below 0% for some countries. Meanwhile euro interest rate remained at 0%. On private side, central bank also bought a lot of company bonds for the same purpose. By this way ECB has injected more than 6000 billion euros on the economy....well, not the economy as most of the money went in more interesting assets, like stock bought on secondary market. This pumped up the financial bubble, again. Let's see how it crashes this time.

during the last decade of qe, the stock market absorbed the extra liquidity while prosperity and productivity per capita flatlined. the lag on inflation is much larger than anyone is giving it credence for. just because you don't see inflation right away doesn't mean that qe did have a significant part of contributing to it's manifestation, although technically it is the unlimited spending it empowers the government to do that causes the inflation.

When will you do our great economy of Turkey?

dude, the 's' in consumer is your biggest enemy

"researchers that went through years and years of QE & inflation data in the industrialised economies found and ... the answer is No...." Can we please ban those researchers. How can one research such a complicated topic with so little data and dare to give such a definitive answer. The only answer appropriate is that we have not enough data. This whole mess comes from the fact that we assume we understand inflation fully. Yet 80% is unknown. That is the reason why the most specialized economists at the ECB/FED/BOE were convinced it was "transitionary" yet markets knew this wouldn't be the case. Also, everyone uses inflation as if it is the most common definition, yet the assumptions underneath inflation are of the upmost importance. Housing prices are now included by the ECB as of 2021. Would they have done this earlier, then inflation wouldn't be this low. Then we still have pension insurance & healthcare costs which are practically fully omitted from inflation. Anyway, the summary is, we do not know enough about inflation. Starting QE on itself gives a lot of moral hazard. Given the unknowns and uncertainty, the amount of QE is potentially extremely dangerous. The effects will be known in the coming decade only. Even then, those results are impossible to attribute or generalize.

@Aaron565

Жыл бұрын

Central banks are working off hundreds of years of history as well as directives from their predecessors. They absolutely engineer the business cycle to benefit private equity, and do so not for stability but in order to own the majority of the world's assets in attempt to establish a permanent seat of power. There are far too many derivative assertions made around the subject to address them all here. Its an outright farce that deflationary economies slows the velocity of money. Gold was the standard, and a far more successful standard for far longer than inflationary economies have existed.

You just have to avoid overproduction deflation where the market becomes saturated because the overall quality of consumer goods produced by manufacturers improves alongside of the lifespan of said goods, then people stop buying and a deflationary debt spiral sets in. Which just happened! It's the end of the world. and. we're. all. doomed!

Can you make a video about Japans zombie companies?

This is a lot of talk but in the end QE is the same as money printing, its just that it shifted from consumer goods to other assets as you said in the end. The end result is the same, massive hardship for the poor and for new generations. Is QE a valid tool? it is, but does it generate inflation? it does.

@MoneyMacro

2 жыл бұрын

The end result is quite different. Asset price inflation is really hard on those who do not hold assets. Consumer price inflation is really hard on those whose income is in home currency and not pegged to CPI. There can indeed be overlap in the groups. But, it is not a complete overlap. E.g. high asset price inflation can really help pensioners who see both their home and the value of their pension investment grow. On the other hand, high CPI inflation would be really hard on non-cpi indexed pensioners. Similarly, high CPI inflation can potentially help those with high credit card debt. Yet, asset price inflation doesn't help this group at all. There are many more such examples if you think about. Therefore, it is important to make the distinction.

@celdur4635

2 жыл бұрын

@@MoneyMacro I agree its important to make the distinction. And i'm not against your point overall, but to say it "didn't cause inflation" is too much and it can be quite dangerous. Specially when developing nations with weaker institutions start copying what the developed world is doing. I think we can all agree that its better if there is no inflation at all, and the market moves as it wills. We should also take into consideration how it affects the poorest in society, the ones that don't have homes, in this case, or are renting, i'm sure you can empathize with the massive stress of having to move out because you can't afford rent anymore or the feeling of being in a hamster wheel not ever being able to buy a home because of high prices. Thank you for taking the time to answer. Cheers!

Hi! Great video. My only critisism is that I think you are conflating "begging the question" with "raising the question". hehe

The ending of all this sounds like it's going to be very painful.

' Land of the FREE ' - ' Home of the BRAVE ' is soon becoming ' the ' Land of the Enslaved ' - ' Home to the Indebted & Home of the Homeless '.

Comparing Japan to the USA doesn't seem like a good argument. Finally, QE may take years to show it failed. There will also be global catastrophies, economies need to be able to handle it.