Quantative easing - can someone explain it please?

Cannon_Fodder

chucky wrote: »

err it's a different leaf that he's talking about CF...

not a clever Hitchhikers Guide pun?

What can he mean?

Oh, the Boston tea party was about taxes...?

Radiantsoul

bubblesmoney wrote: »

are we talking of limited amounts of money increasing the monetary base????
in what world is increasing the monetary base from 800 billion a year ago to 2 trillion (and still printing) limited and all that while decreasing fractional reserve ratios to zilch and buying trash for cash (TARP = CRAP, same goes for bad bank)

in the chart below

• M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.
• M1: The total of all physical currency part of bank reserves + the amount in demand accounts ("checking" or "current" accounts).
• M2: M1 + most savings accounts, money market accounts and small denomination time deposits ( certificates of deposit of under $100,000).
• M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements.

have a look at the grey line shooting upwards. food for thought. :beer:

Yeah there is a 16% increase in the USA's M0(essentially paper money plus fed deposits) but wider measures of money have hardly moved. If all that happens is money printed is kept in bank reserves it will not have any impact on price levels.

purch

If all that happens is money printed is kept in bank reserves it will not have any impact on price levels

Money with a velocity of zero, is nothing much to worry about (but something to keep a radar gun pointing at)

MrDT

excellent blog here written in clear english not economist-ese:
http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/02/just_follow_the_money.html

bubblesmoney

bootalishus wrote: »

Hi

can someone explain to me, in laymens terms, what quantative easing means and how it will effect me if i am renting and have my STR fund in the bank. Also what can I do to protect my STR fund.
I am finding this all very worrying at the moment and panicing that I will end up with zilch, no STR fund and therefore no house.
Also dread to think what sort of quality of life my poor kids will have. I did want another child but I am not so sure now - what will their future be, mega taxes and loads of pensioners with no money.
Feeling very depressed about the whole thing.

its simple.

lets say you have your total assets of 1 bag of wheat. during the bad times when you want to ease your troubles what options do you have. for one the quantitative easing option is something like using the same bag of wheat and mix it equally with a bag of brown (pun unintended) stones. then fill these into two separate bags and voila you have 2 bags of 'wheat' and apparently you are richer now and your networth has doubled overnight (usa base money went up from 800million$ recently to 2 trillion$ with the same assets or worse in value backing the extra money printing).

wonder if eating humble pie and rationing the initial clean bag of wheat would have been better. but guess for those who gorged on debt having the two bags of 'apparently good' wheat makes them feel richer. wonder if when they gorge on these 2 bags of wheat whether their troubles will get eased or if they will get more constipated.

but what ever happens in actual life one bag of wheat might get you 10$ but if you try to sell 2 bags of wheat mixed with stones you will be real lucky to even get 5$ each as anyone with half a brain wont bother with the trouble of buying into such crap in the 1st place

ABUSE

Give over Booty Delicious, you know all about Quantitative Easing...

...it's when you bring home a guy with a Big Number in the trouser department and they have to gently Ease their way in... nuff said

louiser123

was reading this post with interest as i dont understand it either until the last post.

is there really any need for these posts??/

matbe

What are you saying you understood the last post?


Louiser123 you dirty girl!!!!

ABUSE

Tut Tut Louiser

Sorry but the post was asking for it in layman terms and that was my flawed understanding...