Quntitative Easing

Generali

A question. Does anyone know of any point in economic history where printing money (aka quantitative easing) has in any way lessened the impact of a recession or depression?

I can think of times when it's made things worse or had no impact but never when it's made things better.

Apparently, Mugabe claims he inspired UK monetary policy.

Really2

Generali wrote: »

A question. Does anyone know of any point in economic history where printing money (aka quantitative easing) has in any way lessened the impact of a recession or depression?

I can think of times when it's made things worse or had no impact but never when it's made things better.

Apparently, Mugabe claims he inspired UK monetary policy.

I though Japans economy did not start getting better until they did it. i do not know when that point was though but I think it was around 2001.

PS just found http://www.frbsf.org/publications/economics/letter/2001/el2001-31.html

Sir_Humphrey

Generali wrote: »

A question. Does anyone know of any point in economic history where printing money (aka quantitative easing) has in any way lessened the impact of a recession or depression?

I can think of times when it's made things worse or had no impact but never when it's made things better.

Apparently, Mugabe claims he inspired UK monetary policy.

It is difficult to say. Since monetarism came into fashion in the 1960s-70s, there have been few cases of deflation. In Japan, I understand growth increased after QE, although deflation remained.

Alone, it will not solve anything. There is no magic bullet. It is a combination of different measures done together that ought to be able help matters.

You never know what might have happened as you never see the consequence of the alternative.

Wookster

Sir_Humphrey wrote: »

There is no magic bullet.

Exactly. No magic bullet, no quick fix, no easy way out.

What is required is a rebalancing of the economy to a more sustainable and productive base.

Generali

Sir_Humphrey wrote: »

It is difficult to say. Since monetarism came into fashion in the 1960s-70s, there have been few cases of deflation. In Japan, I understand growth increased after QE, although deflation remained.

Alone, it will not solve anything. There is no magic bullet. It is a combination of different measures done together that ought to be able help matters.

You never know what might have happened as you never see the consequence of the alternative.

I understand that the US printed a load of dollars in 1931. The mess that was their economy remained a mess. The Japanese failed to print their way out of problems.

It seems to be the conventional wisdom all of a sudden that printing quids will be a panacea. I don't understand why and I don't think the prevailing opinion is right. I'd really like to know why printing money is the right thing to do as I just don't understand the argument.

Wookster wrote: »

Exactly. No magic bullet, no quick fix, no easy way out.

What is required is a rebalancing of the economy to a more sustainable and productive base.

Well quantitative easing is supposed to be the easy way out and I'd like to understand how and why.

Sir_Humphrey

Wookster wrote: »

Exactly. No magic bullet, no quick fix, no easy way out.

What is required is a rebalancing of the economy to a more sustainable and productive base.

Turning nice words like that into policy means making unpalatable policy choices. Such as cutting IRs very low, QE, fiscal deficits etc in order to maintain business, investment and tax revenues. See my signature below.

Generali

Sir_Humphrey wrote: »

Turning nice words like that into policy means making unpalatable policy choices. Such as cutting IRs very low, QE, fiscal deficits etc in order to maintain business, investment and tax revenues. See my signature below.

Do you know of an instance where quantitative easing led to better economic times?

Really2

Generali wrote: »

It seems to be the conventional wisdom all of a sudden that printing quids will be a panacea. I don't understand why and I don't think the prevailing opinion is right. I'd really like to know why printing money is the right thing to do as I just don't understand the argument.
.

I think that it is virtualy a last resort. I think the problem is there is no evidence in developed economys that it as not worked either.
I think the Japan version takes the basis if they had not done it things would have been worse.

Wookster

Sir_Humphrey wrote: »

Turning nice words like that into policy means making unpalatable policy choices. Such as cutting IRs very low, QE, fiscal deficits etc in order to maintain business, investment and tax revenues. See my signature below.

Shall I rephrase into two questions.

1. What is wrong with the UK economy?
2. What will it take to fix it?

Sir_Humphrey

Generali wrote: »

I understand that the US printed a load of dollars in 1931. The mess that was their economy remained a mess. The Japanese failed to print their way out of problems.

I do not know if they did or not. The failings of Hoover's economic policies are too many to pick out one mistake.

Generali wrote: »

It seems to be the conventional wisdom all of a sudden that printing quids will be a panacea. I don't understand why and I don't think the prevailing opinion is right. I'd really like to know why printing money is the right thing to do as I just don't understand the argument.

As I suggested, it depends on how it is done. I have a bad feeling that some of the people in favour of it are still hung up on discredited supply-side economics (that creating a supply will create demand).

The way I understand it, if money were created to directly fund businesses (this would need bank nationalisation) then investment could be maintained. The other way would be printing money for much-needed public infrastructure (no need to build bridges to nowhere to spend plenty of money). The advantage would be a reduction of crowding out and a bypassing of the IR reduction mechanism, which is currently not functioning.

I have a bad feeling that Brown's obsession with not appearing Socialist will just mean that the printed money sinks down a blackhole somewhere in the balance sheets of banks, as he is too hidebound to nationalise the banks and spend money without ridiculous PFI funding.

Sir_Humphrey

Wookster wrote: »

Shall I rephrase into two questions.

1. What is wrong with the UK economy?
2. What will it take to fix it?

I have posted exhaustively on this over the last few years, and also over on GHPC before access to that forum was blocked for me. I don't want to reiterate them now.

In short, we are too much like the USA, and not enough like Sweden.