Quantitative Easing Explained

 

I know nothing about the people that put this together but I have listened to it twice and I believe that it is accurate (as least as much as I understand economics). I don’t pretend to know a lot about economic theory beyond the basics but its seems to me that if this isn’t done in an extremely business friendly environment, which, I think, would include lower taxes and other incentives that this could cause mass inflation. Inflation like we haven’t seen since the 70’s.

Anyway I love the delivery method they used to get the message out because it takes a “boring” subject and makes it interesting by making it fun.

Comments

  1. The cartoon misses the whole point of “quantitative easing.’

    Its purpose is not to acquire Treasury Bonds. Rather, what the Fed hopes to achieve by buying them from Goldman Sachs (plus any number of banks and financial institutions) is to insert more money into the reserves of the subject institutions with the idea that will then be willing to lend the cash to businesses and individuals, thus spurring the economy.

    On another erroneous implication of the cartoon: Prolonged deflation is most apt to sound the economic death knell for any nation experiencing it. As prices continue to fall, consumers stop purchasing, realizing whatever goods or services they seek will be cheaper tomorrow. Eventually manufacturers must go out of business. No one is buying its product at current prices, and the cost to manufacture exceeds the selling price. The result: massive unemployment and prolonged depression — exactly the scenario of the 1930s.

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