11 votes
Accepted

Why hasn't Quantitative Easing surged inflation, or caused hyperinflation?

High-powered money is another term for the monetary base or MB. MB represents all money created by the government. However, that is not all the only source of money. Banks are allowed to create ...
user2662680's user avatar
  • 1,090
10 votes
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Screw foreign investment, lets just print money

"Foreign Direct Investment" is to be understood as bringing in an economy productive capital, and not just purchasing power. When an economy is seriously below full employment (of capital ...
Alecos Papadopoulos's user avatar
6 votes

Are quantitative easing and helicopter cash really different tactics? And how does QE relate to Modern Monetary Theory?

What is QE: QE is simply an asset purchase by central bank. As explained by Fed St. Louis QE is defined as: large-scale asset purchases—in the hundreds of billions of dollars range—of, for example, ...
1muflon1's user avatar
  • 55.5k
5 votes
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How does the Federal Reserve unwind the asset purchasing scheme announced in response to the 2020 Coronavirus Pandemic?

The unwind depends upon what the central bank did. If the central bank did a repurchase agreement (“repo”) or lent against assets for a fixed time, the agreement automatically unwinds at the term of ...
Brian Romanchuk's user avatar
4 votes
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What is the effect of Quantitative Easing on the US budget deficit?

No, the deficit is not getting larger due to QE. Certainly not directly, because that's impossible, and also not indirectly, either. Quantitative easing is a policy of purchasing government bonds ...
dismalscience's user avatar
4 votes

During deflation, is there any risk on 'printing' money?

You should be confused by Japan's version of QE. No one knows the long term implications, it has never been done before. I don't know that much about Japan's QE other than the monthly totals, but ...
Sean Lambert's user avatar
4 votes

Why inflation is still reported low?

There's a pretty simple answer to that. The money injected into the banking system does not acquire any velocity- it just gets redeposited at the Fed. If they had spent the same amount of money into ...
dm63's user avatar
  • 1,238
4 votes

Is QE the equivalent of printing money?

It is correct that quantitative easing (QE) is not exactly the same as just printing money. However, I would hesitate to say equating it to printing money is complete misnomer (although its not ...
1muflon1's user avatar
  • 55.5k
4 votes

Does quantitative easing favour banks?

Will this policy advantage the financial sector over other parts of the economy? I do not see how this would a priori advantage the financial sector over other parts of the economy. This policy is ...
1muflon1's user avatar
  • 55.5k
3 votes
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Are Open Market Operations a Gift to the .1%?

Yes they are "gift" (or rather a stimulus), but not exclusively to the 0.1%. There's basically "trickle down" by inflating the M2 money supply, i.e. bank loans, which hopefully ...
Dolphin 613 Motorboat's user avatar
3 votes
Accepted

In quantitative tightening do banks have no choice in refusing to buy bonds from Central Banks (mainly Federal Reserve)

The question as it stands now contains points that are debatable. So I will just attempt to answer a similar question; the question could be revised in response. There are a number of other questions ...
Brian Romanchuk's user avatar
3 votes
Accepted

When the ECB does QE, does it print new money?

First of all, I'm not sure you are reading that article correctly, as I cannot find any mention of the claim you make. In any case, you can find here a superb comparative analysis of QE for the Fed, ...
luchonacho's user avatar
  • 8,591
3 votes
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Why doesn't the ECB implement the same fiscal and monetary policy that the FED used to save the US economy?

The ECB faces a unique challenge in that the Eurozone is a monetary union without a fiscal union. Because each country has autonomy over their own fiscal policy and there is no separate Eurobond, it ...
Matt Dyer's user avatar
  • 191
3 votes

How much money was distributed during quantative easing?

The easiest way to estimate the total amount of quantitative easing is to look at the change in the balance-sheet of the Federal Reserve because every bit of money put in through quantitative easing ...
BKay's user avatar
  • 16.3k
3 votes

Why does the Fed feel the need to reduce its balance sheet?

This is veering into the direction of an opinion-based answer, but I would argue that there is no particular evidence that the Fed “needs” to reduce the size of its balance sheet. If the Fed wanted ...
Brian Romanchuk's user avatar
3 votes
Accepted

Does quantitative easing appreciate or depreciate the domestic currency?

The exchange rate can be expressed in a simple classroom monetary model as: $$S = \tilde{m} - \psi \tilde {y} + \lambda (\tilde i)$$ Where $S$ is the exchange rate $m$ is log of money supply, $y$ ...
1muflon1's user avatar
  • 55.5k
3 votes
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During QE what prevents the banks from selling government debt to invest in the stock market instead of lending out the money?

During QE what prevents the banks from selling government debt to invest in the stock market instead of lending out the money? Nothing. Depending on which country we are talking about there might be ...
1muflon1's user avatar
  • 55.5k
3 votes
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How do central banks get the money for quantitative easing?

They just create them ex nihilo. People sometimes say central banks print money, that is not literally true for every central bank (not for Fed since in US money is printed by the Bureau of Engraving ...
1muflon1's user avatar
  • 55.5k
2 votes
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Limits to Quantitative Easing Programmes

1) In principle, there is nothing material to stop the central banks. Apparently, during the great recession in the 1930's in the US, the fed bought even stranger stuff. They could go domestic bonds, ...
Fix.B.'s user avatar
  • 2,648
2 votes

What stops a government in partnership with its central bank from lowering interest rates and then borrowing at this lower rate to fund investments?

Bank of England decided to lower reserve interest rates to 0.25%. This means the central bank wants to reduce the interest paid on reserved stash, discourage ...
mootmoot's user avatar
  • 381
2 votes

Print money to buy and nationalise companies

This is a transaction where productive assets change hands, it is not a transaction that reflects production. Moreover assume that the company oparates exactly as before, producing the same output ...
Alecos Papadopoulos's user avatar
2 votes

Question on money supply related to new crypto project

As I noted in a comment, the description in this question of real world central banks is overly simplistic. Central banks do not make proportional changes to the monetary base to set the price level. ...
Brian Romanchuk's user avatar
2 votes

What is the effect of Quantitative Easing on the US budget deficit?

For considering a question like this, because the Federal Reserve remits seigniorage to the Treasury, it can be helpful to integrate the balance sheet of the central bank and the treasury and consider ...
BKay's user avatar
  • 16.3k
2 votes
Accepted

What happened to the money multiplier after QE?

According to Gambacorta and Mizen (2019) a number of factors explain the 2008 crisis (and insofar post-crisis) multiplier: banks factor in may more things than the interest rate nowadays, of their ...
Dolphin 613 Motorboat's user avatar
2 votes

What happened to the money multiplier after QE?

You may want to look at the following paper by Cukierman (2017). The author compares inflation for a period of identical base expansion in post Lehman US and hyper-inflationary Germany in the 1920s. ...
Elias K.'s user avatar
  • 135
2 votes
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Did (or can) quantitative easing cause an "everything bubble"?

It’s an editorial opinion, and it’s hard to give it a technical meaning. The distinction being made in the text is between growth in the “real economy” - which would be measured by GDP and/or ...
Brian Romanchuk's user avatar
2 votes

Can quantative easing be summarized as "The state prints cash to pay its debt to private sector"?

the government is printing cash from nothing to pay me right now, and destroy its debt That's not the whole story. Any money coming out of the central bank is newly created money, and any money going ...
Nishant George Agrwal's user avatar
2 votes
Accepted

What amount of Quantitative Easing will cause hyperinflation?

I actually found a model that proposes an estimator of CPI increase from a QE "unit" (relative to GDP), but this is based on ECB's intervention (which came pretty late compared to others). This is a ...
Dolphin 613 Motorboat's user avatar
2 votes
Accepted

Why has QE produced hyper-inflation in other countries, but not US and China?

That is because inflation is a change in price level and price level can be expressed using the basic monetary model as: $$P=\frac{MV}{Y}$$ Where M is money supply, V is velocity of money and Y is ...
1muflon1's user avatar
  • 55.5k
2 votes

How much money has the Fed printed?

The Fed’s liabilities (technically broader than the true monetary base but arguably more relevant depending on your definition of “money printing”) are released weekly in their H.4.1 release. They ...
dismalscience's user avatar

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