Welcome Guest [Log In] [Register]


Reply
  • Pages:
  • 1
  • 2
  • 15
WTF is QE?; Does Stimulus Stimulate?
Topic Started: 4 Sep 2015, 07:28 AM (7,647 Views)
createdby
Default APF Avatar


QE is just the literal nightmarish manifestation of a simple demand curve (yes, that demand curve from an Economics 101 textbook).

Move prices one way, and maybe production will move too.

Posted Image

Well, maybe.
Edited by createdby, 4 Sep 2015, 02:34 PM.
Profile "REPLY WITH QUOTE" Go to top
 
b_b
Default APF Avatar


Sydneyite
4 Sep 2015, 09:52 AM
The U.S. Gov made a profit from TARP.
Correct - which reflects an opportunity cost to the private sector (i.e. a tax).
(S – I) + (T - G) + (M - X) = 0
Profile "REPLY WITH QUOTE" Go to top
 
Loki
Member Avatar


Sydneyite
4 Sep 2015, 09:52 AM
Also these guys may not be aware that QE in U.S finished over a year ago now
No it didn't. New asset purchases finished over a year ago. They had to, the treasury market was about to become illiquid. Existing stock is still being rolled over, and has been since QE officially "ended".


“Talk sense to a fool and he calls you foolish.” - Euripides
Profile "REPLY WITH QUOTE" Go to top
 
Sydneyite
Member Avatar


Loki
4 Sep 2015, 04:23 PM
No it didn't. New asset purchases finished over a year ago. They had to, the treasury market was about to become illiquid. Existing stock is still being rolled over, and has been since QE officially "ended".
Rubbish! You are saying QE doesn't end until all purchased securities expire or have been sold back into the market? Ie the Fed balance sheet shrinks back to it's pre QE level? QE is about the *purchase* of the assets - the central bank reserves for bonds swap - ie the injection of new reserves into the financial system When that stops, QE has ended. If you think otherwise you really mis-understand the mechanism.
For Aussie property bears, "denial", is not just a long river in North Africa.....
Profile "REPLY WITH QUOTE" Go to top
 
Loki
Member Avatar


Sydneyite
4 Sep 2015, 04:46 PM
Rubbish! You are saying QE doesn't end until all purchased securities expire or have been sold back into the market? Ie the Fed balance sheet shrinks back to it's pre QE level? QE is about the *purchase* of the assets - the central bank reserves for bonds swap - ie the injection of new reserves into the financial system When that stops, QE has ended. If you think otherwise you really mis-understand the mechanism.
No, that's not what QE does. QE bids up the price of long bonds, reducing the convexity of the yield curve. If you sell those bonds back into the market it has the opposite effect.

QE1 solved the liquidity problem. QE II and III was about controlling the yield curve.

Well, in my opinion anyway. If the US banking system had a shortage of cash, why are all of the banks repoing cash for equities?


“Talk sense to a fool and he calls you foolish.” - Euripides
Profile "REPLY WITH QUOTE" Go to top
 
The Whole Truth
Member Avatar


b_b
4 Sep 2015, 02:37 PM
Sydneyite
4 Sep 2015, 09:52 AM
The U.S. Gov made a profit from TARP.
Correct - which reflects an opportunity cost to the private sector (i.e. a tax).
What it means is that if you own a casino you always skim a profit. You never lose on a days play from the punters. If you own a paper asset. You're a punter at their casino.

One day they might choose to close the casino, and on that day you can expect it to be worth cents on the dollar..
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
Profile "REPLY WITH QUOTE" Go to top
 
b_b
Default APF Avatar


The Whole Truth
4 Sep 2015, 05:17 PM
What it means is that if you own a casino you always skim a profit. You never lose on a days play from the punters. If you own a paper asset. You're a punter at their casino.

One day they might choose to close the casino, and on that day you can expect it to be worth cents on the dollar..
????

If you are suggesting the US government (via the Fed / Treasury) is the casino, then the casino has been running losses almost every year since 1776.

You posted about these loses (deficits) on Mike's US Trade thread.

By now, after almost 240 years of accumulating deficits (and no hyperinflation), people should understand the Government is not like a casino, or business or household. No business I know could run losses for 240 years.

But people will never let observation and facts stand in the way of a good ideology.

Do yourself a favour and go back and read what I wrote on QE. It might save you from further Gold losses.
Edited by b_b, 4 Sep 2015, 05:40 PM.
(S – I) + (T - G) + (M - X) = 0
Profile "REPLY WITH QUOTE" Go to top
 
Terry
Member Avatar


QE and TARP are essentially subsidies and bailouts for the banks and finance sector. Another massive distortion to make everything alright.
Profile "REPLY WITH QUOTE" Go to top
 
Andrew Judd
Default APF Avatar


b_b
4 Sep 2015, 02:27 PM
I think what you may be referring to is QE1 (or TARP). This was different to QE2 and QE3.

QE1 was a program by the Fed to acquire loans with questionable value, in exchange for reserves in 2008/09.


I am pretty sure you are mixing up the programs. Tarp was a treasury baby orchestrated by Hank for his buddies on wallstreet.

TALF was the Term Asset-Backed Securities Loan Facility and at the same time in november 2008 a program to buy about 600billion of GSE MBS was announced.

http://www.federalreserve.gov/newsevents/press/monetary/20081125a.htm

a facility that will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).

The U.S. Treasury Department--under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008--will provide $20 billion of credit protection to the FRBNY in connection with the TALF.


The idea here was to ensure new lending continued rather than buy troubled assets. Importantly loans issued under this program would not create losses for the banks.

http://www.federalreserve.gov/newsevents/press/monetary/20081125b.htm

it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises (GSEs)--Fannie Mae, Freddie Mac, and the Federal Home Loan Banks--and mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae
Edited by Andrew Judd, 4 Sep 2015, 06:20 PM.
Profile "REPLY WITH QUOTE" Go to top
 
Terry
Member Avatar


Andrew Judd
4 Sep 2015, 06:03 PM
I am pretty sure you are mixing up the TALF with TARP. Tarp was a treasury baby orchestrated by Hank for his buddies on wallstreet.

TALF was the Term Asset-Backed Securities Loan Facility

http://www.federalreserve.gov/newsevents/press/monetary/20081125a.htm

a facility that will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).

The U.S. Treasury Department--under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008--will provide $20 billion of credit protection to the FRBNY in connection with the TALF.


The idea here was to ensure new lending continued rather than buy troubled assets. Importantly loans issued under this program would not create losses for the banks.
Which is essentially what I said: bailouts and subsidies for the banks are finance sector. You get it.
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
ZetaBoards - Free Forum Hosting
Free Forums. Reliable service with over 8 years of experience.
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply
  • Pages:
  • 1
  • 2
  • 15



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy