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Forums - Politics Discussion - Quanatative Easing is an inefficent top down economic approach.

HappySqurriel on 24 September 2012
Jumpin said:
HappySqurriel said:
Monetary stimulus is the narcotic pain killer of economics ... It does nothing to address the underlying problems, it only provides short term relief, and it is addictive.


Actually, in most cases, pain killers are all you need and all that will help to get through injuries; and in just about all other cases, they are an extremely good addition. They allow the subject to sleep better and improve the quality of healing while at the same time avoiding mental stress as a result of the physical pain.

In addition, pain killers will be able to neutralize migraine headaches, which could otherwise have you vomiting in pain.

The moral of the story is you have only examined pain killers from a very biased angle, and that is probably also true about your examination of economics.

At no point did I suggest that there was no value with either painkillers or monetary stimulus ...

If we were keeping interest rates artificially low through monetizing debt to prevent suffering while we made structural changes to the economy the argument could be claimed that we were using monetary stimulus in a way that was similar to a doctor using painkillers after surgery.

What we're doing today is similar to a doctor discovering that his patient has cancer and giving them Oxycodone to make them feel better about having cancer, and when they come in with withdrawl symptoms giving them a larger prescription at a higher dosage. The question isn't whether this will end poorly, the only question is whether the cancer or the addiction is going to kill them first.



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sperrico87 on 24 September 2012

The Feds and the economy are addicted to heroin and every time they introduce more quantitative easing they're sticking a needle into a new vein.



 

SamuelRSmith on 24 September 2012
Mr Khan said:
killerzX said:
i thought it helped out poor people, since they have debt. and QE3 inflates the dollar, so they are paying back their debt with cheaper dollars?

That is what i suggested as well (which i suppose is part of the reason they want to hike interest rates on student loans. Need to at least break even in real dollars, long-run). Presumably currency devaluation also makes American exports more competitive by default


No, because although I can buy more dollars with my pounds (all else equal), when I get those dollars, I cannot buy as many goods from American businesses, because their prices have increased.

True, there is a timelapse. But if you were using that as a serious policy measure, you would have to exponentially increase the rate of QE each year, and stay above what other countries are doing, with inflation growing higher and higher... meaning, you'd be fucking over the entire country, just to help out a few exporters.