Fed Balance SheetSubmitted by Mega-Lithium t3_120143p in wallstreetbets
LegendsLiveForever t1_jdgavop wrote
Reply to comment by DYTTIGAF in Fed Balance Sheet by Mega-Lithium
That's not how that works...
Banks create loans out of thin air.
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MMT’s view of how the credit mechanism works has since been confirmed by publications of the Bank of England and the Deutsche Bundesbank. This proves the conventional money supply theory to be scientifically outdated, because it claims that commercial banks are dependent on savings or central bank balances for lending, i.e. they “lend” savings or central bank deposits when they extend credit.
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https://ibb.co/HBNSCyg - QE DOES NOT cause inflation.
Mega-Lithium OP t1_jdid9g6 wrote
I respectfully disagree
QE is not just an asset swap. The “banks” also goose the stock market and the economy through the resulting easy money policy
LegendsLiveForever t1_jdjkmw7 wrote
If, as some claim, the sale of new Treasury securities inhibited spending which kept prices from rising, then QE would have done the reverse, which it didn't. QE (QT) is just another bank buying (selling) gov securities.
In Japan, 0% rate policy for some 30 years along with massive 'money printing' QE, debt/gdp over 200%, minimal natural resources. Not without problems, but world class public infrastructure, universal healthcare, education, low unemployment, low inflation.
Source: https://ibb.co/12pw2Q0 https://ibb.co/Tt3qWdX
any bank can operate indefinitely with negative equity if the regulators allow it and continue to insure its deposits etc.)
DYTTIGAF t1_jdgd59m wrote
Sure. I heard those explanations 3 years ago. That's why the Federal Reserve has had to raise rates 9 times to address the problems associated with "theories" of how things are supposed to happen and the "reality" of what actually did.
[deleted] t1_jdgfoz5 wrote
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