LegendsLiveForever
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.
​
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 This proves the conventional money supply theory to be scientifically outdated, because it claims that commercial banks are dependent on savings or central bank balances for lending, i.e. they “lend” savings or central bank deposits when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.
​
​
https://ibb.co/HBNSCyg - QE DOES NOT cause inflation.
LegendsLiveForever t1_jaf0gu8 wrote
Reply to comment by Surlax in The Fed is yet to catch up to the Taylor Rule estimate by Surlax
Yes, pumping a trillion dollars into the private sector via interest rates (govt is a net payer of them), should definitely slow down inflation. Nothing like pumping $1T into the economy to slow it down. The loan trend should be downwards then, yes, even slightly so if hiking rates effected loans negatively. That is the Taylor Rule thesis correct?
Let's see how 1 year of rate hikes worked on our loan applications: https://ibb.co/64Srz64
https://twitter.com/patrick_saner/status/1628690771141328897?s=20
Rate hikes increase inflation, (esp w/ a high ratio of debt/gdp, interest rates are expansionary), put more money directly in the hands of loan writers. Who increase their income, just like a bond investor might invest in bonds, by writing more loans.
This is old-school economics, and it's just plain wrong, along with a whole other bunch of theories from the 90's. Economics' isn't a science, and even if it was, this wouldn't pass any litmus test.
LegendsLiveForever t1_jdjkmw7 wrote
Reply to comment by Mega-Lithium in Fed Balance Sheet by Mega-Lithium
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.)
https://ibb.co/tsgMS0L