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23 December 2008

Quatitative Easing

A good clip on "Quantitative Easing" and what the Fed is hoping to do. Nod to the inimitable Greg Mankiw. There is something to this. I work in title insurance and have gotten more refi orders in the last week than I have in the previous month and a half.

video

4 comments:

SSFC said...

I'm glad someone's getting work. Even law, which is generally thought of as a recession-proof profession (some fields actually benefit from hard times) is getting hammered.

I recognize that saying that opens a floodgate of schadenfreude. That's your present. Merry Christmas Sean.

SSFC said...

Now, having watched the video, I have another comment. "Quantitative easing" is an economist's term for what laypeople call "printing money".

The disaster that occurred in Argentina earlier this decade, when a sound government was replaced by idiots who didn't understand monetary policy, comes to mind. Argentina had hyperinflation and a shrinking economy.

SeanEBoy said...

It is printing money, but that is the function of the Fed, to control the money supply. Bernanke (to his small credit) is a student of the Great Depression, and his biggest fear is deflation--what arguably tripped the economy in 1929 from a serious market correction and recession into a depression. CPI is down, so inflation is not a conern right now. But the CPI is down primarily due to fuel. Food will ebb down soon, too. Is this a mark of deflation or a stabilization of prices to where they were just over a year ago? Oil is down more than $100 a barrel in less than six months, but might be right around its natural price (which is probably an absurd notion for a commodity, but I hope you get my point).
Aside from it's non-disclosure policy of how much it has increased the money supply or to whom it has given lines of credit, I will grudgingly give the Fed some credit for its handling of the federal funds rate and discount rate and not touching the reserve requirements.
The Treasury is another matter, Hank Paulson is Michael Brown with a better pedigree, nicer suit and equivalent capability to handle a crisis.
And Bush is still Bush...

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