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View Diary: Why what Ben Bernanke said yesterday should make you angry (102 comments)

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  •  My understanding is that (1+ / 0-)
    Recommended by:
    Dburn

    quantitative easing didn't do anything to increase the money supply, it merely loaned money to banks that they then used to buy treasury bonds and collect easy free money from the American taxpayer.

    I agree with him that it should really be up to Congress to fix this, monetary policy has done almost all it can.  I also agree with you that the fed's laser-like concentration on inflation is wrong and should be changed.

    Atheism is a religion like Abstinence is a sexual position. - Bill Maher, 2/3/2012

    by sleipner on Fri Jun 08, 2012 at 11:03:03 AM PDT

    •  No, that's not what it was at all (2+ / 0-)
      Recommended by:
      Deep Texan, gramofsam1

      First of all it was a myth that banks could borrow from the fed and buy t-bills for arbitrage profits.  That story first appeared because a financial reporter didn't understand that the Fed charges both fees and interest rates -- and that taken together they are more expensive than the low interest paid on t-bills.

      QE meant buying debt that benefited the real economy -- from corporations borrowing to expand, to homeowners mortgages, to the car loans that made the auto bailout possible, to credit card receivables that prevented card companies from cutting people off below their balances.

      Above all, the fed funded virtually every home loan and car loan made during the last 3 years.

      •  Well, they certainly weren't using it (0+ / 0-)

        to loan money to anyone, that's for sure.  

        Atheism is a religion like Abstinence is a sexual position. - Bill Maher, 2/3/2012

        by sleipner on Fri Jun 08, 2012 at 12:21:41 PM PDT

        [ Parent ]

        •  yeah they did (1+ / 0-)
          Recommended by:
          HamdenRice

          what part of the FED was backstopping all loans did you not get?

          -You want to change the system, run for office.

          by Deep Texan on Fri Jun 08, 2012 at 12:23:22 PM PDT

          [ Parent ]

          •  I meant the banks did not increase lending (0+ / 0-)

            Seems as if it was just the fed buying off or insuring some of their trash loans they wanted to get rid of, but small businesses and individuals had no easier time qualifying for loans than they did before.  Hence the effect was to help out the banks' bottom line and the rich (as always) but didn't really do anything at all to drive the economy forwards.

            Then again, I'm no expert so I should probably shut up about this unless I do more research ;)

            Atheism is a religion like Abstinence is a sexual position. - Bill Maher, 2/3/2012

            by sleipner on Fri Jun 08, 2012 at 02:55:24 PM PDT

            [ Parent ]

            •  You're not getting it (1+ / 0-)
              Recommended by:
              akadjian

              The banks are indeed dysfunctional.  In order for the economy to survive -- which requires people getting loans to buy large ticket items -- the Fed stepped in and basically has become the nation's "Citibank."  It's a bit complicated in structure, but essentially rather than as in the past, the Fed lending money to banks which lend to consumers, the Fed is lending to consumers through some thinly disguised intermediaries.  It does this by buying something like 95% of all mortgage backed and car loan backed securities that have been issued.

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