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View Diary: Why deficits don't matter - the reality of government finance (116 comments)

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  •  That's debatable (0+ / 0-)

    It doesn't increase net financial assets if the Fed really buys the assets at actual value. Since much of what was bought were securities, you'd have to assume that the reserves the Fed used to buy the assets are more inflationary than the assets themselves and the power to borrow against them using banks. This is debatable because the reserves used by the Fed pretty much stay locked up in the reserve accounts of the banks at the Fed.

    A very good recent analysis of the effects of QE is here. The bottom line is that it may have short-tern indirect effects, but doesn't change fundamentals.

    •  I see QE as this (0+ / 0-)

      Since Congress doesnt pass any serious large scale CCC WPA style stimulus, the Fed wants to do something, and about all they can do is to print.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Sun Nov 11, 2012 at 03:04:00 PM PST

      [ Parent ]

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