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0 pointstopspin7y ago0 comments

> QE had little to do with funding the government deficit.

This is demonstrably false. For a time the Fed was buying over $2 billion of long term debt per day [1]; bonds that had no hope of finding buyers on the open market. They were directly funding federal deficit spending with QE.

[1] https://www.federalreserve.gov/newsevents/pressreleases/mone...

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JumpCrisscross7y ago· 2 in thread

> For a time the Fed was buying over $2 billion of long term debt per day [1]; bonds that had no hope of finding buyers on the open market. They were directly funding federal deficit spending with QE

You're quoting a Federal Open Markets Committee (FOMC) statement [1]. This is the arm of the Federal Reserve which has always bought government debt. Without QE, the FOMC would have been buying huge amounts of Treasuries to keep (a) the money supply constant and (b) interest rates low.

QE's novelty was the Fed saying "we aren't only going to buy Treasuries." Complaining about the Fed buying Treasuries is complaining about the Fed per se. Complaining about QE is complaining about the Fed not buying Treasuries, and instead buying other securities.

[1] https://www.federalreserve.gov/newsevents/pressreleases/mone...

topspinOP7y ago

> You're quoting a Federal Open Markets Committee (FOMC) statement

You're pretending not to see the scale and exceptional nature of that historical event. Characterizing that maneuver as routine is disingenuous and indicative of precisely the sort of thinking that creates the slippery slopes. Will this be the sort of bad guidance our leaders will use to rationalize future decisions? We'll see.

JumpCrisscross7y ago

> Characterizing that maneuver as routine is disingenuous and indicative of precisely the sort of thinking that creates the slippery slopes

It wasn't routine. It was unusually-large FOMC activity directed by Ben Bernanke's study of the Great Depression. (It appears to have worked at keeping the money supply stable.)

But all of that is not QE. If you don't know the difference between QE an the FOMC, mightn't the nuances of monetary policy be similarly escaping you?

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