Investing All-in-One For Dummies. Eric Tyson

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       The Fed is printing a ton of money to implement quantitative easing (QE).

       QE is being done to stop deflation (falling prices), but the Fed is too dumb to realize that consumer prices are rising, not falling.

       The Fed has been wrong about everything the past 20 years.

       Then Fed Chairman Ben Bernanke is unqualified for his job because he has no business experience, has no policy experience, and has never held an elected office. He is a fool who’s been wrong about everything during his tenure in office and has already blown up the American economy and is now working on blowing up the world economy.

       The government is stupidly buying Treasuries from Goldman Sachs at grossly inflated prices (rather than buying Treasuries from the Treasury department). Goldman Sachs is ripping off the American people.

       The Fed is not printing a ton of money (expanding the money supply) to implement QE. Retail money market assets and bank deposits could increase, for example, if individuals decided to hold more cash. Demand for these highly liquid assets can come from folks around the world, so increased demand for the U.S. dollar during times of stress can lead to the growth of M2 (the leading measure of the money supply). Changes in money supply are complicated.

       The Fed is well aware that there’s inflation right now but has been concerned that the rate has been quite low by historical standards and that there were signs of accelerating deflation during the severe recession.

       If the Fed had been wrong about everything the past 20-plus years, our economy would be in shambles and our stock market wouldn’t have appreciated more than 1,400 percent since 1990. Before the COVID-19 pandemic and government-mandated shutdowns, the U.S. unemployment rate was at a 50-year low at 3.5 percent.

       Bernanke was well qualified for his job.

       The Fed is buying Treasuries from banks at competitive prices and is doing so to encourage more bank lending. Saying that the Fed is directing this buying solely to Goldman Sachs is absurd. The Fed conducts such Treasury open market operations through an approved list of 18 primary dealers, and Goldman is one of the 18 dealers operating in a highly competitive environment. Goldman bashing has been going on for a long time.

       Quantitative easing can be thought of as an expansion of the central bank’s balance sheet with no intentional change in its composition. That is, the central bank undertakes more open market operations with the objective of expanding bank reserve balances, which the banking system should then use to make new loans and buy additional securities. However, when credit spreads are very wide, as they are at present, and the credit markets are quite dysfunctional, it becomes less likely that new loans and additional securities purchases will result from increasing bank reserve balances.

       In contrast, credit easing focuses on the mix of loans and securities that the central bank holds as assets on its balance sheet as a means to reduce credit spreads and improve the functioning of private credit markets. The ultimate objective is improvement in the credit conditions faced by households and businesses. In this respect, the Federal Reserve has focused on improving functioning in the credit markets that are severely disrupted and that are key sources of funding for financial firms, nonfinancial firms, and households.