View Poll Results: Is QE Socialism for the Rich and Bankers?

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Thread: Is QE Socialism For the Rich and Bankers?

  1. #11
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    Re: Is QE Socialism For the Rich and Bankers?

    Quote Originally Posted by MildSteel View Post
    The Federal Reserve engaged in QE by bailing out the big banks and keeping interest rates low. The Fed literally took trillions of dollars in bad debt from the big banks and place it on its books where it sits to this very day. It did not take any debt from ordinary consumers. Not only that, but keeping interest rates low has artificially driven up asset prices, which is where the rich have their wealth. This has resulted in the rich getting richer, while at the same time middle class wages have basically remained stagnant.

    Is the Fed engaging in socialism for the rich and bankers?
    Not really socialism in the social ownership sense, but QE is a function of economies where elements are clearly planned.

    Most of your OP is pretty damn close, but you did combine a few things that have different functions. In principle, QE is about buying financial assets for the purpose of causing a price increase that also lowers the yield, the exchange allows for increasing the money supply (or the reserves, held by institution.) The "bad debt" taken in is by design to be eventually released back out once asset prices hit a certain degree of stability for the purpose of matching to "good debt" in terms of market performance. You are right that since 2008 the Fed has increased "Debt held by the Fed" well north of 500%. Something close to $870 Billion held around the end of 2007 to the beginning of 2008, upped to somewhere in the $4.4 Trillion range today. The assets themselves are all over the place. Above $2 Trillion in "long-term" treasuries, just shy of $2 Trillion in GSEs (government-sponsored enterprise,) and additional complex debt investment vehicles packaged in various formats.

    Where you may see question is in the "debt from ordinary consumers." Yes, they did not remove debt from consumers and give them cash in exchange for the valuation of that debt. No, they were not removed from the effect of the process. The whole idea behind QE is to stimulate lending (and diminish savings, or "cash on the sidelines") thus stimulate investment. Interest rate controls, specifically keeping them at near or at zero, are all about supplementing debt issuance when market demand for debt is down. How well that worked is argumentative as the basic premise of the QE is to complement government fiscal spending in the areas of infrastructure and technology. An argument can be made that since Congress did not do all that much to hold up their end of the deal, then Fed action was largely squandered going entirely to wealth benefit. Markets artificially inflated to today's values, asset prices recovered (all but metals,) but the common worker saw little from the effect. Which is why we often say the highest and lowest income quintiles recovered, 4th - 2nd did not. The "wealth effect" did not happen this time, arguably if aggregate demand is not handled then the "wealth effect" never works.

    What the Fed ended up doing was recovering wealth by moving debt around and issuing a massive amount of reserves. Our actual money supply did not go up all that much in comparison to the reserves issued, that spoke to both the large bank bottom line against debt issue and what was called "liquidity" to stay compliant with Regulations. Congress and Fed in a way worked like one hand not aware of what the other hand was doing. Part of QE1 was the stipulation that these large banks hold these reserves (in some percentage) as deposits at the Fed. They were even paid interest on that deposit, meaning banks were less likely to loan that out as the money made from the interest on phantom money beat the return on debt issuance. Another issue... while the Fed is somewhat audited we do not know in totality the actual risk to the markets is once those assets are eventually dumped. Even another issue... QE developed the mentality of corporate valuation being tied to profitability over and above potential corporate growth year on year. Which is why we hear so often of our equity market values now tied to corporate profit since QE is officially over.

    Wealth and bankers made out quite well from 2008 to now, but it was not socialistic. It was oligarchy, the government does not own much more today than it did then (in valuation or acquisition for the purpose of control.)
    Last edited by OrphanSlug; 04-28-15 at 09:42 AM. Reason: Typo
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  2. #12
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    Re: Is QE Socialism For the Rich and Bankers?

    Quote Originally Posted by MildSteel View Post
    No, they are the same thing. What is that? Socialism for the rich and bankers. You can call it quantitative easing, you can call it debt forgiveness, or to borrow from the Israelis when referring to the idea of a Palestinian state, you can call it fried chicken if you want. What it is, is socialism for the rich.



    Do you have any idea what you are talking about? Do you have any idea what monetary policy is, and how it works? That moronic propaganda about free markets is crap. The Fed is merely manipulating the market for the benefit of the rich and bankers. How much of the trillions of dollars that the banks have parked in their accounts at the Fed has "trickled down" to the middle class? Go peddle that nonsense somewhere else.
    What does trickle down reaganomic taxing have to do with the fed? Forget it. I'd rather argue with a wall, have a good day.
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    Re: Is QE Socialism For the Rich and Bankers?

    Quote Originally Posted by MildSteel View Post
    This is a bunch of crap that is devised to cloud the issue at hand. QE and bank bailouts are all part of the response by the Federal Reserve to the financial crisis of 2008. Both have benefited the rich and bankers and are part of the same program of socialism for the rich and bankers. The title uses the term QE loosely to refer to this program of socialism for the rich. Please stop trying to obfuscate the issue in this way.
    I see, so you posted a poll so you could jump on any poster who doesn't agree with your evil rich meme BS. What a waste of space.
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    Re: Is QE Socialism For the Rich and Bankers?

    Quote Originally Posted by ttwtt78640 View Post
    Not so, by keeping interest rates (artificially?) low it also benefits the borrow and spend mindset of our POTUS and congress critters by reducing interest on the, ever growing, national debt.
    No, it is so because it is those very same people who put those people in office.

    Quote Originally Posted by ttwtt78640 View Post
    A side effect of those low interest rates also increases federal income tax revenue since it lowers the mortgage interest deduction "expense", reduces government bond tax free interest and increases the revenue from capital gains.
    And that revenue from capital gains comes from the enormous "GAINS" that the wealthy have made as a result of Fed policy.

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    Re: Is QE Socialism For the Rich and Bankers?

    Quote Originally Posted by ttwtt78640 View Post
    Indeed, using terms "loosely" does tend to obfuscate issues.
    It can do that, but in this instance the intent should be clear to the discerning mind. The intent is to convey the notion that Fed policy is creating enormous wealth disparity. That should be clear.

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    Re: Is QE Socialism For the Rich and Bankers?

    Quote Originally Posted by OrphanSlug View Post
    The whole idea behind QE is to stimulate lending (and diminish savings, or "cash on the sidelines") thus stimulate investment.
    That was the stated intent. However, what makes Fed activity suspect in this instance is that they kept up the activity despite the well known fact that it was doing very little to stimulate bank lending. It therefore begs the question, was the intent solely to prop up the balance sheets of banks?

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    Re: Is QE Socialism For the Rich and Bankers?

    Quote Originally Posted by Luftwaffe View Post
    What does trickle down reaganomic taxing have to do with the fed? Forget it. I'd rather argue with a wall, have a good day.
    If you read the sentence, it is clear that the phrase "trickled down" did not refer to Reagan's tax policy. Please.

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    Re: Is QE Socialism For the Rich and Bankers?

    Quote Originally Posted by ocean515 View Post
    I see, so you posted a poll so you could jump on any poster who doesn't agree with your evil rich meme BS.
    It is interesting that you have taken an observation on the effects of Fed policy and interpreted that as "evil rich meme." I wonder what would make someone do that. I'm not saying that as an insult. I am just wondering.

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    Re: Is QE Socialism For the Rich and Bankers?

    Quote Originally Posted by MildSteel View Post
    It is interesting that you have taken an observation on the effects of Fed policy and interpreted that as "evil rich meme." I wonder what would make someone do that. I'm not saying that as an insult. I am just wondering.
    I guess we're both left wondering. As I wrote, I was wondering why you posted a poll, since you obviously planned to hammer anyone who didn't toe your line. Why make it a poll?
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    Re: Is QE Socialism For the Rich and Bankers?

    Quote Originally Posted by ocean515 View Post
    I guess we're both left wondering. As I wrote, I was wondering why you posted a poll, since you obviously planned to hammer anyone who didn't toe your line. Why make it a poll?
    Because you are a ok guy, I'll try to clear it up, if you will listen. The intent of posting the poll was not to invite opposition so that I would have the opportunity to hammer. The intent was to discuss and to make a point. Yes, I feel strongly about this issue and as a result, my response might be strong to views that I do not feel are accurate. It is nothing more than that. There is no reason for you to feel that I have created a poll with the intention of hammering someone. Is that ok?

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