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(ABC)   You know it's a bad habit when you're jonesing for some stimulus and the fed has to send you to rehab   (abcnews.go.com) divider line 8
    More: Interesting, Federal Reserve, cost of capital, behavioral economics, economic power  
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804 clicks; posted to Business » on 18 Jun 2013 at 11:07 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-06-18 11:16:11 AM  
It's a form of stimulus, but unlike the earlier rounds of stimulus, the government is lending money with interest attached instead of giving it away or spending it.

The Federal Reserve is the government now? Don't tell Ron Paul.
 
2013-06-18 11:26:29 AM  
The goverment has basically become the pusher in this context.  What will be interesting is just how long they string the junkie along.  They know what they have to do, but it is fun to watch the gnashing of teeth of those that would pretend that this is sustainable in the long term.
 
2013-06-18 11:32:25 AM  
QE introduces stimulus because its effects on interest rates lower the overall cost of capital, indirectly encouraging more risk-taking and investment in general. All of this helps companies improve earnings, which prompts people to invest.

Let's rewrite that:
QE introduces stimulus because its effects on interest rates lower the overall cost of capital, indirectly encouraging more... investment in general. All of this... prompts people to invest.

Not sure if author is stating tautology, or a positive feedback loop.
 
2013-06-18 11:45:40 AM  
This paragraph bugs me as well:

Essentially, QE [3]... is the Fed's effort to boost the slow-growing economy by buying about $85* billion in existing bonds from banks every month. It's a form of stimulus, but unlike the earlier rounds of stimulus, the government is lending money [to banks] with interest attached instead of giving it away or spending it.

QE1 and 2 was the Fed buying Treasury bonds. With that in mind, let's rewrite this paragraph:

Essentially, QE 1 and 2 is the Fed's effort to boost the slow-growing economy by buying about $X billion in existing Treasury bonds from the government every month. It's a form of stimulus, but unlike the earlier rounds of stimulus, the government is lending money [to the government] with interest attached instead of giving it away or spending it.

*to my knowledge, it's 40, not 85
 
2013-06-18 12:12:28 PM  
As long as no one confuses QE and "printing money" this could be an interesting discussion.
 
2013-06-18 01:19:19 PM  
QE -- just another word for government printing more money aka,  Obamy Bucks
 
2013-06-18 02:57:31 PM  
Oh, well.
 
2013-06-18 04:00:50 PM  
should I be asking Michael for my Stimi?
 
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