The economic effects of quantitative easing

There’s speculation the Federal Reserve may proceed with a third round of quantitative easing. Marketplace’s Paddy Hirsch explains what QE3 is supposed to do…

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25 Responses to “The economic effects of quantitative easing” Subscribe

  1. Jamie Thornberry May 7, 2013 at 2:37 pm #

    Yes this video is quite true in the fact that quantitative easing leads to inflation. Although inflation isnt the only disadvantage of QE. These include currency wars with foreign investors as well as a rise in commodity prices. At the present time it appears that America is just a kid with a bad credit rating. Debts should be payed as the come and not be passed to further generations.

  2. looneyhart May 7, 2013 at 2:57 pm #

    read: Fiat Money inflation in France by Andrew Dickson White. And make sure you do what the rich do, convert your worthless paper money into a hard asset that also will inflate. Certainly you do not think the childhood games of hot potato or musical chairs, were only a childhood folly? Hope you were good!

  3. vChipGivesThemSight May 7, 2013 at 3:43 pm #

    Investors dump the dollar and move to physical assets and commodities like oil, precious metals and land. Big FIAT currencies like the Dollar, Pound and Yen inflate and possibly crash. This causes many people to loose all they have worked for in their life as all their wealth has been in digital form.

  4. Maku O. Isaac May 7, 2013 at 4:08 pm #

    Hey! Whats the impact of Quantitative easing on the U.S Dollars and the world economy in general. To my mail please: makuisaac25@gmail.com

  5. Ray Cathode May 7, 2013 at 4:36 pm #

    Hey1337cookie, how the heck does money “trickle up from low income workers”?  They spend everything they have and save virtually nothing – there is nothing left to “tricle up”.

  6. cathwitness May 7, 2013 at 5:25 pm #

    Was just wondering how does this benefit the Government apart from the obvious
    tax revenue these activities might generate?
    Also, since the whole population has now taken on more debt, wont it hinder people spending in the future?

  7. Trung Nguyen May 7, 2013 at 6:02 pm #

    remember the first time i saw your QE clip was 4 years ago…
    time runs ;)

    Best wishes for you and thanks.

  8. 1337cookie May 7, 2013 at 6:48 pm #

    This sounds retarded. You cant have infinite growth like that… Money doesn’t trickle down from banks it trickles up from low income workers… Does this QE system actually do anything in reality? Sounds like they have tried it a few times and it hasn’t worked… Sounds like an excuse for paid politicians to put money into big banks….

  9. Jonathan Maher May 7, 2013 at 7:27 pm #

    mmm but here in the UK, after 4 years of quanatative easing the economy is stagnating because the banks have refused to lend to individuals and businesses.
    Banks instead have invested the money overseas or into comodities.

  10. Deiv Muzztein May 7, 2013 at 7:43 pm #

    and why do I have to pay interest again ????

  11. Ryan P May 7, 2013 at 8:42 pm #

    AKA “stimulus” on a massive scale. Once the faucet turns off, so do the effects (if they even happen in the first place).  the bubble will burst and our money will be worthless.

  12. Bellantoni May 7, 2013 at 8:56 pm #

    I thought hard about how I could reduce that to simpler english and I’m pretty sure it can’t be done.

  13. mrsha007 May 7, 2013 at 9:09 pm #

    Please rephrase that comment in English so I can reply.

    What does Austrian economics have to do with Evangelists? The two are completely independent of one another.

  14. Bellantoni May 7, 2013 at 10:01 pm #

    Being told by its evangelists that it’s logical doesn’t necessarily make it so, does it?

    If you think it’s logical to believe that every 6-7 years the business community is duped by the the exact same 400 year old gag… well all your amendment rights are safe from me. You’re free to believe that :)

  15. mrsha007 May 7, 2013 at 10:59 pm #

    What is so wrong with Austrian Economics? It’s sexy because it’s logical.

  16. Marine475 May 7, 2013 at 11:47 pm #

    I think this video lacks note that the excess liquidity usually goes to the public sector to finance such necessities as 10 000$ toilet seats and entitlements for pedophiles. In the end we get millions of debilitated people who think that money, goods and services come from being employed by the public sector. Just look at those fools in Greece.

  17. Don S May 8, 2013 at 12:38 am #

    These banks are not lending to the people.  Why would they lend to unemployed Americans who have terrible credit? What they are doing is buying foreign bonds that pay 5-7%… less risk of default… This is why inflation is in check, the money is not going HERE it is going overseas in the form of bond purchases for emerging markets. Bankers know we are a terrible risk, they want bonds from countries that can actually buy the products they produce (like the USA in the 50′s)

  18. Harry Smith May 8, 2013 at 12:51 am #

    Yeah Quantitative easing might force banks to give out bad loans and well remember Fannie Mae Freddie Mac? This in my perspective will encourage banks to purposefully lend out bad loans. The idea of Quantitative easing sounds simplistic though and it should work on many levels UNLESS you force them with so much money that they have no choice but to give out bad loans.

  19. Harry Smith May 8, 2013 at 1:12 am #

    I like this guy. Shame he doesn’t have more views.

  20. shrinkthegovt May 8, 2013 at 1:36 am #

    I agree, the plan is to increase loans, yet the bubble still hasn’t hit bottom. I don’t get how the Fed thinks lending more private debt out will work when there’s still private debt over 250% of GDP, still higher than the great depression and any other time in history since 2008. They’re trying to blow up the bubble again. Mild inflation at 3% wouldn’t hurt to lessen private debt, if we couldn’t take on more private debt through QE, but I think our country is screwed as it is…

  21. Bellantoni May 8, 2013 at 1:48 am #

    Most of the money won’t stay in this country at all, it’ll create bubbles and cause inflation overseas and we’ll keep up our stagnant and stationary economy until we get fiscal stimulus.

  22. shrinkthegovt May 8, 2013 at 2:40 am #

    Good video, and not to mention, people are still in debt in the private sector and we have a trade deficit. This means there will be leakages in the stimulus, and not all the new job income will be spent on the goods/services, and we risk inflating another bubble. Regardless, when that money is pumped in and there is lack luster job growth because of the leakages, we will see inflation. Hopefully it doesn’t reach double digits.

  23. will mcnutt May 8, 2013 at 3:30 am #

    Man your vids are always so easy to understand!

  24. Itsjames1 May 8, 2013 at 4:28 am #

    Well qe3 is here.

  25. yo1dude1man May 8, 2013 at 5:13 am #

    Exactly! It’s a race to the bottom. Everyone is trying to weaken their currency to drive more exports. US is countering with QE1, QE2, and possibily QE3. But it’s a highway to nowhere, if consumers around the world are faced with increased standard of living cost and potential job lost.
    Haven’t been tracking the Pound, nor British monetary policies. My guess here is Summer Olympics may have injected enough revenue from tourism to stave off any further recessionary pains till 2013.

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