Its a complete FAILURE, all its done is allow banks to boost their balance sheets. While the rest of the real economy in the UK is suffering because they can't get finance and the government wants to make it easier for firms to fire staff.
So with a policy that works against each other, no wonder NO one will spend or borrow.
fucking dick, just say the global monetary-market system is failing. im sick of all this complicated terminology meant to confuse people. anyone that doesn't understand why the economy is broken has to understand fractional-reserve banking. look this up. essentially, our economy only works because of cyclical consumption. meaning we need money to survive. so to feed everybody we make lots of shit and consume a lot of shit, make shittier shit e.g. snuggies, or people cant pay back their debt.
@yakuzasama01 Been researching your question. Ill add to it soon.. So, I sell you a bond for $100 at 2% annual interest rate with yield to maturity 10 years. The next day my friend John offers you $110 for that bond. The interest rate on the bond that you purchased stays the same until maturity. However, if you sell him the bond for $110, how much is his yield? He gets 2% of $100 on a bond that he paid $110 for. So, his yield is less than two percent understand?
@reLENTless1897 Woow. I'm really impressed. You've used a clear and simple phrasing and you've supported your explanation a very highly relevant example. Thank yo very much!
@iwantmyharem your dumb, like really really dumb. Sry, i just noticed how ill-informed you are on economic terminology. I think your a good guy, but you know why money sucks? Money sucks, because people need people from birth to death and money just makes thing complicated. However, it's going to take all of us to get educated enough to trust each without money. And we're no where close to that. Therefore, i'd get an education if i were u before this shit hits the fan.
Confirms the fact that the whole economy is at the mercy of the bankers, that's a privatised monetary system for you.
Take away the banks ability to create money, I suppose for you guys in the US it will mean a vote for Kucinich, Ron Paul or even Bill Still, you can do it people, at least you have politicians who see what's really going on.
No, drawing the fed as "uncle sam" promotes the myth that the federal reserve is a federal agency. It's a *private bank* owned by bankers, but the rest is spot on, making the whole completely sickening. No different than me printing money (out of thin air) to get the banks assets and buy up the treasury bonds (which are a debt of the american people). You, the people will work to pay me back the loan + interest, on money I created out of thin air.
It is a lose lose because even if the economy kicks on, the inflation will skyrocket because for every 10 Billion dollars the Fed creates, a Trillion is created by fractional reserve banking.
Should have went on to explain how the banks still don't lend the money handed to them by the Fed and instead invest it in commodities and equities markets. This being the reason for the bull market we saw for the last couple years.
This guy is a retard. First the Federal Reserve is NOT part of the US government, it's a private business that the US government pays to run the monitory system. He gets even further off track as he goes on and on and on ...
Until the end when he admits that quantitve easing ends up destroying the economy.
He forgot to mention that the Federal Reserve Bank (who creates the money) is independent of the Federal Government (i.e. not a government institution). So, the Fed is creating money from thin air and providing it to banks as a free loan. Any interest that the banks make with this money is pure profit; interest on US bonds is basically risk-free. The private Fed is also printing money to purchase interest bearing US Treasury Bonds (as mentioned). The banks make out in this deal, dontcha think?
@flash3780 That was the intention was to create liquidity in banks and take the pressure off of them so that they can give out more loans. The Fed isnt printing money however, it is crediting US banks federal reserve accounts. This credit isnt a loan, it's the money that the Fed paid the bank to purchase some of their assets.
Hi, Paddy, I had my drink , bit of red wine and french blue cheese. Your lessons are so nice and clear and easy and presentable. you should come to Kaplan singapore and teach Uni. Of Bedfordshire. Special lecturer. Most of my lecturers part time sucks.!
That's just so comforting. Now the banks have plenty of money to make lots more bad loans at huge interest rates because the generous American taxpayers will absorb all the losses. Can you say moral hazard? That's ok, though, because the dollar is soooo weak now all the world will clamor to buy our American goods and we will all have jobs! So where are the jobs? We must be getting something for all this inflation.
Let's all not forget one scary thing. There use to be day when for every dollar there was a gold bar in fort Knox. This is how well and trusted our economy was because it was backed by something " concrete". Now they just keep printing money but it's value is not based on anything tangible. So how can we just keep giving out something that has no real value? Gold is the way to go. I think we need yo get rid of all this worthless paper who's value is manipulated, and go back to basics. Just a t
I just didn't get one thing, I'd appreciate if anyone cares to answer: why does the yield of the treasuries decrease when the Fed buys plenty of bonds? Isn't the yield a fixed rate that's independent from the bond value?
@truthhawk7 oww ok that makes sense. Is there a limit on the number of owners and the percentage they own on these products? Going back to your example, can the number of owners keep growing indefinitely?
the federal reserve is uncle sam huh? you are only pepetuating a myth that the federal reserve is in any way tied to our federal government... you sir are either a liar or lazy in your explanation and with such a serious matter there is no room for laziness.
Yep, he diffidently said that our problem is that poor business people are not in enough debt and they need to take out more loans. So the solution is to give the taxpayers money to these banks to pay off the debt from defaulting on their repossessions so they can give out more credit, but still get to keep all these small business (and houses) that they repossessed while dropping the value of the dollar. So in summery the solution is to drop the value of the money and put people in more debt.
Borrowing short term and lending long term is not taking any risk? What if short term interest rates rise? You borrow for 3 months at 0% but you have to pay that money back in three months or you borrow again. So if short term interest rates go up to 3% you are now paying out1%/year. Yield curves do get inverted.
Here's a better explanation. Jewish TALMUD: "Jehovah created the non-Jew in human form so that the Jew would not have to be served by beasts. The non-Jew is consequently an animal in human form, and condemned to serve the Jew day and night." Midrasch Talpioth, p. 225-L - "Christian birth rate must be diminished materially." - Zohar (II 64b): - "Jews must always try to deceive Christians." - Zohar (1 160a) -"Extermination of Christians necessary." - Zohar (11 43a)
A biggest public campaign has started to end fractional reserve banking, look at the POSITIVE MONEY website and support the campaign ...and spread the word.
My Keynes Hayek: The Clash That Defined Modern Economics is published in October by W.W.Norton. See website: sites.google.com/site/wapshottkeyneshayek/
@CherylJonesJ There would still be printing of money. When banks lend money, new money is created. The actual printing of money you see on TV, when the bills are coming hot off the press, is a completely natural and necessary function of an economy and central bank.
When people talk about "printing money" in a negative light, they mean that the government "prints money" or creates it to pay off its debt. It's called monetizing debt, and it's illegal. This could be done on a gold standard too.
If banks can earn an easy almost risk free 1.5 to 2% with treasuries, why are they leveraging up and buying riskier assets like commodities, foreign stocks, etc? Is it merely to make lots more money despite the risk since the banks know they will be forever bailed out by taxpayers?
One thing you didnt include ( I have a double major in economics and Finance) is that quantitative easing not only lowers yields, but masks the real risk of the investment in 10 year treasury notes because at some point in the future Ben has to stop purchasing these. Once he does yields should go up as the supply of notes is sold back into the market. QE is purely inflation produced through the public sector rather than the private. Which is even worse for the long-term health of our economy.
QE2 ends this June with it the US Treasury is being taken off Federal Reserve life support having to sell a record 180 billion monthly of new issues on the open market not to the Fed. What do you think is going to happen when no one steps up to the plate at these ridiculously low rates 0.02% to 0.53%? Rates will rise it’s just when and buy how much. To join our group talking about the best ways to trade rates higher call US+949-376-8020 or for one report see web address keypage,net link 19.
Who owns the federal reserve, who runs it? Doesn't running the federal reserve mean those people have a nuclear atom bomb on the economy? Doesn't it also mean they can milk the economy by printing money?
Aren't those the 'masters' that need to be killed?
WOW. this is the first demonstration that actually made sense. If it isnt bad enough that our country is in the position of having to resort to quantitative easing, risk hyperinflation, and print money to revive an unsustainable economic model, now I have to have a foreigner be the only one who can adequately explain the process to by which my own government taxes me by denigrating my purchase power. THANKS!
I don't understand though, if banks don't want to loan their money to business people because the banks don't believe the business people will be successful and unable to pay back the loan, why would to loan money to them with QE? Sure they may not want to invest in government bonds anymore with the low yield rate, but why would they loan it out if the banks think they're gonna lose money on the loans? Wouldn't they instead just keep the money until they find something worthwhile to invest in?
@alexamasan you not getting the picture right. The guy explains it in definitive terms, of what should happen, as opposed to what does happen. At the heart of all this is RISK. The bank has made poor decisions in the past and too the risk and ended up with bad securities, so in effect it has lost money. So when the fed come in and buys the bad securities means that the bank is now recovered the money it would have lost. The bank is now again free to risk and lend to make a profit.
@contemporarymonk I completely understand, but isn't this just encouraging the mistakes of the banks though? The goal of QE is to get these banks to lend out money. But the banks would most likely lose money on these loans, that's why they aren't loaning. So they'll just be gaining more toxic assets and repeating the mistakes they just made.
@alexamasan thats the whole job of market regulation, and banks should have learned a lesson, if they have not, and continue the practices they had before, then they are destined to fail and will/should not be bailed out. QE is a hot debate wether it helps or causes more problems, its for you to decide. However i agree that it had to be done simply because there was no other way to solve the problem. The problem is still not solved however we have more time to act and solve it now.
@contemporarymonk So why do you personally think that doing QE is better than simply letting the banks hang on to the money? Do you think that QE encourages the mistakes the banks made in the past?
@alexamasan Banks finance everything, from your toothbrush, to the Copper that your pipes in the house are made from. I work on a trading desk for a metals company. We use the banks a lot to finance our purchase, and we pay the bank back once we have made the sale. Basically meaning that we do not upfront ANY money to the seller. This creates a cost of money, simply interest. Please read next post, i dont have enough space here to explain.
Now picture this: I am a buyer of Copper Ore/Concentrates (Thats what we trade). I want to buy 500 tons of copper concentrate, at the current market it would cost me $9,000 x 500 = $4,500,000. But i do not have this money to pay the seller, and if i did i would still rather use the bank, as the cash flow is very important to me. Now i go to the bank and ask for 4.5 mil, they say no, as they have no cash to lend. Meaning i can not trade, meaning most other companies are in a same possition.....
So simply put, Banks finance big and small companies via credit lines (once you exceed your credit line, the bank will not lend you any more until you pay it back, same as a credit card). If the credit lines are cut and these big corporations cannot acsess large amounts of money, they become stagnant (basiclly not growing), or they begin to decline. So QE is somewhat of a life line, i agree its irresponsible at the least and dangerous in sence of the risk. But now they are talking about QE 3.
@contemporarymonk I understand what you are saying. As I personally see it, banks have to discriminate who they loan to as they want the person to succeed and pay back the loan. Some people asking for loans may simply be incompetent and be unable to pay the loans back, ending up with the bank having either lost all the money loaned or left with collateral that may/may not be toxic and the person who got the loan is now worse off than before because now he's in a debt hole he has to climb out of.
@contemporarymonk Pretending the copper buyer was the debtor, as capital is limited, either the money loaned or the copper itself, it now has been wasted on this failed firm where it could have been invested in a more competent one instead that would have been able to pay back the loan and produce goods. That's why banks have to be careful who they choose to loan to. I understand you see the risk as well, I just think the banks should stay discriminant as most firms fail in the first 5 years.
The federal reserve being a private Nanking cartel has already been adressed but I want to raise another point. Devalued currency means US goods are cheaper for other countries to import. My thing is because the US is being de industrialized in the not so distant future what goods will be available to export? Hollywood entertainment and food?
@solar9019 What goods will be available for export? well no goods as such which you are thinking off, like a toilet being made in the US and sold to New Zeland. BUT you will have a very high hi-tech industry, with intelectual property, which will lead to services (Tertiary jobs) and quaternary jobs. These are basically highly specialised services, such as financial services, education, insurance, banking etc. Basicaly you can export what you know instead of actual physical goods.
@contemporarymonk Fair point. But consider India and china also have intellectual property. Those that are educated in those fields are very good (not to say that we're bad) But their labor is much cheaper. But hey.At the rate we're going maybe the dollar rupee&yuan will be equally worthless soon. Also, intellectual property usually requires at least a 4 yr degree. Not everyone will be getting a 4 yr degree. Whats the high school grad supposed to do for the rest of their life? Flip burgers?
Only the FDR Glass-Steagall principle will separate commercial from speculative banking, thus freeing the nation from obligations to Wall St. and the City of London, and re-establishing a credit system for rebuilding the nation.
H.R. 1489, Return to Prudent Banking Act of 2011, is before the House of Representatives, which aims to revive the separation between commercial banking and the securities business, in the manner provided in the Banking Act of 1933, the so called 'Glass-Steagall Act
@mrledhead68 it's not your money it's money the the Fed created or in other words boroughed from your children and grandchildren because they have to pay it back and from the Chinese, Japanese, Europeans and Arabs which your children and your grandchildren will have to pay of. So it's not your money it's money your offspring hasn't even earned yet.
@cookmatthewr first of all English is only my third language of four which I can speak, the question you should ask yourself is, how many languages do I speak instead of trying to correct somebodies spelling on youtube. In my haste I exchanged the word borrowed for boroughed an honest mistake, but what do you call the use of mental fortitude when mental state would be more appropriate. Third of all how can you disseminate what my "mental fortitude" is as you like to call it from what I wrote.
I spent over 100K for a bachelor's degree. I learned more from this guy from 3 videos than I did in four years. Sad....smh.....That pisses me of........
A great explanation of the theory behind QE, however, the reality is that the US has so much debt that an increase in interest rates means that the amount of debt owed will increase dramatically. By pumping money into the economy, the fed can keep those interest rates low, meaning we won't incur more debt through interest.
(But that doesn't really matter because our daily deficit is so high that the debt is increasing anyway.)
QE money printing is the normal practice of banks its what they have always done except that QE simply means we are doing it on a larger scale than normal.
Writing an article on it now on me blog. danster82 com
QE is not the easy way out, actually it's not a way out at all. Instead of letting it pop, you blow the bubble even more and we will end up with a way bigger crisis. Cheap money and risk full investments got us in the crisis in the first place. So we need even cheaper money and more risk full investments?
But the board members of the FED are selected by the president. It's really strange and dodgy construction. Fact is they're all friends. Politicians, FED members and bankers. We need to end this cronyism and end the FED.
I'm not gonna watch a 2 hour movie. But still, the legal construction is irrelevant, I don't know why you want to emphasize that it's private. The FED has a monopoly on money and the government is protecting it. Who owns who, who knows?
Well, the FED don't pursue public interest. Only some corporations interests (not all private corporations).
Being private puts money management under control of a corporation who is foreign to USA. QE is not about giving credit to USA business, but to protect profits of some banks and financial corporations, all owned by the same owner.
All the money printed was never intended to "stimulate" the economy, or allowing more credit.
I'll tell you a secret. Government and big corporations are not rivals, never were and never will be. The FED has the monopoly on money aka federal reserve notes and the government is protecting it.
@madass888 Do you understand that the government of USA debts a dollar to the FED for each dollar printed? Do you understand than the Fed NEVER gave a cent to the government? The FED gets the debt amount end interests out of nothing? The Fed gets pure profit, after investing nothing, and running no risk? And other banks owned by the Fed owners profit almost 10 times more, without investing anything, and running no risk?
I agree that we should end the FED. But you're pretending as if the government has no blame. We actually have a name for this government-corporate relationship: Cronyism. I'd say we should end the FED, default on our debts and stopping giving bailouts and guarantees to banks.
@madass888 I don’t understand why you say that I “pretend” that, but I think that the government only runs the show. The FED masters own the ropes. The bailouts are insignificant coins. The FED profited more than one dollar for each one ever printed, and circulating in the world. It’s the same for each British pound, and many other currencies in the world. You can’t fight such power.
@marracotube Wow you're obviously a Glenn beck watcher. The federal reserve IS autonomous from the United States, BUT the american congress can take away this autonomy whenever it so choses.
LOL, way to rationalize a ponzie scheeme, major lulz! Then this moron goes on to say that the fed = the government.. His explanation is from the sheeple point of view.
Great explanation of QE the only thing it left off was why it will fail. Because QE does not address the real problem, credit worthiness. It only addresses the symptom.
why doesnt the fed just lend the money to the people. instaed of buying all the assets and tesuries.ect ect. why not get rid of banks and lend money from the start? they create the money in the end?
@jihadulnafs then some people would say it is socialism and not capitalism because the government has a monopoly of it. Correct me if i'm wrong isn't the reason to have a lot of competition is to have innovation. i'm just wondering if we'll ever come to a point where innovation isn't possible anymore.
@crazendisturbed "then some people would say it is socialism and not capitalism "
It already is socialism! There's no such thing as QE in a capitalist society. Once you intervene, it is no longer a free market, so sadly we really aren't a capitalist country anymore.
I think Barry the bank manager will just hold onto his money and only invest in the businesses that are most likely to pay back the loans. I think he's acting rationally by not lending to everyone. Ask yourself; Who's money is in Barry's bank? Well, it's your money of course. Its not Barry's money. Do you want your bank manager to make wise, rational decisions on whom to lend your money to or do you want Barry to be coerced into making bad decisions with your money?
Sounds like a lot of hot air to me, I just think QE is even more bullshit to cover yet another Banking fraud which is deliberately designed to create hyperinflation I can't quite understand why this guy refers to the Fed as Uncle Sam... I'm sure most of us know who runs the Fed.. and it ain't America!
Next problem - this explanation assumes that there is an unmet demand by business for loans. With so much political uncertainty (cap and trade, health care reform, energy costs), you can't force a business to borrow money it doesn't want.
Borrowing 30-90 day "free" money to buy 10 year treasuries is a HUGE risk. The moment interest rates go up, you won't be able to replace the borrowed money. Selling the bonds 9 years early in rising rates will take a huge loss.
This was all wrong. QE does not get government involved but rather the Fed. The buy reserve so the treasury yield goes down which would force the banks to lend to potential businesses that they were holding off due to the risk. Now the risk of not "investing" (or loaning) grows, because after all, they need to make money somehow, and they go boast businesses. Year 2010 was the fruit of these policies, along the stimulus and TARP, which yielded double digit profits every single quarter.
@ninuxy and government and the fed are not related to each other at all?! Anyway he doesn't even use the term government, but uncle sam. if you're that smart, do a better video!
@JJTheBigDog The correlation does not imply causation. You did know that fallacy, didn't you? Uncle Sam is a national personification of the American government, so yes, he was referring to the government. The Fed is "privately" own through a decentralized system of banks (members of the Fed) that operates on whatever monetary policy it decides--currently a fiat system. Although it has public components instilled in it through law, it can act with or without government's permission.
In either case, the Fed by itself does NOT "print" any money. That is to say, the circulation of money "supply" does not increase or decrease by the "Fed" but rather by the government through the Treasury department. This whole rhetorical references to "printing money" is nonsensical. QE has nothing to do with printing Treasury notes.
@ninuxy But isn't the whole POINT of QE to create loans, and thus expand monetary base ("print" money")? If reserves aren't being loaned out, then there was no point to QE?
@zzzzaaa0990 What? So if I am a bank owner and withholding money on my asset sheet, then find venues to be profitable by loaning to businesses, I'm "expanding the monetary base" and "print[ing] money?"
Talking about concocting stuff up there buddy. The Treasury is the only governmental agency that "prints" money. Why are people still stuck in the basics?
@zzzzaaa0990 Yes, it would "transfer" bonds to reserves of the bank's asset balance sheet. There is no new asset created; there are no new loans made, no new deposits raised, no nothing.
When the interest rates are low, banks look for business opportunities to make money or invest. Compounded with the newly "increased" reserves on their asset balance sheet, they have "more" incentives to loan to these businesses who weren't qualified. Hence quantitative [of reserves to] ease [the loaning].
@ninuxy Actually the NY Fed website even says that these operations are "financed through the creation of additional bank reserves". So if and when banks make new loans on these new reserves, new money has been created. I have no idea what you are arguing about.
@zzzzaaa0990 What? So just because a "refined" petroleum goes from a refinery to the gas stations, "new" oil is created (extracted)!!! Try to make some sense.
Yes, when the amount from an "already existing bond" goes to the "reserves" on the balance sheet's asset, you're simply shifting an "already printed money." Similarly, when a loan is issued, those reserves are moved to the loan on the balance sheet, but again, no new money is created.
@ninuxy no no, why are you comparing banks with oil refineries?? You have it all wrong, please pick up a macroecon textbook rather than learning from wherever the fuck you're learning your bs. And no, it doesn't "shift bonds", it creates money out of nothing to BUY these bonds from banks.
@zzzzaaa0990 Umm... that was an analogy which was suppose to clarify an abstract concept through a familiar story. I guess that obvious must have escaped you.
Hahaha! Ya, keep believing whatever a piece of drollery you picked up on the Internet and tell me transfer of bonds to reserves on the balance sheet is equivalent of printing money. You are a lost cause. Money is not created out of nothing. I don't see the Treasury increases the money supply on its sheets.
@zzzzaaa0990 Umm... that was an analogy which was suppose to clarify an abstract concept through a familiar story. I guess that obvious must have escaped you.
Hahaha! Ya, keep believing whatever a piece of drollery you picked up on the Internet and tell me transfer of bonds to reserves on the balance sheet is equivalent of printing money. You are a lost cause. Money is not created out of nothing. I don't see the Treasury increases the money supply on its sheets.
@zzzzaaa0990 Umm... that was an analogy which was suppose to clarify an abstract concept through a familiar story. I guess that obvious must have escaped you.
Hahaha! Ya, keep believing whatever a piece of drollery you picked up on the Internet and tell me transfer of bonds to reserves on the balance sheet is equivalent of printing money. You are a lost cause. Money is not created out of nothing. I don't see the Treasury increases the money supply on its sheets.
However the board of governors of the FED are appointed by the president and confirmed by the senate, the structure of the FED was designed and can be changed by the congress. It is a partially private, partially governmental institution. The objectifs of the FED are given by the Federal Reserve Act and the Humphrey Hawkings Full Employment Act. Therefore the personification through uncle Sam isn't wrong.
@JJTheBigDog You are rehashing piffle here. Just because governors of the Fed are appointed and approved by the congress, it doesn't make it a part of the government system--the Treasury on the other hand is. The Fed can run its business independent of the government but in spirit of cooperation between the banking system and government (economy as a whole), they tend to convene and discuss matters to balance their monetary and fiscal policies.
Hey, just a heads up, two years later and this QE1 didn't work. In fact even mainstream media are starting to wonder if we are close to an economic collapse. And QE2 is not going to work either. So much for Keynsian economics.
What does it feel like to be head and shoulders more intelligent and of infinitely superior moral integrity than most people, and be able to see simple reality so easily? It's amazing how fantastically pathetic and disgusting people are when their pocketbooks are on the line. E.g., like the guy who is about to give this reply a "thumbs down". :)
@CaronteEmpire I agree but I think the gov. bailed them out assuming it would stimulate the economy, correct? Obviously it was a bad decision on their hand, What does their CEA feel about that?
Quantitative easing will only work if they which businesses will do good, not just in the American but. Internationally. How can one have that much faith in bankers to know who will and will not succeed?
@twisted45 banks basically borrow from the government i believe. I think you may be talking about the central bank which the gov does deals with, but I may be wrong?
@martketplace, i have some questions for you, 1. How much interest does the goverment pay to create (aka PRINT) 600 billion in QE2. 2. Who does the goverment buy the bonds from? i have been told that the USA goverment purchases bonds from the barry the banker. if so, wouldn't that make a full cycle? Why would barry the banker lend to hiogh risk average joe small business guy when they can sell bond the the USA govrment for profit and also sell thier bad loans, cdo, and mbs to the USA goverment
Remember that this is an older video from over a year ago - and does not directly address the recent 2nd round (or possible future repeats)... except at the very end (6:56) where he notes that if it doesn't work, we'll all be "very badly... needing a DRINK!"
looks to me like the bankers can get all the money they want for a little of nothing and then sat on it till the time is right then cash in on the loan money even more then ever. I don't really under stand why they don't put the people back to work and use the money for that and cut the banks out of the picture . Could it be " CONTROL " ?? When will people wake up ? We might have 10% of control over government ..lol But which one of you " voted " for the people that runs the Federal Reserve ??
@CaronteEmpire I agree! These bad bets should be felt only by the banks that made them and not the Taxpayers. .....but I place the blame on the Government not the bank. The problem is that Government wields too much power. If the government was not controlling and regulating most of our economy and our daily lives......if we cut Government in half.......then maybe business would not find it in their self interest to send lobbyists to Washington and buy Politicians with campaign donations.
I think he said that inflation makes things cheaper to buy so people will buy more. LIE. Inflation makes the price of everything go UP! We need deflation.
@CaronteEmpire Banks are in the business of lending. If they won't lend to you, you may not be a good risk. This is how it works. Don't confuse Government Guaranteed loans with a "Real World" estimate of a borrower's ability to pay back the loan. Also, times have changed, in this economic environment it is natural for lending to decrease. If the government doesn't like the position they're in (i.e. bailing out banks only to have them payout bonuses etc.) thay olny have themselves to blame.
@4:43 he states that the Fed pimps money into the system. What he fails to mention is that the Fed is simply printing money. No new wealth is created. The Weimar Republic tried the same thing. History shows how that turned out.
Devaluing the dollar makes goods and services more expensive for Americans. Unless wages increase with that rate of inflation, we have a big problem.
why do central banks have so much power?
kktg1001 2 weeks ago
Its a complete FAILURE, all its done is allow banks to boost their balance sheets. While the rest of the real economy in the UK is suffering because they can't get finance and the government wants to make it easier for firms to fire staff.
So with a policy that works against each other, no wonder NO one will spend or borrow.
theredjediknight 1 month ago
ur dumb
Boobs1234ism 1 month ago
This has been flagged as spam show
fucking dick, just say the global monetary-market system is failing. im sick of all this complicated terminology meant to confuse people. anyone that doesn't understand why the economy is broken has to understand fractional-reserve banking. look this up. essentially, our economy only works because of cyclical consumption. meaning we need money to survive. so to feed everybody we make lots of shit and consume a lot of shit, make shittier shit e.g. snuggies, or people cant pay back their debt.
Boobs1234ism 1 month ago
Comment removed
Boobs1234ism 1 month ago
Wooooooooow, you should be my teacher! hahaha =) thanks!
JuanjoGod 2 months ago
Why is it that when Uncle Sam buys off Tbonds, the yields go down? Isn't it still 2% after 10 years? Can someone please explain it to me?
yakuzasama01 2 months ago
@yakuzasama01 Been researching your question. Ill add to it soon.. So, I sell you a bond for $100 at 2% annual interest rate with yield to maturity 10 years. The next day my friend John offers you $110 for that bond. The interest rate on the bond that you purchased stays the same until maturity. However, if you sell him the bond for $110, how much is his yield? He gets 2% of $100 on a bond that he paid $110 for. So, his yield is less than two percent understand?
reLENTless1897 1 month ago
@reLENTless1897 Woow. I'm really impressed. You've used a clear and simple phrasing and you've supported your explanation a very highly relevant example. Thank yo very much!
yakuzasama01 1 month ago
Now I understand. Thank you.
toa4lyfe 2 months ago
EASY AND CLEARLY EXPLAINED
parzrelmuzik 2 months ago
So why dont the Fed just borrow directly to the small business people?
iwantmyharem 2 months ago 2
This has been flagged as spam show
@iwantmyharem your dumb, like really really dumb. Sry, i just noticed how ill-informed you are on economic terminology. I think your a good guy, but you know why money sucks? Money sucks, because people need people from birth to death and money just makes thing complicated. However, it's going to take all of us to get educated enough to trust each without money. And we're no where close to that. Therefore, i'd get an education if i were u before this shit hits the fan.
Boobs1234ism 1 month ago
@Boobs1234ism which terms are incorrect? this is spam
reLENTless1897 1 month ago
very easy to understand for a layman like me, and nice shirt
RODRIGOR300 2 months ago
Confirms the fact that the whole economy is at the mercy of the bankers, that's a privatised monetary system for you.
Take away the banks ability to create money, I suppose for you guys in the US it will mean a vote for Kucinich, Ron Paul or even Bill Still, you can do it people, at least you have politicians who see what's really going on.
rachmatinoff 2 months ago
Holy crap awesome video!
future303 3 months ago
No, drawing the fed as "uncle sam" promotes the myth that the federal reserve is a federal agency. It's a *private bank* owned by bankers, but the rest is spot on, making the whole completely sickening. No different than me printing money (out of thin air) to get the banks assets and buy up the treasury bonds (which are a debt of the american people). You, the people will work to pay me back the loan + interest, on money I created out of thin air.
mikejadoti 3 months ago 16
@mikejadoti The president appoints the fed chairman with the senate approval. Congress can fire the fed chairman. They arent exactly unrelated.
crknipe 2 months ago
@mikejadoti Everyone knows its a private bank, but it is the US central bank so labeling it as "Uncle Sam" is somewhat appropriate.
joeyjobear 1 month ago
@mikejadoti yeah, but you don't have the authority from congress to create currency backed by the US government. So it's a bit different.
mister9a 4 weeks ago
Please don't kill the messenger.
Great video. Thank you for posting.
It's good to understand about "danger of deflation" before watching this video.
vesperita11 3 months ago
Fantastic explanation.
I am really dumb at economics though.
How does the government buying bonds lower their yield ?
Is it simply a case of a lower yield as a result of increased demand?
lemonadeez 3 months ago
you are a fantastik presenter/teacher!
tuzisyy 3 months ago
It is a lose lose because even if the economy kicks on, the inflation will skyrocket because for every 10 Billion dollars the Fed creates, a Trillion is created by fractional reserve banking.
DCUPtoejuice 4 months ago
END THE FED in honor of Jefferson, Jackson, and Lincoln!
DCUPtoejuice 4 months ago
fantastic explanation sir, top class
anubhavsharmaice 4 months ago
Should have went on to explain how the banks still don't lend the money handed to them by the Fed and instead invest it in commodities and equities markets. This being the reason for the bull market we saw for the last couple years.
jaydt1124 4 months ago 5
This guy is a retard. First the Federal Reserve is NOT part of the US government, it's a private business that the US government pays to run the monitory system. He gets even further off track as he goes on and on and on ...
Until the end when he admits that quantitve easing ends up destroying the economy.
Lorgrom 4 months ago
@Lorgrom How does he go off track?
reLENTless1897 1 month ago
@Lorgrom how does he go off track? please explain
reLENTless1897 1 month ago
He forgot to mention that the Federal Reserve Bank (who creates the money) is independent of the Federal Government (i.e. not a government institution). So, the Fed is creating money from thin air and providing it to banks as a free loan. Any interest that the banks make with this money is pure profit; interest on US bonds is basically risk-free. The private Fed is also printing money to purchase interest bearing US Treasury Bonds (as mentioned). The banks make out in this deal, dontcha think?
flash3780 4 months ago
@flash3780 That was the intention was to create liquidity in banks and take the pressure off of them so that they can give out more loans. The Fed isnt printing money however, it is crediting US banks federal reserve accounts. This credit isnt a loan, it's the money that the Fed paid the bank to purchase some of their assets.
reLENTless1897 1 month ago
Hi, Paddy, I had my drink , bit of red wine and french blue cheese. Your lessons are so nice and clear and easy and presentable. you should come to Kaplan singapore and teach Uni. Of Bedfordshire. Special lecturer. Most of my lecturers part time sucks.!
jaquinblanc 5 months ago
So that has happen, Gold and Silver is at record High and Stocks are flat. So whats Next?
bigjolly31641 5 months ago
That's just so comforting. Now the banks have plenty of money to make lots more bad loans at huge interest rates because the generous American taxpayers will absorb all the losses. Can you say moral hazard? That's ok, though, because the dollar is soooo weak now all the world will clamor to buy our American goods and we will all have jobs! So where are the jobs? We must be getting something for all this inflation.
classicalbunny 5 months ago
Seems like great service to bankers who have all these toxic acids from the beginning.
My question is: Why cant the central bank lend directly to the people in need?
Seems like the central bank is simply helping the banks more than the people who needs loans.
dma777able 5 months ago
Nice video - I had a "ah hah!" moment at about 6:10 when things clicked!
Keep up the good work.
Desperate4changing 5 months ago
Let's all not forget one scary thing. There use to be day when for every dollar there was a gold bar in fort Knox. This is how well and trusted our economy was because it was backed by something " concrete". Now they just keep printing money but it's value is not based on anything tangible. So how can we just keep giving out something that has no real value? Gold is the way to go. I think we need yo get rid of all this worthless paper who's value is manipulated, and go back to basics. Just a t
tmplcsw 5 months ago
Thank you very well explained. I would like another one on how the previous QE1 & 2 worked or not.
tmplcsw 5 months ago
I just didn't get one thing, I'd appreciate if anyone cares to answer: why does the yield of the treasuries decrease when the Fed buys plenty of bonds? Isn't the yield a fixed rate that's independent from the bond value?
eurica9 5 months ago
Comment removed
truthhawk7 5 months ago
@truthhawk7 oww ok that makes sense. Is there a limit on the number of owners and the percentage they own on these products? Going back to your example, can the number of owners keep growing indefinitely?
eurica9 5 months ago
Comment removed
truthhawk7 5 months ago
the federal reserve is uncle sam huh? you are only pepetuating a myth that the federal reserve is in any way tied to our federal government... you sir are either a liar or lazy in your explanation and with such a serious matter there is no room for laziness.
bigjohnmlb 6 months ago
@bigjohnmlb Wait, does that flag have a gold trim? Oh no I better put semicolons in my name to defeat their jurisdiction!
number154 6 months ago
The Fed is "Uncle Sam". Dude, you are insulting me. The Fed is a private bank.
terrafirmaterrafirma 6 months ago
Yep, he diffidently said that our problem is that poor business people are not in enough debt and they need to take out more loans. So the solution is to give the taxpayers money to these banks to pay off the debt from defaulting on their repossessions so they can give out more credit, but still get to keep all these small business (and houses) that they repossessed while dropping the value of the dollar. So in summery the solution is to drop the value of the money and put people in more debt.
trentthehunter 6 months ago
Either these guys are too big to see the little picture, or they know exactly what they are doing... and were all fucked in the end.
trentthehunter 6 months ago
So did he just say that our problem is that people are not in enough debt?
trentthehunter 6 months ago
Borrowing short term and lending long term is not taking any risk? What if short term interest rates rise? You borrow for 3 months at 0% but you have to pay that money back in three months or you borrow again. So if short term interest rates go up to 3% you are now paying out1%/year. Yield curves do get inverted.
BillAndInna 6 months ago
Here's a better explanation. Jewish TALMUD: "Jehovah created the non-Jew in human form so that the Jew would not have to be served by beasts. The non-Jew is consequently an animal in human form, and condemned to serve the Jew day and night." Midrasch Talpioth, p. 225-L - "Christian birth rate must be diminished materially." - Zohar (II 64b): - "Jews must always try to deceive Christians." - Zohar (1 160a) -"Extermination of Christians necessary." - Zohar (11 43a)
BobbyWarrenMiller 6 months ago
A biggest public campaign has started to end fractional reserve banking, look at the POSITIVE MONEY website and support the campaign ...and spread the word.
PositiveMoneyUK 7 months ago
So instead of making more of your own currency, print another country's money!
Simples..
locouk 7 months ago
Comment removed
UmmahTube 7 months ago
This has been flagged as spam show
My Keynes Hayek: The Clash That Defined Modern Economics is published in October by W.W.Norton. See website: sites.google.com/site/wapshottkeyneshayek/
Nicholas Wapshott
nhwapshott 7 months ago
The day other countries stop using our money to trade we are screwed. We are the only country with the unique ability to print money.
enteringsumner 7 months ago
All this happened because we were taken off the gold standard. There would not be unlimited printing of money if that had not happened.
CherylJonesJ 7 months ago
@CherylJonesJ There would still be printing of money. When banks lend money, new money is created. The actual printing of money you see on TV, when the bills are coming hot off the press, is a completely natural and necessary function of an economy and central bank.
When people talk about "printing money" in a negative light, they mean that the government "prints money" or creates it to pay off its debt. It's called monetizing debt, and it's illegal. This could be done on a gold standard too.
brendanwm814 6 months ago
If banks can earn an easy almost risk free 1.5 to 2% with treasuries, why are they leveraging up and buying riskier assets like commodities, foreign stocks, etc? Is it merely to make lots more money despite the risk since the banks know they will be forever bailed out by taxpayers?
rigoletto68 7 months ago
nice pen throwing there in the end
worksopians 7 months ago
One thing you didnt include ( I have a double major in economics and Finance) is that quantitative easing not only lowers yields, but masks the real risk of the investment in 10 year treasury notes because at some point in the future Ben has to stop purchasing these. Once he does yields should go up as the supply of notes is sold back into the market. QE is purely inflation produced through the public sector rather than the private. Which is even worse for the long-term health of our economy.
bpolley0 7 months ago
@bpolley0 also isnt it bad practice to purchase debted money "printed money" to purchase toxic assets
88roro11 7 months ago
So why not lend directly to businesses and stop offering treasuries?
ekpil2000 8 months ago
I study economics and I got a question: Is quantitative easing the same as a bad bank?
appelken 8 months ago
great explanation thanks very much
Jubbyzilla 8 months ago
This is the best explanation of qe i've ever seen, and i've seen alot.
Parksey01 8 months ago
A British man explaining what Americans should know. How sad.
emperorles 8 months ago
@emperorles Do you come from a place where only people of the same nationality share information?
alexamasan 8 months ago
This has been flagged as spam show
QE2 ends this June with it the US Treasury is being taken off Federal Reserve life support having to sell a record 180 billion monthly of new issues on the open market not to the Fed. What do you think is going to happen when no one steps up to the plate at these ridiculously low rates 0.02% to 0.53%? Rates will rise it’s just when and buy how much. To join our group talking about the best ways to trade rates higher call US+949-376-8020 or for one report see web address keypage,net link 19.
pcatranis 8 months ago
Who owns the federal reserve, who runs it? Doesn't running the federal reserve mean those people have a nuclear atom bomb on the economy? Doesn't it also mean they can milk the economy by printing money?
Aren't those the 'masters' that need to be killed?
cowbot2 8 months ago
WOW. this is the first demonstration that actually made sense. If it isnt bad enough that our country is in the position of having to resort to quantitative easing, risk hyperinflation, and print money to revive an unsustainable economic model, now I have to have a foreigner be the only one who can adequately explain the process to by which my own government taxes me by denigrating my purchase power. THANKS!
finarrykahn13 8 months ago
and all of this doesn't work in the long run. I am confused about the statement that "increased demand for treasuries lowers yield" huh?
DCUPtoejuice 8 months ago
You are very confused about monetary policy my young friend... There's a whole lot more to the picture
warrenkavanagh 8 months ago
I don't understand though, if banks don't want to loan their money to business people because the banks don't believe the business people will be successful and unable to pay back the loan, why would to loan money to them with QE? Sure they may not want to invest in government bonds anymore with the low yield rate, but why would they loan it out if the banks think they're gonna lose money on the loans? Wouldn't they instead just keep the money until they find something worthwhile to invest in?
alexamasan 8 months ago
@alexamasan you not getting the picture right. The guy explains it in definitive terms, of what should happen, as opposed to what does happen. At the heart of all this is RISK. The bank has made poor decisions in the past and too the risk and ended up with bad securities, so in effect it has lost money. So when the fed come in and buys the bad securities means that the bank is now recovered the money it would have lost. The bank is now again free to risk and lend to make a profit.
contemporarymonk 8 months ago
@contemporarymonk I completely understand, but isn't this just encouraging the mistakes of the banks though? The goal of QE is to get these banks to lend out money. But the banks would most likely lose money on these loans, that's why they aren't loaning. So they'll just be gaining more toxic assets and repeating the mistakes they just made.
alexamasan 8 months ago
@alexamasan thats the whole job of market regulation, and banks should have learned a lesson, if they have not, and continue the practices they had before, then they are destined to fail and will/should not be bailed out. QE is a hot debate wether it helps or causes more problems, its for you to decide. However i agree that it had to be done simply because there was no other way to solve the problem. The problem is still not solved however we have more time to act and solve it now.
contemporarymonk 8 months ago
@contemporarymonk So why do you personally think that doing QE is better than simply letting the banks hang on to the money? Do you think that QE encourages the mistakes the banks made in the past?
alexamasan 8 months ago
@alexamasan Banks finance everything, from your toothbrush, to the Copper that your pipes in the house are made from. I work on a trading desk for a metals company. We use the banks a lot to finance our purchase, and we pay the bank back once we have made the sale. Basically meaning that we do not upfront ANY money to the seller. This creates a cost of money, simply interest. Please read next post, i dont have enough space here to explain.
contemporarymonk 7 months ago
Now picture this: I am a buyer of Copper Ore/Concentrates (Thats what we trade). I want to buy 500 tons of copper concentrate, at the current market it would cost me $9,000 x 500 = $4,500,000. But i do not have this money to pay the seller, and if i did i would still rather use the bank, as the cash flow is very important to me. Now i go to the bank and ask for 4.5 mil, they say no, as they have no cash to lend. Meaning i can not trade, meaning most other companies are in a same possition.....
contemporarymonk 7 months ago
So simply put, Banks finance big and small companies via credit lines (once you exceed your credit line, the bank will not lend you any more until you pay it back, same as a credit card). If the credit lines are cut and these big corporations cannot acsess large amounts of money, they become stagnant (basiclly not growing), or they begin to decline. So QE is somewhat of a life line, i agree its irresponsible at the least and dangerous in sence of the risk. But now they are talking about QE 3.
contemporarymonk 7 months ago
@contemporarymonk I understand what you are saying. As I personally see it, banks have to discriminate who they loan to as they want the person to succeed and pay back the loan. Some people asking for loans may simply be incompetent and be unable to pay the loans back, ending up with the bank having either lost all the money loaned or left with collateral that may/may not be toxic and the person who got the loan is now worse off than before because now he's in a debt hole he has to climb out of.
alexamasan 7 months ago
@contemporarymonk Pretending the copper buyer was the debtor, as capital is limited, either the money loaned or the copper itself, it now has been wasted on this failed firm where it could have been invested in a more competent one instead that would have been able to pay back the loan and produce goods. That's why banks have to be careful who they choose to loan to. I understand you see the risk as well, I just think the banks should stay discriminant as most firms fail in the first 5 years.
alexamasan 7 months ago
*banking
solar9019 8 months ago
The federal reserve being a private Nanking cartel has already been adressed but I want to raise another point. Devalued currency means US goods are cheaper for other countries to import. My thing is because the US is being de industrialized in the not so distant future what goods will be available to export? Hollywood entertainment and food?
solar9019 8 months ago
@solar9019 What goods will be available for export? well no goods as such which you are thinking off, like a toilet being made in the US and sold to New Zeland. BUT you will have a very high hi-tech industry, with intelectual property, which will lead to services (Tertiary jobs) and quaternary jobs. These are basically highly specialised services, such as financial services, education, insurance, banking etc. Basicaly you can export what you know instead of actual physical goods.
contemporarymonk 8 months ago
@contemporarymonk Fair point. But consider India and china also have intellectual property. Those that are educated in those fields are very good (not to say that we're bad) But their labor is much cheaper. But hey.At the rate we're going maybe the dollar rupee&yuan will be equally worthless soon. Also, intellectual property usually requires at least a 4 yr degree. Not everyone will be getting a 4 yr degree. Whats the high school grad supposed to do for the rest of their life? Flip burgers?
solar9019 8 months ago
This has been flagged as spam show
Only the FDR Glass-Steagall principle will separate commercial from speculative banking, thus freeing the nation from obligations to Wall St. and the City of London, and re-establishing a credit system for rebuilding the nation.
H.R. 1489, Return to Prudent Banking Act of 2011, is before the House of Representatives, which aims to revive the separation between commercial banking and the securities business, in the manner provided in the Banking Act of 1933, the so called 'Glass-Steagall Act
tepstolog 9 months ago
So the Feds uses my money, to buy bad loans...AND THIS IS GOOD??? WAKE UP!!
mrledhead68 9 months ago 12
@mrledhead68 it's not your money it's money the the Fed created or in other words boroughed from your children and grandchildren because they have to pay it back and from the Chinese, Japanese, Europeans and Arabs which your children and your grandchildren will have to pay of. So it's not your money it's money your offspring hasn't even earned yet.
boloyung9 6 months ago
@boloyung9 boroughed. Wow. The rest of your post reflects your mental fortitude.
cookmatthewr 5 months ago
@cookmatthewr first of all English is only my third language of four which I can speak, the question you should ask yourself is, how many languages do I speak instead of trying to correct somebodies spelling on youtube. In my haste I exchanged the word borrowed for boroughed an honest mistake, but what do you call the use of mental fortitude when mental state would be more appropriate. Third of all how can you disseminate what my "mental fortitude" is as you like to call it from what I wrote.
boloyung9 5 months ago
I spent over 100K for a bachelor's degree. I learned more from this guy from 3 videos than I did in four years. Sad....smh.....That pisses me of........
youngandunashamed 9 months ago 38
@youngandunashamed At least those 4 years taught you how to spell...
cookmatthewr 5 months ago
@youngandunashamed post secondary education is a great business!
rawnie79 5 months ago
@youngandunashamed
jas672 4 months ago
A great explanation of the theory behind QE, however, the reality is that the US has so much debt that an increase in interest rates means that the amount of debt owed will increase dramatically. By pumping money into the economy, the fed can keep those interest rates low, meaning we won't incur more debt through interest.
(But that doesn't really matter because our daily deficit is so high that the debt is increasing anyway.)
daneathon 9 months ago
So what you are saying is that Quantitative Easing is another name for INFLATION.
tigranvartanovitch 9 months ago
QE money printing is the normal practice of banks its what they have always done except that QE simply means we are doing it on a larger scale than normal.
Writing an article on it now on me blog. danster82 com
Danster82 9 months ago
QE is not the easy way out, actually it's not a way out at all. Instead of letting it pop, you blow the bubble even more and we will end up with a way bigger crisis. Cheap money and risk full investments got us in the crisis in the first place. So we need even cheaper money and more risk full investments?
madass888 10 months ago
Huge flaw in the reasoning: The Fed does not belong to Uncle Sam. It’s private, and owned by the bankers.
The bankers and the FED are not different things. It’s a single thing.
Why the FED-bankers “don’t want to lend”, but pretend to “convince themselves” to lend???
Note that FED-Banksters get money, but toxic assets are thrown out.
marracotube 10 months ago
@marracotube
But the board members of the FED are selected by the president. It's really strange and dodgy construction. Fact is they're all friends. Politicians, FED members and bankers. We need to end this cronyism and end the FED.
madass888 10 months ago
@madass888 Selected by the president? only a minority is proposed by the president (note that proposing is not selecting).
Watch this, /watch?v=7qIhDdST27g
marracotube 9 months ago
@marracotube
I'm not gonna watch a 2 hour movie. But still, the legal construction is irrelevant, I don't know why you want to emphasize that it's private. The FED has a monopoly on money and the government is protecting it. Who owns who, who knows?
madass888 9 months ago
@madass888 Irrelevant???
Well, the FED don't pursue public interest. Only some corporations interests (not all private corporations).
Being private puts money management under control of a corporation who is foreign to USA. QE is not about giving credit to USA business, but to protect profits of some banks and financial corporations, all owned by the same owner.
All the money printed was never intended to "stimulate" the economy, or allowing more credit.
marracotube 9 months ago
@marracotube
I'll tell you a secret. Government and big corporations are not rivals, never were and never will be. The FED has the monopoly on money aka federal reserve notes and the government is protecting it.
madass888 9 months ago
@madass888 Is not about "big corporations", but a single corporation.
marracotube 9 months ago
@madass888 Do you understand that the government of USA debts a dollar to the FED for each dollar printed? Do you understand than the Fed NEVER gave a cent to the government? The FED gets the debt amount end interests out of nothing? The Fed gets pure profit, after investing nothing, and running no risk? And other banks owned by the Fed owners profit almost 10 times more, without investing anything, and running no risk?
marracotube 9 months ago
@marracotube
I agree that we should end the FED. But you're pretending as if the government has no blame. We actually have a name for this government-corporate relationship: Cronyism. I'd say we should end the FED, default on our debts and stopping giving bailouts and guarantees to banks.
madass888 9 months ago
@madass888 I don’t understand why you say that I “pretend” that, but I think that the government only runs the show. The FED masters own the ropes. The bailouts are insignificant coins. The FED profited more than one dollar for each one ever printed, and circulating in the world. It’s the same for each British pound, and many other currencies in the world. You can’t fight such power.
marracotube 9 months ago
@marracotube Wow you're obviously a Glenn beck watcher. The federal reserve IS autonomous from the United States, BUT the american congress can take away this autonomy whenever it so choses.
SuperTofu93 9 months ago
Excellent! Thank you.
rlhillier 10 months ago
This has been flagged as spam show
These videos are helping me understand economics, but are really hurting my liver.
:)
P.S. Thank you; as a Chemistry major, I find economics confusing. I love the way you explain economics for the lay person.
braydenbeautiful 10 months ago
This has been flagged as spam show
These videos are helping me understand economics, but are really hurting my liver.
:)
P.S. Thank you; as a Chemistry major, I find economics confusing. I love the way you explain economics for the lay person.
braydenbeautiful 10 months ago
Comment removed
braydenbeautiful 10 months ago
The cartoon he drew looks like a zionist jew!!! Fuck capitalizing.
racistathiest666 10 months ago
Sounds like a ponzi scheme to me.
bbburton 10 months ago
I was kindof hoping that he would reveal the real purpose of QE, debt monetization.
anryth 10 months ago
LOL, way to rationalize a ponzie scheeme, major lulz! Then this moron goes on to say that the fed = the government.. His explanation is from the sheeple point of view.
WONDOCTORJ 10 months ago
Great explanation of QE the only thing it left off was why it will fail. Because QE does not address the real problem, credit worthiness. It only addresses the symptom.
Simulacra010 11 months ago
why doesnt the fed just lend the money to the people. instaed of buying all the assets and tesuries.ect ect. why not get rid of banks and lend money from the start? they create the money in the end?
jihadulnafs 11 months ago
@jihadulnafs then some people would say it is socialism and not capitalism because the government has a monopoly of it. Correct me if i'm wrong isn't the reason to have a lot of competition is to have innovation. i'm just wondering if we'll ever come to a point where innovation isn't possible anymore.
crazendisturbed 11 months ago
This has been flagged as spam show
@crazendisturbed "then some people would say it is socialism and not capitalism "
It already is socialism! There's no such thing as QE in a capitalist society. Once you intervene, it is no longer a free market, so sadly we really aren't a capitalist country anymore.
jjenson2006 10 months ago
Banks = Moral Hazard
MrFrankBullitt 11 months ago
Print more money yeah that's exactly what we need
pep1player 11 months ago
I think Barry the bank manager will just hold onto his money and only invest in the businesses that are most likely to pay back the loans. I think he's acting rationally by not lending to everyone. Ask yourself; Who's money is in Barry's bank? Well, it's your money of course. Its not Barry's money. Do you want your bank manager to make wise, rational decisions on whom to lend your money to or do you want Barry to be coerced into making bad decisions with your money?
ahoblit 1 year ago
Great video! Thanks
SPW1981 1 year ago
since the feds love regulations, manipulating the markets and interest rate, why not disallow banks from putting Tbills on their balance sheet.
GMHGTO 1 year ago
Sounds like a lot of hot air to me, I just think QE is even more bullshit to cover yet another Banking fraud which is deliberately designed to create hyperinflation I can't quite understand why this guy refers to the Fed as Uncle Sam... I'm sure most of us know who runs the Fed.. and it ain't America!
DeadOriginal 1 year ago
Bottom line.....The Banks are looting America's treasury.
planetofterror 1 year ago
Next problem - this explanation assumes that there is an unmet demand by business for loans. With so much political uncertainty (cap and trade, health care reform, energy costs), you can't force a business to borrow money it doesn't want.
ArtStone 1 year ago
Borrowing 30-90 day "free" money to buy 10 year treasuries is a HUGE risk. The moment interest rates go up, you won't be able to replace the borrowed money. Selling the bonds 9 years early in rising rates will take a huge loss.
ArtStone 1 year ago
This was all wrong. QE does not get government involved but rather the Fed. The buy reserve so the treasury yield goes down which would force the banks to lend to potential businesses that they were holding off due to the risk. Now the risk of not "investing" (or loaning) grows, because after all, they need to make money somehow, and they go boast businesses. Year 2010 was the fruit of these policies, along the stimulus and TARP, which yielded double digit profits every single quarter.
ninuxy 1 year ago
@ninuxy and government and the fed are not related to each other at all?! Anyway he doesn't even use the term government, but uncle sam. if you're that smart, do a better video!
JJTheBigDog 1 year ago
@JJTheBigDog The correlation does not imply causation. You did know that fallacy, didn't you? Uncle Sam is a national personification of the American government, so yes, he was referring to the government. The Fed is "privately" own through a decentralized system of banks (members of the Fed) that operates on whatever monetary policy it decides--currently a fiat system. Although it has public components instilled in it through law, it can act with or without government's permission.
ninuxy 1 year ago
In either case, the Fed by itself does NOT "print" any money. That is to say, the circulation of money "supply" does not increase or decrease by the "Fed" but rather by the government through the Treasury department. This whole rhetorical references to "printing money" is nonsensical. QE has nothing to do with printing Treasury notes.
ninuxy 1 year ago
Comment removed
zzzzaaa0990 10 months ago
@ninuxy But isn't the whole POINT of QE to create loans, and thus expand monetary base ("print" money")? If reserves aren't being loaned out, then there was no point to QE?
zzzzaaa0990 10 months ago
@zzzzaaa0990 What? So if I am a bank owner and withholding money on my asset sheet, then find venues to be profitable by loaning to businesses, I'm "expanding the monetary base" and "print[ing] money?"
Talking about concocting stuff up there buddy. The Treasury is the only governmental agency that "prints" money. Why are people still stuck in the basics?
ninuxy 10 months ago
@ninuxy I meant expanding money supply. Reserves are not part of the money supply? QE adds additional reserves to banks?
zzzzaaa0990 10 months ago
@zzzzaaa0990 Yes, it would "transfer" bonds to reserves of the bank's asset balance sheet. There is no new asset created; there are no new loans made, no new deposits raised, no nothing.
When the interest rates are low, banks look for business opportunities to make money or invest. Compounded with the newly "increased" reserves on their asset balance sheet, they have "more" incentives to loan to these businesses who weren't qualified. Hence quantitative [of reserves to] ease [the loaning].
ninuxy 10 months ago
@ninuxy So if the banks do actually make new loans on these new reserves, then the money supply is increasing? Is this a good or a bad thing?
zzzzaaa0990 10 months ago
@ninuxy Actually the NY Fed website even says that these operations are "financed through the creation of additional bank reserves". So if and when banks make new loans on these new reserves, new money has been created. I have no idea what you are arguing about.
zzzzaaa0990 10 months ago
@zzzzaaa0990 What? So just because a "refined" petroleum goes from a refinery to the gas stations, "new" oil is created (extracted)!!! Try to make some sense.
Yes, when the amount from an "already existing bond" goes to the "reserves" on the balance sheet's asset, you're simply shifting an "already printed money." Similarly, when a loan is issued, those reserves are moved to the loan on the balance sheet, but again, no new money is created.
The money supply remains unchanged.
ninuxy 10 months ago
@ninuxy no no, why are you comparing banks with oil refineries?? You have it all wrong, please pick up a macroecon textbook rather than learning from wherever the fuck you're learning your bs. And no, it doesn't "shift bonds", it creates money out of nothing to BUY these bonds from banks.
zzzzaaa0990 10 months ago
@zzzzaaa0990 Umm... that was an analogy which was suppose to clarify an abstract concept through a familiar story. I guess that obvious must have escaped you.
Hahaha! Ya, keep believing whatever a piece of drollery you picked up on the Internet and tell me transfer of bonds to reserves on the balance sheet is equivalent of printing money. You are a lost cause. Money is not created out of nothing. I don't see the Treasury increases the money supply on its sheets.
Keep walking bozo.
ninuxy 10 months ago
This has been flagged as spam show
@zzzzaaa0990 Umm... that was an analogy which was suppose to clarify an abstract concept through a familiar story. I guess that obvious must have escaped you.
Hahaha! Ya, keep believing whatever a piece of drollery you picked up on the Internet and tell me transfer of bonds to reserves on the balance sheet is equivalent of printing money. You are a lost cause. Money is not created out of nothing. I don't see the Treasury increases the money supply on its sheets.
Keep walking bozo.
ninuxy 10 months ago
This has been flagged as spam show
@zzzzaaa0990 Umm... that was an analogy which was suppose to clarify an abstract concept through a familiar story. I guess that obvious must have escaped you.
Hahaha! Ya, keep believing whatever a piece of drollery you picked up on the Internet and tell me transfer of bonds to reserves on the balance sheet is equivalent of printing money. You are a lost cause. Money is not created out of nothing. I don't see the Treasury increases the money supply on its sheets.
Keep walking bozo.
ninuxy 10 months ago
However the board of governors of the FED are appointed by the president and confirmed by the senate, the structure of the FED was designed and can be changed by the congress. It is a partially private, partially governmental institution. The objectifs of the FED are given by the Federal Reserve Act and the Humphrey Hawkings Full Employment Act. Therefore the personification through uncle Sam isn't wrong.
What's your point with the fiat system?
JJTheBigDog 1 year ago
@JJTheBigDog You are rehashing piffle here. Just because governors of the Fed are appointed and approved by the congress, it doesn't make it a part of the government system--the Treasury on the other hand is. The Fed can run its business independent of the government but in spirit of cooperation between the banking system and government (economy as a whole), they tend to convene and discuss matters to balance their monetary and fiscal policies.
ninuxy 1 year ago
This has been flagged as spam show
@ninuxy you obviously can't even read!
JJTheBigDog 1 year ago
very good explanation
blacy007 1 year ago
'...Chairman Ben'... and he puts a beard in the doodle... Hahah!
So now Uncle Sam is Ben Bernanke.. America is doomed indeed.
.
Liked this guy.
ristau 1 year ago
Hey, just a heads up, two years later and this QE1 didn't work. In fact even mainstream media are starting to wonder if we are close to an economic collapse. And QE2 is not going to work either. So much for Keynsian economics.
labrusca10 1 year ago
@labrusca10
Just a heads up--THIRTY years later and Reaganomics, supply-side economics, etc. are not working. What do you think caused this economic crisis?!
Baronski13 1 year ago
@Baronski13
Well, since Reagan has been president for the past 30 years it must have been his economic policies that created this crisis.
labrusca10 11 months ago
@CaronteEmpire
YES. YES. YES.
What does it feel like to be head and shoulders more intelligent and of infinitely superior moral integrity than most people, and be able to see simple reality so easily? It's amazing how fantastically pathetic and disgusting people are when their pocketbooks are on the line. E.g., like the guy who is about to give this reply a "thumbs down". :)
nastyslapper 1 year ago 2
this guy is a dick
trishspace 1 year ago
@CaronteEmpire I agree but I think the gov. bailed them out assuming it would stimulate the economy, correct? Obviously it was a bad decision on their hand, What does their CEA feel about that?
panama52009 1 year ago
This is the best lecture that I have, he explained so well.
giadai88 1 year ago
Quantitative easing will only work if they which businesses will do good, not just in the American but. Internationally. How can one have that much faith in bankers to know who will and will not succeed?
PredominateOne 1 year ago
why does the american government borrow its own money from a private bank?
twisted45 1 year ago 2
@twisted45 banks basically borrow from the government i believe. I think you may be talking about the central bank which the gov does deals with, but I may be wrong?
panama52009 1 year ago
@martketplace, i have some questions for you, 1. How much interest does the goverment pay to create (aka PRINT) 600 billion in QE2. 2. Who does the goverment buy the bonds from? i have been told that the USA goverment purchases bonds from the barry the banker. if so, wouldn't that make a full cycle? Why would barry the banker lend to hiogh risk average joe small business guy when they can sell bond the the USA govrment for profit and also sell thier bad loans, cdo, and mbs to the USA goverment
MrCheckitout123 1 year ago
Remember that this is an older video from over a year ago - and does not directly address the recent 2nd round (or possible future repeats)... except at the very end (6:56) where he notes that if it doesn't work, we'll all be "very badly... needing a DRINK!"
DardaZiza 1 year ago
looks to me like the bankers can get all the money they want for a little of nothing and then sat on it till the time is right then cash in on the loan money even more then ever. I don't really under stand why they don't put the people back to work and use the money for that and cut the banks out of the picture . Could it be " CONTROL " ?? When will people wake up ? We might have 10% of control over government ..lol But which one of you " voted " for the people that runs the Federal Reserve ??
AngelAsmodeus 1 year ago
@CaronteEmpire I agree! These bad bets should be felt only by the banks that made them and not the Taxpayers. .....but I place the blame on the Government not the bank. The problem is that Government wields too much power. If the government was not controlling and regulating most of our economy and our daily lives......if we cut Government in half.......then maybe business would not find it in their self interest to send lobbyists to Washington and buy Politicians with campaign donations.
samlowrey63 1 year ago
I think he said that inflation makes things cheaper to buy so people will buy more. LIE. Inflation makes the price of everything go UP! We need deflation.
kydenj28 1 year ago
@CaronteEmpire Banks are in the business of lending. If they won't lend to you, you may not be a good risk. This is how it works. Don't confuse Government Guaranteed loans with a "Real World" estimate of a borrower's ability to pay back the loan. Also, times have changed, in this economic environment it is natural for lending to decrease. If the government doesn't like the position they're in (i.e. bailing out banks only to have them payout bonuses etc.) thay olny have themselves to blame.
samlowrey63 1 year ago
@samlowrey63 hopefully the gov. won't make that mistake again
panama52009 1 year ago
@4:43 he states that the Fed pimps money into the system. What he fails to mention is that the Fed is simply printing money. No new wealth is created. The Weimar Republic tried the same thing. History shows how that turned out.
Devaluing the dollar makes goods and services more expensive for Americans. Unless wages increase with that rate of inflation, we have a big problem.
pminturn 1 year ago