Quote:
Originally Posted by Broda
That's not quite right. Bernanke WANTS the QE to create inflation because there are signs of deflation. You know, prices go down so people wait to buy, which in turn means less money changing hands and then you have deflation. Deflation is far more difficult to stop than inflation.
If you pump out lots of money and keep the interest rate low you create inflation. And since money becomes worth less due to the inflation, people will spend it. Thus, you kickstart the economy. When the economy starts to go wild you "simply" increase interest rates again and you stabilize the economy.
Or so the theory goes  |
What are these signs? I've heard this rant before but nobody can ever come up with anything. On the face of it all, it looks like there's an absence of inflation, CREATED by Bernanke and his QE, as well as the stimulus bullshit. Deflation is better for our current economy than inflation. And you're following the same fundamental flaw that Keynesians follow, which is demand side economics. You guys apparently think that consumer spending is what fuels the economy, which wouldn't be accurate. They've tried QE once already, as well as stimulus plans, and nobody's spending.