tag:blogger.com,1999:blog-7861688742346636904.post7663054747406091860..comments2009-11-21T16:09:03.983-05:00hblhttp://www.blogger.com/profile/03192933210484147113noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7861688742346636904.post-47142217490359296112009-11-21T16:09:03.983-05:002009-11-21T16:09:03.983-05:00Yeah BadTux (what a name :), the inflation and deficit hysteria is a bit surreal and depressing... I also find it particularly ironic that from a pure monetary mechanics perspective (i.e., psychology aside), quantitative easing is <b>deflationary</b> as it replaces higher interest paying bonds with lower paying reserves, reducing the income to the non-government sector (which is one piece of the larger chartalism topic I&#39;ve been meaning to get to, among others).ThoughtOfferingshttp://www.blogger.com/profile/03192933210484147113noreply@blogger.comtag:blogger.com,1999:blog-7861688742346636904.post-10218431197468263272009-11-20T17:12:05.184-05:002009-11-20T17:12:05.184-05:00Siiiigh! Time to hit the herring sauce even harder. <br /><br />Over $5 trillion in asset values disappeared out of the economy over the past two years. The majority of the money that the Fed has printed to offset that has simply circulated back through the banking system and been re-deposited by banks into the Fed as reserves, which does absolutely no good for heading off deflation. I keep pointing out to people that deficits don&#39;t matter in this scenario, that we could literally print $5 trillion dollars in greenbacks and buy $5 trillion dollars of U.S. bonds and create a stimulus program that would make FDR&#39;s ghost envious if we desired without having a single worry about either inflation or the deficit, and people look at me as if 1+1=2 is absolute heresy rather than being a fundamental law of mathematics (and by extension, of economics). It is to cry...<br /><br />- Badtux the Math PenguinBadTuxhttp://www.blogger.com/profile/01345749557330760251noreply@blogger.com