# Money Printing - Has It Worked?



## shnaek (10 Apr 2014)

I've never been a fan of money printing, or 'Quantitative Easing' as everyone is calling it these days. I've had plenty heated debates with friends over the years, and more often than not I found myself alone in arguing against money printing. 

But lately some of my friends are starting to come around to my way of thinking i.e. that money printing just makes the rich richer, and makes everything more expensive for the rest of us. It is a tax on everyone. It always ends in a bubble. 

I think that eventually all this money printing will result in massive collapse, and I think that collapse will happen in the next 2-3 years. 

But I'd be interested in hearing what opinions are here, after more than five years of printing presses running at full speed.


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## Purple (10 Apr 2014)

I'm not a fan of it. It causes inflation and is therefore a tax on savings. I don't see where the "Rich richer, poor poorer" argument comes from.


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## shnaek (10 Apr 2014)

Purple said:


> I'm not a fan of it. It causes inflation and is therefore a tax on savings. I don't see where the "Rich richer, poor poorer" argument comes from.



Money printing inflates the prices of stocks and certain assets. It's the reason the s&p500 is near an all time high. In general the rich hold these assets (high end property, art, gold, oil, stocks etc) so that's where my 'rich richer' argument comes from. I'm not saying that it was the point of the printing. Most central banks are populated by academics with no real world experience so who knows why they chose to do what they do.


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## cremeegg (13 Apr 2014)

Being in favour or against quantitive easing as a principle makes no sense.

If your house is cold turn up the heat, if it is too warm turn off the heat.

The economy is a dynamic system and at different times requires different policy responses.

The Eurozone has had less QE to date than either the US or Britain and I would suggest that we would have been better off if we had gone as far as they did. Especially early on in the crisis. 

The result of this is that the Euro is over valued and employment is lower than it should be. Both results that favour the rich over the poor.

Paul Krugman has a good article explaining why a little more inflation would be good for us here 
http://www.irishtimes.com/business/...ion-is-a-kind-of-economic-lubricant-1.1753291

bizarrely the same article with a very different heading appears in the New York Times
http://www.nytimes.com/2014/04/07/opinion/krugman-oligarchs-and-money.html?ref=paulkrugman

The BBC has a report today that the ECB is considering increasing its QE program

http://www.bbc.co.uk/news/business-27008293


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## Firefly (29 Apr 2014)

Interesting talk related to printing more (to help the poor):
http://www.ted.com/talks/michael_metcalfe_we_need_money_for_aid_so_let_s_print_it


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## 44brendan (29 Apr 2014)

Everything has a price (including money). Quantitive easing as an economic toll has been successful in encouraging additional spending and helping to bring an economy more quickly out of recession. It is obviously only one of a number of factors and while the ECB has been very loath to implement it, the current deflationary economy in the EU is now hurting the larger economies. It is not a panacea for all ills but it does have its place in the economic medicine cabinet. The ECB have been extremely reluctant to use it to date and are unlikely to over-utilise it on this occasion. Whether it will be significant enough to add any benefit to the Irish economy is another question, which remains to be answered.


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## Setanta12 (29 Apr 2014)

I thought Europe's problem was a lack of inflation ... ....!?


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## shnaek (5 May 2014)

Mark Faber on CNBC: “My view would be that we have already printed so much money, and to accelerate it will be bringing about numerous other problems, so my time frame is that the [bubble], maximum, will burst in three years’ time.”
Faber continues, “Once the collapse happens, the power of central banks will be curtailed greatly because people will realize who brought along first the Nasdaq bubble in 1999: The Federal Reserve. Who brought about the housing bubble between 2001 and 2007? The Federal Reserve. And who is bringing now along another great credit bubble and asset bubble? The Federal Reserve.”


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## shnaek (15 Jul 2014)

The bubble's last days? 

http://davidstockmanscontracorner.com/the-implosion-is-near-signs-of-the-bubbles-last-days/


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## shnaek (3 Nov 2014)

Interesting article in the Telegraph on this issue:

http://www.telegraph.co.uk/finance/...ry-will-surely-see-QE-as-a-major-mistake.html

"QE has boosted equity prices, while hammering ordinary savers and pensioners while handing a massive wealth transfer to bailed-out banks."


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## shnaek (2 Jan 2015)

Looks like the ECB are going to go ahead and print. I can see this resulting in lots of money flowing to the top 5%, but I would be very surprised if it worked. But as my earlier posts suggest, I am no fan of QE. Maybe I spent too long living in Germany! I am amazed that gold hasn't risen against all paper currencies, but it hasn't, so what do I know.


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## shnaek (23 Jan 2015)

"Those who argue that the US and the UK are growing faster than Europe because they carried out QE early are confusing "correlation with causality". "

http://www.telegraph.co.uk/finance/...ng-world-financial-system-out-of-control.html


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## fpalb (17 Feb 2015)

If money printing is to help the poor, why is it not directly distributed to them? If it's supposed to be fair why is not distributed evenly to all of us? As Purple said, money printing is like a stealth tax on savers, on those who are financially responsible, egging them on to consume and to invest instead of save, forcing an immediate cut of those savings as fees to the financial industry and offering the usual disclaimer for the remainder: "value of investments may go up as well as down". What's not to like?


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## Protocol (15 Apr 2015)

fpalb said:


> If money printing is to help the poor, why is it not directly distributed to them? If it's supposed to be fair why is not distributed evenly to all of us? As Purple said, money printing is like a stealth tax on savers, on those who are financially responsible, egging them on to consume and to invest instead of save, forcing an immediate cut of those savings as fees to the financial industry and offering the usual disclaimer for the remainder: "value of investments may go up as well as down". What's not to like?



Good point.

The ECB could instead of creating money to buy financial assets, it could distribute the same amount of money to people.

See here:

http://www.voxeu.org/article/combatting-eurozone-deflation-qe-people


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## Purple (29 Aug 2015)

fpalb said:


> If money printing is to help the poor, why is it not directly distributed to them? If it's supposed to be fair why is not distributed evenly to all of us? As Purple said, money printing is like a stealth tax on savers, on those who are financially responsible, egging them on to consume and to invest instead of save, forcing an immediate cut of those savings as fees to the financial industry and offering the usual disclaimer for the remainder: "value of investments may go up as well as down". What's not to like?


It's not just that it it hurts savers, it distorts the natural flow of capital. Instead of it going into businesses and services to increase productivity (the only way to create wealth), it flows into financial institutions. The state can borrow more cheaply and so can create more debt. This perpetuates the problems we are facing.
No country can build or maintain an economy based on consumer spending. It is a fallacy. Look at every successful sustainable economy over the last 150 years and look at those that were successful but later declined. Their success has been based on trade and their growth has been based on their ability to supply manufactured goods and services more efficiently that their trading partners and competitors. Their decline has come when their consumer economy became the main engine of growth because any growth that is not based on an increase in efficiency has to be based on an increase in debt and that is not sustainable. 
What money printing does is gives a shot in the arm to a debt driven economy. It's like giving more drugs to a drug addict.


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