Monday, July 8, 2013

Lee Adler — Here’s Why “QE Isn’t Money Printing and Does Not Cause Inflation” Are Not Only Big Fat Lies, But Red Herrings


Adler points out that QE results in asset price appreciation that likely would not have occurred otherwise and it constitutes "inflation" that is not measured by standard measures such as price indexing and wage increases.

The Fed has admitted that an aim of QE was to raise asset prices to increase the wealth effect and thereby stimulate the economy through increased spending based on it. The Fed also admitted that this was "asset inflation, in that it resulted in asset prices higher than they would have been otherwise. In other words, blowing more bubbles.

This criticism is a loose use of "inflation," which is technically defined in economics as a continuous rise in the general price level, and it fails to understand the implications of monetary policy and fiscal policy. But the fact is that the Fed wanted to create inflationary expectations to boost asset prices and it succeeded apparently because a lot of people fell for it.

The Wall Street Examiner
Here’s Why “QE Isn’t Money Printing and Does Not Cause Inflation” Are Not Only Big Fat Lies, But Red Herrings
Lee Adler

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