| All easing central bank monetary operations involve "printing money" in that sense. What's more, when you have central banks operating an inflation-targeting regime, the entire purpose of easing operations is to stimulate higher inflation. This wasn't new with QE. Before QE, central banks mostly influenced the market via interest rate targets. If the "market" rate is higher than the "target" rate, that means printing money to buy debt in the market). (And before interest rate based policy, some central banks explicitly targeted money supply measures). QE extended that from short rates (overnight secured) to long rates (long-dated government bonds at first, then other high quality collateral), because once short rates were near-zero all they could do was to target long rates (well, some central banks have experimented with negative rates but I think the jury's still out on whether that's really worth trying or not). The thing is, that's not what people (at least used to) mean when they talk/talked about "printing money". "Printing money" is normally shorthand for "printing money to give to the government to spend". This is generally viewed as "bad" because if government simply prints money to finance itself then it suffers none of the short term negative political or practical consequences of doing so via taxation. This means it also faces comparatively little pressure to spend efficiently, which results in serious misallocation of resources over time. It is only a short step from QE to "printing money" in the "government spends it" sense though, and some central banks have gone at least some way down that path. If the central bank provides a significant bid into auctions of government bonds, either directly or because market participants know the central bank will immediately purchase bonds in the secondary market at a known, or fairly easy-to-guess price, then the government is really financing itself by selling to the central bank who is printing money. It still has to pay interest, but it's no longer worried about being unable to raise the money, or the impact raising too much money will have on the rate of interest it pays. But it can also absolve itself of responsibility for paying the interest bill, by giving the government a claim over the "profits" made by the central bank, including interest income on its government bond portfolio. So the government pays interest to itself on bonds it sold to the central bank. Some governments/central banks have done this. That only leaves the government concerned about principal repayment, and the theoretical view that QE is temporary and will be wound down still constrains behaviour here. As a separate point though, I don't think QE is the sole cause of the asset bubble we're arguably experiencing. I'd put much more blame on the ultra-low short rates of "conventional" policy personally. QE being withdrawn is much less of a problem than short rates going up for that. |
If you proxy government for companies in this sentence I would argue that is what is happening now. A large number of companies borrowed as much money as they possibly could during QE because they viewed it as "free money" with the low interest rate.
The impact being "money is cheap" and a large number of ventures have been engaged in that do not have real value.
Ultimately the "price of money" is always going to have a counter-balance of inelastic goods aka raw assets. While I agree that QE is not the sole cause (low interest rates are also to blame), I do believe it has had a net negative impact, particularly by inflating the price of assets among those who had access to excess (often times QE involved) funds to acquire them.