[pdonis]

> I take what you say as ‘losing buying power’ to mean that a lower quantity of real goods and services can be purchased for the same amount of currency.

It's not a matter of quantity, it's a matter of which goods and services get bought. Shifting buying power means shifting demand, which means shifting the economic incentives for producing goods and services. In the case of the Fed's QE, which gave printed money to financial institutions to back mortgage and commercial construction loans, the result was to shift production of goods and services into those sectors and out of other sectors. Hence, as I said, McMansions galore and empty commercial real estate all over the US, while at the same time other things that many people need or want are in short supply.

> The creation or destruction of dollars has no bearing on the purchasing power of the dollars held by anyone else.

Yes, it does. See above.

> you need to look at what is being done with the money

Exactly. And when the government plays favorites by printing money and giving it to particular entities, the wrong things get done with the money: too much of things that people don't want or need, not enough things that people do want or need. In short, misallocation of resources, resulting in waste and unnecessary scarcity. The historical evidence for this is massive, going all the way back to at least the Roman Empire.

[qnt]

Your example is backwards; the McMansions, oversupply of CRE, TARP and the rest of the 2008 fiasco was the result of private sector speculation. Private sector misallocation of credit, not public sector.

Look at US private home starts [1] for example. All the misallocation was done well before QE started, and no-one was building new homes for years following the Fed MBS purchases.

[1] https://fred.stlouisfed.org/series/HOUST

[pdonis]

> the McMansions, oversupply of CRE, TARP and the rest of the 2008 fiasco was the result of private sector speculation

Enabled by a combination of the Fed printing money and giving it to financial institutions for mortgages and commercial real estate loans, and Federal government policy requiring financial institutions to give loans to people who would not normally qualify for them, in the name of expanding home ownership.

> Private sector misallocation of credit, not public sector.

There certainly was private sector misallocation of credit, but it was enabled by the above policies plus the belief on the part of the private sector financial institutions that, if push came to shove, they would get bailed out and the loss would be put on the taxpayers, not them. Which is exactly what happened.