[bitcoinmonger]

Agreed. The money supply should be flexible to help alleviate the effects of inevitable financial crashes.

This of course devalues the savings of the average person when this happens, but it's the only way to recover from mistakes like the mortgage bubble.

[ObserverNeutral]

> Agreed. The money supply should be flexible to help alleviate the effects of inevitable financial crashes.

In reality, you either do it in secret...or it makes the crash even worse because people would be even more risk averse because they see the government using these non conventional tool...hence "it must be pretty bad, better save some more"

QE is the quintessential example of this. The only American who benefitted from QE was Bernanke, so he got to be hailed as a hero and now everybody genuflects to him and uses his "playbook".

[laurencerowe]

> QE is the quintessential example of this. The only American who benefitted from QE was Bernanke, so he got to be hailed as a hero and now everybody genuflects to him and uses his "playbook".

The US came out of the 2008 Great Recession much better than the Eurozone due to its ability to borrow cheaply as a result of QE. The Eurozone was hamstrung by the ECB's inability to act similarly and the 2012 agreement to allow the ECB to purchase "unlimited" amounts of bonds saved the currency.

[ObserverNeutral]

US went down more steeply and emerged faster than the EU, not because of QE, or all the fairy tales told by the Fed.

The US as a country is more dynamic, younger and more risk prone than the Eurozone . That's about it. QE had nothing to do with anything.

In turn the dynamism and risk proneness of the US is nothing compared to places like India, Pakistan or Nigeria.

The EU is still a bit more risk prone than Japan but it's really close

Japan is the most risk averse country on Earth and are stagnating since the 90s , no matter how much QE they do or how much they tinker with their unit of account. Economic growth requires entrepreneurial risk taking and consumer risk taking. Down there they don't even risk going to the bar and approach girls, they hardly have sex anymore. With this social landscape the entrepreneurial risk taking which is necessary to start a business and consumer risk taking necessary to max out a credit card for purchases...that's a pure mirage and tinkering with the unit of account or the plumbing won't save them, or anybody for that matter. Just serves as a way for Treasury secretary and the BoJ chair to keep his job and justify his social status because he is "doing something to fix the economy"

Back to the GFC, the US went down more steeply and emerged faster the same way a dude in his 20s can do too much drugs, be wasted and out for a couple of hours and then go to work as nothing happened in the morning.

The destiny of megasocial groups made up of 400M people are not decided by the few elected officials, it's the elected officials who find themselves in those spots because they enact the policies which are popular among the 400M people.

[laurencerowe]

The Eurozone crisis that followed the Great Recession resulted from the structure of the Euro, which had removed the option for countries in the Eurozone to monetize their debt, creating a default risk, forcing them to inflict disastrous austerity on their economies and lengthening the recession.

While US states saw similar affects on their budgets (since they are not allowed to run deficits) this was offset by large federal deficits which kept the economy running. Borrowing costs were kept low by the Fed's QE.

EU central spending is only about 1% of GDP, much less smaller than the US Federal Government spending of 20% in normal years and does not borrow in its own right. The ECB's eventual agreement to stand behind Eurozone governments and pledging to buy their debt was crucial to resolving the crisis.

[ObserverNeutral]

Money is a unit of account.

You like to see human agency in the resolution of the crisis.

In my opinion that's not the case, all the interventions and the tinkering of the unit of accounts and messing with the plumbing of the money markets has a neutral effect.

Wallace Neutrality and Miller-Modigliani prove this mathematically.

You also have to take into account the extreme worry if not outright panic that people have when they see the Fed resort to these sort of hail mary interventions.

"If they need to do this...how bad must it be?"

This was a recurrent theme during the GFC, so there's empirical evidence to claim it's not even neutral but actually counterproductive

[laurencerowe]

Money is just a unit of account. But without enough of it the system gums up and people are left unemployed. We moved on from the gold standard for good reason.

[dools]

Inflation is almost never caused by government spending. It’s caused by regulatory policy that allows, for example, bubbles in real estate or by external shocks like oil and so on. The whole “fiscal policy will debase the currency” thing is blown way out of proportion. I should also point out that there are much better financial instruments than cash to hold long term savings and they’re being made ever more accessible.

The benefit of a government supplied digital currency is a payment system that isn’t run for profit.

[Nursie]

Better than a system in which there are no tools to deal with such problems, and in which monetary supply causes a constraint on the economy, rewarding those who simply hold the currency rather than the productive or investors.