Of course, the danger always was whether they could unwind in without making a mess. They seem to be doing well so far.
No, it isn't. Print enough and the currency fails. The lesson has to be learned over and over again, in part because there is an endless supply of deniers whispering magical thinking into the ears of the powers that be.
QE didn't lead to this only because they stopped. That time. We're still left with the precedent however; giveaways like "cash for clunkers," bailing out UAW and public sector pension funds... all those supposedly "good" things done with magic money from Washington, enabled in part by QE funded deficit spending.
What evidence can you cite that they won't turn to QE again to try to paper over whatever bump in the road comes next? What assurance do you have that they'll stop printing next time?
You don't have either. That's why it's a question.
Another lesson: refuse to print in a deflationary spiral and a recession turns into a depression.
> What assurance do you have that they'll stop printing next time?
This is a slippery slope argument. Central banks could always print. Deciding how much to print is their entire job. QE simply meant instead of using printed money to buy Treasuries, as the Fed has always done, it would also buy other assets.
> bailing out UAW and public sector pension funds... all those supposedly "good" things done with magic money from Washington, enabled in part by QE funded deficit spending
QE didn't monetize the bailouts. Buying Treasuries is something the Fed has always done. QE meant buying other assets, e.g. agency debt.
This is demonstrably false. For a time the Fed was buying over $2 billion of long term debt per day [1]; bonds that had no hope of finding buyers on the open market. They were directly funding federal deficit spending with QE.
[1] https://www.federalreserve.gov/newsevents/pressreleases/mone...
You're quoting a Federal Open Markets Committee (FOMC) statement [1]. This is the arm of the Federal Reserve which has always bought government debt. Without QE, the FOMC would have been buying huge amounts of Treasuries to keep (a) the money supply constant and (b) interest rates low.
QE's novelty was the Fed saying "we aren't only going to buy Treasuries." Complaining about the Fed buying Treasuries is complaining about the Fed per se. Complaining about QE is complaining about the Fed not buying Treasuries, and instead buying other securities.
[1] https://www.federalreserve.gov/newsevents/pressreleases/mone...
You're pretending not to see the scale and exceptional nature of that historical event. Characterizing that maneuver as routine is disingenuous and indicative of precisely the sort of thinking that creates the slippery slopes. Will this be the sort of bad guidance our leaders will use to rationalize future decisions? We'll see.
It wasn't routine. It was unusually-large FOMC activity directed by Ben Bernanke's study of the Great Depression. (It appears to have worked at keeping the money supply stable.)
But all of that is not QE. If you don't know the difference between QE an the FOMC, mightn't the nuances of monetary policy be similarly escaping you?
It's a distinction without a difference. QE recipients used QE funds to heal their balance sheets by buying deficit funding Treasury bonds as directed by the Fed. So we have both Fed created money funding deficit spending indirectly through QE and Fed created money funding deficit spending through direct monetization.
Dwelling on this minutia misses the point entire, and I suspect that's deliberate. The hazard is that -- as a result of these events -- we are now a nation with a propensity to print staggering amounts of money to deal with economic pressures. The question is; will we control that impulse or not?
QE did lead to rampant inflation in asset prices (housing, shares, etc.). It just didn't lead to rampant inflation in consumer goods.
That's purely because of how it was "spent" (on buying up treasuries). If it was spent on actual goods and services then it would have kicked off inflation in consumer goods instead.
The housing market in the US didn't even stop dropping until about the time of QE3 and only recovered slightly by the time QE ended. QE certainly didn't lead to “rampant inflation” in housing except perhaps by comparison to the rapid deflation that would have happened without it out some other policy change directed at the same issue.
The kind of investors that got money via QE wouldn't invest into junk like that, instead they've driven up prices in urban areas. The same kind of people are driving up stocks, which are currently massively overvalued.
Either way, you can't look at the initiation of QE and expect results by next tuesday.
This is overly simplistic. QE led to neither rampant inflation nor dollar depreciation. Money velocity fell and monetary policy responded. (Fiscal policy’s relative non-responsivensss meant monetary policy had to overcompensate.)