Re:The next recession
by dragonwriter on Thursday October 11, 2018 @02:30PM
(#18195910)
> QE did lead to rampant inflation in asset prices (housing
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.
You're looking at the wrong real estate. The people that bought and drove up prices for all this junk real estate in the middle of nowhere were ordinary people who had no idea about investment, fueled by subprime loans. That kind of money wasn't coming back with QE.
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.
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.