Seems like a pretty bad idea in an ostensibly good economy. QE was considered dangerous and hypothetical until 10 years ago and that was an actual crisis. Do you see some danger in normalizing QE (even in more niche markets like overnight)?

QE is a pretty sneak way to keep a stagnated economy going. And, lets be clear, the stagnation is happening because trillions of dollars are hoarded in financial schemes whose only goal is to produce interest, not on producing anything. The biggest example we have is the way big corporations are furiously repurchasing their own stock. This is a huge fortune spent every few days for no productive reason, with the only goal of making big company returns to look more attractive than they are. All the money pumped in this economy is going for share repurchasing programs, stock market investments made by funds in these same companies, real state speculation, and a small portion into venture capital for companies that for their own nature have uncertain returns.

>The biggest example we have is the way big corporations are furiously repurchasing their own stock. This is a huge fortune spent every few days for no productive reason, with the only goal of making big company returns to look more attractive than they are.

Stock buybacks are the same thing financially as a corporation issuing dividends except that with a buyback, the holder isn't forced to take a taxable event. It's almost always better for the owners to receive buybacks rather than dividends, especially if the owners pay income taxes.

They're not the same thing financially: with dividends, it is much easier for shareholders to invest the money in some other company that is better managed. Stock buybacks give the illusion of profit growth, when in fact the profits per share are engineered by company executives. The biggest winners in this arrangement are without question the executives, who practically guarantee share growth and, therefore, large bonuses.

It is not an illusion. Companies state the buyback amounts and outstanding shares. The market for the most part is quite savvy and knows how to price in these mechanical changes. Nobody is being fooled at scale.

Oh brother. There's no illusion. I guess the average guy off the street doesn't get it, but no one in the finance world is fooled into believing a share buyback increased profit. Not a single one. It decreases share count in exchange for cash. Pure balance sheet transaction.

Stock purchases are no different than dividends, which have been around forever. The only difference is being forced to realize tax gains (on the shareholders’ parts).

Returning money to shareholders is much better than pissing it away on whimsical experiments because the market is a better investor than some exec board at a company sitting on cash.

People are not having many children. This has a long term effect, which will last decades. QE will become more and more necessary, as the decades go by, if birth rates remain low. Of course, we could, instead, have the government build things. I live in NYC, I would like to see the government build a new subway system. I'd like to see a system of walkways above the streets, where people can ride their scooters without having to worry about automobiles. I'd like to see the government buy up more land and convert it to parks. We need a vast system of dykes, to keep the coasts safe, in a century when the oceans will be rising. For the New Jersey, New York and Connecticut tri-state area, I can think of $1 trillion in improvements I'd like to see. Other parts of the country also need improvements. Let's say $10 trillion over all. Over 20 years, that's an extra $500 billion of spending a year. If we had that kind of stimulus, we would not need QE.

But birth rates are low, so demand is going to be depressed for many decades to come. So we will need something, either fiscal stimulus or QE.

By the way, when I say birth rates are low, I'm very much including China. The one child policy has global effects. World wide interest rates would be wildly higher if Chinese families had continued to have 4 to 5 children, which is that they were having right before the imposition of the one child policy. It's because China has so few children that they have so much savings, leading to the global savings glut that has given us interest rates near 0%.

I don't know if its a good idea to continue either, but Japan has been actively doing something similar for a while now. It hasn't caused catastrophe, but it hasn't pulled them into high growth either - but it could be argued that there are other factors affecting the overall economy there (the graying and shrinking of their population for one).

They don't have the worlds reserve currency nor run twin deficits, fiscal and trade. Their defense is largely supplied by the US also.

So much different outcome for US with large trade deficit and ever growing fiscal deficits. Some argue if we did go the route of Fed monetizing (which almost certainly has to happen) the $ will be value much lower than it is today. This would help to close the trade deficit though, and repatriate some lost industrial capacity, boosting exports.

You mean 2053 years ago:

https://www.businessinsider.com/qe-in-the-financial-crisis-o...

The danger is inflation, which we don't see in the data yet. When it becomes an issue, you dial back QE.

Best laid plans and all that, but there's no point worrying about a theoretical boogie man.