Trivelle Graham
Quantitative Easing
In today’s day and age markets of all sorts are sprouting out because there are more and more options to either be dependant or independent when it is pertaining to the economy of one's nation. But that doesn’t mean that this can be a good thing, this is causing currencies around the world to decline and become less and less efficient. The cause of this is believed to be America’s fault because the winding down of the U.S.’s federal reserve’s. The obvious problem with this is that, as America goes on the decline, other countries are also going on the decline, and this is only causing other higher organizations such as banks to capitalize on this and become richer.
Quantitative easing, a method America was using for our markets, but a method steadily on the decline as of recently. Quantitative easing is the introduction of new money supply by a central bank. America was using this process to buy billions of assets to create growth in the economy, and now that we feel we have done so, we are slowing this process almost to a complete halt, but is that really such a good idea? Many don’t believe so, and this is simply because they believe that plain and simple the FEDS plain and simple couldn’t even if they wanted to. An online article says “This whole thing is a lie to keep insolvent banks open, inflated home prices from collapsing and do-nothing Wall Street bankers from selling pencils on the street corner” (“Dear John”). Obviously, the was your government makes this sounds, it seems to be a process with the intention of fixing things and that is all, but when the bigger banks latch on to the idea they take control with the intention of only making themselves richer . The FEDS don’t have control of the interest rates, the markets do, showing a loss of control on our behalf and a firm gripping of the markets for their own purposes.
Although the economy is growing because of the quantities easing process, it isn’t growing in the efficient way intended. The money isn’t going towards main streets, small businesses, wages and etc, so where exactly is all this money that have been created by this process headed? That’s where emerging markets start to surface. Believing that stopping this process will cause the cheap supply of money will stop, which is what the markets don’t want, so they will do whatever it takes to keep this process afloat. Another online article says “This is important for the strength of currencies. Turning off the tap of money supply sends a signal that economies are strong enough to come off their life support. As a result, the US dollar is expected to move higher next year” (“Forex focus”). The problem is that money is going into these economies so quickly, but it is slow to come out. No money will really be made except for money that the banks put out there. The big banks are making the money because the big banks are the investors, the pretty much run things in the economy because of the production of the money they are putting out.
I like the discussion topic that you chose, however I wish you put in more numbers to what you were trying to say so we can compare what they are trying to say. But with what you have said you did make a valuable statement with how it can also be a bad thing with more industries being created more and more things can become less efficient which can make it harder on the people in certain business and the economy itself. It was a good post, but next time add more numbers and prove if you can!
ReplyDeleteThis is a very interesting topic that you have chosen. I didn’t know anything about Quantitative easing, but know I do. I agree with nick, that you should have put more number in your essay. I also would have liked to see if there was a graph or fact if the Quantitative easing was growing well and see how good our economy would be. But otherwise it was a great blog post.
ReplyDeleteThis was an interesting article but only seems to tell the story from one side. Apparently this is not working as our economy is not growing and people can't get loans. It would have been nice if we knew how much money is being put into the market and when they think they will stop.
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