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It’s when I first heard you bring up Richard Koo… and your subsequent grappling with the things he discusses here… that I became hooked to your channel… It was my first introduction to him, and subsequently, as you went on “thinking out loud,” it was my first introduction to what the MMT folks had to say… and I began to grapple with these things too.
……..and the linking bus goes round and around. (I thought this could be our `bridge back to reality` from MMT land)
Very interesting video. Nice you see the number of the corresponding linknumber in the right corner of the videoscreen. Very instructive.
So QE 1 was to fix the Lehmen policy mistakes. QE 2 is to start fixing the balance sheet problem so we can turn around a 15 year recession in 5-7 years. Clearly there will be a need for a QE 3, 4 and 5 to accomplish this. Maybe “bigger” than we think because we need to prevent the US corporate realestate downturn. I think low interest rates also help to repair balance sheets and also encourage some new spending but clearly not on the scale necessary without QE. Looks like Bernake is taking his advice ! Is this the signal to go out and borrow lots of cheap money to invest in stocks that will benefit from QE injections like infrastructure, commodities, etc ?
The difference was/is on the structure of holders between JGBs and Treasuries, their average maturity, the manipulation of the curve and especially the foreigners part. Fed buying bonds does not necessarily mean that those are domestic. The seller might be a foreigner. Take your hint from the broad trade weighted USD.