Posen Says G7 Central Banks Should Do More QE

He should know better by now. Must be a slow learner.

Posen Says G7 Central Banks Should Do More QE, Reuters Reports

Aug. 31 (Bloomberg) — Bank of England policy maker Adam Posen said central banks in advanced economies should undertake more quantitative easing to aid the global recovery and make it easier for governments to fix their fiscal problems, Reuters reported.

“Additional monetary stimulus is the last line of defence for the advanced economies today,” he said, according to Reuters. Previous asset purchases by the Bank of England and the Federal Reserve had a “positive significant impact.”

Posen also said advanced economies are not facing inflation dangers, Reuters reported, citing an article he wrote for the news agency.

This entry was posted in CBs and tagged , . Bookmark the permalink.

25 Responses to Posen Says G7 Central Banks Should Do More QE

  1. Leverage says:

    Why the disconnect between central bankers and fiscal policy. Why these people are incapable of seeing that: money printing for the sake of it (yeah I know, reserves) is not better than money printing + increasing aggregate demand (production).

    Why all the austerity demands while fiscal operations are cut? The must be idiots.

    They prefer to increase money (yeah I know, reserves that do nothing), instead of increasing aggregate demand by government spending? Has something to do with the dogma that all government spending is waste? has to do with crowding out silliness? What’s happening here? Is a conspiracy?

    Reply

    Tom Hickey Reply:

    @Leverage,

    Is a conspiracy?

    Of course. Follow the money. Who is profiting from this? The financial sector, which the cb’s front for.

    Reply

    Leverage Reply:

    @Tom Hickey,

    I don’t know Tom, I tend to follow Hanlon’s razor

    “Never attribute to malice that which is adequately explained by stupidity.”

    Reply

    WARREN MOSLER Reply:

    aka, innocent fraud

    Tom Hickey Reply:

    @Leverage,

    The presumption where vast sums of money are involved is that ignorance is not the cause of malfeasance, but rather self-interest.

    Anyway, “Ignorance is no excuse.” These people call themselves professional and therefore should be held to professional standards. One cannot practice a profession and be absolved by ignorance. We who are not professionals can easily understand the operational reality and the professionals cannot. I find that very difficult to believe. They don’t want to understand.

    WARREN MOSLER Reply:

    it like they all think export sales are better than domestic sales

    Reply

  2. kristjan says:

    agreed RJ and that is why It is difficult to understand
    this is the way human mind interacts with everything
    you cannot even think about anything if you know nothing about the thing
    you always have some assumtions
    you have to let go of everything you know about It and have open mind like Bill Mitchell is saying It :)

    Reply

  3. kristjan says:

    I think I found a really good argument supporting MMT. Of course this is a no brainer for an MMTer but It gets the traditional wisdom thinking.
    Once you explained the sectoral balances and how private sector saves when government deficit spends, they finally agree. But they maintain that some percentage deficit spending ratio to GDP is unsustainable and even mathematical impossibility without causing inflation.

    Then you explain that in a closed economy GDP growing 5% with 3% inflation and the private sector maintaining exactly the same GDP/private sector savings ratio the government has to deficit spend.
    It gets them thinking.

    Another good one is that during financial crises private sector is deleveraging and they all agree. But then you show that money is disappearing from the system and government deficit spending replaces the money that is disappearing ’cause they are all monetarists and they are focused on the money suplly.

    Reply

    Unforgiven Reply:

    @kristjan,

    Cool! Any links threads where you used that line of reasoning?

    Reply

    kristjan Reply:

    @Unforgiven,

    I did It in Estonian language and you probably would not understand that.

    Reply

    WARREN MOSLER Reply:

    and you guys are all in sync…

    ;)

    Unforgiven Reply:

    @kristjan,

    See on lihtsalt minu õnn!

    Adam (ak) Reply:

    @kristjan,
    “during financial crises private sector is deleveraging and they all agree. But then you show that money is disappearing from the system and government deficit spending replaces the money that is disappearing”

    I spent over a week trying to explain this to the leading local Australian post-Keynesian economist specialising in debt-related issues.

    Maybe you will have more luck but I have given up.

    On the upside one of my Polish friends is a professor of Information Technology specialising in multi-agent systems. I explained to him endogenous money creation (loans create deposits and all the other stuff) over Skype chat in about 50 lines of text.

    His mind is simply not tainted by studying e-CON-omics.

    Reply

    RJ Reply:

    @Adam (ak),

    loans create Deposits?

    The initial accounting entry is (eg when a person takes out a new bank loan of say 1 million to say buy a house)

    DEBIT

    Customer LOAN $1 million (bank asset customer liability)

    CREDIT

    Customer DEPOSIT or cheque account $1 million (bank liability customer Asset)

    This bank credit (money) is then moved from the buyer to the seller when the house transfers

    It’s fairly obvious that loans create deposits yet I have debated with people who do not initially agree.

    Reply

    WARREN MOSLER Reply:

    And Peter Schiff said definitively in a discussion with me, taped by Linda McMahon’s videologist, that yes, he’s heard that loans create deposits but he doesn’t believe it.

    WARREN MOSLER Reply:

    just fixed his typo

    Unforgiven Reply:

    @Warren Mosler,

    If he would just go get a payday loan, he would figure the whole thing out in short order.

    Schiff: And I don’t have to pay this loan back, right?

    PDLoan: Uh, yes you do.

    Schiff: Well, you just added money to the economy for free, so if I stiff you, it’s no skin off you.

    PDLoan: No, we just made a short-term bet on your future income. You have to cough up part of your next paycheck to pay it back, so no, we didn’t create money, we just altered the temporal quality of money by creating a deposit against your good credit. So quit pwning yourself on YouTube and you’ll be able to pay us!

    Schiff: If you say you created it, I’ll give you a dollar.

    PDLoan: Just take your money and leave quietly.

    kristjan Reply:

    @Adam (ak),

    some people can’t understand simple equations yet they use highly sophisticated language talking about economy
    these are the hopeless types imo

    but others usually understand how money is created in banking system
    the first thing they need to overcome is thinking that money is something physical
    A Mitcell Innes has some very good writings on the subject
    of course the requirement is that you do some thinking while reading :)
    money is not easy to understand to people who are not willing to invest some time studing It
    because things are not like they appear at first glance

    Reply

    RJ Reply:

    @kristjan,

    I like this quote (even if made up)

    It still applies today

    “All of the perplexities, confusion, and distress in America arises, not from the defects of the Constitution or Confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.” — John Adams, Founding Father

    And agree on people think its something physical. Or more that it is something that is somehow real (although question them and can never explain what money is)and NOT just an entry on a computer screen.

    This is the problem. The refusal to see money for what it is. And also what banks do. Even money reformers often want to give banks a power they do not have.

    Why I’m unsure?

    RJ Reply:

    @kristjan,

    “money is not easy to understand”

    It is in fact very easy to understand. But many hold strongly onto flawed beliefs. And refuse to let them go.

    Its getting people to let go of flawed beliefs about money that is the difficult part.

    jason m Reply:

    @Adam (ak), yes, good point, i have had much more luck and influence over friends who have less economics training. paradox of wisdom i guess.

    Reply

  4. Washington Post; News Alert: Obama requests joint session of Congress for jobs speech; President Obama has requested a joint session of Congress Sept. 7 at 8 p.m. ET to deliver a speech on jobs and the deficit, White House spokesman Dan Pfeiffer announced Tuesday via Twitter. A GOP presidential debate hosted by NBC and Politico is also scheduled that night.”

    No need to listen. I’ll tell you what he’ll say: “We must reduce the deficit, but we also must reduce unemployment, and I hope our friends across the aisle will join us in our efforts.”

    Later, he will do whatever his super-committee suggests, which will be to follow the Tea/Republican initiative. This is known as an “Obama compromise.”

    Rodger Malcolm Mitchell

    Reply

  5. mike norman says:

    They don’t know better. They really don’t.

    Reply

  6. Unforgiven says:

    So, were the “asset purchases” bonds that were on the market anyway or were these securities that got “called”?

    Reply

  7. Neil Wilson says:

    I wonder what the ‘positive significant influence’ was?

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>