07-06-2017, 11:56 AM
(07-06-2017, 09:48 AM)Warren Dew Wrote:(07-05-2017, 11:40 AM)David Horn Wrote:(06-30-2017, 03:07 AM)Galen Wrote: You do realize that QE was implemented explicitly to keep asset prices up don't you? That regulations have costs and unintended consequences?
QE was intended to raise the money supply at a time of low monetary velocity, so yes, there was an anti-deflationary intent. You find that bad? Of the options, deflation is vastly worse than inflation.
On regulations: they have unintended consequences, and need to be updated to account for negative issues that may arise. Lack of regulation also has unintended consequences, but short of imposing regulations, there is no corrective. So, in short, regulation is virtually mandatory in an advanced economy.
It's far from clear that deflation is worse than inflation. The deflation of the 1920s didn't cause any major issues, while the inflation of the 1970s did.
I don't know which is worse myself. But I'd say the 1929 crash and Great Depression that followed the "1920s deflation" was pretty serious. The crash itself was caused by rampant speculation; inflation of stock prices and buying on margin.
Quote:That said, quantitative easing did not cause any big inflationary problems, either. What it did do was skew different types of securities, as the Fed preferentially invested in housing securities. This kept the housing bubble going to some extent, with attendant economic distortions.
Right; QE was supposed to be inflationary, and it wasn't. It was the only game in town to stimulate the economy, after the Obama stimulus was blocked on Nov.2, 2010. But is there a housing bubble now in places that are not already the most-attractive and prosperous places with diminishing available housing there, plus rampant real-estate speculation?
Quote:Lack of regulations do not have a big unintended consequences issue, since you know the starting situation before regulations are imposed. Removing long standing existing regulations might theoretically have some unintended consequences, but they would still be less than with new regulations since one does have a baseline one knows about, even if it is an old baseline.
The consequence of lack of regulations are well-known and obvious. One doesn't need to speculate further. Pollution, un-healthy conditions and outbreaks, unsafe products, bad products sold, unfair discrimination, unfair and unsafe treatment of and pay for workers, too many advantages for the already-wealthy, rampant and destructive speculation, un-fair competition and ownership of the economy by a few, resulting in more of all the previous conditions; these and other events are the results of lack-of and de-regulation.