Quantitative Easing: Where did all that money go?

Discussion in 'Economics' started by kmiklas, Jul 22, 2016.

  1. kmiklas

    kmiklas

    A bit dated, but still a good read.

    In sum:
    1. Fed gave trillions to banks via the QE program
    2. Banks put most of that money BACK into Fed accounts paying 0.25% interest.
    3. This amounts to additional QE funds of 0.25% of annual compounded interest.

    The additional 18.5% of 3.5T is not exactly chump change: $650B. How much of this cash made it into SPY, or some other financial instrument? Are they using this free money to compete with real-world investors?

    I thought that this money was supposed to (somehow) get to the people.

    I am so confused by all this. :confused: Well, not so much... I realize that running the economy of the U.S. is not a trivial task, and that the Fed wants to have deep pockets.

    http://www.adividedworld.com/economic-ideas/what-has-happened-to-all-that-qe-money/
     
    Last edited: Jul 22, 2016
  2. Simples

    Simples

    QE was never meant to reach the people. Dunno specifics, but some of it has been used to buy stocks.

    The fear is that if too much money reaches the people, inflation will skyrocket. So QE is money printing without the inflation, theoretically.

    What's most likely to happen is the wrong people gets their hands on that money, and thus the money is spent funding bad investments anyways.
     
    cdcaveman, i960 and kmiklas like this.
  3. kmiklas

    kmiklas

    Well, if it doesn't reach the people, then how is it supposed to stimulate the economy?
     
  4. The author of this article is very confused...
     
    lawrence-lugar likes this.
  5. zdreg

    zdreg

    does that mean the author of this articled is not qualified to be a judge on the Supreme Court of the US?
     
  6. I couldn't possibly know an answer to this.
     
  7. agreed
     
  8. Simples

    Simples

    The money has been used to prop up failed too big to jail bankers and banks, which can take the money in form of higher salary, bonuses and pensions. The banks themselves have had access to cheap money for loaning, but the appetite for risk is not there so the banks just uses the money for their own purposes.

    I'm probably the wrong person to ask about this big economic experiment though.
     
  9. Sig

    Sig

    does that mean the author of this articled is not qualified to chip ice in antarctica?
     
  10. eurusdzn

    eurusdzn

    You can lead a horse to reserves but you can't make him borrow.
     
    #10     Jul 23, 2016