It's like AmEx gave you an unlimited credit line on your card and said not to worry about ever paying it off. ---------------------------------------------------------- If your credit line was based on income and assets, the US could borow quite a large sum. If you borrowed money from Visa and MC to make min payments on Amex..so on and so forh...you could keep up the charade for years. The only thing stopping you is a margin call, who is going to do that? The closest we had to a margin call is a SnP downgrade. ----------------------------------- The US economy is probably one big Repo Zirp.
I realize now that I greatly oversimplified. I should have said, "QE is, among other things, an indirect means of... "Repo Zirp" ?!?
the question is how is that right? there must be some pressure to make spending effective. without any pressure spending is just wasteful and doesn't provide any long term benefits we're 5 years into the crisis. and somehow they still need ZIRP. Very soon business cycle will move into contraction phase. What will be their options then? 3 trillion deficit? Under current economic model prolonged government intervention will not resolve anything
I still don't get why you are running away from my 2 simple follow up questions. Are they really that hard to answer or is it that an honest answer is INCONVENIENT and makes to your lil theory sound silly?
QE's primary purpose was to bailout banks, although you'd never hear the Fed admit to this. But it is a free bailout nonetheless. All you liberals who pretend to love the common man, hate corporate cronyism and support movements like Occupy Wallstreet should be screaming your outrage. Instead, because it happens under the Obama administration, you overlook it. You're fools, plain and simple.
Precisely. The Fed allows infinite borrowing at .015% (and that is the high side) and the primary dealers can turn around and use that infinite money to go out and buy treasuries yielding 2.5%. Bailout, pure and simple. And this is supposed to help the economy.