{"id":15103,"date":"2015-12-09T07:05:48","date_gmt":"2015-12-09T12:05:48","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15103"},"modified":"2015-12-09T07:05:48","modified_gmt":"2015-12-09T12:05:48","slug":"the-poison-of-central-planning","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15103","title":{"rendered":"The Poison of Central Planning"},"content":{"rendered":"

The Poison of Central Planning<\/a><\/strong><\/h3>\n

As is well known, central banks around the world have deployed a range of \u201cunconventional policies\u201d in recent years, ranging from imposing zero to negative interest rates, to outright money printing (QE).<\/p>\n

\"Silvana<\/p>\n

Photo via americanpatriotdaily.com<\/p>\n

We have seen a number of people argue that \u201cQE\u201d does not really involve \u201cmoney printing\u201d, but as we have explained at length, these arguments are misguided (see e.g. our in-depth discussion of the\u00a0modus operandi<\/em>\u00a0of the Fed here: \u201cCan the Fed Print Money?<\/a>\u201d).<\/p>\n

\"1-TMS-2\"<\/a>Additional money created in the US economy since January of 2008 (inside the blue rectangle). The Fed created most of it \u2013 click to enlarge.<\/p>\n

As far as we understand it, the first error is the belief that only bank reserves are created, when in reality,\u00a0both<\/em>bank reserves and deposit money are created in QE operations (the latter is clearly \u201cmoney\u201d, as it can be used for the final payment of goods and services in the economy). The second error is to argue that because new money isn\u2019t just dropped from helicopters (not yet, anyway), but involves asset purchases, it somehow doesn\u2019t qualify as \u201cprinting\u201d. However, it is important to keep in mind that the money used for these purchases is still created\u00a0ex nihilo,\u00a0<\/em>at the push of a button.<\/p>\n

As an aside, it has by now become clear that the ECB\u00a0also<\/em>\u00a0creates both reserves and deposit money to the extent of its securities purchases, whereas Japan\u2019s case still requires some digging on our part which we haven\u2019t gotten around to yet (Japan e.g. excludes deposits held by securities companies from its money supply data; in some ways this is sensible, as it allows for a more fine-grained analysis of money and its potential uses, but it may also disguise how much money the BoJ is really creating).<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

The Poison of Central Planning As is well known, central banks around the world have deployed a range of \u201cunconventional policies\u201d in recent years, ranging from imposing zero to negative interest rates, to outright money printing (QE). Photo via americanpatriotdaily.com We have seen a number of people argue that \u201cQE\u201d does not really involve \u201cmoney […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5728,124,951,233,303,305,536,538,6170,661,662],"class_list":["post-15103","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-central-banks","tag-currency","tag-ecb","tag-fed","tag-federal-reserve","tag-money","tag-money-printing","tag-pater-tenebrarum","tag-qe","tag-quantitative-easing"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15103","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15103"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15103\/revisions"}],"predecessor-version":[{"id":15104,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15103\/revisions\/15104"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15103"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15103"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15103"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}