tag:blogger.com,1999:blog-3591186784456519139.post9193356244344326766..comments2024-01-02T17:38:32.872+00:00Comments on Economics of Imperialism: Europe Gets Even More QuEasyTony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-3591186784456519139.post-26618141128704625132015-02-11T21:00:42.253+00:002015-02-11T21:00:42.253+00:00Hi Biswap,
A few comments on this:
'Open mar...Hi Biswap,<br /><br />A few comments on this:<br /><br />'Open market operations' are normally on short-term money market instruments and affect the rates on these. But recent years have not been 'normal', and central bank policy has switched more to trying to push down longer-term rates/yields, with the Fed's 'operation twist' and the various QE policies that involve buying bonds.<br /><br />There is also another distinction to be made. If a central bank directly finances the government deficit (crediting the government with funds and taking on government securities), this is seen as 'bad' and potentially inflationary financing. Less frowned upon is the central bank buying government bonds in the secondary market. This does not provide the government with any new cash, but it takes bonds from private sector holders and gives them bank funds (cash). This method of pushing yields down is seen as good/OK.<br /><br />Those are the subtle distinctions of capitalist finance these days!<br /><br />Tony NorfieldTony Norfieldhttps://www.blogger.com/profile/03896437404164741498noreply@blogger.comtag:blogger.com,1999:blog-3591186784456519139.post-28374066205764140122015-02-09T10:12:16.028+00:002015-02-09T10:12:16.028+00:00Thank you for your illuminating description of the...Thank you for your illuminating description of the mechanics of Quantitative Easing - my question is how does this differ from the kind of "open market operations" we used to read about in our Macroeconomics courses which governments traditionally used to "loosen" monetary policy?<br /><br />Furthermore - what are the "assets" the government buys up to increase the money supply and reduce yields/interest rate? Are these the assets which were previously sold by the government to raise funds for its spending?<br /><br />I am looking forward to reading your thoughts on the unfolding situation in Greece. Keep up the good work!bishttps://www.blogger.com/profile/10192371058811561920noreply@blogger.com