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Quantitative Easing (QE) Explained: What It Is, What It Isn’t Is QE an Effective Way to Generate More Demand Within the Economy or – as MMT States – Ineffective and a Driver of Inequality?

6. Its primary aim is to bring down long-term interest rates, increase bank lending and – through this circuitous route – increase demand within the economy.

Read on to find out if MMT advocates think this works: tinyurl.com/ympx4uz9

5. QE is about pumping huge amounts of money into the private sector. In practice no additional value has been created or added to the private sector.

In other words, QE is not ‘a fiscal stimulus’.

4. Note, that the total value of assets held by the private sector hasn’t increased.What has happened is that gilts have been swapped for newly created reserves. This is an important point as it refutes the popular belief that

3. * At the same time, it removes the commercial bank's gilts from their securities account.

QE doesn’t increase the value of private sector assets

Commercial banks (and other financial institutions) now have more reserves but less gilts.

2. These bonds (in the UK they are called gilts) are held by commercial banks in their securities accounts, which are located at the central bank.

In practice, here is what happens:

* The BoE creates new money and deposits it into the commercial bank’s reserve account.

1. What is Quantitative Easing (QE)?

In layman’s terms, the central bank – in the UK, that’s the BoE – issues new money in order to purchase bonds from commercial banks (and other financial institutions).

Quantitative Easing (QE) Explained: What It Is, What It Isn’t Is QE an Effective Way to Generate More Demand Within the Economy or – as MMT States – Ineffective and a Driver of Inequality?

Quantitative Easing (QE) Explained: What It Is, What It Isn’t
tinyurl.com/ympx4uz9

Quantitative Easing (QE) Explained: What It Is, What It Isn’t Is QE an Effective Way to Generate More Demand Within the Economy or – as MMT States – Ineffective and a Driver of Inequality?

4. , banks create loans based on a multiple of the reserves they hold at the central bank. In this article I examien both of these assumptions - and as you would expect – they are found wanting.

But first, what is QE and how does it works in practice?

tinyurl.com/ympx4uz9

3. interest rates, combined with providing more ‘liquidity’ in the financial system, will directly lead to more investment. In layman’s terms – cheap loans lead to more business investment and will allow banks to provide those loans. Because, in the conventional story of banking

2. in the right direction - boosting spending in the economy. The BoE also says it is a tool it can use to meet it’s 2% inflation target: a claim I will address later in this article.

Orthodox economists support the BoE story with theoretical underpinnings: cutting

1. To paraphrase – QE is a tool used to boost the economy when interest rates can’t be cut any further: for the BoE it is the policy tool of last resort. It works by pushing up bond prices, lowering bond yields, bringing down long-term interest rates and - if the wind is blowing

Quantitative Easing (QE) Explained: What It Is, What It Isn’t Is QE an Effective Way to Generate More Demand Within the Economy or – as MMT States – Ineffective and a Driver of Inequality?

New on MMT101: Quantitative Easing (QE) Explained: What It Is, What It Isn’t

tinyurl.com/ympx4uz9

Quantitative Easing (QE) Explained: What It Is, What It Isn’t Is QE an Effective Way to Generate More Demand Within the Economy or – as MMT States – Ineffective and a Driver of Inequality?

New on MMT101: Quantitative Easing (QE) Explained: What It Is, What It Isn’t

tinyurl.com/ympx4uz9

MMT101.ORG - Learn Modern Monetary Theory (MMT) | Jim Byrne - MMT101.ORG | Substack Learn Modern Monetary Theory (MMT) to save the world and the people in it. Click to read MMT101.ORG - Learn Modern Monetary Theory (MMT), by Jim Byrne - MMT101.ORG, a Substack publication with thousan...

Tomorrow's MMT101 newsletter/post will be an explanation of Quantitive Easing (QE) - and of course an MMT critique of its effectiveness or not.

Register at my Substack to access to it a soon as it is released:
mmt101.substack.com

4. The private sector - which is the biggest part of the non-government sector is in surplus. It was in receipt of the government spending.

3. the word debt (as money you don’t need to pay back - to yourself) - the only side of the equation that is in debt is the government. The non-government sector is where the surplus is.
So, you could say there’s a government ‘debt’ but you can’t say there is a national debt.

2. assets to the non-government sector).
So, there is indeed a liability on the governments books when it spends more than it brings in - but when there is a liability there must be a corresponding asset. That asset is on the non-government side.
So, at a stretch, if we redefine

1. My answer to a question on Substack Notes.
There is no such thing as the national debt. For a start the nation consists of both the government sector and the non-government sector. Government spending is spent into the non-government sector (government spending adds financial

3. And yet there is nothing more deceptive than the significance of these obvious facts.”

Economists Pavlina Tcherneva – Modern Monetary Theory and Mr. Paul Krugman: a way forward

2. So is the fact that a sovereign currency nation that issues two government liabilities—government bonds and central bank reserves—can always issue such liabilities and convert one into the other ad infinitum.

1. “The fact that the U.S. government is a monopoly issuer of the U.S. currency is an obvious fact. The fact that an issuer of a currency doesn’t need to borrow its own currency from anyone else in order to spend is also an obvious fact.

MMT101 - Modern Monetary Theory (MMT) – Why, What & How Learn MMT: Currency Issuers vs Users, Sovereignty, Government Spending, Tax, Inflation & The Origins of Money Explained

If you haven't had a look yet, browse through the topics of my Modern Monetary Theory (MMT) Course.

This course empowers you. Your politicians and the economists advising them are killing your planet. It tells you what we can do about it.

tinyurl.com/4e295m5m

Economist Dr Steve Keen Demolishing Neoliberal Economists’ Assumptions and Beliefs: Part Two of My Chat with Dr Steve Keen Dr Steve Keen on Barter, Loanable Funds Theory, Why Orthodox Banking Models Assume All Money Is in Cash, the Ashley Madison Theory of Banking, Double-Entry Bookkeeping

Economist Dr Steve Keen Demolishing Neoliberal Economists’ Assumptions and Beliefs: Part Two of My Chat with Dr Steve Keen

Listen to the full episode here:

open.substack.com/pub/mmt101/p...

"The grammar police have started arrested people..." George Monbiot

The grammar police have started arrested people for signs like the one I held on our last demo. It'll be an interesting test of the law, because "I support Palestine. Action is needed now" is an expression of opinion. It would make no sense without the full stop.
www.instagram.com/reel/DMTrNXu...

Recommend an economics related book to me and my fellow MMT101 subscribers. I’d recommend “Diagrams & Dollars: Modern Money Illustrated” by J. D. Alt

Dr Steve Keen on why our current approach to economics is killing the planet and the people on it.

New on MMT101 Podcast:

Economist Dr Steve Keen Demolishing Neoliberal Economists’ Assumptions and Beliefs: Part Two of My Chat with Dr Steve Keen

Listen to the full Podcast:
tinyurl.com/2mhppu88

1. Now it a good time to learn about Modern Monetary Theory (MMT) and why it is the only approach to economics that tells us that saving the world and the people in it is possible.

Get off the "never ending growth is the aim", "we can't afford to save the planet",