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Comment by crdoconnor | Hacker News Reader

Inflation doesn't kick in when money is minted it kicks in after it is spent.

This is why QE didn't trigger inflation in a normal way - minted money was exchanged for bonds (financial assets) not spent on goods and services.

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this is true. not sure why this got down-voted

Probably because it's a very "actually..." style reply when I went for a simplistic explanation on purpose.

While the economics dogma may agree that this is true, I imagine many people have a hard time swallowing the idea of this never-ending of printing free money and giving it to the banks and government.

They do (in some sense) give it to the government, but not to the banks. The banks get it in exchange for bonds and shares which they sell to the Federal Reserve. So the banks aren't getting money for nothing, they're exchanging money-in-the-future for money-now, which is why inflation is created.

If you think about it, when the banks go bust and need a bailout, the Fed debited their balance sheet for 4 trillion dollars but the other side of the balance sheet is buying "toxic assets" or government debt from Wall St banks.

So this is essentially free money. Any legitimate organization would need to provide a legitimate good or service.

So if they are going to keep printing free money and play monopoly they should at least go buy people something like free healthcare. They always try to defend this with the "we are smarter than you" BS...stuff which I studied formally my degree.

My understanding is that the bailouts were completely separate from the quantitative easing. The money for the bailout was raised by selling government debt, and in exchange for it the government got shares in those banks (the government actually ended up with a profit in the long run). This was all on the government balance sheet.

Meanwhile the money printed for QE was spent buying shares and bonds, and relatively few of those shares and bonds were from the troubled banks. This was all on the Fed balance sheet.

QE was the bailout, primarily. It is what economists call monetary policy, with the other side of economic policy being called fiscal policy. The fiscal side of the bailout was much smaller, amost by 3 orders of magnitude. Anyways, it's Ok to be new to a subject but you shouldn't state as much in the first sentence and then start pronouncing what look to be conclusions in the second.

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