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Comment by nutjob2 | Hacker News Reader

The Fed most commonly uses Open Market Operations to modify the money supply, with "money printing" or Quantitative Easing used in more emergency situations.

But more broadly your comment doesn't really represent reality, whatever happens in the markets and economy the Fed manages inflation (or deflation) and it's much more complicated than a single relationship like you describe.

More interesting is trade, where the US consumes so much and pays out so many dollars for goods that places like China which run huge surpluses have few choices other than lend it back to the US.

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Sure; and I'm referring directly to those "emergency situations", which aren't much of an "emergency" as most people would understand the word given that they've engaged in QE for ~7 of the past twenty years.

4 of the last 10 were quantitative tightening.

> 7 of the past twenty years

A lot of shit went down over that period.

But you seem upset by QE in general. It seems to upset a lot of people, possibly because the Fed created a lot of money, but that's what central banks do, they create and destroy money. It's really not that much of a big deal. People lose sight of the fact that money is an abstraction and not something concrete.

> money is an abstraction and not something concrete

That is a choice we have made. Historically it hasn’t been that way.

It's always been that way. The notion that currency is backed by something concrete like gold is an illusion, one that some people cling to these days.

Even if it were true, inflation makes the whole issue moot. Money is only worth what it will buy, so it is at the mercy of prices.

Finally money depends on people's collective acceptance of it. No point in holding gold if people lose confidence in gold, for instance if people start producing convincing fakes. How does the average person verify gold? It almost always goes back to trusting some central authority.

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