| 97ITR | 11-13-2010 07:36 AM |
While this video is entertaining it's important to note that it's not accurate.
1) Deflation is bad because the root of deflation is a decrease in demand and a decrease in the money supply. Both of which, if left uncheck, may end up in a downward spiral that nukes the global economy
2) Quantitative Easing: It's purpose is to spur lending by driving the yield down on treasuries. The Fed buys the securities from the banks in order to drive up the treasury prices. This reduces the rate of return from the treasuries and, hopefully, encourages banks to lend money instead of hoarding it and locking it in treasuries. FYI, the average investor actually does buy treasuries from banks and not directly from the treasury..... the Fed buying from the banks also puts more money into the economy. | 