Reply to post: Re: QE was used to increase inflation

Re: QE was used to increase inflation

" People reduce spending in a deflationary economy, which means companies have to lay off workers"

Totally outdated model which was approximately true somewhere in the 1950s.

Companies lay off workers to make more profits and the economy is irrelevant: There's _always_ a need for more profit, for this quarter.

And companies don't "have to" lay off workers, they are always trying to find a way to do it, just to increase profits _for this quarter_. Even if it means that next quarter some products can't be made because of no-one is there to make it.

Hiring someone is a cost at least an year, so in a quarter-based economy you can't hire anyone, you outsource.

Also "reduce spending" is false: You have to eat something and sleep somewhere. And go to work if you still have a job: _You can't reduce spending even an iota_.

Most of the cost for ordinary people is the housing and housing costs have risen about 150% in last 10 years which causes very real deflation for most of the wage earners (i.e. real economy): Every day increasing slice of the income goes just to have a place to sleep and that means you must save from everything else.

Also: In the 50s a single wage earner could buy a house and pay the mortgage in 10 years. While supporting the family and having almost new car. Now it takes 30 years with 2 incomes and no family even while the productivity of a worker has dramatically increased.

Where do you think the money goes when wage earners are actually _poorer_ than in 1950s?

That's a definition of deflation in the consumer driven economy. The financial sector is just not part of that. (Outside of housing and some raw materials: Everything else is staying in the financial sector, forever.)

The banks (the people who have money) are seeing 10-15% yearly inflation as the central banks are dumping trillions of negative interest cash to them.

That's why central banks stopped reporting real inflation _and_ the (total) amount of money dumped to banks and big investors.

FED alone has managed about 5 trillions now, that's 5000 billions. ECB and others aren't even telling: Thieves usually don't tell how much they are stealing.