If you count operation twist as QE, we’re at least on the fourth try. This QE is “unlimited,” (economics has gotten much more scientific in recent decades, in case you hadn’t heard) so I think QE4eva is a much more apt title.

One would hope that this would be true: “The good news is, when we go into a recession in 2013 well be able to say, DEFINITIVELY, that QE doesn’t work.”

Err, nevermind. Professor Sumner says that we’ll never know.

See how scientific economics has become? Would just one falsifiable statement be too much to ask for?

It looks like the Fed will buy more than 50% of new Fannie and Freddie mortgages. So, I guess the sage advice we’re getting from modern economics profession is that the best way to recover from a housing bubble is to start another housing bubble.

That’s almost as absurd as cheering for this operation to buy unlimited amounts of mortgages while demanding that housing costs come down.

I always thought that economics was nicely encapsulated in the statement: there’s no such things as a free lunch. I guess somewhere along the line they discovered free lunches: “I see this as a free lunch, and I am quite curious to find out just how big or small of a free lunch it is going to be.”

This stuff basically makes fun of itself. I give up.

Let’s give Hayek the last word:

The increased dependence of the individual upon government which inflation produces and the demand for move government action to which this leads may for the socialist be an argument in its favor. Those who wish to preserve freedom should recognize, however, that inflation is probably the most important single factor in that vicious circle wherein one kind of government action makes more and more government control necessary. For this reason, all those who wish to stop the drift toward increasing government control should concentrate their efforts on monetary policy. There is perhaps nothing more disheartening than the fact the there are still so many intelligent and informed people who in most other respects will defend freedom and yet are induced by the immediate benefits of an expansionist policy to support what, in the long run, must destroy the foundations of a free society.

7 Responses to QE4eva

  1. DW says:

    Cute quote but whining about inflation is a very weak form of this debate.

    Monetary policy full stop is the problem. It is, according to many, what put us INTO the mess. Over the short term it is the only thing that can help is his point.

    Taking it out of the hands of individuals (ie abolishing the “policy” part) is an admirable aim. But don’t pretend that a market-driven monetary policy will deliver a tight-money enthusiast nirvana. It will give what is needed and that ‘policy’ is something nobody can predict.

    THAT’s Sumner’s point.

    • chucho says:

      It’s the end of the 1st half, and your opponent just scored eight unanswered touchdowns.

      So what’s the defense gonna look like second half, coach?

    • asdf says:

      Sumner’s idea is terrible. Traders are going to eviscerate that nonsense if it ever came to be.

  2. anonymous says:

    When the true history of the Obama era is written it will start out with: “I’ve been tied up, but I have been able to follow my Twitter feed.”

  3. Gilbert P says:

    Now Foseti, apropos of nothing in this post, I want to just observe that you publish the way I used to drink as a young fellow: nothing all week and then a swill.

    I’m surmising it’s the pressure of young family, young career,etc. Or is it perhaps that, eschewing browsers, you construct your posts on reactionary punch cards, and then book an hour on the mainframe to run a batch once a week?

    • Foseti says:

      All of the above, perhaps

    • baduin says:

      Remember the wise words of Stalin: “The class war gets more hot as socialism progresses”.


      “Stalin, on the other hand, argued in 1933 that the further the country would move forward in constructing socialism, the more acute forms of struggle will be used by the doomed remnants of exploiter classes in their last desperate efforts – and therefore, political repression was necessary to prevent them from succeeding in their presumed goal of destroying the Soviet Union. Stalin believed that the class enemy could even worm its way into the party claiming to lead a socialist state. He evaluated his associates of the day based on whether they acted on that belief or the belief that a party could have no enemies inside it. Tolerance inside the Party to those who disagreed with the official Party line was called by Stalin “rotten liberalism”. He believed such tolerance would make the Party weak and eventually lead to its destruction. As a result, he argued that purges were sometimes necessary.”

      For that reason, it is preferable to avoid personal details – especially if one happens to be a doomed remnant.

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