60.1 Quantitative Easing 20 Year Anniversary!
———Part 1 Summary———
On March 19, 2001 CNN described quantitative easing by the Bank of Japan as “inject[ing] a large amount of money into the Japanese economy.” It wasn’t large, it wasn’t money, and it never got to the economy. In two decades nothing has changed; not in Japan – not anywhere.
———Episode 60 Intro———
Jeff Snider is in his element in Episode 60, in which he observes the 20th anniversary of quantitative easing and notes the unsettling twist in oil futures; also, he reacts to the Federal Reserve Chairman who recently likened the Fed’s actions last year, to the heroic Dunkirk evacuation.
Your podcaster on the other hand comes out of the gate staggering by slandering everyone’s favorite nation: New Zealand. Operating under the false impression that The Hobbit was a documentary, this podcaster opens the show asserting New Zealand is home to all manner of fantastic creatures like the platypus, narwhal, orcs and elves. The YouTube comments were aflame with polite indignation. The narwhal belongs to the Arctic, not Antarctic. Worse yet, the platypus is endemic to the only country in the world that doesn’t care for New Zealand: Australia.
To make amends this podcaster watched BBC Planet Earth with New Zealand’s fourth most popular guitar-based digi-bongo acapella-rap-funk-comedy folk duo Bret McKenzie and Jemaine Clement. So dear audience, please squint your ears at the start of the episode. When you hear “platypus”, receive Fiordland Crested Penguin, which is twice the size of a normal-sized man. When you hear “narwhal”, instead pick up Kakapo, a parrot that identifies as an owl. When you hear “orcs”, perceive Kiwi, like the bald eagle but flightless and with fur. And when you hear “elves”, glean Weka another flightless bird with the legs of a witch, a taste for pickled olives and a cholesterol problem.
———SEE IT———–
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———Ep 60.1 Topics———
01:00 Quantitative Easing was introduced to the world 20 years ago, March 19, 2001
02:12 What are the three purported effects of QE: portfolio effects, signaling, lower rates
04:37 Why is New Zealand in the financial news and what does it have to do with QE?
05:33 Is it unusual for a central bank auction to “bust”?
06:26 Studies have found that QE sized to 10%-of-GDP contributes around 0.50% to lower rates
10:10 The financial media said QE was “money” which was “injected into the economy”
12:16 BOJ Board Member Eiko Shinsotsoka voted against QE and ZIRP but nobody listened to her
15:44 The first QE was for 1 trillion yen, an unscientific guesstimate to influence expectations
19:54 Both China and Japan had a problem with non-performing loans in the late 1990s
22:06 QE’s purpose was to signal intent, earnestness – to maintain appearances of action
24:46 Central banks do not believe that QE works – CENTRAL BANKS DON’T BELIEVE IN IT!
———Ep 60.1 References———
Central Banks Don’t Do Quantities of Money Because They Can’t: https://bit.ly/3srNL1j
Kiwi Busted QE And Its Relation To The Reflation Story: https://bit.ly/3ddL78Q
Alhambra Investments Blog: https://bit.ly/2VIC2wW
RealClear Markets Essays: https://bit.ly/38tL5a7
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