Air your thoughts, post links and generally discuss. Normal posting rules apply.
A reminder: if you're on twitter, check out the hashtag #qedebate for QE-related stuff. And use it yourself, of course, if you're talking about QE.
Widowmaker of all widowmakers? - FT Alphaville
So much for high expectations of Abenomics. Yen strengthens and Japanese equities sell off. Inflation expectations (index-linked bond yields) now right back where they were in early April.
Unintended consequences of unconventional monetary policies - Dr. Ros Altmann
Write-up from Dr. Altmann's presentation to the LSE. Wide-ranging review of the consequences of QE from a broad social and economic perspective. Particularly interesting on intergenerational effects.
Monetary policy outcomes - Stephanie Bell Kelton
Kelton considers a number of reasons why expansionary monetary policy may have contractionary effects. Particularly interesting on portfolio effects similar to those noted by Toby Nangle and Ros Altmann. Not limited to QE.
Is the developed world following Japan's long and winding road? - Shirakawa
Important speech by Shirakawa, former head of the Bank of Japan, on the limitations of monetary policy in a highly-leveraged low-growth environment after the bursting of a bubble.
Initial thoughts from Frances Coppola: Inflation, deflation and QE
Related debates on twitter:
Damaged banks, collateral scarcity and yield squeeze
Inflation, deflation and QE
Redistributive and wealth effects of QE (and other matters)
QE effects on savings and pensions
Effect of QE on UK housing market
Pawel Morski disagrees with Frances Coppola (and provides a neat QE flowchart).
"You can't grow an economy by making households poorer" - James White on the problems of debasing a currency to chase exports. Mercantilism is not the answer.
Martin Wolf reviews progress of Abenomics so far and warns of trouble to come - FT
Dr. Ros Altman's press release for Mark Carney pleading for no more QE.
Links from @wonkmonk_ on Twitter:
QE as placebo - Warren Mosler
Marshall Auerback: If stock markets begin to decline it's because of fiscal policy, not QE
Shaun Richards objects to higher inflation targets (not directly about QE but related)
Derrick Wilkinson's post from 2011 pointing out that there is no evidence that QE achieves anything at all and calling for a "rethink". Should be read in conjunction with Pawel Morski's post (link above), which essentially says that the reason why we still have QE is that rethinking didn't come up with anything better.
Thoughts on inflation - an old post from Frances Coppola (Feb 2012). 1970s redux? Not really. QE effective? Don't think so. Inflation a risk? No. Deflation is the game. Deal with it.
Is QE deflationary? A conjecture - Euronomist Blog, Considers the effect of QE on velocity of money and time preference. Concludes that QE does have deflationary effects in the short run but will encourage greater spending in the medium term once people get bored with putting all their money into stocks & shares.
There's a problem with the transmission - Frances Coppola. QE not only doesn't work properly when monetary policy transmission is weak due to a damaged financial sector, it actually clogs up the transmission mechanism itself. This might help explain QE's apparent diminishing returns. Wonkish.
Does the Fed really control the money supply? - John Aziz (The Week). John looks at M0 money creation since the financial crisis, and M4 money creation, and concludes that creating lots of base money has had little or no effect on broad money (and may even be making matters worse). With very cool charts.
Why QE didn't generate inflation - Robert Wagner (Seeking Alpha), On the importance of trust in markets. If markets hadn't trusted the Fed, the effects might have been very different. Generally similar views to Pawel Morski (see link below), but also makes important point that monetary policy alone will not be sufficient for recovery.
Can (and has) monetary policy offset fiscal consolidation? - Jonathan Portes considers whether the Sumner Critique - that fiscal stimulus will always be neutralised by central bank inflation targeting - holds in practice. He concludes that it doesn't, and that therefore (by extension) monetary policy cannot be a sufficient offset to the contractionary effects of fiscal consolidation.
A conversation in response to USYD seminar on macroeconomic policymaking - Modern Money and Public Purpose. Coordinator: Rohan Grey. Contributors: Joseph Halevy, Jan Toporowski, Marshall Auerback, Massimo Cingolani, Mario Seccareccia, Bill Mitchell, Warren Mosler. And a link to Scott Fullwiler.
Wounded heart - Bill Gross at PIMCO explains how not only QE, but very low interest rates have a depressing effect. Financial markets require "carry" to function properly: without it, transmission of money around the economy grinds to a halt. Related also to this post from Frances Coppola:
The slow death of banks - Frances Coppola at Pieria. Damaged banks are being kept on life support by very low interest rates, QE and extended term repo operations, and covert and overt government subsidies. But these treatments have toxic effects for both the economy and for banks when used long-term. The end may be that banks as we know them die.....
Stock markets and money creation - Euronomist Blog argues that QE raises inflation expectations due to higher prices on stock markets. (Doesn't explain how inflation expectations translate into actual inflation, though).
A fresh harvest of widowmakers in the widowmaker trade - Traders Crucible. Mike Sankowski's brilliant explanation of how expectations of higher inflation from QE can turn out to be very expensively wrong. Especially in Japan. Follow the links to great posts by Warren Mosler, Cullen Roche and Izabella Kaminska, too.
Chart: Japan still mired in deflation - via @Wonkmonk_. Despite extensive QE, it seems Japanese CPI is still headed downward....
Some simple LSAP/QE accounting - Ramanan at Case for Concerted Action provides a simple and clear explanation of how the accounting for QE works when assets are purchased from banks and from non-banks. Essential reading.
QE: The Case for the Defence - Tomas Hirst at Pieria reminds us of the positive effects of QE.
The Fed's Flawed Model - Lacy Hunt puts forward case that QE makes matters worse, not better. Unfortunately appeals to the 90% public debt "tipping point" that has recently been debunked. But his critique of wealth effects and the impact on financial markets is informed and informative.