So I've never really understood Modern Monetary Theory (MMT). In some sense, I can understand it as a counter to the damaging "household budget" and "hard money" views of government finances. To me, it still cedes the equally damaging "money is all-important" message of monetarism and so-called Austrian school that manifests even today when a "very serious person" tells you it's really the Fed, not Congress or the President that controls the path of the economy and inflation when neither inflation nor recessions are well-understood in academic macroeconomics. People have a hard time giving up talking about money.
Austrian school? Yes. Austrian school. This dawned on me some time ago when I read Noah Smith's steps for combating the monetary "hive mind" he says is pervasive in finance:
So how does one extract an individual human mind from this hive mind? That is always a tricky undertaking. But I've found two things that seem to have an effect:
Method 1: Introduce them to MMT. MMT is a great halfway house for recovering Austrians.
It does make sense to think of MMT as a way for an Austrian school devotee to wrap their head around quantitative easing not causing inflation without abandoning too many priors. They just have to nudge their target for the "right" amount of inflation a bit higher (or even just to the Fed's ostensible target of 2%).
I came across a link in several places in my Twitter feed the other day (which is why I decided to write this post) that's actually a really good explainer of MMT. It also helps explain this connection to Austrian school economics. Read these two quotes; first:
Money is created effortlessly every day on computers in large numbers. It’s our access to real resources that is limited.
As the issuer of the currency, governments have the ability to out-bid any private sector business or even control sectors of the economy, such as education, public infrastructure or health care (nations choose varying approaches). Governments should be held accountable to act responsibly when competing for certain scarce resources in the economy to avoid undesired levels of price escalation.
At the same time, governments have too often been guilty of the opposite problem – not managing the currency in a way that maintains domestic full employment and acceptable base living standards.
Now read Ludwig von Mises :
In theoretical investigation there is only one meaning that can rationally be attached to the expression Inflation: an increase in the quantity of money (in the broader sense of the term, so as to include fiduciary media as well), that is not offset by a corresponding increase in the need for money (again in the broader sense of the term), so that a fall in the objective exchange-value of money must occur.
In both cases, money is simply a tool to move real resources (i.e. the real goods and services money is needed for). The question of inflation then becomes a question of whether there are too many or not enough real resources to be moved with money, as well as a level of inflation we define as "right" (with traditional Austrians usually going for 0% and MMT-ers going for something like 4% or more). The other conclusions generally follow from this (e.g. a sovereign government can never run out of its own currency, only produce excessive inflation in MMT). And if inflation hit 10% or more, both MMT and Austrian economics could find themselves on the same page. To put in physics terms, the theories converge as inflation becomes large compared to the (inverse) length of business cycles.
I'm not saying these movements are politically aligned — Austrians tend to be more conservative and MMT-ers more liberal. The issue here is that where these theories converge (at high inflation) is also the only place where they're supported by empirical data. Inflation really seems to be proportional to whatever you might think of as money when inflation is high. As we'd say in physics, it's a great effective theory. But at moderate levels of inflation, the theory breaks down. As I wrote in my post on what to do when your theory is rejected, we should set a scale (inflation ~ 10%/y or 10 years, remarkably comparable to the observed period between recessions) and let our imaginations run wild with whatever model fits the data, not blindly apply a high inflation theory to low inflation. Constraining us to thinking about "money" is tying our hands.
So instead of saying "money is just a tool for moving real resources, therefore money is all-important to the economy", what if we say "money is just a tool for moving real resources, therefore (except in extreme circumstances) money doesn't matter"?
Usefully, these views turn out to be transparently expressed in the information equilibrium framework. This framework allows me to more precisely write down what it means for something to move distributions of real resources around — which is equivalent to moving the information specifying the distributions around. Claude Shannon invented the field that studies this specific subject (information theory), and I think the idea that "money" (whatever you mean by it) is most fruitfully thought of as medium of information flow. Let's consider aggregate demand and aggregate supply, assuming they match in equilibrium. We can then say:
(1) P ≡ ∂AD/∂AS = k AD/AS
We can introduce "money" M by using the chain rule  in calculus plus M/M = 1:
(2) (∂AD/∂M) (∂M/∂AS) = k (AD/M) (M/AS)
Here, "money" is simply functioning as a tool moving "real resources" AS. You could insert anything in that equation: B for bonds or bitcoin. Or G for government debt. If aggregate demand and aggregate supply are in information equilibrium, and money is in information equilibrium with demand, then money is in information equilibrium with supply, i.e.
(3a) ∂AD/∂M = k₁ AD/M
(3b) ∂M/∂AS = k₂ M/AS
By dividing Eq (2) by Eq (3a). Note that the left hand side of (1) is the exchange rate for a piece of the aggregate economy — i.e. the price level P. Now Eq (1) tells us
log AD ~ k log AS
as well as
log P ~ (k −1) log AS.
If we define AD ≡ P Y to use a common symbol in economics for real output (Y), then we find — using the right hand side of Eq (1):
AD ≡ P Y = k (AD/AS) Y
so AS = k Y
That is to say "real output" is directly related to "real resources" in equilibrium. But Eq (3a) also tells us that log AD ~ k₁ log M which means that if "money" grows rapidly compared to real resources AS (i.e. Y is approximately constant), we also find
(4) log P ~ k₁ log M
This latter relationship requires a disequilibrium between money and real resources (AS) because the equilibrium allowing us to write (3a,b) also implies log Y ~ log AS ~ (1/k₂) log M making
(5) log P ~ (k₁ − 1/k₂) log M
reducing the inflation rate in (4) — and in fact requiring some strong restrictions on the form of M (and the relationship between k₁ and k₂) if AD and AS are in equilibrium. Basically, the quantity theory of money as well as money being the source of inflation requires the disequilibrium between money and real resources both Austrian and MMT devotees claim. That's the nugget of truth. But empirically (4) is only roughly true for economies where inflation is well above 10% where M is identified with base money.
But since M was arbitrary (it is introduced via two mathematical identities), the typical case of an economy near equilibrium — i.e. not in recession or experiencing hyperinflation per Eq (4) — should be independent of an arbitrary redefinition of the medium of information flow. Whether we say we exchange work for money and then money for goods, or we just exchange work for goods doesn't matter unless you're in hyperinflation or recession. You might say the latter is extremely important, but it turns out economies aren't in recession most of the time (a few quarters every ~ 8 years for the US ) so most of the inflation that happens isn't monetary .
Whatever you think money is, it doesn't really matter.
At least if you're not in hyperinflation or possibly right in the moment of a financial system seizing up as some theories of the financial crisis shock of 2008 propose.
That's the conclusion we should be drawing from the idea that money is "just a tool" to move information about real resources around. Much like how air doesn't really matter to the transmission of sound waves under typical conditions in a room (all the physics of molecules and thermodynamics is subsumed into a constant speed) — it's just a tool to move vibration information from one point to another — money appears to have little to do with the bulk of inflation from what empirical data is available. In fact, the inflation rate went right through the financial crisis with nary a blip right when commercial paper — one of the major mechanisms by which large payrolls are funded — lost its moneyness.
So what is inflation if it's not monetary? As Noah says in his post linked above that inflation is "one of the biggest mysteries of macroeconomics". My intuition is telling me that inflation is demographic — the shocks to inflation are contemporary with or follow shocks to the labor force size (coupled with the structure of the fading Phillips curve). Shocks to the monetary base follow the shocks to inflation. You can also read Steve Randy Waldman's account. Social factors leading to the baby boom and women entering the workforce were the likely real drivers of inflation (i.e. "real resources" like labor that money was just a tool to help move around), and money was just along for the ride.
Regardless of whether you like the information equilibrium take or whether you find it useful, the key fact is that inflation — except in cases of hyperinflation — empirically isn't related to "money" regardless of what you think money is . The "money is all important" view — regardless of your pet theory of money — is based on a facile extrapolation from a completely different regime . That view might be what's behind all these various measures of "money": money has to be important to unemployment and inflation, therefore some measure must exist that makes the correlation manifest. M1? No, M2! Interest rates! No, it's government debt! No! It's NGDP expectations!
It's all reminiscent of the aether in physics. Something must be the medium in which light waves oscillate! Aether dragging! No, partial aether dragging! Really, the aether is just a tool to move electromagnetic energy around.
Money is the aether of macroeconomics .
 The chain rule is dy/dx = (dy/dz) (dz/dx).
 I don't want to be flippant about the actual human suffering in recessions, but I think it is better for that suffering in the long run to have empirically accurate theory that can yield real solutions than dubious monetary maxims that claim to help.
 "Most" of the inflation in post-war US economic history was caused by a large shock centered in the late 70s. Aside from that period, inflation has been roughly constant at approximately 2.5% (CPI all items) or 1.7% (core PCE).
 Unless you think money is people, which is a slogan I could get behind — at least in terms of empirical data.
 Some theories say that hyperinflation is actually a political phenomenon, meaning even there the correlation between money and inflation may be subordinate to the actual process.
 I am probably trolling here more than I should be, but it really doesn't put me that far from Paul Romer who wrote up a menagerie of terms for economic concepts including aether and phlogiston.
Did you see this Nick Rowe ISLM approach to understanding MMT?
No, I think I missed that one!Delete
It was from the time when I first started dating a wonderful woman who I later married, so that's probably why.
" inflation — except in cases of hyperinflation — empirically isn't related to "money"". So printing excessive amounts of money doesn't boost inflation? What have you been smoking?ReplyDelete
Given that you are a racist, we can't really take your views on anything except as ignorant drivel.Delete
This post reminded me of our friend Vincent Cate. I went over to his blog "How Fiat Dies" (in which he argues for hyperinflation being the fate of fiat currencies, especially in Japan) from as many angles as possible... but he hasn't updated his blog since mid 2016. However, he has more than one blog (the list keeps growing):ReplyDelete
Also, Sumner recently looked at demographics and inflation/disinflation: http://www.themoneyillusion.com/?p=32781ReplyDelete
Spoiler alert: he doesn't beat around the bush with his views:Delete
Do demographics explain disinflation?
No they don't; ...
The "deflationary demographics" are pretty much ending:Delete
But if you were to make those graphs correctly, you'd see the shock to CLF precedes/coincides with the shock to inflation while the shock to the monetary base follows it. Which is consistent with Scott's view that events in the future (Which future? Are we talking many worlds here?) can travel back in time to affect the present.
He's got another on a related topic:Delete
Maybe the plots at the bottom of the failure of drops in M2 to "predict" recessions is more aether?
"but it turns out economies aren't in recession most of the time (a few quarters every ~ 8 years for the US"ReplyDelete
Ha! Tell that to majority of population that still feels the recession and are strugling to make ends met.
And tell that to majority of European south.
True that money can be viewed as just a pass trough medium in normal times where action is not needed to improove it, but when times are bad is another story.
The question why times are good and why times are bad involves distribution of money or distribution of information as you would like to call it.
How the distribution of money affects the future is important to consider and how to get distribution properly so that majority of people can avoid suffering in times of recession is another one that needs the answer.
Threating the the money and the distribution of money as some natural law as in physics field will make you a hard core monetarist.
State's purpose is to affect economy and make benefits of it distributed to the best possible utcome. By managing the money distribution will affect the wellbeing of all or just a few. How it does it is the question here.
Well someone didn't read the footnote!Delete
Also this was entertaining:
[Treating] the money and the distribution of money as some natural law as in physics field will make you a hard core monetarist.
In the post above, I may be approaching the money as I would a natural law in physics, but it in fact leads me to the exact opposite conclusion that monetarism is garbage. Ironically, your contention that money is the source of well-being is the hard core monetarism here.
Saying "i do not want to be flipant" does not make you not flipant. As far as i have searched your theory while usefull for forecasting does not offer solutions to human suffering. SO, please do not pretend that i am an ignoramus who does not read footnotes. It works only for you but not for suffering or solutions to it.Delete
what were the solutions to suffering in The Great deppression? Public work jobs, social safety net.
How were they financed?
Knowing how the solution to suffering was financed is the key to solving the problems. Forecasting would be just a tool to get ready ahead of it but since politics of wealth does not allow for solutions to take place untill a strong political coalition is formed to implement solutions, no forecasting can help to make ignorant and self-serving politicians change the distribution of money.
How was the solution to Great Deppression financed?
There were two ways to finance public spending on large scale in order to prevent human suffering in deppressions.
a) since banks create money by lending FDR's solution was to form state owned banks for specific purposes. Public bank is unlimited funding potential while direct state spending creates public debt that is politicaly dangerous.
One of those banks was Freddie Mac that bought farm securities and prevented the banks from calling in loans at any time taking away the land from farmers. Yes, at those times, the bank could call the loan back for any reason, default on payment was not a requierment. Populism name came from a party that demanded such agrarian reform and stop the banks from taking away the farms at any time.
It took The Dust Bowl disaster for politicians to realize how bank devastated the farming and unused land, which banks took over in huge areas, became the victim of drought and wind. The Dust Bowl would not happen if the frmers kept cultivating and wattering the land, but banks prevented them.
Without Freddie Mac, the government's only solution would be to straight out ban the calling in the loans and foreclosing the land, but those were not the ways of those days. Today it is normal law that banks can not call in the loan for any reason.
Knowing how banks and money works is important to solutions then and as well as now.
b) Hitler's CB governor Hjalmar Schaht printed unlimited ammount of paralell currency called Mefo Bills used only by corporations in order to pay for public works. Unemployment in germany in 1933 was 30% and in 1935 was not measurable. It took them only 2 years to emply all unemployed. Only later the new parallel currency was used to rearm and pay for Auto-Bahn. Weapons demand iron and steel the most and since Hitler was brought to power by Krupp, Thiessen and other Iron barons he rearmed Germany to thank them for.
WIR Credit is an offshot of Mefo Bills and it exist and helps Swiss economy since 1936. Today some 75000 companies in Switzerland use WIR Credit and economy is run on between 5-17% on WIR Credit Money.
To understand money you should watch the video on WIR Credit and wikipedia entry on Mefo Bills. But since you already have no respect for MMT nor my writing you can just ignore all i wrote and enjoy your little theoretical corner without solutions.
I wrote about solutions allready used to alleviate people's suffering in depressions and recessions and they are well hidden from populaation at large by not talking about them except by MMTers who know why those solutions worked.
There is another important aspect about money in international trade where money is used to keep "former" colonies still under the colonial economic abuse. But that is more complications to already owercrowded topic.
Money is the aether of economics but distribution of money is the rules that govern the information transfer trough the aether. YOu want to talk about money how it doesn't matter but i want to talk about the distribution of money and how it matters.
I'm not sure you understand: I use the forecasts to validate the theory. If the theory is useful for forecasting, it is useful because it captures some element of truth.Delete
If a theory cannot forecast, there must be some issues with it. Not all of those issues are necessarily insurmountable, but they must be identified and understood.
I have never seen a theory of "money" (in whatever form) accurately forecast or fit empirical data with the exception of hyperinflation (e.g. here [pdf]).
If you can point me to some MMT theory (or any other monetary theory) that accurately matches empirical data, then I might change my mind. But saying policy X was tried and result Y happened strongly depends on not only the counterfactual, but reasonable assurance that other factors are not at play. Usually in history there aren't randomized controlled trials for policy X, so it is nearly impossible to use policy experiments as evidence.
Thank you for your quick and respectfull response.Delete
I am fully aware of implications of correct forecasting on a theory. What i find more important is wide public understanding of a theory in order to know what to do when problems arrive and then choose correct politicians that will provide solutions not just platitudes and promisess while staying the course.
Politicians and complicated theories are used to con the public into belieivng false theories perpetuated by academic economists. What you are offfering is another highly skilled and complicated theory that can again be used by politicans to confuse the public.
On the other hand, the MMT is simple enough for majority of people to understand and offers the destruction of mythology provided by all those comlicated and missused economic theories.
I do not want to belittle your work but it is highly skilled. What i want to is to criticize your understanding of MMT. Your belittling of MMT comes from not understending it correctly. You do understand the base arguments correctly but not implications that argumetns have on the economy.
Say, where do you get 10% inflation as the borderline from MMT? I am not aware of such number as borderline; in MMT is not really specified number but generally it is 100% inflation that could be taken as borderline damaging to economy. MMT has no set number.
For MMT, inflation is just an information signal. Moreover, inflation can be sector related: is it in asset inflation, import caused inflation, wealth distribution caused inflation and so on in order to affect those sectors.
Basically, MMT should be viewed as the tool for adjusting the economy for state managers for the benefit of most people. And it describes what tools state is using to adjust economies.
I see your forecasting as good only for GDP numbers in general, to maximise the GDP. But the GDP is not a best number to qualify the well being of all population which i am concerned with.
Regarding your last paragrph in the response i can not offer anything but the understanding that that can be said about almost every advanced theory. In differing point of views the counterfactuals can always be found, other factor could be at play at some times and not at other times.
So, since it is realy imposssible to use policy experiments as evidence on the outcome, your demand to prove something can not be met by me nor anyone else and i am not trying to prove it, but offer a glimpse on unknown factors at play that those not skilled in money theories would not know about.
Those are the secrets about money and state actions that should be considerd when encountering the mythologies. Have you ever before heard of such use of banks or parallel currencies as i have described? DId it instigate your great inquiering mind to look into it? Did you dare to watch WIR Credit video on Youtube? Investigate Mefo Bills? Have you ever heard about it before?
"I see your forecasting as good only for GDP numbers in general, to maximise the GDP."Delete
No, the forecasting validates the theory behind the forecasting.
"Have you ever before heard of such use of banks or parallel currencies as i have described? DId it instigate your great inquiering mind to look into it? Did you dare to watch WIR Credit video on Youtube? Investigate Mefo Bills? Have you ever heard about it before?"
2. Yes, in the past.
3. No, because videos are incredibly slow ways to get information.
MEFO bills came out after industrial production had already started to increase (q.v.), so causality MEFO → output actually seems to go the other way: output → MEFO (as a means to finance it). That is to say the industrial production increased for other reasons and MEFO came along later to obscure the finances.
I still haven't seen any empirical analysis on this MEFO 'experiment' or any other monetary theory from you either and you just keep ignoring the fact that I am asking to see it.
I am still asking for data.
Show me a paper or even a blog post where some monetary theory is compared to data.
Why do you say that i ignore it when clearly i have said that i can not provide any proof for monetary theories? Why is it nominal description not understandable for you but you have to be introduced to something new only through math and empirical data?Delete
Money is created out of thin air!
Lets try to present empirical data of it and prove the theory.
Money is equal to any number.
That is what you ask of.
Instead lets look at accounting and find it. Money is an accounting identity and all economics is done through accounting rules, not through any natural laws. That is what MMT says.
This is what you argue about and blame the MMT for not having empirical data to prove the theory. But you did not tackle that question but what other economists say about MMT.
Money is created and destroyed constantly in banking, it is the nature of fiat money. Fiat means the power of gowernment created it. Decision of government is fiat.
The theory of money is tantamount to dark matter theorising in astrophysics where the effects are known but not why nor how. MMT shows that only through accounting you can see the money flow, creation and destruction of it. Theory about that it is not, it is what is done to manage the accounting.
MMT firstly is not about theorising but about dismantling the myhology about banking and public finances. It says: do not worry about public finances but worry about what needs to be done in a society and government can provide it.
If you want the proof of it it will not come in the form of empirical data but in a form of accounting spreadsheet where it all ballances to 0.
Money is aether in macroeconomics because it is avoided to be talked about as having distributional effects.
Money is created by banks as loans are issued and destroyed as the loan is being paid off.
Is that a theory that needs empirical data to be prooven? Or do you need the knowledge about banking practices?
The claim made about the QTM not applying when Inflation it's less than 10% does sound ridiculous if you think in terms of old supply and demand for money concepts. But, you have to actually at the model presented here in which k is an intervening variable. That's the whole point.ReplyDelete
There's not an empirical reason to accept the IE model at this time, but what's interesting is that I don't see a reason to reject it. If you think about it, to come up with an alternative formulation for basic macro that isn't easily rejected is quite an accomplishment.
And, as someone who leans market monetarist, I'm forced to admit there isn't enough data to support my preferred perspective either, or indeed any perspective of which I'm aware. There isn't enough data to properly test any approach.
So, I'm glad Jason's working on this very interesting approach. He's doing a great deal to help explore the state space, if I put that correctly. One of his biggest challenges is trying to communicate his ideas to a less mathematically sophisticated audience.
One of the reasons I started using the IE approach was just to understand other models. Since the basic IE equations reproduce supply and demand to some extent, most other models can be couched in terms of IE (I've been adding to a list here). In the post above, I actually reconstruct the argument that inflation is due to a mis-match between real resources and money which is at the heart of both Austrian and MMT views (and that low inflation implies there are real resources that are under-utilized in the latter).
You might be interested in my attempt to construct Sumner's model in terms of information equilibrium here:
"Whatever you think money is, it doesn't really matter."ReplyDelete
Hmmm. Well, I think money is like a gift certificate. Let's think of money as being a "national gift certificate', good anyplace in the economy.
One way to get a NGC is to work or trade for it. I think your information transformation works well for that method of acquisition.
Another way to get NGC is to create it out of thin air. This happens when the Fed creates money to buy bonds. So why doesn't this create inflation?
I don't think you deal with this method of NGC creation in your theory. Government creates money, spends it, and then recaptures it by issuing more bonds to the public . This results in a smooth transfer of money from creator to final holders, with no need for inflation. Instead, we just have a smooth, steady, increase in wealth flowing to a few long-term money holders--the top 2 percent.
I think we could say that government (when it creates money) borrows from the nation as a whole. Then, when this money is spent, it flows into the hands of a few long term non-spenders and changes form (into bonds). Like aether to ice.
I fault MMT for not recognizing that this second pathway of money creation-and-accumulation will not be spoiled by the simplistic implementation of a guaranteed wage program.
"Government creates money, spends it, and then recaptures it by issuing more bonds to the public "Delete
Government recaptures it only by taxation, not by selling bonds. Many deffinitions say that bonds are sold to the "public" but they are not. Government bonds are sold to Primary dealers that sell some of it, very minute portions to the public. SOme 4% of bonds are held by public and majority of it is in pension funds that used to be public responsibility.
The false defintitons and use of the word "public" are used to cheat you into missunderstanding public finances.
Truth is the government spends into economy, more precisely, into circulation but selling bonds takes away from bank reserves allready held by FED. Allready held by government.
That is important point. Spending sends money into circulation but selling bonds does not take the money out of circulation. YOu will have to search for the source of inflation or no inflation in another mechanism, for example demographics as Jason Smith here succintly finds it. In exchange rate effects of imports, price gouging monopoly powers, public subsidies or just waste on wars that sends money to another countries.....
Selling bonds takes money only from bank reserves allready held by Central Bank that is part of Government, it does not take it from "public", it does not take it out of circulation (better word usage)
This comment has been removed by the author.Delete
I decided to reword my first reply. You are now reading the reworded version:ReplyDelete
Thanks for the feedback.
We need to allow for the reuse of money first created by government.
"Government creates money, spends it, and then recaptures it by issuing more bonds to the public "
I agree that taxation recaptures money but then I add that capture by taxation results in money destruction only when the total money supply decreases. This is the MMT idea that gov creates money and then destroys it with taxation. If the total money supply does not decrease, taxation only recycles money.
In my opinion, only when government borrows from itself (directly from the Fed) do we create truly 'new money'. I think this perspective agrees with MMT.
When you say "selling bonds takes away from bank reserves allready held by FED", you are repeating mainstream theory, not MMT and not what I described above. I don't think you are allowing government to borrow from itself.
I agree that if we reuse money as we might reuse gift certificates, we can create a pyramid of debt. This reuse allows us to have a stable money supply but annually increasing accumulation of debt. This would not be inflationary by itself.
So what happened with QE? The Fed created money and used the money to buy bonds. The bonds were purchased from a population segment who had saved in earlier times, accumulating enough money to buy bonds. Why would we now think that this cut of non-spenders would rush out to spend money just because they traded bonds for money? This is an explanation for non-inflation--not inflation.
I agree that taxation recaptures money but then I add that capture by taxation results in money destruction only when the total money supply decreases"
That makes no sense. You are looking in a single sector and then want to apply it to the total.
You are looking only at government creation of money and ignoring that banks also create money. Banks created money is significantly larger then that of government money. Now you want the total to show the decrease by taxation.
Taxation and spending is continous and not separated and only the fiscal year end can show later on what was the total. Deficit is the only measure of new money into circulation, but only from government.
But this is all new topics not connected to the thread.
But for the sake of the heaven, why would anyone in their right mind want reduction in total supply of money. That can happen only in a drastic reduction of population.
As more kids are born they require new supply of money total while the old money is tied up with other people, new people need more money total. Hence, the demographics can cause inflation as Jason Smith here presented.
QE is not introduced to help economy. QE is a mean to affect monetary policy and to save banks by giving them free money. The excuse given to public was that QE is to fund public spending for stimulus.
QE simply plays with bank reserves that are in FED holdings, it did not introduce a single dollar to economy i.e. into circulation.
Those bonds were not "purchased from a population segment" as you named it. Again, public finances are separated from circulation finances.
All public finances ammount to a single fact that government can not run out of money and all spending is not limited by debt nor reserves. All public spending is as if by newly printed money. ALl it takes is the decision by the Congress and stamped by the president. FED and Treasury are there to accomodate such directives and never default.
QE as part of the monetary policy is to make the interest rates go to 0% but banks did not follow it so it did not have any effect. Banks do not offer official rate to economy which is a prerequisite for monetary policy to work. Can you get 1% loan? That is what it would take for monetary policy to work and improove the economy: to refinance all old interest rate loans to official rate just as it was before the GFC.
QE was simply to save the banks.
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