How The "QE Economy" Works (And Why It Doesn't) In One Giant Flowchart

Tyler Durden's picture


From liquidity-driven perception to the Keynesian endpoint economic reality... just follow the arrows...

(click image for large legible version)


Or, as Bridgewater notes,

The effectiveness of quantitative easing is a function of the dollars spent and what those people do with that money.


If the dollars get spent on an asset that is very interchangeable with cash, then you don’t get much of an impact. You don’t get a multiplier from that.


If the dollar is spent on an asset that’s risky and very different from cash, then that money goes into other assets and into the real economy.


That’s really how you see the impact of quantitative easing.


Source: $hane Obata @sobata416

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Thu, 12/12/2013 - 17:41 | 4241095 Trimmed Hedge
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Thu, 12/12/2013 - 17:46 | 4241116 Seize Mars
Seize Mars's picture

Embrace the Suck.

Thu, 12/12/2013 - 18:03 | 4241159 Dear Infinity
Dear Infinity's picture

Ross Perot's "Giant Sucking Sound" is really just those POMO dollars going down the tubes... 15 minutes at a time. Silver down 4%, zero news, just a normal commodity market.

Thu, 12/12/2013 - 18:02 | 4241160 Harbanger
Harbanger's picture

Embrace Keynesian Maff, there's never a wrong answer.

Thu, 12/12/2013 - 18:07 | 4241181 What you talkin...
What you talkin about Willis's picture

Are you offered a suck?

Thu, 12/12/2013 - 17:49 | 4241122 Aknownymouse
Aknownymouse's picture

Wow. I am dizzy.

Thu, 12/12/2013 - 17:54 | 4241131 Ass. Manager
Ass. Manager's picture

All roads lead to QE4EVA.

Thu, 12/12/2013 - 18:05 | 4241163 CryptoCoinUser
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Hedge fund computational model?

Thu, 12/12/2013 - 18:55 | 4241387 MummyFunster
MummyFunster's picture

It looks like one of those process charts at work where everyone stands around and asks "Did somebody get paid to do that?"

Thu, 12/12/2013 - 19:17 | 4241473 RaceToTheBottom
RaceToTheBottom's picture

I think the choice of green in the diagram was a very bad choice.  You should have used red.

Actions have consequences.

You have doomed the world.

Thu, 12/12/2013 - 20:36 | 4241697 MollyHacker
MollyHacker's picture

All the arrows pointing to Bitcoin or just one?

Thu, 12/12/2013 - 21:51 | 4241906 IREN Colorado
IREN Colorado's picture

"This plan makes perfect sense and I endorse it completely. IN FACT I just told the President it will save our economy" -Treasury Secretary Henry Paulson

Thu, 12/12/2013 - 23:57 | 4242310 TheUnwisestWizard
TheUnwisestWizard's picture

Bubbles everywhere.

Do NOT follow this link or you will be banned from the site!