Gallo: A Link Between QE and Rising Inequality

The video discusses the implications of QE Infinity, focusing on how it can mislead investors and misallocate resources. It explores the effects of negative interest rates, particularly in Europe, where demographic changes have led to increased savings. The discussion highlights the link between QE and rising inequality, emphasizing the limitations of a one-size-fits-all central bank policy. The video concludes with a look at the ECB's bond purchasing strategy and its potential market impacts.

What is a potential risk associated with QE Infinity?

• It stabilizes the economy.

• It guarantees higher returns for investors.

• It may result in misallocation of resources.

• It can lead to increased inflation.

How do negative interest rates affect the IS-LM model?

• They eliminate the need for the model.

• They create uncertainty at the zero bound.

• They increase interest rate sensitivity.

• They make the model more predictable.

What is a consequence of negative interest rates on savings behavior?

• People save more due to lower returns.

• Savings rates remain unchanged.

• People tend to save less.

• It leads to immediate spending.

What is a noted effect of QE on wealth distribution?

• It evenly distributes wealth.

• It concentrates wealth into fewer hands.

• It has no impact on wealth distribution.

• It reduces inequality.

What strategy might the ECB adopt due to limited bonds in Germany?

• Increase interest rates.

• Buy more bonds from other European countries.

• Stop bond purchases entirely.

• Focus solely on corporate debt.