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Comment by lumost | Hacker News Reader

With the current concentration of wealth and banking, it almost seems like there is an incentive for banks to ruin themselves when they end up in a little trouble.

If the bank has trouble, shareholders/executives lose - if the banking system has trouble... then QE will solve the bank trouble.

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> If the bank has trouble, shareholders/executives lose - if the banking system has trouble... then QE will solve the bank trouble

It's a game of chicken, though. The folks at Lehman and SVB didn't cash out. JPMorgan did. (Both times. Actually, all of the times since 1907.)

Jamie pull up the JP Morgan titanic conspiracy theory

https://www.history.com/articles/titanic-sinking-conspiracy-...

JP threw his own money on the table . Silicon valley's VCs whined for bailouts.

And they got them.

IMHO, if QE solves the trouble, the Fed or treasury should be taking a bigger bite of ownership from the bailed out companies in exchange specifically to disincentivize taking risks with a bailout backstop.

That all relies on the assumption of petro-dollar, something that could have been taken for granted during the last 50 years but could easily change within weeks now.

No it doesn’t, the petro-dollar isn’t a real thing. Forcing USD denomination for a transaction doesn’t help USD because there is a buyer of USD and an equally sized seller of USD.

However, there does seem to be an outsized effort applied to defending this not-real thing. A leader who defies the petrodollar has a good chance of getting killed or kidnapped. In a way, the same principle makes any god real: he doesn't have to exist, as long as people who will beat up non-believers do.

Total USD reserve involved in that transaction is not zero. They have to already hold dollars to do the transaction at all, which means a benefit has already been provided to the US. The transaction doesn't change the US's position, but enabling the transaction to occur does.

Petrodollar hypothesis is debunked. The total volume of petrodollar trade approximates minutes in stock markets. This simply isn’t a real factor anymore; a lot of people think it is because there are writings from the 70s that are compelling.

As you said, trade volume doesn't drive valuation, it's reserve size.

Which goes up with inflation btw, so you can export inflation. Actors who maintain reserves of your currency will have to keep buying more from you, providing you with benefits.

When can qe start ?

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