Chuffy Chuffnell Posted February 1, 2009 Posted February 1, 2009 http://business.timesonline.co.uk/tol/busi...icle5635109.ece Rates head for zero as Bank of England set to cut to 1% The Bank of England's rate-setting committee will sit down this week to deliberate on interest rates, knowing that now it has an additional weapon in the armoury of tools it uses to target inflation. An exchange of letters between Mervyn King, the Bank's Governor, and Alistair Darling, the Chancellor, last week confirmed that the Monetary Policy Committee (MPC) can increase money supply using “quantitative easing” to boost the economy if it wishes. Economists take this, coupled with recent indications by several members of the MPC, as a further sign that interest rates are on the way to zero, meaning that it is now a case of forecasting when, rather than if, the Bank will cut rates further. (More follows in the article.) Who will have the honour of switching on those presses? Quote
uncle rogi Posted February 1, 2009 Posted February 1, 2009 Who will have the honour of switching on those presses? by all means you do it mate, i think you should change your name first though eh ? Quote
Chuffy Chuffnell Posted February 1, 2009 Author Posted February 1, 2009 Ye of little faith! Quantitative easing will begin, interest rates will be 0.1%, the pound will rise against other major currencies and inflation will be kept down for the proletariat. It's magic! Quote
BXLONDONMAN Posted February 1, 2009 Posted February 1, 2009 http://business.timesonline.co.uk/tol/busi...icle5635109.eceRates head for zero as Bank of England set to cut to 1% The Bank of England's rate-setting committee will sit down this week to deliberate on interest rates, knowing that now it has an additional weapon in the armoury of tools it uses to target inflation. An exchange of letters between Mervyn King, the Bank's Governor, and Alistair Darling, the Chancellor, last week confirmed that the Monetary Policy Committee (MPC) can increase money supply using "quantitative easing" to boost the economy if it wishes. Economists take this, coupled with recent indications by several members of the MPC, as a further sign that interest rates are on the way to zero, meaning that it is now a case of forecasting when, rather than if, the Bank will cut rates further. (More follows in the article.) Who will have the honour of switching on those presses? There was me thinking the presses were already switched on... Quote
InternationalRockSuperstar Posted February 1, 2009 Posted February 1, 2009 Who will have the honour of switching on those presses? the Sugarbabes of course: http://uk.youtube.com/watch?v=A_cB5UNGqVs Quote
pepsipsg Posted February 1, 2009 Posted February 1, 2009 Can someone explain what it means for the layman? - Interest rates on any kind of debt? - value of the pound sterling? - price of goods (imported/locally produced)? Thanks very much. Quote
InternationalRockSuperstar Posted February 1, 2009 Posted February 1, 2009 - Interest rates on any kind of debt? variable interest rates will rise. special cases such as fixed rate debt or base rate tracking debt will not be much affected in nominal terms, although in real terms it means your interest rate is lowered. - value of the pound sterling? will plummet. - price of goods (imported/locally produced)? the price of pretty much everything will skyrocket (measured in pounds). Quote
InternationalRockSuperstar Posted February 1, 2009 Posted February 1, 2009 one word answer...f*cked yeah, that's the summary. Quote
BXLONDONMAN Posted February 2, 2009 Posted February 2, 2009 Ye of little faith! Quantitative easing will begin, interest rates will be 0.1%, the pound will rise against other major currencies and inflation will be kept down for the proletariat. It's magic! yes indeed it's strong magic !!! that brown has learnt to save us & world !!! Quote
crash2006 Posted February 2, 2009 Posted February 2, 2009 no point having your money in the bank now. Quote
BXLONDONMAN Posted February 2, 2009 Posted February 2, 2009 no point having your money in the bank now. yes that's true ,,, cash or gold .. bit of both to keep the gold bugs on hpc happy !!! Quote
the_austrian Posted February 2, 2009 Posted February 2, 2009 the price of pretty much everything will skyrocket (measured in pounds). Not if credit destruction happens at a faster rate. Quote
BXLONDONMAN Posted February 2, 2009 Posted February 2, 2009 variable interest rates will rise.special cases such as fixed rate debt or base rate tracking debt will not be much affected in nominal terms, although in real terms it means your interest rate is lowered. will plummet. the price of pretty much everything will skyrocket (measured in pounds). how long before you think this might all happen ? Quote
alabala Posted February 2, 2009 Posted February 2, 2009 http://www.international-economy.com/TIE_W06_Posen.pdf Monetary discipline cannot substitute for financial discipline. Once the Japanese banking system became undercapitalized and started rolling over vast numbers of non-performing loans in the mid-1990s, the credit channel of monetary policy shut down. The point is not so much that monetary policy was left “pushing on a string” since the Bank of Japan could still affect expectations in part through a commitment to quantitative easing (Lessons 7 and 8)—rather, the point is that the Bank of Japan could not encourage more responsible lending behavior by the banking system until the Financial Supervision Agency did its job and made the banks write off bad loans and recapitalize. Under the abnormal circumstances of Japan’s deflation, the Bank of Japan printed a very large amount of money, to a chorus of understandable approval—this was the logical next weapon in the Bank of Japan’s arsenal. Somewhat surprisingly to some, not so much to others, the amount of quantitative easing had no discernable effect on deflation or deflationary expectations. Quote
Injin Posted February 2, 2009 Posted February 2, 2009 Not if credit destruction happens at a faster rate. Espceically if it happens at a faster rate. Hyperinflationary depression. Quote
InternationalRockSuperstar Posted February 2, 2009 Posted February 2, 2009 how long before you think this might all happen ? weeks/months I'd expect hyper-inflation by the end of summer at the very latest, but most likely well before then. Quote
the_austrian Posted February 2, 2009 Posted February 2, 2009 Espceically if it happens at a faster rate.Hyperinflationary depression. Where does the hyperinflation come from if credit is contracting faster than QE? Assuming the demand for notes is roughly stable... Of course, State failure means hyperinflation in any circumstances but I see the State strengthening in the near future. Quote
the_austrian Posted February 2, 2009 Posted February 2, 2009 weeks/monthsI'd expect hyper-inflation by the end of summer at the very latest, but most likely well before then. Is that driven by State failure or some other factor? Quote
Patfig Posted February 2, 2009 Posted February 2, 2009 yes indeed it's strong magic !!! that brown has learnt to save us & world !!! Give that man a Nobel prize or was it noballs prize Quote
Injin Posted February 2, 2009 Posted February 2, 2009 Where does the hyperinflation come from if credit is contracting faster than QE?Assuming the demand for notes is roughly stable... Of course, State failure means hyperinflation in any circumstances but I see the State strengthening in the near future. Credit isn't money, it's promising access to the money (and therefore value) that exists to multiple people. This retains the value of that money. (the state having to use more overt measures to keep control is a sign of weakness, not strength, btw. Threats alone are begining to stop working.) Quote
porca misèria Posted February 2, 2009 Posted February 2, 2009 Can someone explain what it means for the layman?- Interest rates on any kind of debt? - value of the pound sterling? - price of goods (imported/locally produced)? Thanks very much. That's easy. Look at Zimbabwe, which is a few years ahead of us with the presses. The remaining uncertainty is interest rates, which have failed to reflect the state of the economy since 2001[1]. Current low rates are a bubble driven by vested interests, and need to rise. But saying that now could be like predicting HPC in 2003: the fundamentals for a crash were in place, but it took several years of bubble before it happened. [1] The date is (AIUI) HPC consensus wisdom. The economic trigger was when Gordon Brown's "prudence" period ended and he switched from paying off the national debt (pushing "natural" rates down) to borrowing/spending more money (pushing rates that would prevail in a free market back up, but growing a gap between market and political rates, turning debt into obscene profit and thus driving the bubble). Quote
the_austrian Posted February 2, 2009 Posted February 2, 2009 Credit isn't money, it's promising access to the money (and therefore value) that exists to multiple people. This retains the value of that money.(the state having to use more overt measures to keep control is a sign of weakness, not strength, btw. Threats alone are begining to stop working.) Credit very much is money... perhaps you can provide a workable definition of money which excludes credit? Quote
InternationalRockSuperstar Posted February 2, 2009 Posted February 2, 2009 Credit very much is money... perhaps you can provide a workable definition of money which excludes credit? legal tender. Quote
the_austrian Posted February 2, 2009 Posted February 2, 2009 legal tender. Legal tender satisfies the qualities of money but what precludes credit from being described as money? Quote
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