[Mr Deflation]

http://business.time...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?

[uncle rogi]

Mr Deflation, on Feb 1 2009, 10:33 PM, said:

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 ?

[Mr Deflation]

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!

[BXLONDONMAN]

Mr Deflation, on Feb 1 2009, 11:33 PM, said:

http://business.time...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?

There was me thinking the presses were already switched on...

[InternationalRockSuperstar]

Mr Deflation, on Feb 1 2009, 10:33 PM, said:

Who will have the honour of switching on those presses?

the Sugarbabes of course:
http://uk.youtube.co...h?v=A_cB5UNGqVs

[pepsipsg]

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.

[geoffk]

one word answer...f*cked

[InternationalRockSuperstar]

pepsipsg, on Feb 1 2009, 11:51 PM, said:

- 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.

pepsipsg, on Feb 1 2009, 11:51 PM, said:

- value of the pound sterling?

will plummet.

pepsipsg, on Feb 1 2009, 11:51 PM, said:

- price of goods (imported/locally produced)?

the price of pretty much everything will skyrocket (measured in pounds).

[InternationalRockSuperstar]

geoffk, on Feb 1 2009, 11:54 PM, said:

one word answer...f*cked

yeah, that's the summary.

[BXLONDONMAN]

Mr Deflation, on Feb 2 2009, 12:30 AM, said:

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 !!!

[crash2006]

no point having your money in the bank now.

[BXLONDONMAN]

crash2006, on Feb 2 2009, 01:13 AM, said:

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 !!!

[nik21]

InternationalRockSuperstar, on Feb 1 2009, 11:56 PM, said:

the price of pretty much everything will skyrocket (measured in pounds).

Not if credit destruction happens at a faster rate.

[BXLONDONMAN]

InternationalRockSuperstar, on Feb 2 2009, 12:56 AM, said:

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 ?

[alabala]

http://www.internati...E_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.