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Quantitative Easing Confirmed

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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? :rolleyes:

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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? :rolleyes:

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

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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.

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- 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).

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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.

money_by_magic_art.JPG

It's magic! :lol:

yes indeed it's strong magic !!! that brown has learnt to save us & world !!! :unsure::lol::lol::lol:

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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 ?

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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.

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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.

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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.)

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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).

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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?

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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