Good Article On The Outcomes Of Qe

[HPCbeliever]

http://www.economist.com/businessfinance/d...e=hptextfeature

Enjoy!

There is also this one on why the Fed is not allowed to continue with QE. I like this bit:

If the programmes are doing some good, why is the Fed not expanding them? The outlook has improved, for one thing: America’s economy is levelling out, it noted on August 12th. But the main reason is political, not economic. The Fed’s Treasury-purchase plan prompted charges that it was inviting hyperinflation and had subordinated itself to the government’s deficit needs. Alan Greenspan, a former Fed chairman, says inflation will exceed 10% if the Fed fails to shrink its balance-sheet and raise rates, and 3% for a time even if it does.

Needless to say, that is not the Fed’s view: it still foresees rising unemployment and falling inflation. But many officials have concluded that, for now, the benefits of buying more Treasuries do not outweigh the costs of a damaging rise in inflation expectations and a perceived loss of independence. Even the ultimate weapon is useless if you are too nervous to use it.

Remember the UK is in a much worse position than the US. We have more QE and we are a second rate nation (not a superpower with a reserve currency).

http://www.economist.com/businessfinance/d...ory_id=14214898

Edited August 15, 2009 by HPCbeliever

[interestrateripoff]

Inflation is seen as easier to control than deflation.

Why this is I have no idea, it appears that "academics" believe you can continually inflate forever.

[HPCbeliever]

Well I suppose we Brits know a thing or two about inflation. Given that we have alreday pumped about 9% of GDP into the economy as funny money (abiout 1/3 more than the yanks). I assume the outlook for inflation here is worse (i.e. between 5% and 15%) whatever Penfold says.

[Guest sillybear2]

John Law was an unreformed Scot and and unreformed compulsive gambler that bankrupted the French state, leading them to lose their American territories and setting the stage for the revolution. He was a convicted murderer to boot, he fled England to avoid justice, however he didn't finance nor start any vast, unending and unwinnable wars overseas, so he was obviously a better man than our Brown.

Edited August 15, 2009 by sillybear2

[HPCbeliever]

John Law was an unreformed Scot and and unreformed compulsive gambler that bankrupted the French state, leading them to lose their American territories and setting the stage for the revolution. He was a convicted murderer to boot, he fled England to avoid justice, however he didn't finance nor start any vast, unending and unwinnable wars overseas, so he was obviously a better man than our Brown.

Probably more cheerful than Brown too!