The Masked Tulip Posted August 9, 2010 Author Share Posted August 9, 2010 Have to admit,........................ money/savings..............................Wages.................................Buying/Purchasing Power..........? They will both fall and fall hard, this is a venture of making the poor poorer and the not so poor poorer. Even if you have a $500k or £500k house it falls with wages and savings, they all fall relative to the cost of goods required to survive which is being inflated in cost! Due to the expansion of numbers on the screen.......... If a house cost, well is worth £500k today, well someone will pay £500k, it will still be worth £500k after all this printing, but the £500k will not be worth £500k will it, so what will the house be worth???? Eventually, once they believe that deflation has been beaten then you will see wage inflation... and the whole cycle will begin again... and will begin sooner than most of us realise if they keeping churning out a trillion bucks every year. I cannot emphasise this enough - if they print another trillion then we all need to re-evaluate on here. The older HPCers who can remember the 70s will understand this. Many of us are waiting for an Autumn stock-market crash - will the markets crash if the Fed says tomorrow that there is another trillion waiting in the wings? I doubt it as the markets know that money will end up in shares. Even if the Fed does not say this and the markets crash in, say October, all the Fed has to do to ease panic at that time is to announce QE2. The mindset is to print and that has dire consquences for those hoping to buy a house IMPO. Quote Link to comment Share on other sites More sharing options...
Yoss Posted August 9, 2010 Share Posted August 9, 2010 Funny how some such as daddy bear were ridiculed about the government inflating it way out. Looks like its time to throw in the towel and buy a house. The only saving grace is there is less pressure for the UK to do it then the yanks. Guy I work with has made £18K out of bank shares - he's been trying to entice me into them for months. Being a pessimist (as I am one) in a recession is like being an optimist in a bull market. Both show an unbalanced state of mind. Greed & Fear... although do not expect interest rates to remain low for a very long time, that's just chuff! When bank balance sheets are restored and debts inflated away (Avg mortgage rate still 3.5% over base)..The inflation cometh! So even if tempted...Always remember base rates have been much Much higher! And mortgage rates were very much nearer base rate than they are now. and all without crazy income multiples/self certs/Key Worker Allowances/Family Tax Credits/Housing Benefits/BTL Tax Breaks etc etc etc. Quote Link to comment Share on other sites More sharing options...
Drac Posted August 9, 2010 Share Posted August 9, 2010 (edited) To buy a house you need a job, not a normal job, a well paid job, a job that someone else is willing to fund your wage because the product/service you provide is of high value relative to what the purchasing person earns...............tell me where all these jobs are.? Next, wage inflation, ain't coming to your area anytime soon, no way, they can print, print print, when you are so low paid you can just eat and keep warm, well paper, numbers on a screen, no use to me and you. If you cannot work to earn to eat to keep warm, you will steal, you will riot, believe me, printing, will achieve nothing apart form making everything you need expensive, and everything like things you do not need stagnate. Its all about the cost of human resource...............not bricks and mortar. Edited August 9, 2010 by Panda Quote Link to comment Share on other sites More sharing options...
MoonLady Posted August 9, 2010 Share Posted August 9, 2010 Would someone mind telling me please, why the BOE would follow suit and have QE2 just because USA are. Is it to stop the pound becoming weaker against the dollar? sorry I am trying to understand. thanks guys Quote Link to comment Share on other sites More sharing options...
Pole Posted August 9, 2010 Share Posted August 9, 2010 Eventually, once they believe that deflation has been beaten then you will see wage inflation... and the whole cycle will begin again... and will begin sooner than most of us realise if they keeping churning out a trillion bucks every year. I cannot emphasise this enough - if they print another trillion then we all need to re-evaluate on here. The older HPCers who can remember the 70s will understand this. Many of us are waiting for an Autumn stock-market crash - will the markets crash if the Fed says tomorrow that there is another trillion waiting in the wings? I doubt it as the markets know that money will end up in shares. Even if the Fed does not say this and the markets crash in, say October, all the Fed has to do to ease panic at that time is to announce QE2. The mindset is to print and that has dire consquences for those hoping to buy a house IMPO. +1 We shouldn't rely on our opinions when making important choices. Our opinions are often based on emotions, but choices need to be made based on facts. Many hpcers get very emotional re house prices. I'm also of the opinion that house prices should fall nominally soon. However, the facts are slowly indicating that the gov and the global banks can influence things more than most of us ever imagined (as the last 2 years have clearly shown). Who really knows how long they can keep this game up? Another year, another 5 years, another 10 years? Many of on here need to re-evaluate the situation for themselves. The world is clearly changing. Quote Link to comment Share on other sites More sharing options...
libspero Posted August 9, 2010 Share Posted August 9, 2010 Would someone mind telling me please, why the BOE would follow suit and have QE2 just because USA are. Is it to stop the pound becoming weaker against the dollar? sorry I am trying to understand. thanks guys I didn't think they were planning to? I thought after the G8(?) meeting they all came away with America saying they would stimulate and spend, and Europe saying they were going for austerity. Unless Merv is going to bottle it and thinks it will be a good idea to jump on the "they're doing it so we have to do it" rationale.. while drawing attention away from pressing inflation. Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted August 9, 2010 Author Share Posted August 9, 2010 I didn't think they were planning to? I thought after the G8(?) meeting they all came away with America saying they would stimulate and spend, and Europe saying they were going for austerity. Unless Merv is going to bottle it and thinks it will be a good idea to jump on the "they're doing it so we have to do it" rationale.. while drawing attention away from pressing inflation. Doest hte US has the bottle to print by themselves and risking a collapse in the Dollar? Or have they strong-armed the rest of the Western economies? From what I have read in recent days King has been hinting about might having to need to print again - don't know how we can afford it but there you go. Quote Link to comment Share on other sites More sharing options...
libspero Posted August 9, 2010 Share Posted August 9, 2010 From what I have read in recent days King has been hinting about might having to need to print again He has.. but he knows what it will do for his credibility if he starts QEing to avoid deflation, when inflation is running at 1-2% overtarget. I think it would be seen as pure debt monetisation and I don't think the markets would like it. I expect they'd also price in even higher inflation. Quote Link to comment Share on other sites More sharing options...
Pole Posted August 9, 2010 Share Posted August 9, 2010 Doest hte US has the bottle to print by themselves and risking a collapse in the Dollar? Or have they strong-armed the rest of the Western economies? From what I have read in recent days King has been hinting about might having to need to print again - don't know how we can afford it but there you go. Depends on how you define 'we'... Quote Link to comment Share on other sites More sharing options...
Yoss Posted August 9, 2010 Share Posted August 9, 2010 I didn't think they were planning to? I thought after the G8(?) meeting they all came away with America saying they would stimulate and spend, and Europe saying they were going for austerity. Unless Merv is going to bottle it and thinks it will be a good idea to jump on the "they're doing it so we have to do it" rationale.. while drawing attention away from pressing inflation. Lets play Spot the final salary pension in 5 years time.... And the soon to follow the 6% "compulsory pension deduction" from you wages to pay for your retirement! WTF..Isn't that what taxes and the ever increasing NI contributions where supposed to pay for? I guess not! Expect a huge tax grab via this method as most people don't question what Tax/Employers NI/Employees NI pay for, we may have been all VERY naughty! and borrowed to much! Then add 20% VAT and Council Tax.... Then some might start asking questions, I just hope the press do! Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted August 9, 2010 Author Share Posted August 9, 2010 He has.. but he knows what it will do for his credibility if he starts QEing to avoid deflation, when inflation is running at 1-2% overtarget. I think it would be seen as pure debt monetisation and I don't think the markets would like it. I expect they'd also price in even higher inflation. Why worry about cred when you can be BOE Guv'nor for the next 5 years? Quote Link to comment Share on other sites More sharing options...
shindigger Posted August 9, 2010 Share Posted August 9, 2010 If theyre going to print why the ****** dont they just give everyone £20k and be done with it? If they really want stimulus, then the money has to reach us plebs. Not just get soaked up in the banker cum sponge. Quote Link to comment Share on other sites More sharing options...
shindigger Posted August 9, 2010 Share Posted August 9, 2010 Lets play Spot the final salary pension in 5 years time.... And the soon to follow the 6% "compulsory pension deduction" from you wages to pay for your retirement! WTF..Isn't that what taxes and the ever increasing NI contributions where supposed to pay for? I guess not! Expect a huge tax grab via this method as most people don't question what Tax/Employers NI/Employees NI pay for, we may have been all VERY naughty! and borrowed to much! Then add 20% VAT and Council Tax.... Then some might start asking questions, I just hope the press do! Im wondering which pension fund will be the first to raise their pay out date "in line with government legislation". I.E. 65 becoming 68/70 for Norwich Union and beyond. Dont give them any of your money. Quote Link to comment Share on other sites More sharing options...
ken_ichikawa Posted August 9, 2010 Share Posted August 9, 2010 Wonder howHu Jintao feels about all of this then. I wonder just how many of those $ he's spent! And what would happen if Beijing simply didn't turn up for a US bond auction, Beijing'd probably be nuked. Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted August 9, 2010 Author Share Posted August 9, 2010 Wonder howHu Jintao feels about all of this then. I wonder just how many of those $ he's spent! And what would happen if Beijing simply didn't turn up for a US bond auction, Beijing'd probably be nuked. Yanks can buy more Chinese made stuff. Quote Link to comment Share on other sites More sharing options...
cybernoid Posted August 9, 2010 Share Posted August 9, 2010 (edited) Whether or not it is worth going to work in the uk is already on a knife edge. If this eventually leads to inflation but not wage inflation then there will be no point bothering. What will the boomers do then? Who is going to mow their lawn, service their cars, do their housework? Having money will mean nothing, their power to get people to do things for them and pretend they like them will evaporate. Im certainly not going to work for nothing. I hope those that have made a bit of cash through the years lived at least some of the high life while they had the chance. Edited August 9, 2010 by cybernoid Quote Link to comment Share on other sites More sharing options...
huw Posted August 10, 2010 Share Posted August 10, 2010 And what would happen if Beijing simply didn't turn up for a US bond auction, Beijing'd probably be nuked. Bye-bye foreign reserves (or a significant percentage thereof); bye-bye globalised markets; hello confrontation over resources that the USA can no longer acquire through debt-based trade. If there's nuking, it will be as part of that conflict. In the meantime there'll be plenty of economic fallout to go around. It's a thistle the Chinese have to grasp eventually, though. Quote Link to comment Share on other sites More sharing options...
wonderpup Posted August 10, 2010 Share Posted August 10, 2010 Im certainly not going to work for nothing. Yes- you are. The only question is whether or not you'll be wearing an orange jumpsuit with "workfare' printed on the back. Either way you will be working for peanuts. Quote Link to comment Share on other sites More sharing options...
indirectapproach Posted August 10, 2010 Share Posted August 10, 2010 (edited) So, in a nutshell things are going to gyrate wildly around some stable core but not change too much fundamentally because we're all farked which is what we've all been all along. Except for the salad days when everything was dandy for pretty much everyone. Because these days we pretty much live in a hyper linked global economy where we all pretty much sink or swim together. "Ask not for whom the bell tolls ..." is a piece of metaphysical poetry that I have always deeply disliked and thought to be completely inaccurate and of no help. But maybe now, that concept is coming into its own. Just goes to show. If you are bear for long enough, you will be right. So maybe a John Donne staying power is a premium quality. Edited August 10, 2010 by indirectapproach Quote Link to comment Share on other sites More sharing options...
aa3 Posted August 10, 2010 Share Posted August 10, 2010 Stocks will be a rocketship if they go for a big new QE. I hope I am near a computer when they announce it, I will be going huge, including into double and triple long ETFs. I know they need QE, you know they need QE, they are realizing they need QE.. even skeptical HPCforum members are realizing most OECD nations need epic more QE. Like it or not the government worker and government contract worker is the backbone of New Britain's consumer economy. Massive, massive numbers of workers in NHS, education and councils everywhere you go in Britain. Most on pretty generous incomes, that 99% spend fully every time the pay comes in. Quote Link to comment Share on other sites More sharing options...
Guest DissipatedYouthIsValuable Posted August 10, 2010 Share Posted August 10, 2010 Funny how some such as daddy bear were ridiculed about the government inflating it way out. Looks like its time to throw in the towel and buy a house. The only saving grace is there is less pressure for the UK to do it then the yanks. Guy I work with has made £18K out of bank shares - he's been trying to entice me into them for months. Being a pessimist (as I am one) in a recession is like being an optimist in a bull market. Both show an unbalanced state of mind. Where exactly is the wage inflation making buying a house now a sensible option? Quote Link to comment Share on other sites More sharing options...
Meat Puppet Posted August 10, 2010 Share Posted August 10, 2010 Stocks will be a rocketship if they go for a big new QE. I hope I am near a computer when they announce it, I will be going huge, including into double and triple long ETFs. And what about bonds? They could go for a strategy of capping long term bond yields at something around 2.5% as was done during the Great Depression and World War II. With the 30 year currently yielding 4% and a currency hedge in place there are huge potential gains. Quote Link to comment Share on other sites More sharing options...
Georgia O'Keeffe Posted August 10, 2010 Share Posted August 10, 2010 (edited) Stocks will be a rocketship if they go for a big new QE. I hope I am near a computer when they announce it, I will be going huge, including into double and triple long ETFs. I know they need QE, you know they need QE, they are realizing they need QE.. even skeptical HPCforum members are realizing most OECD nations need epic more QE. Like it or not the government worker and government contract worker is the backbone of New Britain's consumer economy. Massive, massive numbers of workers in NHS, education and councils everywhere you go in Britain. Most on pretty generous incomes, that 99% spend fully every time the pay comes in. mmm, seeing as absolutely everyone would be expecting this result and therefore have positioned themselves accordingly for the easy money i would wager the more likely scenario that on announcement if it happens will produce a sell off on the news, i would go with them going up on the announcement only if the announcement came out of the blue and people hadnt therefore positioned themselves prior to the news in anticipation but everyone and their dog is expecting this news Edited August 10, 2010 by Tamara De Lempicka Quote Link to comment Share on other sites More sharing options...
mdman Posted August 10, 2010 Share Posted August 10, 2010 Can someone explain how QE, even a trillion or more, will produce wage inflation? Quote Link to comment Share on other sites More sharing options...
mattyfc Posted August 10, 2010 Share Posted August 10, 2010 More QE would be another nail in Obama's coffin. The US, pioneers of free market economics think they can print and spend there way to prosperity. Wasting 1.5trn a year with little to show for it. Why would they want to do more? The US needs a new president, $200-300bn in government cuts for the next 5-10 years. This is the way back to sustainability and long term growth. Quote Link to comment Share on other sites More sharing options...
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