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Pole

The Time Has Finally Come For Qe2!

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Why is anyone waiting for the Bank of England to punish the banks by raising IRs is beyond me.

They'll continue robbing us dry - that's the plan and it works. Banks are making massive profits while the real economy is completely dead, but who cares?

Can this go on for longer? Yes! No one in this country is going to even lift a finger against the banks. The two main political leaders (Laurel and Hardy) come from families with strong traditions in the banking industry.

And the general public are so brainwashed that they love those 0.5% IRs and they will love QE2 - it stops their precious houses from falling in price. Even if GBP collapses and the country goes to the dogs - the media will blame it on the global crisis (it came from America, from Greece, from Spain, from Iceland, etc.) Very few understand the concept of infaltion and even fewer know the history of nations that printed too much money...

The Bank of England's Monetary Policy Committee is likely to keep policy on hold at the end of its two-day meeting Thursday, but with economic growth set to ease, economists say it may yet increase its bond-buying program. (Wall Street Journal)

Printing-press.jpg

Edited by Pole

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Ahh. MPC day today isn't it?

To be honest, I'd be surprised if they made any changes - they have got some horrible kickings from the city and the media in the past for not signalling very clearly which way they are going. King has started to mumble about rates, but only Sergent has voted for them recently. No-one has voted for more QE this year I think. I don't think they will move without showing a split vote first on either of these issues.

So what might be interesting is when they release the minutes.

Edited by Timm

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Hang on a minute.... have you forgotten who is in charge now?

From the mouth of our glorious leader last year....

"The clearest sign of big government irresponsibility is the enormous size of our debt.

"If we win the election, we will have to confront Labour’s Debt Crisis, deal with it, and take the country with us. I want everyone to understand the gravity of our situation.

"Our national debt has doubled in the last five years and our annual deficit next year will be over £170 billion.

"That’s twice as big as when we nearly went bankrupt in the 1970s. It is a massive risk to our economy. If we spend more than we earn, we have to get the money from somewhere.

"Right now, the Government is simply printing it. Sometime soon that will have to stop, because in the end, printing money leads to inflation. Then the Government will have to borrow it.

"But we’ll only be given the money if lenders are confident we can pay it back. If they’re not, we’ll have to pay higher interest rates and that could stop our economic recovery in its tracks.

"So we have three choices.

"Option one: we can just default on the debt. Not pay it. Other countries have done that in the past. But I don’t think anyone in this country wants to go down that road.

"Option two: we could encourage inflation, which would wipe out the value of the debt, making it easier to pay off. But that’s not just an economic disaster – it’s a social disaster too. It doesn’t just wipe out debts, it wipes out people’s hard-earned savings.

"So we have the third option - for me the only option. We must pay down this deficit. The longer we leave it, the worse it will be for all of us.

"I know there are some who say we should just wait.

"Don’t talk about the deficit. Don’t even plan for what needs to be done. Just wait. Don’t they understand – it’s the waiting that’s the problem.

"The longer we wait for a credible plan, the bigger the bill for our children to pay. The longer we wait, the greater the risk to the recovery. The longer we wait, the higher the chance we return to recession.

"Here’s the most obvious reason we can’t wait. The more we wait, the more we waste on the interest we’re paying on this debt.

"Next year, Gordon Brown will spend more money on the interest on our debt than on schools. More than on law and order, more than on child poverty.

"So I say to the Labour Party and the trades unions just tell me what is compassionate, what is progressive about spending more on debt interest than on helping the poorest children in our country?

"The progressive thing to do, the responsible thing to do is to get a grip on the debt but in a way that brings the country together instead of driving it apart. That means showing leadership at the top which is why we will cut ministers’ pay and freeze it for a parliament.

"It means showing that we’re all in this together which is why we’ll freeze public sector pay for all but the one million lowest paid public sector workers......for one year to help protect jobs.

"And it means showing that the rich will pay their share which is why for now the 50p tax rate will have to stay and Child Trust Funds for those on middle and higher incomes will have to go.

"Yes we have made some tough choices. But in British politics today that is the only responsible thing to do."

http://www.telegraph.co.uk/news/newstopics/politics/david-cameron/6273107/David-Cameron-Conservative-Party-conference-speech-in-full.html

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Why did the lobster blush? And it wasn't because the seaweed.

Are you predicting a sudden plunge into boiling liquidity rather than a slow rise in temperature that would be unnoticed by the average frog?

It's Sentance.

I had a dream last night that rates went up to 1.5% today!

Yes, thanks.

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Rates are not going to budge for a long time.

To many mortgage holders would loose their (the banks) houses.

There is no possible way they will raise rates even if the pound crashes.

They are quite clearly happy creating an artificial bottom to this correction.

I for one would love an IR rise so savings can get a decent return but they wont do that they are coining it in.

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and on another side how do we get Mr King the sack he clearly cannot do his job and needs to be removed from his office.

He's doing his job very well.

(you don't really think he works for people like you and me, do you?)

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Hang on a minute.... have you forgotten who is in charge now?

From the mouth of our glorious leader last year....

As far as I can see, the government is going for the 2nd option from the article

Option two: we could encourage inflation, which would wipe out the value of the debt, making it easier to pay off. But that’s not just an economic disaster – it’s a social disaster too. It doesn’t just wipe out debts, it wipes out people’s hard-earned savings.

Has anyone listened to the Radio4 interview with Clegg this morning? He confirmed it (not directly though).

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Why is anyone waiting for the Bank of England to punish the banks by raising IRs is beyond me.

They'll continue robbing us dry - that's the plan and it works. Banks are making massive profits while the real economy is completely dead, but who cares?

Can this go on for longer? Yes! No one in this country is going to even lift a finger against the banks. The two main political leaders (Laurel and Hardy) come from families with strong traditions in the banking industry.

And the general public are so brainwashed that they love those 0.5% IRs and they will love QE2 - it stops their precious houses from falling in price. Even if GBP collapses and the country goes to the dogs - the media will blame it on the global crisis (it came from America, from Greece, from Spain, from Iceland, etc.) Very few understand the concept of infaltion and even fewer know the history of nations that printed too much money...

The Bank of England's Monetary Policy Committee is likely to keep policy on hold at the end of its two-day meeting Thursday, but with economic growth set to ease, economists say it may yet increase its bond-buying program. (Wall Street Journal)

Printing-press.jpg

Think it helps discussion if we first get the facts right (as opposed to rhetoric). QE has some money printing effect (as the MBS rubbish are swapped for Gilts and are used to borrow money from BoE - not entire sure if this is permitted but suspect that some leakage allowed this to happen) but QE is not money printing,

I am not sure if you understand the concept of inflation and its causes (monetary inflation and price inflation) either.

To get a currency collapse (depend what you mean by collapse, I think accurate term such as 10% off etc relative to X is more accurate), you really need a lost of confidence and actually few countries collapse as a result of printing too much money, but rather countries collapse because it allows the few vested interest to benefit too much from the money printing (so, if benefits of the money printing is shared, it will be ok. So if BoE doubles everyone banks balance, price will double, the currency exchange rate will drop by half, wages double but nothing nasty will happen). On the other hand, if BoE only doubles Bob Diamond and a few other's account, then there will be serious social consequences.

BoE can print 100Trillion if it wants and lock it up in a special reserve account (or a vault) and nothing will happen too. Only when the money gets into the private sector or when the private sector lost faith of BoE then we have a big problem.

Also, Fed Bond buying program is different from BoE QE itself....

The real evil of low discount rates is that Banks are profiting at everyone else expenses, savers are unfairly paid a too low rates (and have real purchasing power debased) and debtors are spared the full consequences of their actions.

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The Market Oracle is going for more QE and interest rate rises:

The Bank of England WILL RAISE INTEREST RATES AND PRINT MONEY - This is contrary to anything you will hear anywhere else as the consensus view is that QE and Zero interest rates are complimentary, they will NOT be as we move forward! Because the Bank of England Will have no choice but to attempt to DEFLATE PRICES whilst INFLATING the Economy to achieve this it MUST RAISE Short-term Interest rates WHILST KEEPING LONG-TERM interest rates low. To achieve this the Bank of England needs to BUY Bonds and Stocks whilst forcing demand for consumption and wage increases lower. This WILL become the consensus view AFTER the FACT, perhaps in 6 months time

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The Market Oracle is going for more QE and interest rate rises:

Perhaps.

But not this month it would seem.

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BoE can print 100Trillion if it wants and lock it up in a special reserve account (or a vault) and nothing will happen too. Only when the money gets into the private sector or when the private sector lost faith of BoE then we have a big problem.

If the money gets in to peoples hands then its inflationary and shows a reasonably functioning economy.

If the money doesn't get in to peoples hands as now then the debtors are unable to service their debt the economy collapses and investors flee the currency.

Remember people its not about getting money in to peoples hands in a hyperinflation people make do with less not more. Its about the perception of creditors that they will get repaid. When they realise that the debt cannot be repaid then they will dump it.

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Meanwhile, in the US:

http://ftalphaville.ft.com/blog/2010/09/09/338376/goldman-urges-the-fed-to-take-the-big-bank-option/

As should now be obvious, Goldman Sachs is very keen on the idea of QE2. In fact, barely a day goes by when it is not discussed by the bank.

Already this week, Goldman’s chief US economist Jan Hatzius has told the world why a further $1000bn of QE is justified, even though recent US economic data points more towards a slow down than a double dip.

And now the debate at Goldman has turned to how QE2 will be implemented not if; will it be a large one off purchase programme along the lines of the $600bn MBS scheme announced in November 2008 and subsequently extended by $1,500bn and included in the purchase of Treasuries? Or will the Fed decide to buy a small amount of assets on an ad hoc basis (the open-ended approach) or even purchase a specified amount of assets until certain condition are met – i.e. the unemployment rate falls below 9 per cent.

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The Market Oracle is going for more QE and interest rate rises:

Seems sensible, i suppose they realise that they could lose control by waiting to long. But do the BOE do sensible?

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Think it helps discussion if we first get the facts right (as opposed to rhetoric). QE has some money printing effect (as the MBS rubbish are swapped for Gilts and are used to borrow money from BoE - not entire sure if this is permitted but suspect that some leakage allowed this to happen) but QE is not money printing,

I am not sure if you understand the concept of inflation and its causes (monetary inflation and price inflation) either.

To get a currency collapse (depend what you mean by collapse, I think accurate term such as 10% off etc relative to X is more accurate), you really need a lost of confidence and actually few countries collapse as a result of printing too much money, but rather countries collapse because it allows the few vested interest to benefit too much from the money printing (so, if benefits of the money printing is shared, it will be ok. So if BoE doubles everyone banks balance, price will double, the currency exchange rate will drop by half, wages double but nothing nasty will happen). On the other hand, if BoE only doubles Bob Diamond and a few other's account, then there will be serious social consequences.

BoE can print 100Trillion if it wants and lock it up in a special reserve account (or a vault) and nothing will happen too. Only when the money gets into the private sector or when the private sector lost faith of BoE then we have a big problem.

Also, Fed Bond buying program is different from BoE QE itself....

The real evil of low discount rates is that Banks are profiting at everyone else expenses, savers are unfairly paid a too low rates (and have real purchasing power debased) and debtors are spared the full consequences of their actions.

Working in North Africa you can see this in motion houses in half decent areas are more expensive than UK (London aside) and anything than makes money is priced two or three times what you would think it was worth. At the other end wages are under pressure (china/unemployment) and business creation is illogical due to high rents.

Everyone in the top 1 percent is hooked in either owning banks or being the relative of someone who owns a bank businesses are propped up regardless of performance.

Once you remove the link between a market price and reality (due to having a money tree) the end is near once inflation returns externally.

Edited by Fromage Frais

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When they feel the banks (most of the banks) are strong enough they will raise rates.

They could be forced into before due to external factors.

There will be increased talk from the MPC on the need to raise rates and high quickly to help talk down borrowing so they can continue zero rate policy whilst the banks are in the critical care ward.

It will all end in tears for all of us.

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  • 239 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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