Institute Of Directors Urges Bank Of England To Inject Extra £50Bn Into Uk Economy

[interestrateripoff]

http://www.telegraph.co.uk/finance/economics/8044422/Institute-of-Directors-urges-Bank-of-England-to-inject-extra-50bn-into-UK-economy.html

The organisation wants a further £50bn in quantitative easing (QE), on top of the £200bn already injected into the economy to boost the money supply.

"Monetary policy needs to help ensure a sustainable recovery is in place before the public sector recession begins," said Graeme Leach, IoD chief economist

"Yes, inflation is above target now, but a double-dip recession would raise the spectre of deflation. The growth threat is more of a danger than inflation."

Despite better than expected services sector data yesterday, industry surveys have been pointing to a slowdown in the UK recovery.

Adam Posen, a member of the Bank's Monetary Policy Committee (MPC), last week argued publicly for more QE to stave off the threat of a lost decade akin to 1990s Japan, a call backed by the British Chambers of Commerce.

More calls for free money as this has always worked in the past.

Wow so we need a sustainable recovery before the public sector recession begins, genius. I can see why he's in this post.

Edited October 6, 2010 by interestrateripoff

[non frog]

Institute of Directors. Directors like Goodwin.

Go figure.

[MrFlibble]

Just another £50bn... The word billion seems to roll off the tongue these days like it is no money at all...

[Wahoo]

Pumping it in is easy.

Taking it out is near impossible.

Sell if you're holding sterling.

[Realistbear]

Pumping it in is easy.

Taking it out is near impossible.

Sell if you're holding sterling.

This is a buy signal for Sterling--at least accordnig to FOREX trends--already up vs. $ today on the back of this news. More stimulus is good for houses and the house market IS our economy.

Good for stocks too:

http://uk.finance.yahoo.com/news/ftse-gains-as-stimulus-hopes-boost-confidence-reuters_molt-988b6fe0183c.html?x=0

FTSE gains as stimulus hopes boost confidence

Simon Falush, 9:24, Wednesday 6 October 2010

LONDON (Reuters) - Hopes that governments around the world will make fresh moves to stimulate their economies helped lift commodity share prices, pushing the top share index to its highest level in over five months early on Wednesday.

At the moment the market is basing its plays on only the US going to QE2 as the assumption is that the recovereh is already locked in here with no need for stimulus.

Edited October 6, 2010 by Realistbear

[lurker07]

Would someone PLEASE ask these Vested Interests why double-digit inflation is better than "the spectre of deflation"? Ooooooo. Spooky.

[Sour Mash]

Free money is quite obviously needed - please give me and my mates the freshly printed £50,000,000,000 and we promise to spend it and boost the economy.

I don't see how anyone could have a problem with that ...

[interestrateripoff]

http://www.sjsu.edu/faculty/watkins/hyper.htm#FRANCE

The increase in the money supply came as a result of the Confederacy inability to collect funds through taxes. Only 5 percent of its expenditures were covered by taxes. Initially the Confederate government tried to borrow extensively. This failed because the planters had funds only after the fall harvest, but the war started in April. The war interferred with the harvest and export of the cotton crop so the planters were asking the government for help instead of loaning it funds. Consequently less than 30 percent of the funds for the Confederacy came from bonds. Thus, the Confederate government saw printing money as an unavoidable method for financing the war. The Confederate Congress was reluctant to use this measure and stated in the act which authorized the printing of money that it was "not to exceed at any one time one million of dollars." Actually 1500 times this amount was printed.

The printing of such large sums created a major problem. Paper, engravers and printers were hard to find. In desperation, the Secretary of the Treasury recommended that counterfeit money be utilized. Anyone holding a counterfeit bill was supposed to exchange it for a government bond and the government would stamp it "valid" and spend it.

Perhaps we should try this make all counterfeit money legal?

[interestrateripoff]

http://lynncoins.com/fiat-money-france5.htm

And, first, in the economic department. From the early reluctant and careful issues of paper we saw, as an immediate result, improvement and activity in business. Then arose the clamor for more paper money. At first, new issues were made with great difficulty; but, the dyke once broken, the current of irredeemable currency poured through; and, the breach thus enlarging, this currency was soon swollen beyond control. It was urged on by speculators for a rise in values; by demagogues who persuaded the mob that a nation, by its simple fiat, could stamp real value to any amount upon valueless objects. As a natural consequence a great debtor class grew rapidly, and this class gave its influence to depreciate more and more the currency in which its debts were to be paid.[85]

The government now began, and continued by spasms to grind out still more paper; commerce was at first stimulated by the difference in exchange; but this cause soon ceased to operate, and commerce, having been stimulated unhealthfully, wasted away.

Manufactures at first received a great impulse; but, ere long, this overproduction and overstimulus proved as fatal to them as to commerce. From time to time there was a revival of hope caused by an apparent revival of business; but this revival of business was at last seen to be caused more and more by the desire of far-seeing and cunning men of affairs to exchange paper money for objects of permanent value. As to the people at large, the classes living on fixed incomes and small salaries felt the pressure first, as soon as the purchasing power of their fixed incomes was reduced. Soon the great class living on wages felt it even more sadly.

Prices of the necessities of life increased: merchants were obliged to increase them, not only to cover depreciation of their merchandise, but also to cover their risk of loss from fluctuation; and, while the prices of products thus rose, wages, which had at first gone up, under the general stimulus, lagged behind. Under the universal doubt and discouragement, commerce and manufactures were checked or destroyed. As a consequence the demand for labor was diminished; laboring men were thrown out of employment, and, under the operation of the simplest law of supply and demand, the price of labor—the daily wages of the laboring class—went down until, at a time when prices of food, clothing and various articles of consumption were enormous, wages were nearly as low as at the time preceding the first issue of irredeemable currency.

The mercantile classes at first thought themselves exempt from the general misfortune. They were delighted at the apparent advance in the value of the goods upon their shelves. But they soon found that, as they increased prices to cover the inflation of currency and the risk from fluctuation and uncertainty, purchases became less in amount and payments less sure; a feeling of insecurity spread throughout the country; enterprise was deadened and stagnation followed.

New issues of paper were then clamored for as more drams are demanded by a drunkard. New issues only increased the evil; capitalists were all the more reluctant to embark their money on such a sea of doubt. Workmen of all sorts were more and more thrown out of employment. Issue after issue of currency came; but no relief resulted save a momentary stimulus, which aggravated the disease. The most ingenious evasions of natural laws in finance which the most subtle theorists could contrive were tried—all in vain; the most brilliant substitutes for those laws were tried; “self-regulating” schemes, “interconverting” schemes—all equally vain.[86] All thoughtful men had lost confidence. All men were waiting; stagnation became worse and worse. At last came the collapse and then a return, by a fearful shock, to a state of things which presented something like certainty of remuneration to capital and labor. Then, and not till then, came the beginning of a new era of prosperity.

Just as dependent on the law of cause and effect was the moral development. Out of the inflation of prices grew a speculating class; and, in the complete uncertainty as to the future, all business became a game of chance, and all business men, gamblers. In city centers came a quick growth of stock-jobbers and speculators; and these set a debasing fashion in business which spread to the remotest parts of the country. Instead of satisfaction with legitimate profits, came a passion for inordinate gains. Then, too, as values became more and more uncertain, there was no longer any motive for care or economy, but every motive for immediate expenditure and present enjoyment. So came upon the nation the obliteration of thrift. In this mania for yielding to present enjoyment rather than providing for future comfort were the seeds of new growths of wretchedness: luxury, senseless and extravagant, set in: this, too, spread as a fashion. To feed it, there came cheatery in the nation at large and corruption among officials and persons holding trusts. While men set such fashions in private and official business, women set fashions of extravagance in dress and living that added to the incentives to corruption. Faith in moral considerations, or even in good impulses, yielded to general distrust. National honor was thought a fiction cherished only by hypocrites. Patriotism was eaten out by cynicism.

Thus was the history of France logically developed in obedience to natural laws; such has, to a greater or less degree, always been the result of irredeemable paper, created according to the whim or interest of legislative assemblies rather than based upon standards of value permanent in their nature and agreed upon throughout the entire world. Such, we may fairly expect, will always be the result of them until the fiat of the Almighty shall evolve laws in the universe radically different from those which at present obtain.[87]

Still I'm sure it's different this time. It's not like it's artificially stimulating demand it's to ensure we recover so we get a sustainable recovery without stimulus, we have an exit strategy the French clearly at this point did not.

[HPC001]

Still I'm sure it's different this time. It's not like it's artificially stimulating demand it's to ensure we recover so we get a sustainable recovery without stimulus, we have an exit strategy the French clearly at this point did not.

Clearly no Lincoln greenback then...the major success of the greenback came down to two things 1) they were tender for pretty much anything 2) a cap was placed on the total ($450 million) which caused it to appreciate back to 1:1 with gold. In fact if it weren't for the civil war and a couple of exceptions on tender they would have done even better.

[TheCountOfNowhere]

Great Idea, postpone the collapse and subsequent recover 6 months, that will help, whilst making the rest of us significantly poorer in the process.

[Scott Sando]

Free money is quite obviously needed - please give me and my mates the freshly printed £50,000,000,000 and we promise to spend it and boost the economy.

I don't see how anyone could have a problem with that ...

That is whats happening, but as George Carling says " it's a big club, and your not in it".

[Executive Sadman]

Stimulate demand?

What about production?

Or is this their solution for everything. bring foward demand so that this time next year stuff people would buy then, they wont buy, because theyve already bought.

I see a flaw in their plan.

[Realistbear]

Just another £50bn... The word billion seems to roll off the tongue these days like it is no money at all...

Relative to our estimated 5TR debt (including off balance sheet £) it is no money at all.

While the BoE deny the need for further QE the business community see things differently. Who do you believe? Who has the greater VI in QE?

Edited October 6, 2010 by Realistbear

[wonderpup]

Don't these same people want to lower wages to make us more 'competitive'?

Maybe one day they will make the giant leap of thought and work out that wages and demand have a connection. What good will more funny money do if it simply gets funnelled into the City Casino? If the banksters win the profits stay with them- and- of course- if they lose the bill comes back to us.

In any case non of it finds its way into the hands of people who might spend it into the economy.

[shipbuilder]

Why those damn lefty socialists in the Institute of Directors............

[MrPin]

The IOD is a self promoting vested interest body, and I have little respect for them!

[interestrateripoff]

Don't these same people want to lower wages to make us more 'competitive'?

Maybe one day they will make the giant leap of thought and work out that wages and demand have a connection. What good will more funny money do if it simply gets funnelled into the City Casino? If the banksters win the profits stay with them- and- of course- if they lose the bill comes back to us.

In any case non of it finds its way into the hands of people who might spend it into the economy.

Not a fan of the trickle down theory then?