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What Am I Missing?

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ok, what am I missing...

If reducing interest rates to 0% is such a great idea, why didn't we do it every other time we have had a recession?

Gordon Brown should be awarded a Nobel Prize in Economics... he has removed the risk from capitalism.

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ok, what am I missing...

....

This is not a recession. It is the total collapse of the world banking system and its subsequent bail out. Interest rates are low to give banks "free money" to get the economy started again. T'aint working as no one can see what to invest the newly borrowed money in.

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ok, what am I missing...

If reducing interest rates to 0% is such a great idea, why didn't we do it every other time we have had a recession?

Gordon Brown should be awarded a Nobel Prize in Economics... he has removed the risk from capitalism.

In order for 0% IR not to cause havoc you need a correspondingly large black hole into which credit is being sucked.

Deflationary forces are powerful and low IR are no match for the power of deflation as our Japanese friends have discovered.

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This is not a recession. It is the total collapse of the world banking system and its subsequent bail out. Interest rates are low to give banks "free money" to get the economy started again. T'aint working as no one can see what to invest the newly borrowed money in.

oh it will work, you are just too impatient.

anyway the important thing tgoing on that most are missing in the hyperbole about QE is the stealth guarantees of pretty much everything that are creeping in. FSCS going up, all the ECB shenanigans, the currency swaps between central banks etc.

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I know what he's saying though, when the housing market was on it's **** in 1994 they didn't lower rates.

Exactly.

It has such an air of "buy now, pay later". Which feels so immoral.

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In order for 0% IR not to cause havoc you need a correspondingly large black hole into which credit is being sucked.

Deflationary forces are powerful and low IR are no match for the power of deflation as our Japanese friends have discovered.

But what about Printy Printy?

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We were also told by the bankers that printing money would lead to hyperinflation. Well the BoE more than doubled the base money supply in one year and inflation is 'out of control' at 3.1% yoy(and falling).

The reality is with more money in the system simply more economic activity takes place. Imagine you are a car salesman and in the days when bankers are restricting money you sell a couple cars a month and scratch out a living. Now money floods into the society and you are selling a new car everday. And making some real money, like £30k a month.

There is no inflaton you are still making £1k per car you sell. But more activity is happening.

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We were also told by the bankers that printing money would lead to hyperinflation. Well the BoE more than doubled the base money supply in one year and inflation is 'out of control' at 3.1% yoy(and falling).

The reality is with more money in the system simply more economic activity takes place. Imagine you are a car salesman and in the days when bankers are restricting money you sell a couple cars a month and scratch out a living. Now money floods into the society and you are selling a new car everday. And making some real money, like £30k a month.

There is no inflaton you are still making £1k per car you sell. But more activity is happening.

But then you realise that you dont have enough cars to sell. You can only get one every other day. So you increase the price so your making £3k per sale to reduce the demand to what you can provide and make even more money!

Edited by Pent Up

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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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