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Spectre Of Stagflation Reappears As The Excesses Of Qe Hit Home

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Spectre of stagflation reappears as the excesses of QE hit home

Liam Halligan

Telegraph

Rising inflation and stagnating growth raises the spectre of 1970s-style "stagflation". Banished for decades from the lexicon of economists, this ugly word is now re-entering the mainstream. As well as bringing misery on Western households, looming stagflation also has the capacity to seriously spook Western, and ultimately global, financial markets.
I'm not saying that Western policymakers have any easy options. I do feel, though, that we've made a bad situation worse. There was, perhaps, an argument for limited quantitative easing in the aftermath of the credit-crunch – provided the newly created liquidity was used to "transition" and restructure our bloated, insolvent, banking system, with losses having been declared. That could have resulted in QE genuinely kick-starting lending, by restoring trust among various inter-bank market participants.

Rather than a one-off buffer, though, allowing us to purge and renew, QE has instead been used as a veil, allowing the grotesque banking cover-up to continue.

Losses are being imposed on Western savers in the form of current and future inflation with no compensating gains whatsoever in terms of bank restructuring or enhanced lending. Losses are being imposed on creditors to Western governments too.

The Western world has barely begun to feel the inflationary impact of QE. In my view it will quite soon. We face a serious bout of inflation – nay stagflation. Enduring it will be made worse by the knowledge that it will be at least partly self-imposed.

I like the cut of his jib..

Full article Here.

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I was a young housewife in the stagfaltion of the seventies, not funny. There is more week than money, each and every week. Everyone got pi$$ed off trying to manage on less and less and went out on strike. So blackouts, no bins emptied, graves undug, etc. etc....

Might be a bit different this time.

I don't see a wage spiral upwards, no unions worth a cuss to lead and plenty of unemployment to beat the workers into submission. Just a falling standard of living for all then, unless you're a robbing banker and can award yourself a massive payrise and bonus.

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Well I was arguing with the deflationistas all last year that we we far more likely to get Stagflation.

:blink:

It was only Friday I was hinting that many had been predicting this outcome prior to the credit crunch Linky

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So after all his frothing at the mouth ranting he's now in favour of QE :lol:

Losses are being imposed on Western savers in the form of current and future inflation with no compensating gains whatsoever in terms of bank restructuring or enhanced lending

They got their capital back, more or less.

Without QE all savings would have been wiped out. not sure most of his readership would have preferred that outcome, especially not Her Maj. Perhaps that's why he's now in favour of QE, just neither to hot nor too cold, like goldilocks.

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It was only Friday I was hinting that many had been predicting this outcome prior to the credit crunch Linky

Perhaps the deflationistas are just more vocal.

:)

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So after all his frothing at the mouth ranting he's now in favour of QE :lol:

They got their capital back, more or less.

Complaining about the way that savers have been ripped off by QE/ZIRP now equates supporting QE? Maybe in your screwed up mind.

Without QE all savings would have been wiped out. not sure most of his readership would have preferred that outcome, especially not Her Maj. Perhaps that's why he's now in favour of QE, just neither to hot nor too cold, like goldilocks.

On what tenuous basis do you make the claim that "all savings would have been wiped out"?

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It's not QE that's causing prices to rise now, but the years of excessive borrowing and money supply growth during the boom. Prices rise first in the assets for which the money is borrowed - residential and commercial property and companies subject to leveraged takeovers - then the money slowly leaks out into the rest of the economy resulting in price rises where demand encounters supply constraints. £200 billion of QE is chump change by comparison.

Edited by CrashConnoisseur

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My father-in-law lives in a coastal village north of Aberdeen and I was suprised by the amount of barter that goes on there. He is an engineer by trade and gets almost all of his fish, meat, whiskeyband dairy in return for servicing other people's boats, tractors etc etc no banksters or state to take a cut and very hard to monetise if you were so inclined to put it on your P60 :P

It's the future so tool up peeps.

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I like the cut of his jib..

Full article Here.

Yap. If solving this financial mess is as easy as doing deficit spending and QE, then there will be no 3rd world countries in the world.

Looks like the false 'prosperity' created by QE/Deficit spending is popping...

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It's not QE that's causing prices to rise now, but the years of excessive borrowing and money supply growth during the boom. Prices rise first in the assets for which the money is borrowed - residential and commercial property and companies subject to leveraged takeovers - then the money slowly leaks out into the rest of the economy resulting in price rises where demand encounters supply constraints. £200 billion of QE is chump change by comparison.

QE contributed to a weak pound which is what is causing most of the inflation we have at the moment.

If QE doesn't cause inflation, why don't we just 'print' a Billion quid - that would certainly reduce government borrowing for a few years.

:blink:

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My father-in-law lives in a coastal village north of Aberdeen and I was suprised by the amount of barter that goes on there. He is an engineer by trade and gets almost all of his fish, meat, whiskeyband dairy in return for servicing other people's boats, tractors etc etc no banksters or state to take a cut and very hard to monetise if you were so inclined to put it on your P60 :P

It's the future so tool up peeps.

That's much easier in a smallish relatively isolated community. There's no way I could do it to any worthwhile effect where I live. Mr Tesco wouldn't let me water his hanging baskets in return for a few litres of fuel.

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  • 309 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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