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Quantitative Easing 'is Good For The Rich, Bad For The Poor'

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http://www.guardian.co.uk/business/2011/aug/14/quantitative-easing-riots

Quantitative easing (QE) – the Bank of England's recession-busting policy of buying up billions of pounds of bonds – may have contributed to social unrest by exacerbating inequality, according to one City economist.

As the Bank of England considers unleashing a fresh round of QE, Dhaval Joshi, of BCA Research, argues the approach of creating electronic money pushes up share prices and profits without feeding through to wages.

"The evidence suggests that QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it," Joshi says in a new report.

He points out that real wages – adjusted for inflation – have fallen in both the US and UK, where QE has been a key tool for boosting growth. In Germany, meanwhile, where there has been no quantitative easing, real wages have risen.

As the Bank waded into the financial markets to spend its £200bn of newly created money, mostly on government bonds, the price of many assets, including shares and commodities such as oil, was driven up.

That helped to boost companies' revenues, but Joshi argues that with the labour market remaining weak, employees have had little hope of bidding up their wages. "The shocking thing is, two years into an ostensible recovery, [uK] workers are actually earning less than at the depth of the recession. Real wages and salaries have fallen by £4bn. Profits are up by £11bn. The spoils of the recovery have been shared in the most unequal of ways."

Not 100% sure about no QE in Germany, the Germans have certainly benefited from QE in other Euro states like Greece / Ireland and their banks have probably benefited by being able to exchange worthless Greek bonds for freshly minted ECB euros.

Although this news I find shocking that QE has done nothing for poor and has been just for the 0.1% elites to profit with.

I'm stunned that this conclusion has been reached.

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typical Guardian mis interpreted nonsense

profits = company investment = job creation

additionally

profits = dividends = supporting workers' pensions

so, in a word, no

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Uhh, yeah.

Thats what it is supposed to do.

We knew this before it even began. We knew it was done because its good for the rich. Not in spite of, but because of.

http://www.guardian.co.uk/commentisfree/2010/apr/11/economic-recession-recovery

Quantitative easing has become the most flagrantly regressive public policy intervention in modern times. It has enriched the wealthy further by putting a floor under especially high-priced property, boosted share prices and done nothing for small- and medium-sized business.

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typical Guardian mis interpreted nonsense

profits = company investment = job creation

additionally

profits = dividends = supporting workers' pensions

so, in a word, no

Why invest in your own company when investing in Speculative assets is a better deal?

http://quantumpranx.wordpress.com/2011/06/16/why-the-wheels-are-falling-off-chinas-boom/

Recently Liu Chuanzhi, the Chairman of Lenovo and the iconic figure of Chinese manufacturing, faced a serious dilemma while asked why of Lenovo Group’s profit in 2009 60% came from asset investment and only 40% came from manufacturing. He said “when the typhoons come, even a pig can fly in the sky. Everybody is profiteering from this. Why can’t we?” The typhoons refers to the property frenzy and the easy ways to make money.

Dont think for a minute our businesses are any different.

Cheap money/QE encourages malinvestment and speculation.

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typical Guardian mis interpreted nonsense

profits = company investment = job creation

additionally

profits = dividends = supporting workers' pensions

so, in a word, no

And in the couple of years QE have shares peaked above 1999 levels?

http://en.wikipedia.org/wiki/FTSE_100_Index

the highest value reached to date is 6950.6, on 30 December 1999.

So that'll be a no then, hardly great news for the proles and the pension blackhole caused by the very same elites skimming off the top.

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typical Guardian mis interpreted nonsense

profits = company investment = job creation

additionally

profits = dividends = supporting workers' pensions

so, in a word, no

typical intentional mis-interpretation

profits = increased salaries for board and increased reserves/savings; any jobs created in low cost economies rather than domestically

Dividends scammed off by fund managers, banksters and other assorted city criminality; workers pensions virtually non-existent except for some pointless money purchase scams, see above for beneficiaries.

:)

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profits = company investment = job creation

Many Corporations are sitting on huge reserves yet unemployment still rises. The more successful the elite are in fleecing the population the more they kill the demand that drives the economy.

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typical intentional mis-interpretation

profits = increased salaries for board and increased reserves/savings; any jobs created in low cost economies rather than domestically

already addressed savings; as to salaries, yep, but this is not an argument against QE per se, it is an argument against the corporatist structure, abotu which i haven';t established for myself that QE is part of it

Dividends scammed off by fund managers, banksters and other assorted city criminality; workers pensions virtually non-existent except for some pointless money purchase scams, see above for beneficiaries.

:)

so we have (ongoing and sensible) pensions reform, and yes I agree pensions charges HAVE been a scam, and worker buy in to pensions is insufficient, but that is being addressed by the previous and current govt continuing the same work

And in the couple of years QE have shares peaked above 1999 levels?

http://en.wikipedia..../FTSE_100_Index

So that'll be a no then, hardly great news for the proles and the pension blackhole caused by the very same elites skimming off the top.

why don't you just pick a random year IRR...

Many Corporations are sitting on huge reserves yet unemployment still rises. The more successful the elite are in fleecing the population the more they kill the demand that drives the economy.

that's because they're nervous, for the time being, so avoiding direct investment

that's an argument FOR lower interest rates, to dissuade them from hoarding cash like this, of course

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Why invest in your own company when investing in Speculative assets is a better deal?

http://quantumpranx....ff-chinas-boom/

Recently Liu Chuanzhi, the Chairman of Lenovo and the iconic figure of Chinese manufacturing, faced a serious dilemma while asked why of Lenovo Group's profit in 2009 60% came from asset investment and only 40% came from manufacturing. He said "when the typhoons come, even a pig can fly in the sky. Everybody is profiteering from this. Why can't we?" The typhoons refers to the property frenzy and the easy ways to make money.

Dont think for a minute our businesses are any different.

Cheap money/QE encourages malinvestment and speculation.

OK, that's a fair point for me

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typical Guardian mis interpreted nonsense

profits = company investment = job creation

additionally

profits = dividends = supporting workers' pensions

so, in a word, no

Where are the jobs then, China?

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typical Guardian mis interpreted nonsense

profits = company investment = job creation

additionally

profits = dividends = supporting workers' pensions

so, in a word, no

profits = profits and dividends paid to those rich enough to own shares (within/outside a pension fund)

demand = company investment = job creation

QE = an ideologically driven and inefficient policy encouraging pure speculation

So, er, yes, Guardian account sounds quite plausible to me

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Look at it in reverse.

Deflation/HPC don't cause destruction of real assets. But they do cause destruction of the monetary value of notional assets. In doing so, they increase the value (purchasing power) of money. Or rather, reverse some of the destruction caused by inflation.

The rich have the real assets that are losing their value. The poor have fewer assets, and what they have is more likely to be in a bank account than invested in real assets. Thus deflation/HPC - on balance - redistribute wealth from the rich to the poor.

QE reduces, or reverses, that effect, thus favouring assets owned by the rich.

The chinese government may stand to benefit more than anyone, as they continue to expand their asset base.

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And in the couple of years QE have shares peaked above 1999 levels?

http://en.wikipedia.org/wiki/FTSE_100_Index

So that'll be a no then, hardly great news for the proles and the pension blackhole caused by the very same elites skimming off the top.

Hardly compatible.

Back then stocks were largely priced on a overly ambitious assumptions of future earnings & the productivity gains that would be made by the net.

Only a few days ago the FTSE was at 6000 and the prospects are what?

The reason stock prices are so high is that bond yields are so low.

Plus the whole stick market game seems to be musical chairs. Slamming each other.

Apple recently hit 400B market cap making it the mist valuable company in the world.

Does anyone truly believe Apple will return 400b + int to its shareholders in the form of dividends or share buy backs before it goes bust/worthless ?

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that's because they're nervous, for the time being, so avoiding direct investment

You hear this a lot but which companies are sitting on big piles of cash? Of the FTSE companies balance sheets I've seen all are in big debts

id be glad if you could list some big UK companies with big piles of savings.

Plus a pile of cash doesn't equate spending & jobs. If a company can't see a good risk vs reward that pile stays where it is.

If anyone has info on who is sitting on the 4 trillion or so cash/cash equivalent pounds in the UK that would definitly be good data

So how many billions in pension funds.

How many billions in savings accounts

How many billion in foreigners holdings

In company net savings (broken down to big & small companies)

Etc

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Hardly compatible.

Back then stocks were largely priced on a overly ambitious assumptions of future earnings & the productivity gains that would be made by the net.

That's almost sounding like the stock market is a casino devoid of reality...

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'Quantitative Easing 'is Good For The Rich, Bad For The Poor'

... and there was me thinking that it was the poor benefiting from having their investment portfolios supported by the tax payer and the rich who were suffering from the rising prices of essential goods.

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typical intentional mis-interpretation

profits = increased salaries for board and increased reserves/savings; any jobs created in low cost economies rather than domestically

Dividends scammed off by fund managers, banksters and other assorted city criminality; workers pensions virtually non-existent except for some pointless money purchase scams, see above for beneficiaries.

:)

Yep!

Many Corporations are sitting on huge reserves yet unemployment still rises. The more successful the elite are in fleecing the population the more they kill the demand that drives the economy.

...and yep!

We also need to consider that these new profits are with diluted money. In affect, the money has been stolen from the masses and given to the corporates. If this money is then hoarded or, worse still, spent abroad, it has benefited the few rather than the many.

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Seriously?

Fuuucks sake!

Surely this was obvious to even the most blithering simpleton.

If they call it something fancy like 'Quantitative Easing' and wheel out some men in posh suits to say that it's something very serious and needed, the masses assume they must be missing something. I remember many a debate here, discussing whether it was just printing or not and whether it would affect prices, so how is the average Joe going to read it?

QE is just printing money though. We have centuries of evidence of what this does and it damn well doesn't help the poor or middle classes.

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Although this news I find shocking that QE has done nothing for poor and has been just for the 0.1% elites to profit with.

I'm stunned that this conclusion has been reached.

Yes - it's quite simply incredible that the governments and central banks would be working to enrich a small number of wealthy and influential people at the expense of the great ignorant masses!

My faith in the probity of our fine politicians and integrity of our learned bankers has taken a severe knock, I can tell you. What is the World coming to? :lol:

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  • 343 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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