Sir Mervyn King, Print More Cash

[uztopride]

The Bank of England was last night urged to print more money after Britain’s flagging economy slowed sharply over the summer. Gross domestic product increased by just 0.2 per cent in the three months to the end of August, according to the National Institute of Economic and Social Research. That was down from 0.6 per cent in May, June and July and fuelled fears that the recovery has run out of steam and the UK is heading for a double-dip recession.

Official figures showing industrial production fell 0.2 per cent in July while manufacturing grew by just 0.1 per cent added to the gloom. Mortgage lender Halifax reported a 1.2 per cent slide in house prices in August to £161,743.

The tidal wave of bleak news piled pressure on the Monetary Policy Committee to restart the printing presses when its latest monthly meeting ends at noon today. The Institute of Directors and accountancy firm PricewaterhouseCoopers called on the bank to print another £50bn to kick-start the recovery. ‘The time to launch QE2 has arrived,’ said Graeme Leach, chief economist at the IoD. The risks are sufficiently great to warrant an extension in QE now, in order to avoid the risk of a double-dip recession. We already have an L-shaped economic recovery and the hit to business and consumer confidence over the summer risks a slip back into recession.

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['Bart']

There is no solution. Austerity won't work, stimulus won't work, printy printy won't work. There's no way out.

(Much harder for Merv or a politician to say that though, sometimes being an anonymous internet forum poster has it's advantages.)

[interestrateripoff]

There is no solution. Austerity won't work, stimulus won't work, printy printy won't work. There's no way out.

(Much harder for Merv or a politician to say that though, sometimes being an anonymous internet forum poster has it's advantages.)

There is a way out, it's default. We have to get rid of the debt, we can either do this via the chaos of mass default or do it in a controlled way with a debt jubilee. Neither option will please everyone.

Happy clappy solutions will solve nothing.

['Bart']

There is a way out, it's default.

For one nation maybe.

But the debt problem is endemic.

Default, dear Brutus, is not in our stars, But in ourselves

[R K]

There is no solution. Austerity won't work, stimulus won't work, printy printy won't work. There's no way out.

(Much harder for Merv or a politician to say that though, sometimes being an anonymous internet forum poster has it's advantages.)

Of course there is. Austerity won't work obviously.

Shifting taxes from the lower to higher paid/corporates will work.

Protectionist trade policies against China and the surplus currency hoarders will work.

Borrowing at virtually zero real rates for as long as you like and spending it on infrastructure anywhere outside Greater London will work.

Lots of things will work but you're correct - Austerity ain't one of them.

[mikthe20]

Of course there is. Austerity won't work obviously.

Shifting taxes from the lower to higher paid/corporates will work.

Protectionist trade policies against China and the surplus currency hoarders will work.

Borrowing at virtually zero real rates for as long as you like and spending it on infrastructure anywhere outside Greater London will work.

Lots of things will work but you're correct - Austerity ain't one of them.

Surely austerity is the precursor to default/bankruptcy? You can't print or bail out debtors if you're austere. They have to go bust.

[Bloo Loo]

Protectionism is required.

Default is required.

we cant have jobs going abroad, and people must get used to paying for a service or a good a reasonable price.

The debate on Child care yesterday in the MSM...for fracks sake...of COURSE it costs good money to have a PERSON look after your child...and if housing is so expensive because of excessive borrowing, probably by the person who cant afford NOT to have two jobs and requires childcare, what do people expect.

Bankers have casued this, and they need to be destroyed in droves....and they will be, probably when the corpse they and Politicians are sucking dry is well past sell by date.

[Andy_K]

You can't default until your deficit is gone, otherwise nobody will lend you money to keep overspending.

And if you don't have a deficit, you probably don't really need to default anyway...

[scrappycocco]

I love how it's the people that are protected from inflation making these decisions for the rest of us. There was a guy this morning on sky, living in a bubble saying how it would be positive more easing.

[winkie]

I love how it's the people that are protected from inflation making these decisions for the rest of us. There was a guy this morning on sky, living in a bubble saying how it would be positive more easing.

Probably because he's hoping some of it will make its way into his pocket......QE will kill what little wealth the working man has and trying to put aside....the rich indebted risk takers will be filling their boots.

[OnlyMe]

Probably because he's hoping some of it will make its way into his pocket......QE will kill what little wealth the working man has and trying to put aside....the rich indebted risk takers will be filling their boots.

And those who have some sort fo sfe harbour by piling into TIPS prior to battling 5%+++++++ inflationary "deflation".

First users of money pritning benefit - everybody else in the end loses - that is where the public have no conception of the absolute LIE that they are being sold.

[Bloo Loo]

You can't default until your deficit is gone, otherwise nobody will lend you money to keep overspending.

And if you don't have a deficit, you probably don't really need to default anyway...

answer is simple...live within your means.

your approach means you keep borrowing forever....its ponzi for you.

[Traktion]

There is no solution. Austerity won't work, stimulus won't work, printy printy won't work. There's no way out.

(Much harder for Merv or a politician to say that though, sometimes being an anonymous internet forum poster has it's advantages.)

I'd agree but for one change - there is no easy way out.

You can create an environment for corporates to spend, but taxing them to death won't work. However, they're not going to invest here while we are so strung out with rules and regulations. Those that think you can just tax until the pips squeak without any repercussions are wrong; new businesses won't grow and old businesses will struggle to compete.

However, if you don't bail out the banks, the market will encourage the corporates to spend. Why? Because if the banks start to fail, they will take a hair cut and lose much of it anyway. If all they spend it on hard assets, even that is better than hoarding debt repayment tokens for others (ie. credit money). Ofc, it may mean that move their cash elsewhere, weakening Sterling - especially all that freshly printed money - but what else did TPTB expect/want?

Keeping the banks safe is keeping those with cash hoarding. Let a few banks fail, as they've been trying to do since the start of this crisis and they will try to spend it all right! Then the credit can start extinguishing debts and the imbalances can start resolving. Start removing regulations at the same time and you may even get some of this money heading towards jobs, rather than safe assets.

What for the average person? All that printed money will find its way into the prices of the stuff they want. They should never have printed it in the first place. However, not printing any more will prevent it getting any worse (EDIT: than the outcome already unfolding)... unless they've already printed far too much that is.

TBH though, I don't expect this to happen. I expect more and more printing and more stagnation, with a possibility of a random panic triggering hyperinflation in low order prices at some point.

Edited September 8, 2011 by Traktion

[Sour Mash]

answer is simple...live within your means.

your approach means you keep borrowing forever....its ponzi for you.

He's right that it's better to reduce the deficit to zero before defaulting, otherwise you are in for a rocky few years once you do default as all of a sudden you can't finance the difference between income and expenditure.

However, assuming you can eliminate the deficit and assuming you don't owe anyone with a huge military that can come in an seize assets (or have a big enough military to defend yourself) then you are in an excellent position to give two fingers to your creditors.

Seems to me that the US could quite feasibly become self-sufficient by adjusting their lifestyles to European levels and getting rid of the freeloading vested interests that sap their national productivity (Wall St, massive military overspend to name but two). They have considerable natural resources (including, crucially, oil) and a well developed infrastructure and lots of labour with which to exploit said resources.

After that they could tell their creditors to get stuffed and they still would have enough of a military machine (plus nukes) that anyone would think twice about messing with them.

[Traktion]

Protectionism is required.

Default is required.

we cant have jobs going abroad, and people must get used to paying for a service or a good a reasonable price.

The debate on Child care yesterday in the MSM...for fracks sake...of COURSE it costs good money to have a PERSON look after your child...and if housing is so expensive because of excessive borrowing, probably by the person who cant afford NOT to have two jobs and requires childcare, what do people expect.

Bankers have casued this, and they need to be destroyed in droves....and they will be, probably when the corpse they and Politicians are sucking dry is well past sell by date.

Protectionism won't work. The imbalances need to be worked out, not maintained.

[Bloo Loo]

Protectionism won't work. The imbalances need to be worked out, not maintained.

how do you propose to stop cheap imports undercutting and making uneconomic the production of those things here?

[Bloo Loo]

He's right that it's better to reduce the deficit to zero before defaulting, otherwise you are in for a rocky few years once you do default as all of a sudden you can't finance the difference between income and expenditure.

However, assuming you can eliminate the deficit and assuming you don't owe anyone with a huge military that can come in an seize assets (or have a big enough military to defend yourself) then you are in an excellent position to give two fingers to your creditors.

Seems to me that the US could quite feasibly become self-sufficient by adjusting their lifestyles to European levels and getting rid of the freeloading vested interests that sap their national productivity (Wall St, massive military overspend to name but two). They have considerable natural resources (including, crucially, oil) and a well developed infrastructure and lots of labour with which to exploit said resources.

After that they could tell their creditors to get stuffed and they still would have enough of a military machine (plus nukes) that anyone would think twice about messing with them.

as an aside, I read in todays daily hate that a few dozen highly deadly, top of the range, anti aircraft rockets have gone unnacounted for in Libya..probably sold to Al Qeeeeeda to attack our airliners....or, more probably, wasted firing at attacking NATO aircraft...the more logical of the two theories.

[Traktion]

how do you propose to stop cheap imports undercutting and making uneconomic the production of those things here?

The only way it can - either by prices decreasing here, prices increasing there, or a combination of both. Not even King Canute could hold back the tides.

[Roman Roady]

There is no solution. Austerity won't work, stimulus won't work, printy printy won't work. There's no way out.

(Much harder for Merv or a politician to say that though, sometimes being an anonymous internet forum poster has it's advantages.)

The past 30 years have been paid for by indebting the future. Well we are now there...time to pay up.

The party is over for the west and especially the UK.

[Bloo Loo]

The only way it can - either by prices decreasing here, prices increasing there, or a combination of both. Not even King Canute could hold back the tides.

OK, apart from tarrifs acheiving just that, how can prices here fall when the cost of living here is maintained artificially high to pay for the financial industry?

Ive just been told a project I am working on is going back 12 weeks, as the suppliers are awaiting stocks....steel products, made from British Steel (It says so in the blurb) in China....so we send them the Steel, and they process it, paint it, pack it and ship it back to us cheaper than we can make it here.

Its madness.

[Traktion]

OK, apart from tarrifs acheiving just that, how can prices here fall when the cost of living here is maintained artificially high to pay for the financial industry?

I suppose it depends on what your trying to protect. If it's trying to keep high wages in the west, it will fail; we are just too expensive compared to other regions.

I wouldn't say it was just maintaining the financial industry either. The rules, regulations, price fixing and so forth price us out of the market.

Ive just been told a project I am working on is going back 12 weeks, as the suppliers are awaiting stocks....steel products, made from British Steel (It says so in the blurb) in China....so we send them the Steel, and they process it, paint it, pack it and ship it back to us cheaper than we can make it here.

Its madness.

Indeed it is. Why is it cheaper to do that though? If it is the cost of living, it can't be food and energy, as that is a small part of our budget (in comparison). Therefore it has to the cost of property and other overheads (such as red tape, regulations, laws, taxes etc), which ofc is the government's fault.

EDIT: To add, it can't be lack of labour, as we have many idle hands unemployed.

Edited September 8, 2011 by Traktion

[Guest spp]

So when will the bars of this debt prison become visible!?

I'm starting to feel a little uneasy about my Gold/Silver position...it's not heavy enough!

All you trolls do your work, troll everywhere possible to create the biggest BTFD moment we are ever likely to see again.

The fiat for Gold shop awaits you and your barbaric relic!

[leicestersq]

There is a way out, it's default. We have to get rid of the debt, we can either do this via the chaos of mass default or do it in a controlled way with a debt jubilee. Neither option will please everyone.

Happy clappy solutions will solve nothing.

You are right. Huge defaults will hit the real owners of the debt. Pension funds will be wiped out.

[billybong]

Sir Mervyn King to print more money and give it to Sir Mervyn King.

What difference would it make as a lot of the freshly printed money already goes into his wage and pension along with the other BoE spongers.

[ingermany]

how do you propose to stop cheap imports undercutting and making uneconomic the production of those things here?

Abolish the minimum wage. Let people start work at 14. Stop social security benefits. Repeal employment legislation. On their current performance I think the Liberal Party would support it.