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How Much Qe To Save The "recovery" £500Bn?

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http://www.telegraph.co.uk/finance/economics/8812210/Bank-of-Englands-QE2-may-reach-500bn-economists-warn.html

Others warned that far more QE than first time will be needed, as the policy cannot push the borrowing cost on Government debt much lower than it already is. Although benchmark 10-year gilts fell sharply in early trading, they closed four basis points higher at 2.39pc.

Michael Saunders, UK economist at Citi, said: "With the recent large deterioration in the economic outlook, the MPC will probably have to do QE on a very big scale. We expect the cumulative total will eventually reach £500bn or so. It may go even higher than that."

The Bank is sticking to its existing policy of only buying Government debt to keep risk to a minimum. Once complete, it will own 32pc of the total £860bn UK gilt market. At £500bn, it would hold two-thirds. It expects to complete the asset purchases over the next four months.

Excellent, the BoE looks like it will end up owning all govt debt to fix the "recovery". Printing money is easy and it fixes everything, poverty will be ended overnight.

However I'm still reading the below and the more I read it the more I feel we are following the same path...

http://lynncoins.com/fiat-money-france3.htm

Issue after issue followed at intervals of a few months, until, on December 14, 1792, we have an official statement to the effect that thirty-five hundred millions had been put forth, of which six hundred millions had been burned, leaving in circulation twenty-eight hundred millions.

When it is remembered that there was little business to do and that the purchasing power of the livre or franc, when judged by the staple products of the country, was equal to about half the present purchasing power of our own dollar, it will be seen into what evils France had drifted. As the mania for paper money ran its course, even the sous, obtained by melting down the church bells, were more and more driven out of circulation and more and more parchment notes from twenty four to five were issued, and at last pieces of one sou, of half a sou and even of one-quarter of a sou were put in circulation.[42]

But now another source of wealth was opened to the nation. There came a confiscation of the large estates of landed proprietors who had fled the country. An estimate in 1793 made the value of these estates three billions of francs. As a consequence, the issues of paper money were continued in increased amounts, on the old theory that they were guaranteed by the solemn pledge of these lands belonging to the state. Under the Legislative Assembly through the year 1792 new issues were made virtually every month, so that at the end of January, 1793, it was more and more realized that the paper money actually in circulation amounted close upon three thousand millions of francs. All this had been issued publicly, in open sessions of the National and Legislative Assemblies; but now under the National Convention, the two Committees of Public Safety and of Finance began to decree new issues privately, in secret session.

As a result, the issues became larger still, and four hundred workmen were added to those previously engaged in furnishing this paper money, and these were so pressed with work from six o’clock in the morning until eight in the evening that they struck for higher wages and were successful.[43]

The consequences of these overissues now began to be more painfully evident to the people at large. Articles of common consumption became enormously dear and prices were constantly rising. Orators in the Legislative Assembly, clubs, local meetings and elsewhere now endeavored to enlighten people by assigning every reason for this depreciation save the true one. They declaimed against the corruption of the ministry, the want of patriotism among the Moderates, the intrigues of the emigrant nobles, the hard-heartedness of the rich, the monopolizing spirit of the merchants, the perversity of the shopkeepers,---each and all of these as causes of the difficulty.[44]

....

Three of these have gained in French history an evil pre-eminence, and first of the three was the Forced Loan.

In view of the fact that the well-to-do citizens were thought to be lukewarm in their support of the politicians controlling the country, various demagogues in the National Convention, which had now succeeded the National, Constituent and Legislative Assemblies, found ample matter for denunciations long and loud. The result outside the Convention was increased activity of the guillotine; the results inside were new measures against all who had money, and on June 22, 1793, the Convention determined that there should be a Forced Loan, secured on the confiscated lands of the emigrants and levied upon all married men with incomes of ten thousand francs, and upon all unmarried men with incomes of six thousand francs. It was calculated that these would bring into the treasury a thousand millions of francs. But a difficulty was found. So many of the rich had lied or had concealed their wealth that only a fifth of the sum required could be raised, and therefore a law was soon passed which levied forced loans upon incomes as low as one thousand, francs,--or, say, two hundred dollars of American money. This tax was made progressive. On the smaller proprietors it was fixed at one-tenth and on the larger, that is, on all incomes above nine thousand francs, it was made one-half of the entire income. Little if any provision was made for the repayment of this loan but the certificates might be used for purchasing the confiscated real estate of the church and of the nobility.[46]

Still history never repeats...

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forced loans....sounds hard to beleive.......but now thats an idea they are trying to foist on the Greeks....isnt it?

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...it all depends on how much unpaid debt we have, or will have.....unpaid debts do not disappear someone has to pay for them...more often than not it is the ones that repaid theirs all in good faith or not as it is turning out to look like. ;)

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I believe going forward it will all be about QE. For the last 300 years the Bank of England modified the rate of money supply growth mainly by adjusting the base interest rate.

However there has been a phase change, and now that doesn't work. Because of the limits of the zero bound, which Japan has been against for the last 10 years. In times like now we will see an acceleration of QE. In up swings, a deceleration of QE.

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I believe going forward it will all be about QE. For the last 300 years the Bank of England modified the rate of money supply growth mainly by adjusting the base interest rate.

However there has been a phase change, and now that doesn't work. Because of the limits of the zero bound, which Japan has been against for the last 10 years. In times like now we will see an acceleration of QE. In up swings, a deceleration of QE.

I agree....when interest rates can't be lowered further to increase money and to get money moving around in the economy, printing of money QE is it's only replacement......where has all the old money we did have go?...on unpaid debts and into other countries....what is stopping this lot being invested overseas to disappear so that we again are left paying the inflation bill?. ;)

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500 billion just to stand still and give bankers a huge bonus.

I don't know about you lot but I was amazed by the anger that I was hearing in the shops, post office, even an estate agents yesterday re QE2 announced the day before.

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  • 284 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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