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Radio 4 Now - Qe Discussion


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[the program] So far they have said the BoE admit measuring the effects of QE is very hard. They believe that the last round was beneficial. Others disagree.

The pension funds are calling an urgent meeting because QE and QE2 is causing so many pension deficit problems that it's really really bad for all companies.

[my view] If I were to pay £75BN I think I would want to be able to measure the benefits. If I couldn't then it would infer the benefits were so small they couldn't easily be measured, so why are we investing so much?

Doesn't make sense.

Catch it on replay 12:15 ish.

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[my view] If I were to pay £75BN I think I would want to be able to measure the benefits. If I couldn't then it would infer the benefits were so small they couldn't easily be measured, so why are we investing so much?

There's an argument that it's not so much what we see after QE as what we don't see.

If inflation stays level, growth remains subdued, house prices remain flat and unemployment creeps up, then the government can argue that if they hadn't done QE everything would have collapsed and if there's no measurable effect QE has done its job.

I'm not saying I agree, just that it's not about measuring change necessarily.

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There's an argument that it's not so much what we see after QE as what we don't see.

If inflation stays level, growth remains subdued, house prices remain flat and unemployment creeps up, then the government can argue that if they hadn't done QE everything would have collapsed and if there's no measurable effect QE has done its job.

I'm not saying I agree, just that it's not about measuring change necessarily.

True. The biggest objection is that there's no vote in parliament, but that goes to the root of monetary policy.

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[the program] So far they have said the BoE admit measuring the effects of QE is very hard. They believe that the last round was beneficial. Others disagree.

The pension funds are calling an urgent meeting because QE and QE2 is causing so many pension deficit problems that it's really really bad for all companies.

[my view] If I were to pay £75BN I think I would want to be able to measure the benefits. If I couldn't then it would infer the benefits were so small they couldn't easily be measured, so why are we investing so much?

Doesn't make sense.

Catch it on replay 12:15 ish.

Theyre both right.

Its beneficial for the rich and bankers.

Its impoverishing everyone else.

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There's an argument that it's not so much what we see after QE as what we don't see.

If inflation stays level, growth remains subdued, house prices remain flat and unemployment creeps up, then the government can argue that if they hadn't done QE everything would have collapsed and if there's no measurable effect QE has done its job.

I'm not saying I agree, just that it's not about measuring change necessarily.

This isn't a personal attack, so please don't take it that way.

'You can't measure something you don't see' is not true. It's used by weak management or those with not enough brains to work out how to measure something. Scientists and engineers measure these things all the time.

The other justification "Do it or you'll lose lots of money". That's not a business case and in any normal board room you would be shown the door. It's a no lose bet. If you don't do it and the economy tanks then you blame inaction. If you do it and it doesn't tank then you say hoorah for QE. If you do it and the economy still tanks you say it stopped it from being worse.

Heck give me £75 billion. I can stop the economy collapsing, honest.

I understand your point, but £75billion requires metrics prior to occuring. Yet they haven't, and this is the second attempt. Keep on going until stuff changes by random chance???? and then shout out how great we were for QE.

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We can measure it by the facts.

The GDP value of the first £200bn was 14% but it only added 2% to GDP and added 1.5% to inflation.

Epic fail.

Thanks for that Redhat. Figures make it clear what I had assumed.

I also heard that QE lowers interest rates. I found this rather amusing at it infers the BoE rate has little to no influence on what they really want them to be. I guess the banks say "go f*ck yourself, we can make more profit by charging mortgages and loans at 3.5% when we borrow ourselves at nearer 0.5%" (though of course they don't quite get that rate)

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Thanks for that Redhat. Figures make it clear what I had assumed.

I also heard that QE lowers interest rates. I found this rather amusing at it infers the BoE rate has little to no influence on what they really want them to be. I guess the banks say "go f*ck yourself, we can make more profit by charging mortgages and loans at 3.5% when we borrow ourselves at nearer 0.5%" (though of course they don't quite get that rate)

Those figures are the B of E's own so you can bet the GDP is top side and the inflation is low side.

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Thanks for that Redhat. Figures make it clear what I had assumed.

I also heard that QE lowers interest rates. I found this rather amusing at it infers the BoE rate has little to no influence on what they really want them to be. I guess the banks say "go f*ck yourself, we can make more profit by charging mortgages and loans at 3.5% when we borrow ourselves at nearer 0.5%" (though of course they don't quite get that rate)

Perhaps the tax payers (slaves) could will have to tell government to go f*ck itself when it wants the QE to be repaid.

I mean, if QE is created from nothing, it is nothing, so why should something that did not exist have to be repaid???

Edited by nixy
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