R K Posted February 9, 2012 Share Posted February 9, 2012 http://blogs.channel4.com/faisal-islam-on-economics/3-year-qe-jubilee-and-years-more-to-come-so-what-of-the-losers/16166 Low interest rates and QE have prevented a depression, at the cost of a bit more inflation. As we reach three years of what we were told would be a temporary policy, with the markets forecasting anther three, four or five years, this is surely no longer tenable. QE and low interest rates have transferred billions from savers to borrowers, from retirees to buy-to-let speculators, from pensioners to bankers. Do Building Societies, with no shareholders, even work in an environment of prolonged zero interest rates? It still might be justified in the round. But the government will surely have to look at regulatory or fiscal changes to mitigate the damage. Discuss (more on CH4 tonight according to blog) Quote Link to comment Share on other sites More sharing options...
Blue Peter Posted February 9, 2012 Share Posted February 9, 2012 http://blogs.channel4.com/faisal-islam-on-economics/3-year-qe-jubilee-and-years-more-to-come-so-what-of-the-losers/16166 Discuss (more on CH4 tonight according to blog) Low interest rates and QE have prevented a depression, at the cost of a bit more inflation If this is true, then any saver / pensioner should still regard it as a bargain, since the alternative would be a wipe-out. And, if, after a feww years thye can engineer a return to normalcy (which means no over-priced houses), then perhaps it will have been worth it. The danger is that they can't, because that world has gone (and indeed, the debt explosion occurred because "that world" had gone) and there will be a final reckoning when it does all fall apart. And because they are not thinking along those lines they won't have prepared for it, when they could, Peter. Quote Link to comment Share on other sites More sharing options...
porca misèria Posted February 9, 2012 Share Posted February 9, 2012 http://blogs.channel4.com/faisal-islam-on-economics/3-year-qe-jubilee-and-years-more-to-come-so-what-of-the-losers/16166 Discuss (more on CH4 tonight according to blog) Excellent! People like him complaining in the mainstream media are a step in the right direction! Quote Link to comment Share on other sites More sharing options...
bmf Posted February 9, 2012 Share Posted February 9, 2012 Excellent! People like him complaining in the mainstream media are a step in the right direction! Faisal is a lonely bright light in the moribund media. Good on him but it's not what the block vote want to hear. Quote Link to comment Share on other sites More sharing options...
porca misèria Posted February 9, 2012 Share Posted February 9, 2012 If this is true, then any saver / pensioner should still regard it as a bargain, since the alternative would be a wipe-out. You're missing the point. It's been a huge redistribution, and losers from that redistribution can indeed feel hard-done-by. The alternative would not be a wipe-out: other shapes of redistribution were available, and some of those might've been fairer (e.g. a big HPC would've reversed some of that most iniquitous transfer of wealth from the productive to the rich). But your point holds insofar as there was no painless way out after the bubble. Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted February 9, 2012 Share Posted February 9, 2012 If this is true, then any saver / pensioner should still regard it as a bargain, since the alternative would be a wipe-out. Can you substantiate this bold assertion put about by the people who stood to lose everything but in fact have ended up gaining at our expense? Would doing anything else except ever increasing money printing and bending over backwards to prevent capitalism running its course on the failed banks really have resulted in wipe-out of our entire way of life, guaranteed, definitely? For sure there's no magic way out but the pain could have been rather more fairly distributed and done so in a fashion that would have enabled a faster and stronger recovery than the prolonged stagnation (at best) that we are looking at. Quote Link to comment Share on other sites More sharing options...
Nuggets Mahoney Posted February 9, 2012 Share Posted February 9, 2012 If this is true, then any saver / pensioner should still regard it as a bargain, since the alternative would be a wipe-out. And, if, after a feww years thye can engineer a return to normalcy (which means no over-priced houses), then perhaps it will have been worth it. The danger is that they can't, because that world has gone (and indeed, the debt explosion occurred because "that world" had gone) and there will be a final reckoning when it does all fall apart. And because they are not thinking along those lines they won't have prepared for it, when they could, Peter. I can understand the argument that hitting people with savings is more pragmatic than wiping out people who have over-extended themselves. A goodly portion of those savings would have been made off the back of the boom those over-extended people helped fuel It's a **** argument though. Sooner or later any society that consumes more than it produces is going to end up skint and hungry, whatever paper tricks it tries to play Quote Link to comment Share on other sites More sharing options...
Blue Peter Posted February 9, 2012 Share Posted February 9, 2012 You're missing the point. It's been a huge redistribution, and losers from that redistribution can indeed feel hard-done-by. The alternative would not be a wipe-out: other shapes of redistribution were available, and some of those might've been fairer (e.g. a big HPC would've reversed some of that most iniquitous transfer of wealth from the productive to the rich). But your point holds insofar as there was no painless way out after the bubble. Could you not argue (and I think that The Red Knight might) that savers have been the other side of the borrowers and therefore that a fair proportion of savings have been dependent upon the bubble as well? I'm not sure that other redistributions would have worked politically. But now (and for the last 3 years) is the time to be working on reversing the effects of the bubble, which they don't seem to be doing, Peter. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted February 9, 2012 Share Posted February 9, 2012 Prevented a depression, or merely postponed and compounded it? The Weimar Wheelbarrow Club has done nothing in the last three years it hasn't spent the previous thirty doing. Deficit consumption, sovereign debt production, competitive currency devaluation, asset price inflation, mark-to-make-believe accounting. Now they've gambled that the Great Bubble of China can support the global ponzi in one final throw of the dice at 0%. Good luck with that. Quote Link to comment Share on other sites More sharing options...
tomandlu Posted February 9, 2012 Share Posted February 9, 2012 Could you not argue (and I think that The Red Knight might) that savers have been the other side of the borrowers and therefore that a fair proportion of savings have been dependent upon the bubble as well? That would imply that, without the housing bubble, there would not have been anything productive to invest in. The bubble was vicious - not only did it end up nearly destroying the economy, but it diverted investment from more profitable and productive enterprises. Quote Link to comment Share on other sites More sharing options...
Blue Peter Posted February 9, 2012 Share Posted February 9, 2012 Can you substantiate this bold assertion put about by the people who stood to lose everything but in fact have ended up gaining at our expense? No, and no one can, since no one dared do it. After letting Lehman Brothers fold, and the consequent turmoil that that caused, TPTB decided that they weren't going to risk it. I suspect that most people would have made the same decision, Peter. Quote Link to comment Share on other sites More sharing options...
moonriver Posted February 9, 2012 Share Posted February 9, 2012 Excellent! People like him complaining in the mainstream media are a step in the right direction! I so agree, and I hope we hear more of this side from the MSM. It is about time we did. After all, every citizen of the UK is not a debtor. On Radio 5, "Wake up to Money" this morning, I was pleased to hear the presenters complain (although only briefly) to the finance guest who was singing the praises of QE, that it is being done to help debtors, whilst savers and pensions pay the price. Too true. Quote Link to comment Share on other sites More sharing options...
Nuggets Mahoney Posted February 9, 2012 Share Posted February 9, 2012 (edited) I'm not sure that other redistributions would have worked politically. But now (and for the last 3 years) is the time to be working on reversing the effects of the bubble, which they don't seem to be doing, No they are not. I'm currently a significant saver. I would wear the QE thing if the overextension and profiteering was being brought to earth at the same time savers were being let down As other commentators are saying, a systemic reset has been compounded and deferred, not avoided The work of short-termist fools or calculating psychopaths, take your pick Edited February 9, 2012 by Nuggets Mahoney Quote Link to comment Share on other sites More sharing options...
winkie Posted February 9, 2012 Share Posted February 9, 2012 I can understand the argument that hitting people with savings is more pragmatic than wiping out people who have over-extended themselves. A goodly portion of those savings would have been made off the back of the boom those over-extended people helped fuel It's a **** argument though. Sooner or later any society that consumes more than it produces is going to end up skint and hungry, whatever paper tricks it tries to play Free debt without productivity requires more debt....crunch time for the savers, their debt free savings will be stolen to feed the ever continuous debt hungry monster.....born with debt, live on debt, die with debt, roll it over and do it again Quote Link to comment Share on other sites More sharing options...
Blue Peter Posted February 9, 2012 Share Posted February 9, 2012 That would imply that, without the housing bubble, there would not have been anything productive to invest in. The bubble was vicious - not only did it end up nearly destroying the economy, but it diverted investment from more profitable and productive enterprises. I believe that's where we've got to. Why lend money to deadbeats, if there are real profitable projects to be financed? The answer is that there aren't enough real, bankable projects, so we lent money to deadbeats until not even that was enough. And, it's not going to get any better, Peter. Quote Link to comment Share on other sites More sharing options...
Nuggets Mahoney Posted February 9, 2012 Share Posted February 9, 2012 I so agree, and I hope we hear more of this side from the MSM. It is about time we did. After all, every citizen of the UK is not a debtor. I've got some bad news for you. Way more people are on the teat than off it. Otherwise the UK would be paying its way Quote Link to comment Share on other sites More sharing options...
winkie Posted February 9, 2012 Share Posted February 9, 2012 I've got some bad news for you. Way more people are on the teat than off it. Otherwise the UK would be paying its way It is reaching the point where, why pay your way when you can print your way out of trouble? Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted February 9, 2012 Share Posted February 9, 2012 It is reaching the point where, why pay your way when you can print your way out of trouble? The idea of capital formation seems to have gone right out the window in the last few years, alright. Seems to me that there's absolutely no prospect of commercial banks getting away from dependence upon Central Bank provided liquidity at near zero cost any time soon. Still, what could possibly go wrong? This is a new age of cronyism, who needs those old fuddy-duddy capitalist ideas any more. Why swap goods and services for money when you can just print the money, I can't believe no-one figured this out before. Quote Link to comment Share on other sites More sharing options...
Blue Peter Posted February 9, 2012 Share Posted February 9, 2012 Still, what could possibly go wrong? This is a new age of cronyism, who needs those old fuddy-duddy capitalist ideas any more. Why swap goods and services for money when you can just print the money, I can't believe no-one figured this out before. That's the question on the Bond Markets on Fire thread. The Text book answer is lots of inflation, but we don't really seem to be having the inflation that 325 billion sterling, goodness knows how much dollars and Euros might be imagined to produce. Are they still truthfully fighting deflation (in the heart of the beast)? Peter. Quote Link to comment Share on other sites More sharing options...
JaneTracy Posted February 9, 2012 Share Posted February 9, 2012 The problem with QE is that it has not worked as promised and even the Bank of England struggles to find a good reason for doing it. I read a few days ago an interesting article which pointed out it wasnt doing much good to the money supply either. Time for a re-think?In my opinion yes. For all the arguments advanced in favour of QE I have yet to see anyone giving evidence to say that it has outright worked anywhere it has been tried,unless of course you only count increased inflation. Accordingly all we ever see are calls saying we are just about to turn a corner or if we look backwards that only if (usually Japan) had done more it would have worked! Or as Andrea True Connection put it. More More More For myself I am intrigued by the disparity between the narrow and broad money numbers and am reminded of Goodhart’s Law yet again. Has a proposed solution to a dislocation created its own dislocation? Quite possibly." http://www.mindfulmoney.co.uk/wp/shaun-richards/why-the-uks-latest-monetary-figures-mean-that-the-bank-of-england-will-give-us-more-quantitative-easing/ Quote Link to comment Share on other sites More sharing options...
Djini Posted February 9, 2012 Share Posted February 9, 2012 What are the losses? To me it's all gains. No savings being erroded, just debts losing their value while my salary increases (and that of my wife's)!. All good here! I might buy another new car. Shame about the Petrol prices though, that does hurt but maybe we'll invade Iran soon. Quote Link to comment Share on other sites More sharing options...
Executive Sadman Posted February 9, 2012 Share Posted February 9, 2012 I hear this rubbish a lot from the MSM Low interest rates and QE have prevented a depression, at the cost of a bit more inflation they should say. Low interest rates and QE have delayed a depression, at the cost of a bit more inflation It cannot be prevented. In three years time, when out debt turns over, we will be Greece Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted February 9, 2012 Share Posted February 9, 2012 I hear this rubbish a lot from the MSM Low interest rates and QE have prevented a depression, at the cost of a bit more inflation they should say. Low interest rates and QE have delayed a depression, at the cost of a bit more inflation It cannot be prevented. In three years time, when out debt turns over, we will be Greece But I was told that debt doesn't matter. Quote Link to comment Share on other sites More sharing options...
Executive Sadman Posted February 9, 2012 Share Posted February 9, 2012 But I was told that debt doesn't matter. It doesnt matter until it does. Unfortunately politicians prefer to wait until it does matter to do something about it (run around in circles in a blind panic and blame the other guy) Quote Link to comment Share on other sites More sharing options...
Fancypants Posted February 9, 2012 Share Posted February 9, 2012 Surely the biggest concern is how the zombieconomy is becoming addicted to QE, and requires ongoing treatment. What was supposed to be a temporary expedient to help us get over e brief and "unexpected" bumpy patch is gradually becoming a perpetual doping where the dose is increasing all the time. The corrosive effects of this synthetic lifeblood will slowly exert themselves. Eroding the credibility in our means of exchange and in the integrity of the financial system won't solve the problem, it will just undermine the reducing number of parts of it that work and that might be able to survive in the long term without QE etc. Quote Link to comment Share on other sites More sharing options...
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