Printing More Money Will Leave Pensioners Worse Off, Admits Boe

[easy2012]

http://www.telegraph.co.uk/news/9116401/Printing-more-money-will-leave-pensioners-worse-off-admits-Bank.html

Printing more money will leave pensioners worse off, admits Bank

The Bank of England’s decision to effectively print more money has left some pensioners “worse off” but without this policy “many more people would be much worse off”, a senior Bank figure has admitted.

...

Not sure who the 'many more people are' though..

[The Knimbies who say No]

http://www.telegraph.co.uk/news/9116401/Printing-more-money-will-leave-pensioners-worse-off-admits-Bank.html

Not sure who the 'many more people are' though..

Strange they have to 'admit' something which is a simple matter of fact.

But then, Government ministers also deny basic facts of QE:

[Democorruptcy]

The B of E say it's OK though because they think they all own a house, bought when they were cheap.

[StainlessSteelCat]

Not sure who the 'many more people are' though..

People who work for banks.

[leicestersq]

If the policy helps reallocate a portion of national wealth from pensioners to those working, then it will be a good thing. Diverting too much resource to those who dont produce is a massive drag on the nation.

[Bruce Banner]

If the policy helps reallocate a portion of national wealth from pensioners to those working, then it will be a good thing. Diverting too much resource to those who dont produce is a massive drag on the nation.

So the money I didn't spend over my working life, ie saved to spend later, should be taken from me and given to you?

[leicestersq]

So the money I didn't spend over my working life, ie saved to spend later, should be taken from me and given to you?

On the contrary. Money that you have wisely invested in assets shouldnt be taken from you.

It is the size of the fiscal transfers from the working to the pensioners that concerns me. Make that transfer too large, and working ceases to be worthwhile, and investing in a business ceases to become a sound decision.

The huge increase in pensioner numbers is driving economies into treacherous waters. It is no surprise that the European countries that are in the most trouble are the ones of Southern Europe, with the worst demographics (not sure about Greece but that is just a basked case that would fail no matter what its demographics looked like).

When you tax the working people, you should be careful not to overtax as it drives people onto benefits, and causes businesses to move overseas or to shut down. And yet it is that very same productive capacity that we all rely on for the things we need and want.

When Pensioners campaign for higher pensions, and have little regard for the burden they are placing upon others should their policy be enacted, they should be careful what they wish for. One day the state may be unable to make any transfer payments at all.

We would all like a pension. I recognise though that the size of that pension must be in line with what can be afforded.

[SleepyHead]

Strange they have to 'admit' something which is a simple matter of fact.

But then, Government ministers also deny basic facts of QE:

It's an amazingly revealing interview that one. Andrew Neil brilliantly exposes the lunacy of the economic thinking going on at the treasury.

Journalists should watch and learn. 3 brilliant questions from @afneil

"You are monetising the debt"

"Are you comfortable as a conservative with a policy which is effectively state imposed negative real interest rates?"

"Inflation hits the poorest. So you're squeezing savers in middle England and you're hitting the poorest by putting inflation up."

[Bruce Banner]

On the contrary. Money that you have wisely invested in assets shouldnt be taken from you.

It is the size of the fiscal transfers from the working to the pensioners that concerns me. Make that transfer too large, and working ceases to be worthwhile, and investing in a business ceases to become a sound decision.

The huge increase in pensioner numbers is driving economies into treacherous waters. It is no surprise that the European countries that are in the most trouble are the ones of Southern Europe, with the worst demographics (not sure about Greece but that is just a basked case that would fail no matter what its demographics looked like).

When you tax the working people, you should be careful not to overtax as it drives people onto benefits, and causes businesses to move overseas or to shut down. And yet it is that very same productive capacity that we all rely on for the things we need and want.

When Pensioners campaign for higher pensions, and have little regard for the burden they are placing upon others should their policy be enacted, they should be careful what they wish for. One day the state may be unable to make any transfer payments at all.

We would all like a pension. I recognise though that the size of that pension must be in line with what can be afforded.

Thanks for that, your agenda is now crystal clear... http://www.swp.org.uk/

[@contradevian]

If the policy helps reallocate a portion of national wealth from pensioners to those working, then it will be a good thing. Diverting too much resource to those who dont produce is a massive drag on the nation.

Except you are diverting resources to inflating property (or stop it from deflating) itself a non productive asset. If it was diverting resources into "making stuff, exporting it and employing people" I'd agree with you, but it ain't.

Edited March 2, 2012 by "Steed"

[@contradevian]

http://blogs.ft.com/.../#axzz1nwnVdCtN

I commented to this article that the issue for me is not necessarily policy but the unique responsibility for an independent, unelected body to be honest up front about what it is doing and the effects on different groups so that the less connected have the information to act rather than be manipulated.

Time the Bankrupt of England was made fully accountable. Sad thing is Merv runs rings round the Finance grand standing committee when he appears.

[leicestersq]

Thanks for that, your agenda is now crystal clear... http://www.swp.org.uk/

Huh? I thought I was calling for less wealth to be transferred away from the producers?

From what I remember of the Socialist workers party, they actually want free money from other people. I oppose that. My basic agenda is that each person should receive in income an amount closely equivalent to what they produce.

Is your agenda to take as much as possible from those who produce to give to pensioners?

[leicestersq]

Except you are diverting resources to inflating property (or stop it from deflating) itself a non productive asset. If it was diverting resources into "making stuff, exporting it and employing people" I'd agree with you, but it ain't.

The effect of QE is a little bit uncertain. I believe that the basic idea of it is sound though. If you can use it to replace debt money with non-debt money, then that makes the economy more stable without having to go through deflation to achieve it. I think Steve Keen puts forward similar ideas.

As for diverting resources into producing stuff people want, most of the responsibility for that rests with Parliament, not the BofE. I am sad to say I see a lot of schemes and scams going on that divert resources away from producers.

[inflating]

Time the Bankrupt of England was made fully accountable. Sad thing is Merv runs rings round the Finance grand standing committee when he appears.

They are a disgrace

[Georgia O'Keeffe]

Huh? I thought I was calling for less wealth to be transferred away from the producers?

From what I remember of the Socialist workers party, they actually want free money from other people. I oppose that. My basic agenda is that each person should receive in income an amount closely equivalent to what they produce.

Is your agenda to take as much as possible from those who produce to give to pensioners?

you were making a laughable assertation, clearly the policy isnt acheiving that though, workers continue to get poorer, this policy with the current UK setup is simply redistributing the money to different rentiers be they land owner, state, or FIAT trader, clearly some pensioners will be in this Group and the benefit will offset against their perceived savings which arent actually savings reducing in real terms but the idea its transferring wealth to producers is laughable, its impossible for it to flow into production under the UKs current economic setup, its been flowing out of production for more than 30 years, youd have to be living on the moon to not notice that, interest rates have been trending down for 30 years, QE is simply a continuation of that policy to reduce them below zero and ensure the continuation of non production due to excessive external costs , particularly excessive opportunity costs when compared to other forms of investment

Edited March 2, 2012 by Tamara De Lempicka

[Bruce Banner]

Is your agenda to take as much as possible from those who produce to give to pensioners?

Hardly, I worked and saved for my retirement.

I do not as yet receive a State pension, but when I do I expect it to be commensurate with what I paid into the State pension scheme.

Incidentally, I don't actually need the State pension so perhaps it should be confiscated and given to someone who paid nothing into it.

[Democorruptcy]

Huh? I thought I was calling for less wealth to be transferred away from the producers?

Pensioners are ex-producers. If workers now see that their wealth will be stolen later why bother working now?

[leicestersq]

you were making a laughable assertation, clearly the policy isnt acheiving that though, workers continue to get poorer, this policy with the current UK setup is simply redistributing the money to different rentiers be they land owner, state, or FIAT trader, clearly some pensioners will be in this Group and the benefit will offset against their perceived savings which arent actually savings reducing in real terms but the idea its transferring wealth to producers is laughable, its impossible for it to flow into production under the UKs current economic setup, its been flowing out of production for more than 30 years, youd have to be living on the moon to not notice that, interest rates have been trending down for 30 years, QE is simply a continuation of that policy to reduce them below zero and ensure the continuation of non production due to excessive external costs , particularly excessive opportunity costs when compared to other forms of investment

I do wonder what the affect of the current monetary policy is on output. It looks to me as if without some sort of QE we would be in a deflationary environment, and because of our laws and policies, the economy would find it difficult to go gracefully into deflation. Employment contracts and benefit contracts cannot easily be adjusted downwards.

What would happen say, if the government announced a cut in the state pension of 10% to match a fall in the price level of 10%, there would be uproar? What would the court say about it?

And in deflation, even if interest rates fall to zero, the real value of the debt accelerates upwards to a rate at which the burden becomes unsustainable. The paradox of thrift kicks in, and soon your economy collapses because no one can spend due to the uncertainty of not knowing if there is any work or money tomorrow.

Pumping in new money, whilst at the same time restraining the banks by forcing them to hold a much higher percentage of capital, seems like a good way of rebalancing the debt to money ratio in the economy.

As for returns on savings, well banks can only offer you a rate of interest that is based on what they can lend at, minus costs including bad loans. If banks cannot find safe places to lend at good rates of interest, the market isnt going to offer the saver a great rate. Mind you, getting poorer slowly by having your savings in the bank, is probably a better result than having them wiped out by a deflationary collapse.

[Bruce Banner]

Wriggle, wriggle, wriggle .

[leicestersq]

Pensioners are ex-producers. If workers now see that their wealth will be stolen later why bother working now?

They are. But there are two components to their income.

Some have saved and invested in various things. For example if you spend some of your working time making a phone line. When you are retired you rent it out, and you make money because for the young person the cost of renting it is less than building a new one. You are able to derive income from that.

This sort of income is a good income, everyone benefits from the work you did, and you benefit to. This should be protected and the goal of creating similar investments which will in turn be protected by the state incentivises current workers to do the same thing.

That portion of pensioner income, which is a direct transfer of what is produced by a worker, to a pensioner, is a bit more dubious. It still has merit of course, because that worker would like some of the same if they make it to retirement. However, because it is a tax, you have to be careful not to tax too much or else it disincentivises the worker too much. It is these transfer payments I have my concerns about, not the wealth that has been stored up in assets produced by the hard work of the retired generaton.

[Georgia O'Keeffe]

I do wonder what the affect of the current monetary policy is on output. It looks to me as if without some sort of QE we would be in a deflationary environment, and because of our laws and policies, the economy would find it difficult to go gracefully into deflation. Employment contracts and benefit contracts cannot easily be adjusted downwards.

What would happen say, if the government announced a cut in the state pension of 10% to match a fall in the price level of 10%, there would be uproar? What would the court say about it?

And in deflation, even if interest rates fall to zero, the real value of the debt accelerates upwards to a rate at which the burden becomes unsustainable. The paradox of thrift kicks in, and soon your economy collapses because no one can spend due to the uncertainty of not knowing if there is any work or money tomorrow.Pumping in new money, whilst at the same time restraining the banks by forcing them to hold a much higher percentage of capital, seems like a good way of rebalancing the debt to money ratio in the economy.

As for returns on savings, well banks can only offer you a rate of interest that is based on what they can lend at, minus costs including bad loans. If banks cannot find safe places to lend at good rates of interest, the market isnt going to offer the saver a great rate. Mind you, getting poorer slowly by having your savings in the bank, is probably a better result than having them wiped out by a deflationary collapse.

I dont think thats anything more than state propoganda, but it works because nobody reading history books, the industrial revolution spent just as much time in deflation as inflation, the problem with deflation is a state concept, hence their propoganda and their liking for platitudes with no historical basis, the problem is the state cant tax it and the modern econmy is very much based on everexpanding state debt hidden by an indicator that is nonsense known as GDP, i was still in nappies 30 years ago but you often get posters highlighting how economic indicators of health have changed over time the state has purposefully distributed propoganda that everyone now states as fact because history is about 5 minutes.

Two off the lowest inflation countries in the world over the last 30 years are Germany including pre euro and Switz, the idea that you cant produce in low inflation / deflation is laughable, switzerland is in deflation right now, youre still buying state propoganda, it is far more likely that the stealth inflation over the last 30 years has been the destroyer of productivity, inflation rewards rent seekers predominantly, the biggest rent seeker on the block being the State and the guardians of FIAT known as banks

Edited March 2, 2012 by Tamara De Lempicka

[leicestersq]

I dont think thats anything more than state propoganda, but it works because nobody reading history books, the industrial revolution spent just as much time in deflation as inflation, the problem with deflation is a state concept, hence their propoganda and their liking for platitudes with no historical basis, the problem is the state cant tax it and the modern econmy is very much based on everexpanding state debt hidden by an indicator that is nonsense known as GDP, i was still in nappies 30 years ago but you often get posters highlighting how economic indicators of health have changed over time the state has purposefully distributed propoganda that everyone now states as fact because history is about 5 minutes.

Two off the lowest inflation countries in the world over the last 30 years are Germany including pre euro and Switz, the idea that you cant produce in low inflation / deflation is laughable, switzerland is in deflation right now, youre still buying state propoganda, it is far more likely that the stealth inflation over the last 30 years has been the destroyer of productivity, inflation rewards rent seekers predominantly, the biggest rent seeker on the block being the State and the guardians of FIAT known as banks

Maybe I should have stated my definition of deflation here. It means destruction of the money supply.

Bankers are able to hold a gun to the head of the government, because if they collapse, the deposits held by depositors can get wiped out. It is great holding they keys to a bank. Which is why the government should get its own gun and make sure that all banks have a healthy amount of capital and properly marked loans.

When you have crooks or fearful people overseeing the banks, they will go renegade, steal the money, and leave the financial system on the brink. A deflationary collapse here is very different to a deflation of prices that the Swiss may have seen now and again. When deposits go, people get what cash they can, and cease to trade with anyone not knowing who they can trust. Without trade, there is no production and all wealth generation ceases. It is possible that this nightmare can occur.

[Georgia O'Keeffe]

Maybe I should have stated my definition of deflation here. It means destruction of the money supply.

Bankers are able to hold a gun to the head of the government, because if they collapse, the deposits held by depositors can get wiped out. It is great holding they keys to a bank. Which is why the government should get its own gun and make sure that all banks have a healthy amount of capital and properly marked loans.

When you have crooks or fearful people overseeing the banks, they will go renegade, steal the money, and leave the financial system on the brink. A deflationary collapse here is very different to a deflation of prices that the Swiss may have seen now and again. When deposits go, people get what cash they can, and cease to trade with anyone not knowing who they can trust. Without trade, there is no production and all wealth generation ceases. It is possible that this nightmare can occur.

but the only reason deflationary collapse would happen now is because the state has centrally created and managed an economy where they havent let the natural occurrence of deflation happen for 80 years (you have to be clear here this problem is fundamentally that they wouldnt let deflation happen in the 60s and 70s, then again in 2000, then again in 2008, you will notice each time it gets harder and harder to avoid it as it cant be and as will ultimately be learned, ewven if it takes hyperinflation), those bad choices are unavoidable they have to be paid at some point, and under a FIAT currency depositors can be made good by the state, asset prices then collapse under a penal interest rate and the cost of living and the entire economy adjusts accordingly to the real level of sustainable wealth, its not something to fear because the adjustment is going to happen anyway if it has to, economies that become too malinvested such that they cant be sustained wont be. The banks might be full of Crooks, but the sov state fundamentally makes the rules and if the state is bought then clearly crooks in the banks are irrelevant, the crooks in the state are the fundamental problem as you cant get to the banks without going through the state first

Edited March 2, 2012 by Tamara De Lempicka

[Brave New World]

It's an amazingly revealing interview that one. Andrew Neil brilliantly exposes the lunacy of the economic thinking going on at the treasury.

Journalists should watch and learn. 3 brilliant questions from @afneil

"You are monetising the debt"

"Are you comfortable as a conservative with a policy which is effectively state imposed negative real interest rates?"

"Inflation hits the poorest. So you're squeezing savers in middle England and you're hitting the poorest by putting inflation up."

I watched it a couple of weeks ago when i was off on paternity leave.

Had the verbal equivalent of 'asking him outside' on an email to him to go toe to toe on his lack of insight into the impact of QE and the wider contamination it will have on the UK.

not a surprise to to say i never got a response.

These people are just so flimsy to debate with, that and jornos are increasinlgy light weight/complicit.

[SleepyHead]

I watched it a couple of weeks ago when i was off on paternity leave.

Had the verbal equivalent of 'asking him outside' on an email to him to go toe to toe on his lack of insight into the impact of QE and the wider contamination it will have on the UK.

not a surprise to to say i never got a response.

These people are just so flimsy to debate with, that and jornos are increasinlgy light weight/complicit.

Good on you for trying.

They're running scared because they know that when pushed by a decent journalist (few of them sadly) they can't defend their policy. Their days of claiming ZIRP/QE etc are helping the economy are running out....... because it isn't helping, it's just making things worse.

Judging by that interview it doesn't look like the treasury have the first clue what damage they are doing. Very worrying.