Lepista Posted July 25, 2012 Share Posted July 25, 2012 It isn't going to bankers - it's being used to buy government debt. If the government has it, then why are they in debt? Where is the money now? The money is being distributed by the government, to whoever they want. Who is that? (hint: Who has offshore accounts) Quote Link to comment Share on other sites More sharing options...
Panda Posted July 25, 2012 Share Posted July 25, 2012 http://soberlook.com/2012/07/more-on-qe-raising-bank-leverage.html?utm_source=BP_recent UK and US QE is totally different, you know that though.......The link describes the US QE............Not the UK QE... Quote Link to comment Share on other sites More sharing options...
Panda Posted July 25, 2012 Share Posted July 25, 2012 It is going to the bankers, it's all circular. You need to do some research, accountancy research, you are incorrect.................I am no banker, but believe not what you are told....... Quote Link to comment Share on other sites More sharing options...
Panda Posted July 25, 2012 Share Posted July 25, 2012 If the government has it, then why are they in debt? Where is the money now? The money is being distributed by the government, to whoever they want. Who is that? (hint: Who has offshore accounts) The QE money is sitting on the BoE balance sheet as new UK government debt, it's going nowhere, the goverment debt is still real, the deficit is still real, the debt is still increasing... but held by the BoE, not in the market place, there is no freshly printed cash out there in our economy, or on the banks balance sheets, if there was, if we really had 325 billion pounds injected into the real economy and lent out, inflation would not be circa 5% to 10% it would be a lot higher, does no one under stand what QE is actually achieving? It's just a tool to control interest rates on goverment debt, by market manipulation, so controlling Gilt issuence.......Purchasing and issueing with a slight hand..... Quote Link to comment Share on other sites More sharing options...
fluffy666 Posted July 25, 2012 Share Posted July 25, 2012 It isn't going to bankers - it's being used to buy government debt. .. via the bankers, who get to take a percentage .. Quote Link to comment Share on other sites More sharing options...
bmf Posted July 25, 2012 Share Posted July 25, 2012 'It's turtles/bankers/governments* all the way down.' * delete as per belief. GEB Quote Link to comment Share on other sites More sharing options...
A.steve Posted July 25, 2012 Share Posted July 25, 2012 (edited) Can anyone explain to me what the difference is between countries receiving a bailout, and us printing currency? So for instance, if Spain needed a 500bn bailout, is that much different to 500bn of QE? In one sense, there's no difference at all - in another they're a world apart. With a bailout, the expectation is that the money loaned will be spent directly into the economy - but with QE, a gilt on someone's balance sheet is exchanged for a little more cash than it would otherwise fetch today on the open market.... and, if the government want cash to spend into the economy, they need to issue new gilts and sell them to someone with cash to buy them. Demand will be increased by the reduced supply of gilts in the market - but, conversely, any shenanigans like this undermines the value of the currency... relative to other currencies - though, it is important to note, this will only be one of many influences. With QE, the control remains with a single government - or, actually, with a single cabinet - whereas, with a bailout, external agents, who consider themselves responsible for recovering the loan with interest, hold the purse strings. If QE goes wrong, a currency will rapidly devalue... possibly causing serious turmoil if access to essential imports becomes unaffordable... If a bailout goes wrong, the state will fail as a direct consequence of failing to make payments to its employees. Edited July 25, 2012 by A.steve Quote Link to comment Share on other sites More sharing options...
Lepista Posted July 25, 2012 Share Posted July 25, 2012 If When QE goes wrong, a currency will rapidly devalue... possibly causing serious turmoil if access to essential imports becomes unaffordable... If When a bailout goes wrong, the state will fail as a direct consequence of failing to make payments to its employees. Fixed for you. Quote Link to comment Share on other sites More sharing options...
Errol Posted July 25, 2012 Share Posted July 25, 2012 If QE goes wrong If ... ? Quote Link to comment Share on other sites More sharing options...
okaycuckoo Posted July 25, 2012 Share Posted July 25, 2012 4-5 years ago I thought this is what would happen, the bubble would burst, insolvencies would hit, and assets/commodities would fall to fair value. Then they started to print and at the time I thought 'Jesus thats a lot of funny money', they can't keep that up but to be safe got into some of that which shall not be named. Now I wish I had wen't balls deep, it's almost a certainty that faced with deflation rather than let the system they claim to love act as it should they will whir up the presses and print until there's hyperinflation. Anything else would be rational but TPTB aren't rational, it'll only stop when they are stopped at the end of a rope. That's what they want you to think. They deal in expectations and incentives. In my view you've been right all along, it's just a question of timing. Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted July 25, 2012 Share Posted July 25, 2012 The QE money is sitting on the BoE balance sheet as new UK government debt, it's going nowhere, the goverment debt is still real, the deficit is still real, the debt is still increasing... but held by the BoE, not in the market place, there is no freshly printed cash out there in our economy, or on the banks balance sheets, if there was, if we really had 325 billion pounds injected into the real economy and lent out, inflation would not be circa 5% to 10% it would be a lot higher, does no one under stand what QE is actually achieving? It's just a tool to control interest rates on goverment debt, by market manipulation, so controlling Gilt issuence.......Purchasing and issueing with a slight hand..... QE money is money that simply did not exist 'in the system' before the BoE magicked it into existence via buying Gilts through third parties. There certainly has been inflation as a result, demonstrated by simply looking at the official measure of inflation since 2008 at a time when strong sustained falls would have been expected. On a more global scale, you can see that markets actually rose since the crash in 2008 until this year. Again we should have seen strong falls. All the result of new money being created. That it is being masked as 'borrowing' with smoke and mirrors is neither here nor there - that money is never going to be destroyed by the bonds being sterilised. They will be either 'written off' or more likely rolled into extremely long term bonds held by the central bank such the proposed 100 year gilt. Quote Link to comment Share on other sites More sharing options...
zebbedee Posted July 25, 2012 Share Posted July 25, 2012 (edited) That's what they want you to think. They deal in expectations and incentives. In my view you've been right all along, it's just a question of timing. I agree thats what they want us to think and they certainly TRY and manage expectations, thats perhaps more worrying coz my expectations are now that they don't have the slightest clue what to do and when TSA(pproaches)TF they'll whir up the presses because it's easy (in the simple minded short term junkie fix kind of way). I cannot see them allowing deflation under any circumstances, they're mates are all asset rich cash poor and know people with big polonium needles. Edit. Right all along in the same way that someone jumping from a building keeps saying they won't hit the ground right up until they do. If I'd been right all along I'd have loaded up on houses in '01 ditched those in '05 and loaded up on that which shall not be named in. I was right in thats what should have happened. Edited July 25, 2012 by zebbedee Quote Link to comment Share on other sites More sharing options...
Panda Posted July 25, 2012 Share Posted July 25, 2012 QE money is money that simply did not exist 'in the system' before the BoE magicked it into existence via buying Gilts through third parties. Do not believe what you are told by the useless media, do your research.....QE money still exists on the BoE balance sheet.....as UK debt, If they really wanted to print to the real economy or the banks they could do this via a £20k tax personal allowance expansion, not via back door accountancy tricks....Do not question when you have not numbers to back up your reasoning.............The numbers are real, do your research.......... Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted July 25, 2012 Share Posted July 25, 2012 Do not believe what you are told by the useless media, do your research.....QE money still exists on the BoE balance sheet.....as UK debt, If they really wanted to print to the real economy or the banks they could do this via a £20k tax personal allowance expansion, not via back door accountancy tricks....Do not question when you have not numbers to back up your reasoning.............The numbers are real, do your research.......... It doesn't matter whether there is an entry on the BoE balance sheet (from the Gilts they purchased) corresponding to the money created because the money 'borrowed' though QE is never going to be repaid. (IMO). It's just smoke and mirrors. Money supply gets pumped up, government gets source of cheap deficit funding which will be put on the long finger as regards repayment (i.e. almost free money) and the banks get nice margins. Everyone else gets screwed with inflation and sod-all interest rates on their savings. Quote Link to comment Share on other sites More sharing options...
57percent Posted July 25, 2012 Share Posted July 25, 2012 The QE money is sitting on the BoE balance sheet as new UK government debt, it's going nowhere, the goverment debt is still real, the deficit is still real, the debt is still increasing... but held by the BoE, not in the market place, there is no freshly printed cash out there in our economy, or on the banks balance sheets, if there was, if we really had 325 billion pounds injected into the real economy and lent out, inflation would not be circa 5% to 10% it would be a lot higher, does no one under stand what QE is actually achieving? It's just a tool to control interest rates on goverment debt, by market manipulation, so controlling Gilt issuence.......Purchasing and issueing with a slight hand..... I don't agree with this. There's clearly new money in the system at the end of QE and it ends up with the govt. The BoE do hold the gilts, but they've been purchased with money that did not exist. No money has been taken from the economy to purchase them so this is new money. The fact that this new money has been used to buy nearly exactly all the new govt debt is a pure coincidence. The debt has not been fully monetised yet as it's still reported as govt debt and theoretically the BoE could exchange the gilts for money and then destroy it. But if they did want to monetise it in the future it would now be very, very simple. Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted July 25, 2012 Share Posted July 25, 2012 I don't agree with this. There's clearly new money in the system at the end of QE and it ends up with the govt. The BoE do hold the gilts, but they've been purchased with money that did not exist. No money has been taken from the economy to purchase them so this is new money. The fact that this new money has been used to buy nearly exactly all the new govt debt is a pure coincidence. Exactly. The debt has not been fully monetised yet as it's still reported as govt debt and theoretically the BoE could exchange the gilts for money and then destroy it. But if they did want to monetise it in the future it would now be very, very simple. The proposed 100 year Gilts ... the eventual dumping ground for QE. Pure smoke and mirrors, the very essence of the financial system. Quote Link to comment Share on other sites More sharing options...
@contradevian Posted July 25, 2012 Share Posted July 25, 2012 (edited) I don't agree with this. There's clearly new money in the system at the end of QE and it ends up with the govt. The BoE do hold the gilts, but they've been purchased with money that did not exist. No money has been taken from the economy to purchase them so this is new money. The fact that this new money has been used to buy nearly exactly all the new govt debt is a pure coincidence. The debt has not been fully monetised yet as it's still reported as govt debt and theoretically the BoE could exchange the gilts for money and then destroy it. But if they did want to monetise it in the future it would now be very, very simple. This is not incompatible. If a bank were to lend you money it would sit in your bank account waiting for you to spend in the economy and also sit on the banks balance sheet as a "debt." For every debit there is a credit. The difference is that the debt on the BoE balance sheet is unlikely to get paid. Edited July 25, 2012 by Socially Housed Quote Link to comment Share on other sites More sharing options...
Panda Posted July 25, 2012 Share Posted July 25, 2012 There's clearly new money in the system at the end of QE and it ends up with the govt. The BoE do hold the gilts, but they've been purchased with money that did not exist. No money has been taken from the economy to purchase them so this is new money. The fact that this new money has been used to buy nearly exactly all the new govt debt is a pure coincidence. The debt has not been fully monetised yet as it's still reported as govt debt and theoretically the BoE could exchange the gilts for money and then destroy it. But if they did want to monetise it in the future it would now be very, very simple. New money = New debt................. Increased new money = New debt held on the BoE balance sheet...... How can this add to NEWLY PRINTED MONEY, its the same as NEWLY ISSUED GOVERMENT DEBT, as always.....Just held by the BoE, not some pension fund..... Quote Link to comment Share on other sites More sharing options...
57percent Posted July 25, 2012 Share Posted July 25, 2012 This is not incompatible. If a bank were to lend you money it would sit in your bank account waiting for you to spend in the economy and also sit on the banks balance sheet as a "debt." For every debit there is a credit. The difference is that the debt on the BoE balance sheet is unlikely to get paid. But one further difference. For the bank to lend me money, it would have first been on deposit in someone elses account. By me borrowing the money, someone else in the economy is not spending that money. (slightly ignoring the timing issues) In the case of QE the money comes from nowhere. Quote Link to comment Share on other sites More sharing options...
57percent Posted July 25, 2012 Share Posted July 25, 2012 New money = New debt................. Increased new money = New debt held on the BoE balance sheet...... How can this add to NEWLY PRINTED MONEY, its the same as NEWLY ISSUED GOVERMENT DEBT, as always.....Just held by the BoE, not some pension fund..... No. This is where I see the difference. When the pension fund purchases gilts (lending the govt money) they have taken the money from somewhere else. When the BoE purchase the gilts, the money is not taken from somewhere else. It's just created and adds to the narrow money supply. (sure, the action of creating new debt increases the broad money supply, but they are different things. One is much more inflationary than the other) Quote Link to comment Share on other sites More sharing options...
Panda Posted July 25, 2012 Share Posted July 25, 2012 But one further difference. For the bank to lend me money, it would have first been on deposit in someone elses account. By me borrowing the money, someone else in the economy is not spending that money. (slightly ignoring the timing issues) In the case of QE the money comes from nowhere. Gilt issuence and QE is no different,,,,,,,,,Just the buyer is the Pru or the BoE................Still money printing, debt issuence, goverment debt is currency devaluation, its been going on for decades..................Do your research, do not believe what you are told................. Quote Link to comment Share on other sites More sharing options...
Panda Posted July 25, 2012 Share Posted July 25, 2012 No. This is where I see the difference. When the pension fund purchases gilts (lending the govt money) they have taken the money from somewhere else. When the BoE purchase the gilts, the money is not taken from somewhere else. It's just created and adds to the narrow money supply. (sure, the action of creating new debt increases the broad money supply, but they are different things. One is much more inflationary than the other) Only newly printed money is created when debt is written off, this will never happen in the UK.... we are all debt slaves either through taxation or inflation..... Quote Link to comment Share on other sites More sharing options...
57percent Posted July 25, 2012 Share Posted July 25, 2012 Gilt issuence and QE is no different,,,,,,,,,Just the buyer is the Pru or the BoE................Still money printing, debt issuence, goverment debt is currency devaluation, its been going on for decades..................Do your research, do not believe what you are told................. Debt devalues money by extending the broad money supply (increasing the banking leverage) Printing devalues money by extending the narrow money supply (increasing the money supply the banking sector can leverage on). In my opinion they are very different. QE = Printing, but with the pretence it will be reversed. Quote Link to comment Share on other sites More sharing options...
pezo Posted July 25, 2012 Share Posted July 25, 2012 .. via the bankers, who get to take a percentage .. Which Bankers are you on about? The BoE magics the money buys guilts at a %, so the Bankers at the BoE get a % but the BoE is wholly owned by the governemnt and if they wanted they could get a much better % elsewhere. High street banks and investment banks are actually taking a hit on this as they have to find other more risky things to invest in. Quote Link to comment Share on other sites More sharing options...
57percent Posted July 25, 2012 Share Posted July 25, 2012 if the velocity of money is dropping then it can offset an increse in the moeny supply. the banking sector appears to be deleveraging and has been for some time but I coul;d be wrong. That's how I see it. The banking world is deflating, the BoE/QE is inflating. Who will win? Quote Link to comment Share on other sites More sharing options...
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