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TheCountOfNowhere

Fed Official: Forget Market Volatility, End Qe Now

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If they end, I'm sure jobless numbers will increase and they'll have to start buying again. They've distorted the market and now can never exit. They may get a few months where they don't buy but "panic" will return forcing them to stop "volatility" again!

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If they end, I'm sure jobless numbers will increase and they'll have to start buying again. They've distorted the market and now can never exit. They may get a few months where they don't buy but "panic" will return forcing them to stop "volatility" again!

Do you really think they care that much ?

If the banks have been saved and the rich are much richer then it's job done.

I think the leaders of all countries are probably wary of what might happen if the money printing continues and the population decide enough is enough.

I still hark back to the day our dear old queen visiting the BoE.....(open) q.e. stopped. Coincidence I am sure. Someone people with a sense of history maybe realise how quickly it can all go wrong and what the consequences are.

Edited by TheCountOfNowhere

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QE isn't money printing. It's an asset swap.

Surely it depends on what the central banks decide to do with the assets they have bought - sell them, hold them forever or write them off.

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Surely it depends on what the central banks decide to do with the assets they have bought - sell them, hold them forever or write them off.

Holding them forever is a write off isn't it...I think that's the plan.

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Nah, it's just double entry book keeping.

Say BOE does £100m QE

BOE

Dr Assets - Gilts purchased - £100m

Cr Reserves of banks - £100m

That's it. Instead of £100m of government debt being in circulation, one of the banks has £100m on zero interest reserves i.e. an electric security on the BOEs internal ledger system. These excess funds are just like a hot potatoe - they yeild nothing so no one wants to hold them inducing yeild searching behaviour.

The BOE couldn't just cancel the debt because it would still have £100m sitting in excess reserves.

The only

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On the contrary, bond yields have fallen and the boe has made money on their purchases.

And what do they do with that money?

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They could do this but the BOE will still need to pay interest on the reserves it purchased the bonds with.

Didn't we get an interest holiday...something to do with the bonds having risen in value.

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Fair point - they remit the profits to treasury. That I accept is monetary finance of gov. But that's what all central banks do the argument being the treasury is on the hook for any losses on the we portfolio in the future.

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Nah, it's just double entry book keeping.

Say BOE does £100m QE

BOE

Dr Assets - Gilts purchased - £100m

Cr Reserves of banks - £100m

That's it. Instead of £100m of government debt being in circulation, one of the banks has £100m on zero interest reserves i.e. an electric security on the BOEs internal ledger system. These excess funds are just like a hot potatoe - they yeild nothing so no one wants to hold them inducing yeild searching behaviour.

The BOE couldn't just cancel the debt because it would still have £100m sitting in excess reserves.

The only

I don't see why you think double entry book keeping prohibits the printing of money/debt?

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Well if you increase the amount of money in circulation chasing the same amount of goods...that's what tends to happen.

Bond yields have fallen because of falling inflation expectations. Qe increases inflation expectations and therefore raises government funding costs. Counter intuative but true and supported by evidence. When qe ends each time bond yields fall.

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Do you really think they care that much ?

If the banks have been saved and the rich are much richer then it's job done.

I think the leaders of all countries are probably wary of what might happen if the money printing continues and the population decide enough is enough.

I still hark back to the day our dear old queen visiting the BoE.....(open) q.e. stopped. Coincidence I am sure. Someone people with a sense of history maybe realise how quickly it can all go wrong and what the consequences are.

Being the cynical type it wouldn't surprise me if QE was continuing on the QT, they can operate in secret and it wouldn't surprise me if they weren't exploiting this to the full.

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Being the cynical type it wouldn't surprise me if QE was continuing on the QT, they can operate in secret and it wouldn't surprise me if they weren't exploiting this to the full.

IMO QE needs be public knowledge to work. It has zero economic effect and only 'works' through inducing yield seeking behaviour in investors. So what would be the point of doing it quitely!?

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Yeah, you keep on believing in the truths the central bankers tell and faires too.

It's a fact.

The excess reserves used to buy the gilts are locked in the BOE internal banking ledger system.

The only way this money get 'out' is through the banks lending.

QE is an exchange of a gilt for a zero interest yielding electronc security. It's not money printing. That would require actual ehh...money printing. - which will probably happen eventually.

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It's a fact.

The excess reserves used to buy the gilts are locked in the BOE internal banking ledger system.

Yeah, it's a fact...that they tell you so they get away with a mass fraud/theft.

The bankers are lying, trying to save their own necks, they are fooling no one.

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IMO QE needs be public knowledge to work. It has zero economic effect and only 'works' through inducing yield seeking behaviour in investors. So what would be the point of doing it quitely!?

To keep the banks solvent.

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Being the cynical type it wouldn't surprise me if QE was continuing on the QT, they can operate in secret and it wouldn't surprise me if they weren't exploiting this to the full.

What are student loans if it's not QE?

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I'm critical of QE because it has induced yield seeking behaviour but it is a BLUFF in my oppionion.

The BOE / FED want people to believe it is printing money - I remember a quote from Paul Krugman to the effect that the FED needs to be "Credibly irresponsible" - so that we all run out and buy and do stuff economically. The fact is QE has next to no real economomic effect, it's only real a effect is through altering investors behaviours.

People look at graphs of the FED balance sheet and the S&P and say 'ah look' but in reality the two are correlated only because people believe the two are correlated. There is no causal mechanism for the QE money to get into the stock market. I remember seeing similar charts for gold and that didn't work out! When people work out QE is a bluff markets will tank.

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