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kingcrimson

Printing Money

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Just a thought, if governments can print billions of £s and give them to the banks with no obvious benefit to the people, what would be the affect of crediting every person in the U.K over the age of eighteen with £50000 to spend as they please.....

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It would cause immediate and irreversible inflation.

Printing base money requires bank credit to get into the economy. And if it does get into the economy, all they have to do to get it out again is to either sell assets back to the market or raise interest rates.

I suspect that the prime purpose of QE is really to have the money to buy all the dodgy assets off banks and to increase asset values to stop the banks all going bust. If they didn't do it, they probably wouldn't have the readies to save the banking system.

It's hard to argue with the analysis that QE was simply a massive bank bailout to stop them going bankrupt. It was to save the financial system and not the real economy.

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It would cause immediate and irreversible inflation.

Printing base money requires bank credit to get into the economy. And if it does get into the economy, all they have to do to get it out again is to either sell assets back to the market or raise interest rates.

I suspect that the prime purpose of QE is really to have the money to buy all the dodgy assets off banks and to increase asset values to stop the banks all going bust. If they didn't do it, they probably wouldn't have the readies to save the banking system.

spot on. QE is a bank bailout. With $700+ trillion outstanding in interest rate derivatives , small changes in rates causes huge wins / losses and knocks one or other side out in the zero sum game. Margin calls cannot be met, cash flow "assets" of the winners go to zero when the loser is left insolvent, and that ripples through potentially leaving the entire system bust. Central banks are frantically printing money to meet the banks' margin calls. They call it QE. It is theft.

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spot on. QE is a bank bailout. With $700+ trillion outstanding in interest rate derivatives , small changes in rates causes huge wins / losses and knocks one or other side out in the zero sum game. Margin calls cannot be met, cash flow "assets" of the winners go to zero when the loser is left insolvent, and that ripples through potentially leaving the entire system bust. Central banks are frantically printing money to meet the banks' margin calls. They call it QE. It is theft.

QE was designed to maintain asset values.

As Asset values form part of the Bank balance sheet, then banks can remain solvent on paper.

Sadly, there is no-one buying some of these assets at any price, apart from the central bank.

So yes, a bank bailout.

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