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Now the Bank of England needs to deliver QE for the people

http://www.theguardian.com/business/economics-blog/2015/may/21/now-the-bank-of-england-needs-to-deliver-qe-for-the-people

The empirical evidence from analogous policies – such as tax rebates in the US – suggests that transfers to the household sector would have a far greater impact on demand at a fraction of the size of QE. Consumers appear to quickly spend between a third and a half of any cash windfalls. So to increase consumption by 1% of GDP, you would need a transfer of 3% of GDP. UK QE currently stands at about 20% of annual GDP. The Bank of England estimates this raised GDP by 3%. Further QE would likely have less effect. So cash transfers to consumers are a far more effective stimulus than that provided by more QE for a lower spend.

Steve Keen has proposed this too, however he proposes that QE to households with debt must be forced to use the money pay down that debt (not sure how you would enforce that) - thereby creating a debt jubilee of sorts.

Pretty unlikely to happen while the neoclassical economists are in control, but this surely the only quick way to the end of ZIRP. Print money to give to households, increase consumption and create some inflation, stop printing and raise interest rates to compensate.

Nothing can go wrong :P

Edited by Bear Goggles

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Now the Bank of England needs to deliver QE for the people

http://www.theguardian.com/business/economics-blog/2015/may/21/now-the-bank-of-england-needs-to-deliver-qe-for-the-people

Steve Keen has proposed this too, however he proposes that QE to households with debt must be forced to use the money pay down that debt (not sure how you would enforce that) - thereby creating a debt jubilee of sorts.

Pretty unlikely to happen while the neoclassical economists are in control, but this surely the only quick way to the end of ZIRP. Print money to give to households, increase consumption and create some inflation, stop printing and raise interest rates to compensate.

Nothing can go wrong :P

Negative mortgage rates.

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I proposed (in sig) QE directed at much needed infrastructure investment (houses since this is hpc), which makes more sense (to me) than people splurging it on German autos and Chinese t*t.

Usual suspects ofc will warble on about non-existent hyperinflation and all that cr&p (as they do)

Edited by R K

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I proposed (in sig) QE directed at much needed infrastructure investment (houses since this is hpc), which makes more sense (to me) than people splurging it on German autos and Chinese t*t.

Usual suspects ofc will warble on about non-existent hyperinflation and all that cr&p (as they do)

You are arguing for what Greece effectively did.

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Now the Bank of England needs to deliver QE for the people

http://www.theguardian.com/business/economics-blog/2015/may/21/now-the-bank-of-england-needs-to-deliver-qe-for-the-people

Steve Keen has proposed this too, however he proposes that QE to households with debt must be forced to use the money pay down that debt (not sure how you would enforce that) - thereby creating a debt jubilee of sorts.

Pretty unlikely to happen while the neoclassical economists are in control, but this surely the only quick way to the end of ZIRP. Print money to give to households, increase consumption and create some inflation, stop printing and raise interest rates to compensate.

Nothing can go wrong :P

What they mean is, they need to deliver massive pay rises and devalues everyones savings.

It's also known as theft.

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QE for people.... who can't service their astronomic debts.

Poppyc0ck.

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You are arguing for what Greece effectively did.

Greece hasnt done any QE. It doesn't have a currency. Do you mean the loans via the nominal greek economy to German and French banks? or something else.....it's all debated regularly on the greek thread. Greece were promised by the way by the IMF and ECB etc that the Troika plan to reduce spending would shave about 4% off Greek gdp. Instead it cratered Greek gdp by 25%. Imagine what that means. 1/4 of a countrys output! Sold as a positive outcome!

Edited by R K

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Yeah I heard something similar, one example was that instead of HS2 use the money to put solar panels on as many houses as possible? numbers such as 50 billion being floated around to save twenty minutes on a train journey!

say 26million households 5 grand a pop for solar panels or whatever? i dunno just an idea I heard floating about.

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I proposed (in sig) QE directed at much needed infrastructure investment (houses since this is hpc), which makes more sense (to me) than people splurging it on German autos and Chinese t*t.

Usual suspects ofc will warble on about non-existent hyperinflation and all that cr&p (as they do)

Can imagine the HPI heads at the top if they were in control of QE for those VI allowed to apply for contracts.

Bit like the organisations Dr Evil goes up against, but them laughing and falling over themselves to to pay at each higher request.

... unless you pay me 1 million dollars.

... unless you pay me 1 hundred billion dollars.

...unless you pay me 1 billion, gagillion, fafillion, shabolubalu million illion yillion ..

http://www.taxresearch.org.uk/Blog/2015/03/12/how-green-infrastructure-quantitative-easing-would-work/

"What is needed now is a QE programme that would stimulate the economy, boost employment and tackle climate change. This could be achieved if QE funding was used to fund essential infrastructure improvements across the UK. That could increase employment, create new business opportunities, broaden the tax base and, most importantly, create the infrastructure that could be the basis for future prosperity in the UK that the government, most political parties, the private sector and trade unions all recognise that we now need.

...What we are suggesting now is that this programme be extended and that a new QE programme of up to £50 billion a year be created during the first years of the new parliament to provide the funding to build the infrastructure that will be our legacy to our children."

It shows how quickly people have lost their grasp on reality, all this QE paradise, money-never-runs-out overriding markets. I can understand why the HPI heads want it rather than any corrections, allowing good money to replace bad at lower prices in market.

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Still no sign that the Fed's exponential monetary inflation has found its way into the real economy...

The more house prices go up, the more the QE excuse-givers, and hpiers at the top, want QE and stimulus to help 'create jobs / demand' for people to afford their VI scam house prices. All cheered on by some of the ULTRA-HPIers on the forum.

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I wonder what Boomers would do with a sudden windfall of free cash...

Probably put into one of those high yield bonds! Opps, oh no, they've stopped already! :P

Direct stimulus would have been a better use of the QE money but what's done is done and it's not a crisis any more, whatever they say! I just wish they would stop trying to help... or just stop.

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If all the other economic policies they try fail to work then just try another one.

It's bound to work eventually - after all they're the experts.

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If all the other economic policies they try fail to work then just try another one.

It's bound to work eventually - after all they're the experts.

It has already worked.

The bankers have made off with even more of our money. Them in the know have sold off their property empires and working man is worse off.

Or do you think the QE was for our benefit ?

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The more house prices go up, the more the QE excuse-givers, and hpiers at the top, want QE and stimulus to help 'create jobs / demand' for people to afford their VI scam house prices. All cheered on by some of the ULTRA-HPIers on the forum.

An echo housing bubble created in mimicry of the first, which the cargo cult Keynesians dance around while chanting 'aggregate demand' as if to summon the perfidious gods of economic prosperity.

Cargocultplane.jpg

http://charleshughsmith.blogspot.co.uk/2015/05/when-current-housing-bubble-finally.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+google/RzFQ+%28oftwominds%29

Bubbles are followed by echo-bubbles, and the bursting of the second bubble ends the speculative cycle.

If we have learned anything in the past 20 years of massive asset bubbles and equally massive declines when the bubbles finally pop, it's this: those caught up in the expansionary phase of the bubble cannot believe the bubble that's rewarding them so richly could actually burst.

This psychology of mass delusion now dominates housing, stocks and bonds: not only is this not a bubble, the expansion will continue forever.

History, however, suggests otherwise: all bubbles burst, period. With that in mind, I've made a few notes on a chart of the Case-Shiller Home Price Index. This chart displays both the nation Case-Shiller index and the San Francisco Bay Area index.

Case-Shiller-SF-natl5-15.png
Over the long-term, housing has tended to rise about 1% annually above inflation. According to the Bureau of labor Statistics, $1 in pre-bubble 1997 is $1.46 in 2015 dollars. A 1% gain over the past 17 years adds 18.4%. If we add inflation and a 1% annual gain, we find a historically justified target around 110 on the Case-Shiller index.
One of the more striking characteristics of bubbles is their symmetry: if the expansionary phase took 3 years, the bursting phase also takes around 3 years to complete.
The last housing bubble took about 3 years from peak to trough, and this provides a baseline projection for the decline of the current housing bubble, which is shaping up as a classic echo-bubble: very much like the previous bubble, but of slightly lower magnitude.
The projected decline over the next three years to the 110 level is the best-case scenario. Analyst Mark Hanson made a very persuasive case for a much sharper drop when the current housing bubble pops: Mark Hanson Is In “Full-Blown, Black-Swan Lookout Mode” For Housing Bubble 2.0.

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Government has been delivering that. Championed by the Libdems in coalition. Raising the tax threshold gives money to people, and that's a huge effect when aggregated over the population as a whole. Simultaneously lowering the higher-rate threshold means that the high-paid don't get to share in that particular distribution.

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An echo housing bubble created in mimicry of the first, which the cargo cult Keynesians dance around while chanting 'aggregate demand' as if to summon the perfidious gods of economic prosperity.

One of the more striking characteristics of bubbles is their symmetry: if the expansionary phase took 3 years, the bursting phase also takes around 3 years to complete.

The last housing bubble took about 3 years from peak to trough, and this provides a baseline projection for the decline of the current housing bubble, which is shaping up as a classic echo-bubble: very much like the previous bubble, but of slightly lower magnitude.

Your blog link is basically re-hashing some of Grantham/GMOs bubble work BUT your blogger is using a nominal price index rather than a real index (which doesn't tell you anything very much).

Nominal prices don't reveal bubbles - only real prices do that. US housing market crashed to a -1 std dev underperformance v real trend so I think we can reasonably conclude it fully burst. Now it's ziggy zagging back along trend, as one would expect. It's not in another bubble. "Echo" bubble doesn't have any meaning in terms. Prices oscillate. Who knew. Back to back bubbles dont occur in the same asset class.

Edited by R K

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It has already worked.

The bankers have made off with even more of our money. Them in the know have sold off their property empires and working man is worse off.

Or do you think the QE was for our benefit ?

Indeed, QE to "the people" would shift wealth from the richest to the poorest which is exactly the opposite of what its designed to do.

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It has already worked.

The bankers have made off with even more of our money. Them in the know have sold off their property empires and working man is worse off.

Or do you think the QE was for our benefit ?

Do you? You mustn't have read my posts when I've mentioned QE and the various policies - that's ok, I don't read or take in all of your posts.

Of course QE wasn't intended for the benefit of most people (neither are their general policies - but they like to pretend they are that much as become clear in the past few decades) but that doesn't mean to say that those implementing the policies are content with the direction that things are going at the moment and with the way things are turning out - especially the deflation. Deflation despite QE which is the only good thing about the current situation and which they so clearly dislike. They want general inflation.

Indeed with QE they've managed to thieve plenty with their inflated property empires etc but it's in other respects it's not working in the way that they intended - they've lost control.

Unless you think they're so good at what they do that the deflation is also part of their plans?

Edited by billybong

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