Interesting commentary...

[A.steve]

Printing money when it wasn't needed;  GDP is very difficult to measure; Why does either party want to win the next election? Interest rates are not going to go back to zero again; Coherent policies from government could be a good idea.

[Jinxed]

How do they get away with it?

Edited September 19, 2023 by Jinxed

[Unmoderated]

17 minutes ago, Jinxed said:

Absolutely ridiculous explanation. How do they get away with it?

Did you listen to it?

Try 8 minutes and 30 seconds. He's critical of the role his generation are playing in this. 

As a finance expert, I think he talks a lot of sense. 

[A.steve]

3 minutes ago, Unmoderated said:

I think he talks a lot of sense. 

I've always considered Mervyn King worth my attention.  N.B. I listened to the video - I didn't set much store by the words picked out in print as the tag-line for the video on Youtube.

[Jinxed]

I dont know enough about banking to make a detailed analysis, but i do know a very slick political animal when i see one, he does make the right noises doesnt he?  Wonderful grainy grandfatherly softly spoken timbre tonal voice. Bankers are good people, its not fair on the next generation,  its not us its the system, etc, etc. Yet he was the governer from 2003, to 2013. How many hundreds of billions did he pour into the mortgage markets? I didnt see him calling for more regulation, whilst he was inflating the biggest credit bubble in history.

Edited September 19, 2023 by Jinxed

[Unmoderated]

11 minutes ago, A.steve said:

I've always considered Mervyn King worth my attention.  N.B. I listened to the video - I didn't set much store by the words picked out in print as the tag-line for the video on Youtube.

Not entirely sure I follow but you mean the 'Interest rate caution' part? If so I agree. As bad as inflation is deflation can truly destroy a nation and the policies required to fix that can be far worse than inflation. 

[Unmoderated]

2 minutes ago, Jinxed said:

I don't know enough about banking to make a detailed analysis, but I do know a very slick political animal when I see one, he does make the right noises doesn't he? Wonderful grainy grandfatherly softly spoken timbre tonal voice. Bankers are good people, its not fair on the next generation, it's not us its the system, etc, etc. Yet he was the governor from 2003, to 2013. How many hundreds of billions did he pour into the mortgage markets? I didn't see him calling for more regulation, whilst he was inflating the biggest credit bubble in history.

Don't forget, Labour adjusted the measure of inflation for his target to remove housing costs and then trifurcated financial regulation and oversight from the BoE to between the BoE, Treasury and FSA (as was).

He might well disagree with that but it was his job. In other videos he is critical of the asset inflation QE caused. 

[Jinxed]

7 minutes ago, Unmoderated said:

He might well disagree with that but it was his job. In other videos he is critical of the asset inflation QE caused. 

Yeh I get it. I know what he's said. 

If he had resigned, he might deserve the moral authority you seem to be implying he deserves. Instead, hes a knight of the garter, just like his pal Blair.

Edited September 19, 2023 by Jinxed

[stuckinlimbo]

To his credit, Mervyn King did publish a book in 2017 (the end of alchemy) denouncing ZIRP for how long it had gone on for and it’s generational inequality. This is not a new argument he is making. 

[Jinxed]

I'd quite like to know what was said and agreed to in the meetings which must have taken place, between Brown, Blair and Eddie King, prior to New Labour winning the 1997 election? Baron King of Lothbury, knight of the garter surely knows?  As he was an appointee of Brown. The very first thing Labour did was to announce that they were making the BOE independent, literally within 3 or 4 hours of winning the election, and even the Tories appeared shocked. Exactly what did they agree upon beforehand? Has it ever been made public knowledge?  The tripartite system presumably? Did they agree to create the FSA, taking the power to watch inflation in Land away from the BOE? Paving the way for the banking crisis? Has Baron King of Lothbury, knight of the garter ever been asked any tough questions? 

Nope, of course not....not with our MSM

Edited September 19, 2023 by Jinxed

[Unmoderated]

20 minutes ago, Jinxed said:

Yeh I get it. I know what he's said. 

If he had resigned, he might deserve the moral authority you seem to be implying he deserves. Instead, hes a knight of the garter, just like his pal Blair.

Why would he resign?

How would he make any difference out of that position?

Lots of people were arguing against this policy in 2008 and after, myself included. Investigate the real complexity in the how and why things worked that way and it all comes back to politics and Labour. They refused to allow a correction in the flawed belief that it would save the next GE for them. Instead they screwed a generation in the build up to and after 2007 and still lost the election. 

People blame Tories for the housing crisis. They've not unwound things but they've certainly not made them any worse. If Labour hadn't used house prices for political gain (shows how weak their other policies are) we'd not be close to the mess we're now in. 

I'll never forgive them for it. 

[Unmoderated]

2 minutes ago, Jinxed said:

I'd quite like to know what was said and agreed to in the meetings which must have taken place, between Brown, Blair and Eddie King, prior to New Labour winning the 1997 election? Baron King of Lothbury, knight of the garter surely knows?  As he was an appointee of Brown. The very first thing Labour did was to announce that they were making the BOE independent, literally within 3 or 4 hours of winning the election, and even the Tories appeared shocked. Exactly what did they agree upon beforehand? Has it ever been made public knowledge?  The tripartite system presumably? Did they agree to create the FSA, taking the power to watch inflation in Land away from the BOE? Has Baron King of Lothbury, knight of the garter ever been asked any tough questions? 

Nope, of course not....not with our MSM

They did this because Tories had used the BoE to manipulate the economy to their own political ends. Raising rates after a GE and lowering them in the lead up to a GE. Worked well.

Technically that's also not the first thing Labour did. They agreed first to change the measure of inflation from RPI to CPI to exclude housing costs. The official reason was more insidious. To align more closely with Europe to support with the eventual adoption of the Euro. 

Remember that.

[Jinxed]

Quote

They agreed first to change the measure of inflation from RPI to CPI to exclude housing costs.

If memory serves, Brown did that in 2003, not 1997

Quote

 

Lots of people were arguing against this policy in 2008 and after, myself included. Investigate the real complexity in the how and why things worked that way and it all comes back to politics and Labour. They refused to allow a correction in the flawed belief that it would save the next GE for them. Instead they screwed a generation in the build up to and after 2007 and still lost the election. 

People blame Tories for the housing crisis. They've not unwound things but they've certainly not made them any worse. If Labour hadn't used house prices for political gain (shows how weak their other policies are) we'd not be close to the mess we're now in. 

I'll never forgive them for it. 

 

Agreed.

 

Edited September 19, 2023 by Jinxed

[Unmoderated]

5 minutes ago, Jinxed said:

If memory serves, Brown did that in 2003, not 1997?

Agreeing to change, and changing are different things  

[Jinxed]

Seriously though, the main reason that the parliamentary enquiry tasked to look into the 'causes of the banking crisis' in 2008/2009, gave, as a reason, for the banking crisis, was the creation of the tripartite system, taking the power to watch inflation in land, away from the BOE, its centuries old purview.  

Presumably the tripartite system, (or something similiar) was agreed upon by George Blair and Brown in 1997? 

The whole thing stinks to high heaven. As does everyone involved. Including old gravelly gob 😉  

 

Edited September 19, 2023 by Jinxed

[The Angry Capitalist]

1 hour ago, A.steve said:

Printing money when it wasn't needed;  GDP is very difficult to measure; Why does either party want to win the next election? Interest rates are not going to go back to zero again; Coherent policies from government could be a good idea.

 

He is way off the mark thinking this inflation is from 2020 onward specifically.

It started from 2008 and QE1 started by Ben Bernanke of the Federal Reserve.

He is also clearly not knowledgeable about interest rates (or even economics for that matter) which is frightening from a former BOE governor. Interest rates need to be set by the free market and not by central banks.

The market needs to do this to remove the excess money printing of the last 15 years and bring back an equilibrium and maximize efficiency in the economy.

My guess is he thinks it will be close to impossible for rates to go to double figures. It's a very realistic probability from my perspective.

He is right about the economics profession though. The majority of them especially those who advise governments and central banks are completely clueless (or criminal depending on your viewpoint).

But who do you blame for all this QE madness?

Central banks or governments or both?

Probably both.

Government needs to stop deficit spending and only spend what they receive in taxes. If they can't receive enough in taxes to spend then they should not spend.

And net zero needs to be abolished and quickly.

[Jinxed]

Quote

My guess is he thinks it will be close to impossible for rates to go to double figures. It's a very realistic probability from my perspective.

Ouch! 

 

Edited September 19, 2023 by Jinxed

[SE10]

57 minutes ago, Unmoderated said:

Why would he resign?

How would he make any difference out of that position?

Lots of people were arguing against this policy in 2008 and after, myself included. Investigate the real complexity in the how and why things worked that way and it all comes back to politics and Labour. They refused to allow a correction in the flawed belief that it would save the next GE for them. Instead they screwed a generation in the build up to and after 2007 and still lost the election. 

People blame Tories for the housing crisis. They've not unwound things but they've certainly not made them any worse. If Labour hadn't used house prices for political gain (shows how weak their other policies are) we'd not be close to the mess we're now in. 

I'll never forgive them for it. 

Not made things worse.... help to buy?

[A.steve]

34 minutes ago, The Angry Capitalist said:

But who do you blame for all this QE madness?  Central banks or governments or both?

...

Government needs to stop deficit spending and only spend what they receive in taxes. If they can't receive enough in taxes to spend then they should not spend.

And net zero needs to be abolished and quickly.

You will find my perspective controversial.  QE was mad - but it was a limited form of madness.   When instigated, we were facing a fundamental collapse of all western economies owing to a failure of their monetary systems.  I recognised that the 'honest' course of action would have been to accept unmitigated failure of all western economies... but I also recognised that this would not be survived by the majority.  I accepted, pragmatically, that monetary intervention was necessary - despite knowing it to be unethical.

I do not agree with the perspective that QE was "money printing" - in reality, it was a balance-sheet shuffle that brought all interest rates to near-zero... and, hence, to all intent and purpose, suspended the progress of time.  As an immediate emergency response - for a brief period (say 3 or 6 months) I felt this response could be justified... even if one had to hold one's nose to tolerate its stench.  The egregious failure was to keep rates that low for many years - it caused economic and social perversions.

Real "money printing" actually happened in 2020.  My perception is that this was part of a deliberate multi-faceted strategy to spark inflation.  I believe the mantra of always wanting low inflation (orthodoxy at central banks since 1992) has run its course - I don't think it's believed by those with influence any longer.  Sure, it might still be the public facing narrative... but I don't believe this is what Governments are trying to achieve any longer.  Through all the horrific blunders and unethical policies... I hesitantly think, now, the objective is sensible levels of interest... and, from a monetary intervention perspective, let the chips fall where they may.   I think that such an approach is the only one with a hope of delivering benefit to anyone... yet I hardly dare allow myself to think it might be being pursued in practise.

Stopping deficit spending is less clear-cut as being a valid objective.  My concept of money does not require zero fiscal deficits - I do think there needs to be transparency and predictability to any plans to deficit spend.  If cash were to devalue a little each year... I don't think that necessary a bad thing... if everyone understands the rules by which everyone is playing.

 

Edited September 19, 2023 by A.steve

[no_dependent4663]

its just a boom-bust cycle, it will last as long as it takes for the rich to buy everything and then boom until they are ready to sell a piece.

 

If you have the cash, IMO, buy assets, yes that includes property.

[The Angry Capitalist]

3 hours ago, A.steve said:

You will find my perspective controversial.  QE was mad - but it was a limited form of madness.   When instigated, we were facing a fundamental collapse of all western economies owing to a failure of their monetary systems.  I recognised that the 'honest' course of action would have been to accept unmitigated failure of all western economies... but I also recognised that this would not be survived by the majority.  I accepted, pragmatically, that monetary intervention was necessary - despite knowing it to be unethical.

I do not agree with the perspective that QE was "money printing" - in reality, it was a balance-sheet shuffle that brought all interest rates to near-zero... and, hence, to all intent and purpose, suspended the progress of time.  As an immediate emergency response - for a brief period (say 3 or 6 months) I felt this response could be justified... even if one had to hold one's nose to tolerate its stench.  The egregious failure was to keep rates that low for many years - it caused economic and social perversions.

Real "money printing" actually happened in 2020.  My perception is that this was part of a deliberate multi-faceted strategy to spark inflation.  I believe the mantra of always wanting low inflation (orthodoxy at central banks since 1992) has run its course - I don't think it's believed by those with influence any longer.  Sure, it might still be the public facing narrative... but I don't believe this is what Governments are trying to achieve any longer.  Through all the horrific blunders and unethical policies... I hesitantly think, now, the objective is sensible levels of interest... and, from a monetary intervention perspective, let the chips fall where they may.   I think that such an approach is the only one with a hope of delivering benefit to anyone... yet I hardly dare allow myself to think it might be being pursued in practise.

Stopping deficit spending is less clear-cut as being a valid objective.  My concept of money does not require zero fiscal deficits - I do think there needs to be transparency and predictability to any plans to deficit spend.  If cash were to devalue a little each year... I don't think that necessary a bad thing... if everyone understands the rules by which everyone is playing.

 

I can see why you think that and many fall into this way of thinking.

However, the QE starting from 2008 has caused inflation (of the currency) from the money printing (in all western economies) and prices have risen as a consequence.

Covid-19 money printing (QE) caused prices to rise significantly and swiftly due to the fact that lock downs were pursued so goods and services were reduced (due to factories closing down etc) and inflation of the currency was followed during the same time-frame. More currency/credit and less goods and services results in very high prices and in a very short time-frame.

If you look at prices for most things starting from 2008 such as food, new vehicles, stocks, government bonds and housing they all went up over 2% central bank target per year before 2020 especially when you factor in shrinkflation from food items.

Electrical goods did not go up significantly over the same time frame due to globalization and low oil prices which disguised the money printing QE era since 2008.

Money printing does not result in instant price rises unless the process is very drastic with much currency added in a short space of time (like 2020).

The price rises come after many years of rates going lower and lower. What helps disguise the process is that during this time-frame of money printing is that production might actually rise somewhat with the money printing so more goods and services do come online.

But eventually the money printing reaches its end when no more added production of goods and services is possible and parts of the populace get to spend the illusory wealth created by the money printing.

If we had no QE from 2008 TVs and other items would be even cheaper than what they have been.

New vehicle prices would also be much much cheaper if we had no QE.

Artificial low interest rates enabled many to purchase new vehicles on finance/credit which was artificial demand and thus causing higher prices.

Some things got cheaper due to low rates such as streaming services via tech companies who had access to nearly free money at near zero rates.

Now watch Netflix customers squeal and cancel subscriptions in their droves as prices now have to rise to make Netflix profitable now they no longer have access to 0.25% rates.

We are in the early stages of the inflation from 2008 playing catch up to western economies who have all experienced bloated asset prices off the back of QE era.

It's going to take a lot of deflation to get back below annual 2% inflation targets.

But when it starts bond prices, stock prices, house prices and new vehicle prices are going to plummet as it was those asset classes that received most of the QE money printing.

The recent price rises since 2020 would have been experienced without Covid-19 and lock-downs.

ALL THE LOCK-DOWNS DID WAS BRING THE PRICE RISES SOONER THAN IF THEY DID NOT HAPPEN.

BUT THEY STILL WOULD HAVE HAPPENED BUT FURTHER INTO THE FUTURE.

The lockkdowns forced us to down a pint of water in seconds.

The alternative would have been to take larger and larger sips each year until we inevitably reached the stage we did in 2020/2021.

The dosage increased and we overdosed.

Prior to that the shots were gradually getting bigger and so we did not suffer any major drawbacks.

Edited September 20, 2023 by The Angry Capitalist

[BorrowToLeech]

6 hours ago, Jinxed said:

I'd quite like to know what was said and agreed to in the meetings which must have taken place, between Brown, Blair and Eddie King, prior to New Labour winning the 1997 election? Baron King of Lothbury, knight of the garter surely knows?  As he was an appointee of Brown. The very first thing Labour did was to announce that they were making the BOE independent, literally within 3 or 4 hours of winning the election, and even the Tories appeared shocked. Exactly what did they agree upon beforehand? Has it ever been made public knowledge?  The tripartite system presumably? Did they agree to create the FSA, taking the power to watch inflation in Land away from the BOE? Paving the way for the banking crisis? Has Baron King of Lothbury, knight of the garter ever been asked any tough questions? 

Nope, of course not....not with our MSM

BOE independence had been discussed for years. It is, was then at least, neoliberal orthodoxy:

https://www.lse.ac.uk/iga/assets/documents/research-and-publications/Rockefeller-Project/Paul-Wachtel-Mario-Blejer-A-fresh-look-at-central-bank-independence.pdf

The idea was that governments cannot be trusted to raise interest rates when the need arises, because they will pander to the electorate, and so an independent bank would be better able to fight inflation. To keep rates higher without the threat of an election, essentially. 

In particular, New Labour did this in order to pander to the city and to business more generally. Labour not being popular with those two groups historically, Brown wanted to clearly signal his Thatcherite economic policy.   Three weeks after this policy was announced Blair would be having tea with the woman herself in Downing Street.

It’s quite interesting to look back at who did and who didn’t support this at the time, and what was said then compared to what actually happened. 

https://www.bbc.co.uk/news/special/politics97/news/05/0506/brown.shtml

https://www.bbc.co.uk/news/special/politics97/news/05/0506/morgan.shtml

“

The Shadow Chancellor, Kenneth Clarke, claimed the interest rate rise was a sign that Labour would follow a tight financial policy which could lead to job losses. "I wouldn't have made this interest rate rise for a start because nothing economically has changed since I last decided not to," he told BBC Radio 5 Live. He said Mr Brown had rushed to hand over responsibility for monetary policy to the governor of the Bank of England and his committees. "I think he has made a mistake," said Mr Clarke.” His predecessor, Norman Lamont, took a different view, however. "I'm delighted Gordon Brown has decided to give the Bank full operational independence," he said. "This change is right and should have been made by Conservative governments. "Gordon Brown deserves credit for this bold move."

 

 

[Jinxed]

There was no reckoning, no blame, no punishment, no responsibility, no reparations, no remorse, nothing. Infamously, not one banker was prosecuted. Not one politician.  And its gotten worse since because they got away with it.

RBS acquired ABN Amro, along with hundreds of billions of pounds of exposure to these subprime mortgages;  they were not AAA rated assets, and the banks and credit agencies knew it. What about the three main credit agencies?

Where were the charges of Fraud? Were were the gross negligence charges? 

The people who were responsible walked away centi millionaires, and the rest of us,  millions of hard working decent middle income earners have been priced out of a house, and a life, suffering under horrendous inequality, and are using foodbanks. 

Researchers from the FED and the BOE have shown that if Banks had raised IR, during the 2000-2006 Bubble phase, then this HPI could have been avoided. 

It  started with JP Morgan wrapping MBS inside CDOs, then other credit derivative traders followed suit, who were basically juvenile delinquents in their twenties in New York. Why didnt the courts come up with charges for people like James Crosby, Fred Goodwin et al? Instead were fed the line that Gordon Brown, 'saved the world' ?!!????!!!!!!

Nobody was there to stop them. Where was the regulation? 

It seems obvious that the Government broke the social contract, and it brings to mind the infamous statement made by Lord Denning;

“No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever…”

What the Bankers did should have been considered illegal. It would have been in previous decades and centuries. The same people who were in positions of responsibility during the crisis, are the ones who tasked themselves with clearing it up!!! And they are still at it today! By 2008, when the bailouts occurred, the Banking profession in the USA was receiving up to 40% of all corporate profits, many multiples of times higher than at any point throughout history.

This lot should have been lynched. 

How many millions of people today are shit scared of becoming homeless at any moment?

They sacrificed the sacred cow of allowing us to work and pay for a home and (smirkingly and beady eyed) called it 'moral hazard'

Edited September 20, 2023 by Jinxed

[dugsbody]

10 hours ago, Unmoderated said:

People blame Tories for the housing crisis. They've not unwound things but they've certainly not made them any worse.

🤣🤣🤣

[Unmoderated]

10 hours ago, SE10 said:

Not made things worse.... help to buy?

Fair point, and I hate HTB!

I just look at what happened from 1997 to 2010 and the momentum that carried through.