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Realistbear

Merv Forced To Hand Over 4,400,000,000 Pounds Today

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http://www.ft.com/cms/s/0/e1ff6060-61dc-11...00779fd2ac.html

BoE offers banks £4.4bn extra cash
By Chris Giles, Economics Editor
Published: September 13 2007 10:49 | Last updated: September 13 2007 10:49
Continued high overnight interest rates forced the Bank of England to offer £4.4bn additional cash to commercial banks on Thursday morning, in a bid to normalise the money markets.
In offering an additional 25 per cent extra cash in return for high-quality assets, the
Bank hopes to flood the market with sterling
and bring overnight interest rates back down towards the official rate of 5.75 per cent.

Tut Tut Merv--doing a Weimar are we now?

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http://www.ft.com/cms/s/0/e1ff6060-61dc-11...00779fd2ac.html
BoE offers banks £4.4bn extra cash
By Chris Giles, Economics Editor
Published: September 13 2007 10:49 | Last updated: September 13 2007 10:49
Continued high overnight interest rates forced the Bank of England to offer £4.4bn additional cash to commercial banks on Thursday morning, in a bid to normalise the money markets.
In offering an additional 25 per cent extra cash in return for high-quality assets, the
Bank hopes to flood the market with sterling
and bring overnight interest rates back down towards the official rate of 5.75 per cent.

Tut Tut Merv--doing a Weimar are we now?

Nah. He was quite hawkish about the 3 month rate.

Mervs doing his job well methinks. :)

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Its funny I have listened to the last few broadcasts by Merv in the BoE reports, and no mention of all this

financial chaos we have witnessed recently, how come?

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http://www.ft.com/cms/s/0/e1ff6060-61dc-11...00779fd2ac.html
BoE offers banks £4.4bn extra cash
By Chris Giles, Economics Editor
Published: September 13 2007 10:49 | Last updated: September 13 2007 10:49
Continued high overnight interest rates forced the Bank of England to offer £4.4bn additional cash to commercial banks on Thursday morning, in a bid to normalise the money markets.
In offering an additional 25 per cent extra cash in return for high-quality assets, the
Bank hopes to flood the market with sterling
and bring overnight interest rates back down towards the official rate of 5.75 per cent.

Tut Tut Merv--doing a Weimar are we now?

Somewhat inconsistent. Says one thing, does another. Who's Weimar?

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Somewhat inconsistent. Says one thing, does another. Who's Weimar?

Who's Weimar? Seriously?

You want a sure sign this country's doomed, it ain't manufacturing output figures or House Prices, it's comments above like that.

Edited by bearbullfence

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Somewhat inconsistent. Says one thing, does another. Who's Weimar?

Weimar Republic--Germany's dabbling in hyperinflation in the pre-WW2 days. They let the printing presses loose and destroyed the country allowing Hitler a foot in the door.

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You guys just don't get it yet do you?

4.4bln is nothing compared to the capital that is being destroyed day after day during this credit crisis.

A flooded market does not put 3month LIBOR at more than a 1% above base rate.

We've HAD monetary hyperinflation. It is over now.

Could be over now. During the Weimar hyperinflation there were times when not so much money was created. IIRC, these were the times where prices went up even faster. So, for a hyperinflation, it is very important what people THINK, which is why the Fed manages inflation EXPECTATION. When the people start thinking inflation, the central banks might be forced to provide more inflation.

If the central banks do not totally screw up and let things slide out of hand, we're possibly in for very high retail price (food, oil) inflation (+30%pa) soon, and lots of asset deflation (stocks, houses). That's my best case scenario.

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ECB have to date "created" an additional financing of 250,000,000,000.00 Euros and have just added another 75,000,000,000.00:

http://www.ft.com/cms/s/0/c9599ea4-611e-11...00779fd2ac.html

ECB loans banks further €75bn

By Gerrit Wiesmann in Frankfurt
Published: September 12 2007 12:12 | Last updated: September 12 2007 12:12
The European Central Bank on Wednesday loaned commercial banks €75bn ($104bn) for three months, a sign that institutions in the money market remain wary of lending to each other for periods of more than a week.
The Frankfurt-based central bank said 140 banks had applied for €139bn in central bank deposits, agreeing to pay an average interest rate of 4.52 per cent as compared with current interbank prices of 4.75 per cent.
The size of the refinancing operation shows how worried commercial banks remain that the crisis in the US mortgage market could yet render fellow institutions in the money market unable to repay loans.

These are NOT small amounts we are seeing here. The banks are terrified and stand at the edge of the precipe.

Edited by Realistbear

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ECB have to date "created" an additional financing of 250,000,000,000.00 Euros and have just added another 75,000,000,000.00:

http://www.ft.com/cms/s/0/c9599ea4-611e-11...00779fd2ac.html

ECB loans banks further €75bn

By Gerrit Wiesmann in Frankfurt
Published: September 12 2007 12:12 | Last updated: September 12 2007 12:12
The European Central Bank on Wednesday loaned commercial banks €75bn ($104bn) for three months, a sign that institutions in the money market remain wary of lending to each other for periods of more than a week.
The Frankfurt-based central bank said 140 banks had applied for €139bn in central bank deposits, agreeing to pay an average interest rate of 4.52 per cent as compared with current interbank prices of 4.75 per cent.
The size of the refinancing operation shows how worried commercial banks remain that the crisis in the US mortgage market could yet render fellow institutions in the money market unable to repay loans.

These are NOT small amounts we are seeing here. The banks are terrified and stand at the edge of the precipe.

3-Month Libor pulling back yet at all?

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Weimar Republic--Germany's dabbling in hyperinflation in the pre-WW2 days. They let the printing presses loose and destroyed the country allowing Hitler a foot in the door.

Paper money fell to its intrinsic value:

hist_hyperinflation.jpg

200px-Inflation-1923.jpg

wheelbarrow.gif

This here would have saved you:

barron110804c.gif

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You guys just don't get it yet do you?

4.4bln is nothing compared to the capital that is being destroyed day after day during this credit crisis.

A flooded market does not put 3month LIBOR at more than a 1% above base rate.

We've HAD monetary hyperinflation. It is over now.

That money won't all be deflated or defaulted away. These liquidity greasings are an attempt to allow the monetary inflation (which we have had), which caused the major asset price inflation (which we have had), to continue into general price inflation, which we are just beginning to see, and then into wage inflation which we will have to see at some point unless Brown fancies his chances of surpressing the riots with his plastic policewomen and an overstretched army. IMHO

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These are NOT small amounts we are seeing here. The banks are terrified and stand at the edge of the precipe.

The loans are also getting longer. 3 months now. Soon a year, then 20, then forever. ---> HYPERINFLATION! :ph34r:

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Could be over now. During the Weimar hyperinflation there were times when not so much money was created. IIRC, these were the times where prices went up even faster. So, for a hyperinflation, it is very important what people THINK, which is why the Fed manages inflation EXPECTATION. When the people start thinking inflation, the central banks might be forced to provide more inflation.

If the central banks do not totally screw up and let things slide out of hand, we're possibly in for very high retail price (food, oil) inflation (+30%pa) soon, and lots of asset deflation (stocks, houses). That's my best case scenario.

I think the mistake people make on this forum with regards to Zimb and Weimar is that in both cases hyperinflation was a result of massive production failure (too few goods, some in the 70s with the oil shock), not the deliberately pumping money supply. Which should by now, in theory, be failing.

However, because of China's own inflation problem and the increasing demand for oil. I do expect to see inflation in consumerables, but as a result of production issues not centralised money supply which is still demand led.

If you are well placed for asset price deflation and moderate consumer price inflation, I would say you are well set.

FWIW... despite my infamous thread, I am no longer gold bearish. I'm not a bug, but I think it's value as a safe haven from the credit crisis is it's greatest asset ATM.

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Weimar Republic--Germany's dabbling in hyperinflation in the pre-WW2 days. They let the printing presses loose and destroyed the country allowing Hitler a foot in the door.

surely they were a victim of the Great Crash, but just handled it worse than other countries?

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The loans are also getting longer. 3 months now. Soon a year, then 20, then forever. ---> HYPERINFLATION! :ph34r:

What is amazing to me is that the reaction in the markets has been muted. Stocks--barely a flicker. Currencies--pound drops a quarter of a cent. Gold down $6.20. Nothing dramatic either way.

IMO someone is going to trigger off a panic and it isn't going to be Merv. Big Al has been told to keep schtoom and Paulson is the one who told him. Warren B has the power but he has gone quiet with his $45,000,000,000.00 "cash pile" wating to pick up some bargains. Sarkozy is most likely to tell it like it is but does he have the power to trigger the markets? Perhaps Trichet.

GOLD 09/13/2007 06:50 705.20 706.20 -6.20

Edited by Realistbear

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The loans are also getting longer. 3 months now. Soon a year, then 20, then forever. ---> HYPERINFLATION! :ph34r:

Where are these three month loans? 3 mnth LIBOR is not easing. That suggests a serious lack of money in the system.

Take it away Merv.

But he added that this action was not intended to reduce three-month interest rates and “has not done so elsewhere”.

Moves to try to reduce three-month interest rates, which have remained more than a percentage point above the official rate were misguided he argued and, except in the most extreme circumstances, would sow “the seeds of a future financial crisis”.

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That money won't all be deflated or defaulted away. These liquidity greasings are an attempt to allow the monetary inflation (which we have had), which caused the major asset price inflation (which we have had), to continue into general price inflation, which we are just beginning to see, and then into wage inflation which we will have to see at some point unless Brown fancies his chances of surpressing the riots with his plastic policewomen and an overstretched army. IMHO

How do you deflate money away?

The money is provided so that we don't get a liquidity shock where good assets are sold at cut down prices just to balance the daily balance sheet.

Anyway, so far Brown is not backing down on wage inflation. With the consumerable market now globalised, production is a far more important factor in general price inflation than localised monetary policy.

If and when I do see long term loans from the Bank, I will gladly back down on my view.

But they haven't.

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Who's Weimar? Seriously?

You want a sure sign this country's doomed, it ain't manufacturing output figures or House Prices, it's comments above like that.

Calm down. I am aware of the problems of hyperinflation but don't have knowledge of every individual in history! Indeed you don't need to go back that far to find examples of hyper-inflation and we are not going to see hyperinflation anyway.

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If the central banks do not totally screw up and let things slide out of hand, we're possibly in for very high retail price (food, oil) inflation (+30%pa) soon, and lots of asset deflation (stocks, houses). That's my best case scenario.

:blink: 30% p.a. RPI as a best case scenario? You don't think you might be just a tad pessimistic there?

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