the_austrian Posted January 2, 2009 Share Posted January 2, 2009 The stage is set... the media have been scaremongering about deflation for the last few weeks. So, when is the big announcement? Quote Link to comment Share on other sites More sharing options...
Nicholas Cage Posted January 2, 2009 Share Posted January 2, 2009 Quantative easing just means an indicator has to change then you know it's worked. If that is inflation it's going to be complex, interest rates haven't worked. Quote Link to comment Share on other sites More sharing options...
whojamaflip Posted January 2, 2009 Share Posted January 2, 2009 To get interest rates to 2% they must already be using Quantitative Easing. (buying northern rock by definition is quantitative easing, as is buying shares in RBS). If BOE cut to a US style 'zero to 0.25% range' then they would be literally fly-tipping bags of notes at the doorsteps of banks. how much easing are you looking for? Quote Link to comment Share on other sites More sharing options...
Injin Posted January 2, 2009 Share Posted January 2, 2009 After they have already done it, of course! Quote Link to comment Share on other sites More sharing options...
hazymemory Posted January 2, 2009 Share Posted January 2, 2009 did you notice the oil price today? couple more days like that and they won't be citing the collapse in the oil price as a reason for falling inflation. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 2, 2009 Share Posted January 2, 2009 To get interest rates to 2% they must already be using Quantitative Easing. (buying northern rock by definition is quantitative easing, as is buying shares in RBS).If BOE cut to a US style 'zero to 0.25% range' then they would be literally fly-tipping bags of notes at the doorsteps of banks. how much easing are you looking for? explain: Government buys something = QE. Quote Link to comment Share on other sites More sharing options...
the_austrian Posted January 2, 2009 Author Share Posted January 2, 2009 After they have already done it, of course! More profitable that way The element of surprise Quote Link to comment Share on other sites More sharing options...
Guest Steve Cook Posted January 2, 2009 Share Posted January 2, 2009 did you notice the oil price today? couple more days like that and they won't be citing the collapse in the oil price as a reason for falling inflation. yep...over 23% in a day Anyone going long will have made a sh*t load of money today Quote Link to comment Share on other sites More sharing options...
Guest Steve Cook Posted January 2, 2009 Share Posted January 2, 2009 (edited) explain: Government buys something = QE. we know here the money is going that the government has spent. Into the economy. Or at least, that's the plan. That money either comes from existing coffers or it comes from nowhere, to be paid for later by our descendants. Either way, the government has "eased" the money supply in circulation right now. Quantitative Easing = Inflating Fundamentally, these terms are synonymous Edited January 2, 2009 by Steve Cook Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 2, 2009 Share Posted January 2, 2009 we know here the money is going that the government has spent. Into the economy. Or at least, that's the plan.That money eiother cvomes from existing coffers or it comes from nowhere, to be paid for later by our descendants. either way, it has "eased" the money supply in circulation right now Are you saying then that BLOO LOO buying something = QE too? Quote Link to comment Share on other sites More sharing options...
Guest Steve Cook Posted January 2, 2009 Share Posted January 2, 2009 (edited) Are you saying then that BLOO LOO buying something = QE too? in principle, yes Quantitative easing means bringing more money into circulation. This can be achioeved by increasing the velocity, decreasing the amount that is hoarded, or simply by increasing the supply in absoloute terms byby printing Edited January 2, 2009 by Steve Cook Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 2, 2009 Share Posted January 2, 2009 in principle, yes so QE means people buying things. So why would we need an announcement of an everyday, totally normal, happened for thousands of years, event? Quote Link to comment Share on other sites More sharing options...
Guest Steve Cook Posted January 2, 2009 Share Posted January 2, 2009 (edited) so QE means people buying things.So why would we need an announcement of an everyday, totally normal, happened for thousands of years, event? Because when you and I quantitively ease the money supply by spending some of our money, it is quantitively contracted when the shop keeper saves it. Similarly, we quantitively contract the money supply when we put our wages aside prior to spending it. In other words a zero-sum (discounting velocity...of course) When the government spends money it is not a zero-sum unless they are using previously collected taxes. But, even then, it is only zero-sum in the very longer term. In the short term, injecting a large amount of previously hoarded tax revenue will, until it is recovered by future raised taxes, quantitavely ease the money supply. If they are using previously non-existent money that they are borrowing from the future, it is undiluted, undisguised, uniquivocal easing. Edited January 2, 2009 by Steve Cook Quote Link to comment Share on other sites More sharing options...
whojamaflip Posted January 2, 2009 Share Posted January 2, 2009 explain: Government buys something = QE. Its what the japanese did. they ran out of bonds to buy (in order keep rates low) so started buying corporate bonds and equities. Quote Link to comment Share on other sites More sharing options...
deflation Posted January 2, 2009 Share Posted January 2, 2009 I voted never because it will probably just happen, it won't be 'announced' as such. Quote Link to comment Share on other sites More sharing options...
Guest Steve Cook Posted January 2, 2009 Share Posted January 2, 2009 (edited) I voted never because it will probably just happen, it won't be 'announced' as such. I agree If they can manage it, we wont get to know formally If it all goes tits up and they have to take dramatic and large action over a short time frame, they will not be able to disguise their actions and so then we will get an "announcment" Edited January 2, 2009 by Steve Cook Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 2, 2009 Share Posted January 2, 2009 Because when you and I quantitively ease the money supply by spending some of our money, it is quantitively contracted when the shop keeper saves it. Similarly, we quantitively contract the money supply when we put our wages aside prior to spending it. In other words a zero-sum (discounting velocity...of course)When the government spends money it is not a zero-sum unless they are using previously collected taxes. But, even then, it is only zero-sum in the very longer term. In the short term, injecting a large amount of previously hoarded tax revenue will, until it is recovered by future raised taxes, quantitavely ease the money supply. If they are using previously non-existent money that they are borrowing from the future, it is undiluted, undisguised, uniquivocal easing. I was under impressions the term QE was a euphamism for Printing, not normal economic acitivity. The FED will QE by giving banks M0 for only a promise to repay, no supporting asset to counter or interest to pay. Quote Link to comment Share on other sites More sharing options...
Number79 Posted January 2, 2009 Share Posted January 2, 2009 The stage is set... the media have been scaremongering about deflation for the last few weeks.So, when is the big announcement? They are already doing it in a number of ways but will never outright admit to running the presses. Quote Link to comment Share on other sites More sharing options...
Guest Steve Cook Posted January 2, 2009 Share Posted January 2, 2009 (edited) I was under impressions the term QE was a euphamism for Printing, not normal economic acitivity.The FED will QE by giving banks M0 for only a promise to repay, no supporting asset to counter or interest to pay. I think we all get too hung up on the distinctions between printing, buying and selling teasures, lowering and raising taxes and god knows what other mechanisms are used by government to control the money in circulation They are all designed to have the same effects, at the end of the day. Sure, some are more powerful and immediate tools than others. But, that is all. If the government inflates the amount of money in circulation, then they have inflated the amount of money in circulation. In other words, the have "quantitavely eased" the amount of money in circulation. The specific mechanism by which they achive this is of operational interest but not of principle interest. Edited January 2, 2009 by Steve Cook Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 2, 2009 Share Posted January 2, 2009 (edited) I think we all get too hung up on the distinctions between printing, buying and selling teasures, lowering and raising taxes and god knows what other mechanisms are used by government to control the money in circulationThere are all designed to have the same effects. some are more powerful and immediate tools than other is all. If the government inflates the supply of money in circulation, then they have inflated the amount of money in circulation. In other words, the have "quantitavely eased" the amount of money in circulation. The government puts money in the system by issuing bonds which banks buy, earning interest and exchange for Cash at the BoE if they wish. QE must shortcircuit this method and the money is just introduced and not backed by debt. Edited January 2, 2009 by Bloo Loo Quote Link to comment Share on other sites More sharing options...
Y-QUERK Posted January 2, 2009 Share Posted January 2, 2009 Its going to be announced? Quote Link to comment Share on other sites More sharing options...
Guest Steve Cook Posted January 2, 2009 Share Posted January 2, 2009 (edited) The government puts money in the system by issuing bonds which banks buy, at interest and exchange for Cash at the BoE if they wish.QE must shortcircuit this method and the money is just introduced and not backed by debt. If the governemnt issue bonds, the debt is overt and visible. If the government prints money the debt is covert and invisible (future taxes) They are both still borrowings from the future. As such, there is no fundamental difference Edited January 2, 2009 by Steve Cook Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 2, 2009 Share Posted January 2, 2009 If the governemnt sells bonds, the debt is up front and visible.If the government prints the debt is covert and invisible (future taxes0 They are both still borrowings from the future. there is no fundamental difference in line 2 you say they print (future taxes) BUT, as this is debt free money, why would they need tax revenue to cover it. It is truly, thin air money. Quote Link to comment Share on other sites More sharing options...
Injin Posted January 2, 2009 Share Posted January 2, 2009 in line 2 you say they print (future taxes)BUT, as this is debt free money, why would they need tax revenue to cover it. It is truly, thin air money. They don't. The only reason woul dbe to restore value to the currency. That'll happen. Quote Link to comment Share on other sites More sharing options...
1929crash Posted January 2, 2009 Share Posted January 2, 2009 The stage is set... the media have been scaremongering about deflation for the last few weeks.So, when is the big announcement? Before April, as the unemployment figures are mounting. Quote Link to comment Share on other sites More sharing options...
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