Friday, October 12, 2012

Massive debt forgiveness

Turner: Time for helicopter money?

Speculation mounts that the QE programme will be unmasked as what is really is - printing money. Will this help house price / earning ratios return to mean ? I can't see it.

Posted by voiceofreason @ 08:12 AM (2856 views)
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20 thoughts on “Massive debt forgiveness

  • Ok, so they give everyone enough money to pay pack their debts. Then what happens with all of this spare money everyone has?

    Another problem is that the corrupt system has not been changed, so even if they did fix what they tell us is broken it will end up back in the same place.

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  • to increase debt to pay bills,you must have strong growth to offset…unfortunately I feel deflation is upon us which indirectly increases debt too

    ask japan

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  • The only helicopter needed will be the one that Turner , King , Bernanke etc will need to escape the lynch mobs.

    As far as a House Price Crash is concerned, I think that many are already realising their homes are now pretty much worthless. Asking prices are irrelevant, as no one will want to buy for decades.

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  • i remember the 90`s says:

    @3 who cares what your house is worth so long as you got one .

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  • To make the fool who ran the failed FSA, head of BOE sums up the complete hypocrisy of UK Government.

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  • @4

    I thought the point of this site was to discuss the value of houses.

    I too remember the 90’s, when houses in London fell by 25% in real terms. I fear a greater problem is upon us this time. Many people will wish to continue living in their homes as values decline, and many will not.

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  • lots of prices dropping in cheshire

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  • This doesn’t entirely make logical sense. If the government pays the Bank of England what is owed on the bonds, this money is owed to the Treasury (the government pays itself). If it doesn’t, it does not pay itself. Same outcome. Actually as I posted a few weeks ago, it seems to be paying the bank of England’s asset purchase fund company but the Treasury is not being payed what is “owed” to it on the balance sheet. If so this really is scandalous: billions of pounds are owed to HM Treasury at the same time as we are being told that we need to slash spending to cure the deficit (which obviously doesn’t work because with less goverrnment spending less will be collected in tax revenues).
    N

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  • @ nickb – None of it makes any sense what so ever ! We buy goods with a currency that can can be printed on a screen & manipulated to suit.. I’ m sure it’s not open to criminal behavior or wrong doings 😉

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  • mark wadsworth says:

    @ 5, nice one!

    @ 8, you are missing the other side of the transaction. If the government owes itself money (i.e. one deparment of HMT owes another department money, or the latter department holds bonds issued by the former), there is no shortfall if it does not collect the interest from itself because it doesn’t have to pay it either.

    It’s like me saying that Family B is worse off because NickB doesn’t charge his children rent. Assuming you have minor children, you’d have to increase their pocket money to cover the rent which you the collect back off them and once the dust has settled, the total wealth of Family B is entirely unchanged.

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  • mark,
    Re-read… What I’m saying is that it appears from the books that rent is being collected from the children and not being paid out in pocket money.
    N

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  • … the family might in some abstract sense not be worse off because of that – but the kiddies are!
    N

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  • mark wadsworth says:

    NickB, for the love of G-d, please take the word of the world’s second best accountant who has actually gone to the time and trouble of looking at the BoE’s accounts and the accounts of its captive subsidiary, which confirms what commonsense dictates:

    It does not make any difference whether the government pays itself interest on the bonds in itself which it owns or not.

    Those are the facts and that is the logic, said with no axe to grind.

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  • for the love of God please revisit the thread where we discussed this 2 or 3 weeks ago where the point at issue was seemingly clarified. Of course your sentence in bold is true, and you don’t need even to be a half wit accountant to see that. but this is not what is at issue. The government is *apparently* paying interest into an account at the Bank of England – from somewhere it its budget. if that money is just sitting in the bank of england, in a company account, then although the government’s paper wealth is not affected, it is not re-entering the “circular flow” as it would be if that money were paid into the Treasury and passed on to other government departments. I say apparently because maybe a sh*t hot accountant could explain how it’s really all OK, a misconception or whatever, but you haven’t done that.
    N

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  • mark wadsworth says:

    NickB, OK, you believe what you want to believe. had I left a comment on the earlier thread I would have said exactly the same thing. I don’t really care if people want to go round believing nonsense, it just saddens me. I mean, I wouldn’t argue with Techie about W formations and double-tops, and I’ll happily take lessons from Jack C on the free structures prevalent in the IFA business etc. Because they know what they are talking about. Apparently I don’t have a clue, eh?

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  • Mark,
    On the contrary you appear to be generally very well informed. You did in fact comment on the earlier thread, which was then picked up by Neil Wilson. You aren’t engaging with the questions put here though, it seems to me, you are just asserting that they are nonsense.
    N

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  • mark wadsworth says:

    NickB, I usually give it two or three tries and when I realise that people are refusing to listen to a word, I throw in the towel. I give in. Believe what you want, I genuinely don’t care any more.

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  • mark
    You say that I’m not listening but if anyone is failing to respond it’s you, as is abundantly clear from the above.
    N

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  • I feel this QE will bear down on the British economy’s ability to grow for many years to come. After extreme amounts of QE one can expect higher inflation, lower growth and current and prospective pensioners who get poorer and poorer.

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  • Isabella Kaminski at FT Alphaville has put together a very useful series on QE which might be of interest (though, no doubt, the debate will go on for some time until the wood can be seen despite the trees)

    First part attempts to demonstrate the nature of QE, and it’s aims:

    Don’t call it money printing, rubiks cube edition

    The second part analyses where things are today, as a consequence of QE, and draws a conclusion:

    Rubik’s Revolutions

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