Thursday, February 21, 2013

Massive, NO MASSIVE QE planned

QE may need to be raised by £175bn, says BoE's David Miles

The Bank of England has a case for restarting its asset purchase programme, and may need to increase it by up to £175bn if the economy is running substantially below capacity, a senior policymaker has said. David Miles, in a speech on Thursday, gave a detailed model of how policy should respond to the amount of slack in the economy - something the central bank has generally avoided before, and which moves in the direction of policy guidance favoured by incoming central bank governor Mark Carney. Miles is an external member of the bank's Monetary Policy Committee, and until this month he was alone in voting for an extra £25bn of asset purchases.

Posted by hpwatcher @ 07:21 PM (3082 views)
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12 thoughts on “Massive, NO MASSIVE QE planned

  • If this doesn’t create another bubble in housing – nothing will. And the funny thing is that they don’t have the money, it’s just stealing from those who do! GET OUT OF STERLING NOW – these [email protected] are going to inflate!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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  • The Tullett Prebon UK Essentials Index was launched on Wednesday – it’s on their website. The fact that they have taken this step is some indication of:
    1. How CPI is viewed.
    2. What they expect comes next.

    I could supply the answers but their website is worth a read.

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  • That is another 10% inflation guaranteed.

    Got gold? Looks like the globalists are attempting to destroy Sterling to force us into the Eurozone.
    You may not be able to stop the rot but, when they move to the new currency, you can buy into it at a preferential rate.

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  • Glad I gout our of sterling last summer during the period that it had been rigged to rip off the Olympic tourists.

    I really can’t see that another 10% devaluation is going to cause UK wage inflation, which is what the UK really needs. Perhaps if sterling falls to parity with the Euro it will help a tiny bit, but to really get any movement in the economy London will need to undercut the wages of Hamburg, Paris and Dublin.
    The rest of the country needs to seriously undercut the cost of labor of other European counties before there is the slightest chance and even then this will take years to come.
    Non of their monetary policy is going to work overnight take a look at the unemployment chart of Latvia below and the LVT to GDP chart.

    LVT Unemployment

    LVT to GDP

    Oh, a one more point, devaluing the pound MAY reduce unemployment in the long run but there is no guarantee that it will cause general wage inflation allowing more people to pay back their debts.
    I can’t find any charts to back this up at the moment. Latvia would not be a good example as wages there are a fraction of the rest of the developed words.

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  • there won’t be wage inflation at the moment, due to the influx of migrants who are prepared to work for wages much less than the minimum wage.

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  • They keep doing it because they keep getting away with it.

    It’s all part of the plan to keep nominal house prices up (be devaluing everything else) and line the pockets of bankers. Typical Homey fare, in other words.

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  • The problem is that the oldies in power believe that if they push hard enough on a string they will get wage inflation.

    News for them – they will not!

    Past wage inflation was caused by increases in productivity and cheap energy, nothing they can print will achieve wage inflation. Merely increasing the quantity of units of exchange (money) does not equate to people who work getting more units of exchange for working as their wages are based on comparable wages (competition) from across the globe. When you are completing with people who will gladly work for 10% of the wage you earn, devaluing the currency by 10%,20% or even 30% is going to achieve nothing.

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  • Khards, Agreed.

    Mark, I don’t think they are getting away with it. The attempt to devalue is not creating wage inflation (as Khards says), but rather it is increasing the cost of essentials and in the long term this will compromise the goal of higher land values by limiting what people are able to pay. This is already in evidence in the market for first time buyers which is a decent baramoter of the long term health of the housing market.

    The problem for those waiting in the wings is the process is very slow. Probably the only alternative to waiting is to switch out of the currency and then, once the government have done their worse, switch back in.

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  • mark wadsworth says:

    Bellwether, let’s hope you are right. But this currency switching is more of a long term thing, you have to reckon on leaving it a couple of years before you show a decent profit (because once you’ve bought in the rates usually go against you etc).

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  • this has absolutely nothing to do with the no one in the private sector willing to buy gilts at this level and the uk government is getting desperate to fund itself.

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  • this is mental .. coincidentally i was preparing the leave the country … just hope the ship can keep floating for another 6 months while i find a job and bail

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