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RichardD
3,237 posts
114 months
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1point7bar said: Because there would be more currency chasing scarcer resources. Why are the resources scarcer? The US can magic dollars out of nowhere, get oil from Saudi and shiny things from China with no problems. In theory resources should be scarcer, but with this backed by nothing but confidence FIAT money, if there is the faith that a currency has value then others will trade their shiny stuff for it (of which there is plenty of). That was my point earlier.
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Digga
10,898 posts
152 months
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RichardD said: 1point7bar said: Because there would be more currency chasing scarcer resources. Why are the resources scarcer? The US can magic dollars out of nowhere, get oil from Saudi and shiny things from China with no problems. In theory resources should be scarcer, but with this backed by nothing but confidence FIAT money, if there is the faith that a currency has value then others will trade their shiny stuff for it (of which there is plenty of). That was my point earlier. Kind of true - if the QQE is merely replacing hoarded currency, the money supply effects may be negligable.
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Mermaid
12,497 posts
40 months
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Greek Pm says , "We need more time, not more money."
Really? And once you have more time, no doubt you will need more money.
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Digga
10,898 posts
152 months
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Mermaid said: Greek Pm says , "We need more time, not more money."
Really? And once you have more time, no doubt you will need more money. What the whole club Med lot sadly never figured out was that money is time and time is money.
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coyft
3,024 posts
80 months
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1point7bar said: coyft said: Only one supplier of the currency they are issued in. I don't see your reasoning. Well they have an infinite supply of the currency so they can purchase an infinite amount of bonds. If the choose to intervene in this way, free market priincipals will no longer apply to bond yields.
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Ozzie Osmond
12,117 posts
115 months
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coyft said: Well they have an infinite supply of the currency so they can purchase an infinite amount of bonds. If the choose to intervene in this way, free market priincipals will no longer apply to bond yields. Don't forget the "free market" in UK index-linked bonds was canned years ago when the government effectively compelled pension funds to invest heavily in them!
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1point7bar
1,091 posts
17 months
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The ECB purchase bonds as a free market operation from the global market.
The price is a market price.
The ECB sell bonds at auction. The coupon is deemed by demand.
The ECB purchasing it's own bond issuance is self defeating.
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loafer123
2,699 posts
84 months
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RichardD said: In theory resources should be scarcer, but with this backed by nothing but confidence FIAT money, if there is the faith that a currency has value then others will trade their shiny stuff for it (of which there is plenty of). That was my point earlier. You've answered your own question. At some point, by printing money, the faith in the value of that money will disappear, as in the Weimar Republic. The level of printing at which faith is lost is completely unknown, so you could be laughing at my stupidity one day and queueing for bread the next. I think the UK government / BoE are playing a blinder on this, however. They are printing, whilst making the right moves to erode the deficit, so that, with a bit of luck we can balance the books at about the time the markets realise most of the UK government debt is owned by the UK government...
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Globs
11,750 posts
100 months
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Digga said: AstonZagato said: Those of a cynical disposition should not read the case of SPVG, the Dutch pension fund that was forced by the Dutch Central Bank to sell its 13% stake in gold. Wonder where the Dutch got that idea?   The ultimate price of letting a private banking cartel rent you your currency. At least their own constitution warned them against it - they have been paying the price for ignoring that ever since.
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1point7bar
1,091 posts
17 months
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RichardD said: 1point7bar said: Because there would be more currency chasing scarcer resources. Why are the resources scarcer? The US can magic dollars out of nowhere, get oil from Saudi and shiny things from China with no problems. In theory resources should be scarcer, but with this backed by nothing but confidence FIAT money, if there is the faith that a currency has value then others will trade their shiny stuff for it (of which there is plenty of). That was my point earlier. Nic Johnson ($20 billion Pimco Commodity Real Return Strategy Fund manager) said today in a telephone interview from Newport Beach, California. “We see higher inflation because of rising commodity prices, unconventional monetary policies and increasing sovereign debt.” The commodity fund is part of Pacific Investment Management Co., which also owns the world’s largest bond fund. (Bloomberg)
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turbobloke
55,495 posts
129 months
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Merkel allies quoted as saying a Greek exit from euro would not have 'great impact' because it is widely expected.
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DJRC
19,843 posts
105 months
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turbobloke said: Merkel allies quoted as saying a Greek exit from euro would not have 'great impact' because it is widely expected. Translation: "will you bloody bunch of gits sod off as quickly as possible please before my bloody election!"
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RichardD
3,237 posts
114 months
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loafer123 said: ...
The level of printing at which faith is lost is completely unknown, so you could be laughing at my stupidity one day and queueing for bread the next.
I think the UK government / BoE are playing a blinder on this, however. They are printing, whilst making the right moves to erode the deficit, so that, with a bit of luck we can balance the books at about the time the markets realise most of the UK government debt is owned by the UK government... An interesting point on the faith and printing issue. I think like most gubberment decisions here there are options that produce short term benefits at a much worse long term cost. As to the quest to balancing the books I think this is always going to be very difficult, it seems at the moment that with spending cuts and any tax rises, they are being swallowed up by the exponentially growing debt interest bill  .
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Digga
10,898 posts
152 months
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RichardD said: loafer123 said: ...
The level of printing at which faith is lost is completely unknown, so you could be laughing at my stupidity one day and queueing for bread the next.
I think the UK government / BoE are playing a blinder on this, however. They are printing, whilst making the right moves to erode the deficit, so that, with a bit of luck we can balance the books at about the time the markets realise most of the UK government debt is owned by the UK government... An interesting point on the faith and printing issue. I think like most gubberment decisions here there are options that produce short term benefits at a much worse long term cost. As to the quest to balancing the books I think this is always going to be very difficult, it seems at the moment that with spending cuts and any tax rises, they are being swallowed up by the exponentially growing debt interest bill . I disagree that the government are playing a blinder. I think we could be caught in no man's land when the markets realise the true position. - PS cuts are nowhere near as hard and fast as they could/should have been
- Red tape reforms, crucial to both economic activity and the reduction in bureacratic overhead (see above) are neaar non-existant
- Very few sensible measures to shore-up the economy or invest for future have been made
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RichardD
3,237 posts
114 months
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1point7bar said: ...Pimco... Sorry, yes of course, I forgot about money pumping up commodity prices. Which is interesting in the context of the selling of cheap shiny things, as will the higher input costs fully filter through...
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Globs
11,750 posts
100 months
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Digga said: RichardD said: loafer123 said: ...
The level of printing at which faith is lost is completely unknown, so you could be laughing at my stupidity one day and queueing for bread the next.
I think the UK government / BoE are playing a blinder on this, however. They are printing, whilst making the right moves to erode the deficit, so that, with a bit of luck we can balance the books at about the time the markets realise most of the UK government debt is owned by the UK government... An interesting point on the faith and printing issue. I think like most gubberment decisions here there are options that produce short term benefits at a much worse long term cost. As to the quest to balancing the books I think this is always going to be very difficult, it seems at the moment that with spending cuts and any tax rises, they are being swallowed up by the exponentially growing debt interest bill . I disagree that the government are playing a blinder. I think we could be caught in no man's land when the markets realise the true position. - PS cuts are nowhere near as hard and fast as they could/should have been
- Red tape reforms, crucial to both economic activity and the reduction in bureacratic overhead (see above) are neaar non-existant
- Very few sensible measures to shore-up the economy or invest for future have been made
Still at least our government are earnestly debating the other big issues affecting the UK, gay marriage. That'll solve everything.
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Andrew[MG]
2,401 posts
67 months
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Digga said: I disagree that the government are playing a blinder. I think we could be caught in no man's land when the markets realise the true position. - PS cuts are nowhere near as hard and fast as they could/should have been
- Red tape reforms, crucial to both economic activity and the reduction in bureacratic overhead (see above) are neaar non-existant
- Very few sensible measures to shore-up the economy or invest for future have been made
Indeed, as was well documented in that PDF from a few pages back
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Digga
10,898 posts
152 months
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Globs said: Still at least our government are earnestly debating the other big issues affecting the UK, gay marriage. That'll solve everything. I'm attending my first gay marriage ceremony in a few weeks. Like you, I'm not sure how/if the 'pink pound' can pull UK plc out of the mire... Whilst I have absolutely nothing against this or other issues the government are tackling, I find it idiotic in the extreme that they coalition are not - like manu businesses are in present times - 'all hand to the pumps' at sorting the economy. Since 2009 it has been disintegrating in a way that has not been seen before and which may not permit (if left) any emaingful recovery for generations. Priorities need realigning.
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Art0ir
3,605 posts
39 months
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Andy Zarse
8,056 posts
116 months
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Digga said: Mermaid said: Greek Pm says , "We need more time, not more money."
Really? And once you have more time, no doubt you will need more money. What the whole club Med lot sadly never figured out was that money is time and time is money. Indeed. The Greeks don't get "money" otherwise they'd probably have spotted the ECB arse-raped them again last week. Greece had a maturing government bond which it looked like she could not repay. Never fear, the ECB allowed a grateful Greece to issue some extra 3 month T bills to cover it off. That was not quite the friendly gesture you might think as the maturing bonds were actually owned by the ECB! So the ECB got its cash back and scuttled into the distance declaring another "profit" made out of the Greek taxpayer leaving Greece with the problem of wondering what happens in 3 months time when they have to repay the T bills. Nice. And you thought the ECB was trying to help Greece? Also, I saw this quote in the Torygraph this morning. Mr Samaras told Bild, "Greek living standards have declined over the last three years by approximately 35pc. A return to the drachma would immediately lower it by at least another 70pc". As they say in America, you do the math...
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