Discussion
chris watton said:
To the completely uninitiated, why the hell did Cameron proudly state that ‘we’ are giving millions in overseas aid in his PPB last night, when we are so broke that the BoE has to print more money?
Are there different types of money?
Yep - real money sent overseas; pretend money printed and lent to UK businesses.Are there different types of money?
fbrs said:
Gargamel said:
Instead of wasting the time giving the money to the banks, why not take the £75bn and cut income tax down to 35% and 15% for a few years. Much greater impact and a vote winner too.
ffs, the boe arn't giving the money to the banks, they are buying gilts = lending the money to the governmentSomeone more eloquent than me said:
..a monetary system like ours, in which interest rates can be set administratively to encourage bank lending and to underwrite the constant growth of state and banks, must ultimately lead to a bloated public sector and a bloated banking industry. The fiat money system is feeding its own disintegration...
Ari said:
I'm genuinely confused by this. Where is this £75,000,000,000-00 actually coming from? And where's it going?
papermoneycollapse.com See also the video on the homepage of this website. It might be a bit long winded, but you cannot watch it and fail to understand the answer to the question you have just posed.Edited to make link clicky
Edited by The Excession on Thursday 6th October 14:38
Ari said:
I'm genuinely confused by this. Where is this £75,000,000,000-00 actually coming from? And where's it going?
What effect will increasing the money supply have?The Bank's plan aims directly to increase the money supply, which should also directly increase the other side of the equation – the nominal growth rate. It is creating money – £75bn in the first instance – with the press of a button and buying up corporate and government bonds. It would like to buy the majority of these off non-bank investors such as pension funds.
The fact that it is effectively printing money in order to buy these bonds (though in fact it actually creates it with the press of a button and electronically transfers it to the seller of the bonds) is important.
This means that the Bank will directly increase the amount of cash flowing around the economy by £75bn. This will, in and of itself, have a direct impact on nominal growth.
In normal times it would be highly inflationary, but these are not normal times and economists believe there is a significant chance of the UK sliding into a debt deflation spiral – the intractable phenomenon that America endured in the 1930s.
Will quantitative easing work?
That is the big unanswerable – the question being whether the banks and investors who get the cash from the BoE go out and spend it. If they do it will increase nominal growth by far more than the £75bn the BoE puts in, and will help both prevent stubborn deflation and boost growth.
But it is still rather too early to draw any conclusions about whether they will do, and whether this money does become contagious.
What about the risks of hyperinflation?
These methods are inherently extremely inflationary – after all they aim directly to increase the quantity of cash in the economy, and as Milton Friedman pointed out, inflation is always and everywhere a monetary phenomenon.
The Weimar Republic and Zimbabwe suffered hyperinflation after doing something very similar. In the long run, if the Bank was to continue pumping extra newly magically-created cash into the economy it would cause hyperinflation. However, it is expressly not doing this for an extended period: merely until the threat of deflation and depression appear to have been diverted.
Once normality has returned to the system, it will be the Bank's role gradually both to decrease the size of its balance sheet, selling off these assets, and simultaneously reducing the supply of money. To extend the printing money metaphor, in due course they will be pulping money. After which they will have to raise interest rates.
However, most economists reckon that won't happen for a good couple of years, and it will only take place once it is clear the policy was successful. Remember Japan has been stuck with near zero rates for almost a decade.
http://www.telegraph.co.uk/finance/5061988/Quantit...
I'd rather have a bit of:
"liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate…"
Oh dear, we are in worse trouble than I hoped. Looks like Labour did a "good job" of wrecking the economy as usual. And as usual it will take the tories a few years to rectify it, by which time people will be upset that they are not all getting free laptops for Mercedes, Troy and whatever other chavtastic name they assign to their scrotes, and will vote Labour again.....
Jasandjules said:
Oh dear, we are in worse trouble than I hoped. Looks like Labour did a "good job" of wrecking the economy as usual.
The country was debt free in 1997? There were no public sector pensions prior to Tony Blair? Gordon Brown invented the welfare state?Next you'll try and say the Tory party is planning to reduce the UK debt, when it's actually increasing it.
Fittster said:
The country was debt free in 1997? There were no public sector pensions prior to Tony Blair? Gordon Brown invented the welfare state?
1997 2007 2010
National Debt (Bn) 348bn 500bn 776bn
Budget Deficit (Bn) 0bn 84bn 171bn
Unfunded public pension liabilites 270bn 730bn 886bn (2009)
Personal Debt (Bn) 503bn 1346bn 1460bn
Balance of trade (Bn/yr, + is surplus) +4.4 -44.9 -34.2
Thanks for those replies.
This is going to sound dumb perhaps, but should we be turning cash into assets if we have it?
I've got myself into a position over the years of zero debt (own everything I have, including house, outright) and a small amount of savings. Now just as one example, I've been eyeing up the new Rolex Explorer II. I love watches and it's the most beautiful watch I've ever seen (I think, waiting to see one in the flesh).
Now ordinarily, I can't afford it, in as much as I have the cash to buy it, but it'd put far too big a dent into savings for something that I just don't need.
However things like this make me think that if my meagre savings are going to be rendered worthless anyway, I might as well convert some of them into an asset that will at least have some value.
Or am I just using "man maths" to justify buying a watch I shouldn't?
This is going to sound dumb perhaps, but should we be turning cash into assets if we have it?
I've got myself into a position over the years of zero debt (own everything I have, including house, outright) and a small amount of savings. Now just as one example, I've been eyeing up the new Rolex Explorer II. I love watches and it's the most beautiful watch I've ever seen (I think, waiting to see one in the flesh).
Now ordinarily, I can't afford it, in as much as I have the cash to buy it, but it'd put far too big a dent into savings for something that I just don't need.
However things like this make me think that if my meagre savings are going to be rendered worthless anyway, I might as well convert some of them into an asset that will at least have some value.
Or am I just using "man maths" to justify buying a watch I shouldn't?
Fittster said:
Jasandjules said:
Oh dear, we are in worse trouble than I hoped. Looks like Labour did a "good job" of wrecking the economy as usual.
The country was debt free in 1997? There were no public sector pensions prior to Tony Blair? Gordon Brown invented the welfare state?Next you'll try and say the Tory party is planning to reduce the UK debt, when it's actually increasing it.
New labour Lite is the best way to describe the useless bunch of self-serving incompetents, I think.
The fact that we now have QE demonstrates that they have run out of ideas and/or are much too scared to administer the sorely needed (but bad tasting) medicine. Weak – very weak.
anonymous said:
[redacted]
http://www.ukpublicspending.co.uk/uk_national_debt...How did New Labour make lending easy? I think you'll find Thatcher liberalised the credit markets.
Are you including the money spent bailing out the banks in your figures for 2008? I thought PH was in favour of bailing out failed banks?
fbrs said:
Fittster said:
The country was debt free in 1997? There were no public sector pensions prior to Tony Blair? Gordon Brown invented the welfare state?
1997 2007 2010
National Debt (Bn) 348bn 500bn 776bn
Budget Deficit (Bn) 0bn 84bn 171bn
Unfunded public pension liabilites 270bn 730bn 886bn (2009)
Personal Debt (Bn) 503bn 1346bn 1460bn
Balance of trade (Bn/yr, + is surplus) +4.4 -44.9 -34.2
Ari said:
Thanks for those replies.
This is going to sound dumb perhaps, but should we be turning cash into assets if we have it?
I've got myself into a position over the years of zero debt (own everything I have, including house, outright) and a small amount of savings. Now just as one example, I've been eyeing up the new Rolex Explorer II. I love watches and it's the most beautiful watch I've ever seen (I think, waiting to see one in the flesh).
Now ordinarily, I can't afford it, in as much as I have the cash to buy it, but it'd put far too big a dent into savings for something that I just don't need.
However things like this make me think that if my meagre savings are going to be rendered worthless anyway, I might as well convert some of them into an asset that will at least have some value.
Or am I just using "man maths" to justify buying a watch I shouldn't?
If youi loose your job, will you have enough savings to survive until finding a new one if you spend x% of them on a rolex?This is going to sound dumb perhaps, but should we be turning cash into assets if we have it?
I've got myself into a position over the years of zero debt (own everything I have, including house, outright) and a small amount of savings. Now just as one example, I've been eyeing up the new Rolex Explorer II. I love watches and it's the most beautiful watch I've ever seen (I think, waiting to see one in the flesh).
Now ordinarily, I can't afford it, in as much as I have the cash to buy it, but it'd put far too big a dent into savings for something that I just don't need.
However things like this make me think that if my meagre savings are going to be rendered worthless anyway, I might as well convert some of them into an asset that will at least have some value.
Or am I just using "man maths" to justify buying a watch I shouldn't?
If the answer is yes, get it bought.
Wurls said:
Someone not so eloquent said:
..in which interest rates can be set administratively to encourage bank lending ...
Banks are encouraged to lend by surety of repayment. Its borrowers who are encouraged to borrow through low interest rates.allgonepetetong said:
If youi loose your job, will you have enough savings to survive until finding a new one if you spend x% of them on a rolex?
If the answer is yes, get it bought.
Yep, there'd be enough left to keep me going a few months.If the answer is yes, get it bought.
Just getting really pissed off at having savings instead of debt for the first time ever, and gaining no interest on savings, and looking at the possibility of it being eroded in value anyway...
I bought a second-hand Rolex GMT two years ago, against my better financial judgement. That seems to have gained about £500 in value since, which is roughly 10% a year, so a shrewd buy as it turned out (by pure luck, not pretending there was any shrewdness on my part).
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