Could the BoE ever go bankrupt?

rl290

fimonkey wrote: »

Could teh Government even be made bankrupt? If so, what would happen then?

1. No, it cannot - it can always make more money.

2. In the same way that Zimbabwe has not gone bankrupt, the worst case is that a glut of new money causes hyperinflation... Russia had a similar problem in the Rouble crisis, and some South American countries have been there. However, I see this (hyperinflation) as unlikely - though I can easily see higher inflation emerging in coming years.

R

sabretoothtigger

Before boe goes bankrupt the british people will go bankrupt so in that way its unlikely. If they make the wrong choices, the first people to suffer will be the public relying on bank notes to be worth a certain amount.

I guess this is why people buy gold because its worth just as much anywhere and I guess you could just leave the country with your gold and leave browns mistakes behind.

I do hope the plan they announce tomorrow involves auctioning, free markets and government security regulation not socialist ideas of bigger government absorbing industry wholesale

BallandChain

Labour are going to announce a plan? It must be for the 3 day working week.....

nachovx

Lights off at 10:30 as well, an end to 24 hour TV and the internet going off at 11pm.

amcluesent

Clown to admit he was a 'silly billy' to sell all of England's gold for a pittance.

fimonkey

amcluesent wrote: »

The BoE can get into a pickle. The last time Labour inflated the money supply and let rip with inflation was in 1976 when Sterling collapsed. 'Sunny' Jim Callaghan humiliated Britain (a.k.a 'the sick man of europe') by having to beg for an emergency loan from the IMF. Labour turned Britain into a banana-republic without any bananas. Sound familiar?

Labour's not working. Again.

What's IMF, and what's a 'banana republic' please? (Off to check wiki, but think an explanation here would help as you guys are much clearer than what I read on the internet sometimes).

Thanks

amcluesent

IMF - International Monetary Fund
Banana republic -a country that is politically unstable, dependent on limited agriculture (e.g., bananas), and ruled by a small, self-elected, wealthy and corrupt clique.

moneywolf

YES the bank of England could go bankrupt

Just like germany did in the 1920's

If it all went tit's up the GDP of the uk economy or reserves could not cover the deposits.

So if they do not gaurantee all deposits its for a reason, because it would send the country under worst case.

So basically we are now on a knife edge,


lets hope for the best.

fimonkey

Thanks for th ereplies,.. I don't uderstand the Zimbabwe issue very well, in that if a loaf of bread is worth 30p today but £3 tomorrow, how on earth do ppl function everyday with salaries, incomings and outgoings? Surely there comes a point when nobody can afford anything (or do wages rise with inflation so it all cancels each other out)?

I also don;t undersatnd the rouble/Russia thing, but would like to know more... (Back to wiki for me?)... especially.. how did Russia steer their way out of it?

Finally, if the BoE cannot really go bust, why don;t they, and other world banks just throw the required money at the banks to srt them out adn get things moving again, but in exchange for a share in how the banks are run in future so it doesn't ever happen again?.....

When I was a student I got into a silly credit card debt paying daft amounts of interest each month and not clearing the debt which was crippling me. My dear Mother paid off the debt, made me repay her at a more sensible rate, and made me promise to never take out a credit card till I leant (learned?) my lesson. OUt of respect for the help I got, I did just that, and indeed learnt my lesson...

Simplistic view, but why can;t the worlds BIG banks (BoE, America;s equivalent etc) do just that?

fimonkey

moneywolf wrote: »

YES the bank of England could go bankrupt

Just like germany did in the 1920's

If it all went tit's up the GDP of the uk economy or reserves could not cover the deposits.

So if they do not gaurantee all deposits its for a reason, because it would send the country under worst case.

So basically we are now on a knife edge,


lets hope for the best.

Really? What happened to Germany when they went bankrupt? How did they get out of it?

Also, if we went bankrupt, would we then be ripe for a takeover? Could another country then perhaps buy us out?