Printing money

ashbourne

Hi,

I recently heard that there is a good possibility that the government will start printing extra bank notes and thus making any decent amount of savings worth less.

Is this a likely scenario? If you have fixed savings of a significant amount is there a possibility that it could be worth less soon?

If so, what are signs it is happening and how much less would they be worth?

Also, any way to safeguard against it?

jon3001

ashbourne wrote: »

Also, any way to safeguard against it?

Use your cash to buy hard assets.

ashbourne

You think its likely then?

Jakg

Have you never heard of "inflation"?

ashbourne

I have, but my knowledge of how printing money and reasons for doing it would effect savings is limited.

Any help is appreciated

jon3001

Another scenario is deflation. That would involve falling prices, wages (e.g. Vauxhall and JCB) increasing unemployment and thus falling tax receipts. How would the government then meet its obligations to pay interest to bond holders? Printing money could be an option.

Deflation should be good for holders of cash and bonds. But an increase in the money supply wouldn't.

Personally, I've no idea what will happen and how likely the various scenarios are. I go for an all-weather portfolio that will (hopefully) respond well in a variety of situations. So yes, I've got exposure to hard assets via precious metals and commodity futures. But also traditional assets such as stocks, bonds and cash.

In any event you should still retain cash for emergencies and planned expenditure. I don't think we're going into Zimbabwe territory.

ed123_2

,,,,,,,,the goverment has debt, individuals have debt, companies have debt...print money= inflation, debt problem gone....they call it quantative easing...a dirty little secret theu don't want anybody to know about..

agsnu

Not all sterling (or any other currency, for that matter) is backed by actual physical notes, for starters.

ashbourne

but would the government let inflation go beyond their recommended boundaries?

I thought the whole interest rate lowering was about getting inflation down would it have to go way beyond these limits to have an impact?

Sorry if my questions seems simplistic, just trying to get an overview...

jon3001

agsnu wrote: »

Not all sterling (or any other currency, for that matter) is backed by actual physical notes, for starters.

'Printing money' is a metaphor for increasing the money supply.

pippa93

Well, for a start, printing more money could start hyperinflation, which would obviously be very bad...

like the above poster says, the actual paper money isn't a symbol of the currency..

if there was more money printed, it would be bad for savers

however i think a major amount of money printing by the government in very unlikely....