Quantative easing - good time to have a mortgage?

granville_2

From Guido Fawkes...

1echidna

amcluesent wrote: »

Of course Clown will be running the printing presses and creating money as credit; he doesn't know or care what the consequences are.

I'm sure that policy now is to create, but falsify the figures, on inflation.

The big credit bubble has burst, get another one inflating for us to live off as soon as possible! (Labour) Turn the country into a workhouse and begin the long labour of save, save, save to pay off our debts (Conservative)

SGE1

Generali wrote: »

We're confusing two things here I think.

1. Quantitive Easing: Money is created and given to banks in return for assets. This increases the money supply and so is inflationary.
2. Bank recapitalisation: money is borrowed by the Government and given to the banks in return for equity. This does not increase the money supply, at least not directly.

But surely borrowed money is money brought into the system, money that wasn't previously there. So shouldn't the effect be the same? Is the only difference that with quantitative easing, the money won't return to where it came from (as with borrowing), so the sum total of money in the economy increases?

purch

so the sum total of money in the economy increases?

If they can create enough 'new' money to replace the Grillions lost through the destruction of asset values.

kennyboy66_2

Its utterly laughable when people suggest we are going down the same road as Argentina, Zimbabwe are Weimar Germany.

One of the theoretical problems is that policy makers know how to control inflation, its the actual doing it thats the politically hard part.

No-one really knows how to counteract deflation without the obvious consequences of the risk of inflation. The mad mullahs of free markets will say just do nothing and the market will self correct. The slight problem with this is that we don't really know how long, or how deep a depression we will get into before the system does get back into some kind of equilibrium.

The closest we got to the 'do nothing' approach was the depression in the US in the 1930's. Predictably the Taliban tendency of neo-con economics will still claim that it was government intervention that prolonged that depression.

Even Milton Freidman believed that the US government should have increased the money supply in the early 1930's.

1echidna

Pity those poor lads running HMGs computer model of the economy. Hard to forecast what degree of confidence consumers have to go out and spend or for that matter the effect on our economy of a recession overseas. I guess also the effect of 'clogged up plumbing' in the banking system and when and if it will clear itself. I wonder what they are thinking of doing - hiring more people to try and make a more sophisticated model or firing the lot of them?

Generali

SGE1 wrote: »

But surely borrowed money is money brought into the system, money that wasn't previously there. So shouldn't the effect be the same? Is the only difference that with quantitative easing, the money won't return to where it came from (as with borrowing), so the sum total of money in the economy increases?

Well IMO the money being added to the money supply is only inflationary if it is spent. If it is just parked in banks' reserves then it can't be used to bid up the prices of assets or goods.

setmefree2

Fed aims to buy $500 billion in MBS by mid-year
Does anyone know if the fed are buying up the same amount of MBSs as before the credit crunch? If not - roughly what is the difference in what the Fed is buying now and what the shadow banking system was buying before?



RBS to tap state funding scheme with new £14bn securitisation

Bank bosses discuss mortgage plan

Has anyone any idea or seen any articles on when the Shadow Banking system will be back up and running - if ever?

Does anyone have a clue how much MBS the BOE have got on their books?

purch

Does anyone know why you are typing in Big Black Bold letters ??

abaxas

The problem with known currency devaluation is that people dont have to sell us the things we need.

We require gas to heat our homes and food to live. What happened if people refuse to sell us that? We cant force them to.