Bank warns of 'deep recession'

mbga9pgf

If we go inflationary, commodities look a real pinch at the mo and probably will be where I protect at least part of my cash...

Not talking about the yellow shiny stuff either! (Copper,Aluminium are at historic lows)....

Stock market I am unsure about. There are a few sectors that will preserve wealth well, dont think a FTSE tracker would be the way foreward at the mo though!

purch

Not talking about the yellow shiny stuff either!

Keep an eye on Platinum too !!!

Wookster

chucky wrote: »

it's time that you made a decision Wookster - keep on using savings as your investment tool and grumble along complaining or look at alternatives that will give you a better yield.

it's simple enough. just don't blame others for it.

What a simplistic way of looking at where we are. Quantitative easing is likely to be disastrous. It does not address the fundamental problem in this economy: that there is too much debt and we do not produce enough.

Furthermore it is likely to cause a damaging run on the pound.

Wookster

Really2 wrote: »

Savers could easily ship their savings in to other assets (shares etc.)
But I do not see how in effect writting off bad debt will cause the much touted "Hyper-Inflation"

QE does not involved "writing off" bad debt. It involves inflating it away i.e. debt devalues in real terms.

It is one of the least credible ways of getting out of the mess that we are in.

mbga9pgf

I think thats where people are getting confused. i cant see how buying assets that are worthless with cash that has been printed out of thin air is inflationary? All it does is ensure the foreign depositors cash is safe and ensures the banks dont default. How is that going to make my pint of stella and a packet of crisps more expensive? They are not going to helicopter the stuff. They are simply buying assets that are worthless, to protect the economy as a whole.

Writedowns not set to finish till 2012. RBS hasnt announced a full set of results yet without the benefits of pre-crunch profits to counteract losses. When RBS are announcing 40 billion annual losses, how do you suggest we prevent the largest bank in the UK from going under and the country defaulting?

They arent even using this cash for large-scale public works construction....

I am genuinely confused on this one, as I dont see a significant downside to this plan, but at the back of my mind I understand there is a natural equilibrium that means this will come to bite us in the !!!! at some stage....

Ian_Griffiths_Halifax

handful wrote: »

Further evidence if it was needed that quantitive easing will commence probably after another 0.5% cut in IR in March. Rates have to be 0% - 0.5% for QE to commence, all that remains is for the decision to be taken as to how to inject this cash into the economy. Favourite seems to be by the buying of toxic debts with it but I prefer the 'dropping it out of a helicopter' method!

I've just ordered one of these

You can order one here http://www.alanaecology.com/acatalog/Butterfly_Nets.html

purch

i cant see how buying assets that are worthless with cash that has been printed out of thin air is inflationary?

If it say's it is on Wikipedia.....then it is !!!!!

Get with the Program !!!!

mbga9pgf

But M4 has been >10% for years! unless there is money velocity, (which, if you dont know, there is none) the economy deflates! You cant have inflation without the will to spend cash, which, of course there is none at the moment!

Really2

Wookster wrote: »

QE does not involved "writing off" bad debt. It involves inflating it away i.e. debt devalues in real terms.

It is one of the least credible ways of getting out of the mess that we are in.

Thats why I said "effectivly"

Setting up a bad bank which pays for toxic debts would be in effect writting off the bad debt.

As mbga9pgf says I to can not see how this is going to cause a massive over supply of money as this debt is currently swallowing all cash down a plug hole and will do so more and more if it is not plugged.

Wookster

mbga9pgf wrote: »

I think thats where people are getting confused. i cant see how buying assets that are worthless with cash that has been printed out of thin air is inflationary?

The BoE buys worthless assets (can you see the problem already?) from banks who then will have surplus cash sitting on their balance sheets. Banks then lend money to consumers and corporates thus increasing monetary supply without a corresponding increase in production which causes inflation.