BoE to start printing money

chucky

lostinrates wrote: »

If that's the usual reason are there others?

If its never worker because its always too late how do people know it'll work if done early?

it's like being sick - i'd rather be diagnosed earlier than late into an illness.

lostinrates

chucky wrote: »

it's like being sick - i'd rather be diagnosed earlier than late into the illness.

There are jokes to be made that the doctor could be treating
the symptoms, not the cause.....then you just keep getting not quite well and sicker each time, lol. But I won't hold you to the analogy.

I'm afraid I'm not getting the idea tonight.

Tim_Nicholas

I agree with Mr Devon. I don't think we will see the money as such in its physical terms.

Its like someone coming along and paying off your overdraft. You don't really have the money to spend again, but you have the facilitiy available to spend, IE banks will lend more money, and hopefully at rates reflective to the base rate.

lostinrates

Tim_Nicholas wrote: »

I agree with Mr Devon. I don't think we will see the money as such in its physical terms.

Its like someone coming along and paying off your overdraft. You don't really have the money to spend again, but you have the facilitiy available to spend, IE banks will lend more money, and hopefully at rates reflective to the base rate.

Oh, I accept thats how it would work...but I don't see how that solves rather than perpetuates the problem.:o

Tim_Nicholas

lostinrates wrote: »

Oh, I accept thats how it would work...but I don't see how that solves rather than perpetuates the problem.:o

Neither do I... My educated guess would say..

If banks loan money, people can spend it, companies have money, confidence gets restored, recession ends, massive inflation.

Over a 3 year period

I have no idea past a guestimate !

Generali

The only way QE can work is as follows:

1. Everyone agrees the following statement: the whole economy/bank thing has been a complete fck up and basically we have to start again by wiping out the problems of the past.
2. You then accept that bad debts are the problem. To get the economy moving again they need to be reduced to manageable levels.
3. The Central Banks print money and that is used to pay off large amounts of unmanageable debt owed by consumers, companies and investors.
4. You increase the level of taxation on banks to very high levels. As that money hits the Government's bank account it is destroyed again. All of it.

That is a system that might work. It reduces the likelihood of inflation as you are destroying the cash again. Let us note that this is not the system that is being tried by any Government at present.

There is only one flaw, a biggie and a fatal one IMO. You create moral hazard. Why worry about how much you borrow if the 'Government' is just going to pay your debts for you? You'd just be building the foundations of an even bigger mess.

Bettyboop

I had a feeling 'printing more money' would be one of very few solutions. From my persepective Zimbabwe printed and printed more and more dollars to make up shortfalls and now what was once the Zim dollar is now utterly worthless. Toilet paper costs more than what the currency is worth. It's safer to wipe your a*rse with it! Let's hope the UK doesn't take a similar battering.

purch

This thread shoud be used as evidence that the huge amount of knowledge available on the Internet when in the wrong hands does nothing but harm !!!

lostinrates

lostinrates wrote: »

Hang on a second.....

if ''stuff'' - like houses and new cars and everything on sale in shops -is worth less, and there is still the pretend money in debt in existance...is that ALREADY quantative easing by accident rather than design???? (more head spinning )

Can anyone answer my question from last night?:o


I'm TRYING to understand how this from the perspective of how this could be a good idea, honestly I am, but I just can't grasp it.

Wookster

Generali wrote: »

The only way QE can work is as follows:

1. Everyone agrees the following statement: the whole economy/bank thing has been a complete fck up and basically we have to start again by wiping out the problems of the past.
2. You then accept that bad debts are the problem. To get the economy moving again they need to be reduced to manageable levels.
3. The Central Banks print money and that is used to pay off large amounts of unmanageable debt owed by consumers, companies and investors.
4. You increase the level of taxation on banks to very high levels. As that money hits the Government's bank account it is destroyed again. All of it.

That is a system that might work. It reduces the likelihood of inflation as you are destroying the cash again. Let us note that this is not the system that is being tried by any Government at present.

There is only one flaw, a biggie and a fatal one IMO. You create moral hazard. Why worry about how much you borrow if the 'Government' is just going to pay your debts for you? You'd just be building the foundations of an even bigger mess.

I still don't see how this will not cause massive inflation - cash is used to pay off debts, it flows out of the UK to the creditors of the big banks who realise that hey it can't buy any more than it did before so they start to sell off sterling assets which causes a run on the pound and makes it nigh on impossible for the government to borrow.

Also in a globalised work it is just impossible to imagine the government taxing banks heavily - taking that much cash out of the system would surely lead to downward pressure on asset prices & a painful reduction of credit available to corporates and consumers - thats akin to what we're seeing now...