BoE to start printing money

StevieJ

nickmason wrote: »

There you have it, proof that Wookster isn't !!!!!!.

You miss the point, what if you wish to change your stance slightly and don't want everyone ribbing you about it?

exil

The reason for QE is that the BOE is worried about DEFLATION - and with good reason.

Whilst moderate inflation is liveable with, deflation on any scale could result in the recession lasting for years (as it has in Japan).

murphydavid

To me QE is simply another way for government to re-distribute wealth. The government and their chosen ones get the new money / wealth. The remainder have their monetary wealth de-valued. By wealth I also include salary levels etc. At first it is disguised because value is dependent on confidence; scarcity and perceived desirability, but after a time things work themselves out. In the end (among other things) there are possessions and bits of paper (money etc) that represent possessions you might buy in the future. If you increase money in any form while at the same time the countries total possessions are decreasing (or not increasing as fast) due to lack of production; consumption and natural wastage then money is devalued and your existing money and annual salary are of less value. Thus you loose wealth. Of course people will try to counteract that by getting pay rises etc but those less able will get hit worse.
In the past confidence in money was established by the person issuing the money proving that he had a quantity of Gold or other value that would cover the value of the notes. To issue more he had to increase his stock of Gold. Soon it became and now it is much more complex but I think the principle is still valid. ie put crudely (the countries total possessions + how much it will produce) divided by (The total money in circulation + any increase in money supply) equals (how much possessions a pound is worth). So the pound value is inversely proportional to the volume of QE
Personally I would rather the Government be up front about it. If they want more money then take it in taxes. If they want everyone to have a pay decrease simultaneously then pass a law to make it so. This would mean that all people voting in elections would have a clearer impression of what the government is really thinking of doing. Trouble is the deception vis the government and their chosen seeming to get a free lunch when in truth we are going to pay the bill and the inevitable disaster (as dictated by history) may well not be out-ed till after the next election. If they do it that is.
The other point that seems to be aired and sounds almost plausible is QE can be kept under control by staging it such that the inflation rate is held at 2%. There are two points to be made. First the inflation was being controlled by imposed interest rate reductions. The people in control of this have subtlety re-written the directive from we will hold the rate at 2% to we will do what we like with the rate and tell you we are pre-empting the possibility that it might not be 2% and write letters to the government saying why we got it wrong which they and the media will ignore. Now they have run out of interest because the real lenders have long since ceased to take any notice of it. Try getting a loan based on the BOE interest rate. The second point is; does anyone think that this same lot or a similar lot will stop feeding when they get their noses in the trough? No I don’t think so so confidence can not be restored in this way and it will almost certainly get out of control like the interest rate before it.
Anyway if they must do which I pray they don’t I really hope they only do it so far as to devalue my wealth by 2% a year. Fat chance!

chriz1000

I’m fairly surprised as The Sun has explained Quantative Easing in layman’s terms pretty well, a couple of things not confirmed but apart from that an easy FAQ if you don’t fully understand QE:
http://www.thesun.co.uk/sol/homepage/news/money/article2262459.ece

purch

Wad's it all About !!!! :rotfl: :rotfl:

The Sun alway's does the best headlines !!!!

Gotcha !!!! :T