BoE to start printing money

Generali

brightonman123 wrote: »

forgive my ignorance, but how does the extra cash get fed into the system, and then to my pocket?

There are many ways this can be done.

The most usual is for the Bank of England to credit the cash to the Government's bank account and the money used to buy back Gilts (Government bonds).

That frees up cash for the banks to lend.

Wookster

Generali wrote: »

The problem is that everything is such a massive mess that it really is hard to see a way out.

If you prop up the banks you promote moral hazard and are giving out a blank cheque but then everyone is terrified of the alternative, especially the politicians who have promoted the idea that they can solve all ills with a wave of the magic pen.

I think they are scared shitless of the chaos that not supporting the banks would bring: bad things for sure, run on the pound? Worldwide economic collapse as the contagion spreads? Also, any ability for borrowing would dissappear overnight. Given the speed events run at in September last year was it really feasible for them to let the banks go down?

Generali wrote: »

The economy is screwed and again, the politicians are scared to do the obvious thing which is to scale down the public sector and make business more competitive by reducing the tax and regulatory burdens they face.

Labour has been truly awful with red tape and regulation. Even during my time in the UK I have seen through work the year on year increases in tax and other compliance requirements.

When I got my UK passport last year I debated renouncing my Zimbabwean citizenship but at this rate, if there is real political change in Zimbabwe I can see that the possibilities will be significantly better there than in the UK though I wouldn't be able to kitesurf sniff sniff

passau91

This sounds dangerously close to becoming a political slanging match, so before it all gets out of hand, a question (tongue in cheek, but probably what is on quite a few other people's minds...)

If we suspect that quantitative easing is the same thing as printing more money for all practical purposes - i.e. that whatever is intended, it actually does lead Sterling to devalue even further - is it generally thought to be sensible to get a fair whack of whatever savings we have out into something else like gold bullion, non-sterling accounts etc. (discounting purchasing property - in my case it is not currently an option)? I'm just playing devil's advocate to see what options there might be.

Thanks for any thoughts on this.

StevieJ

Generali wrote: »

No I don't. I think the UK would be in a better position fiscally however which would make things much easier and probably lead to a better outcome.

The Labour Party does have a particularly poor history on economic management. Every UK Labour Government has had to endure either a Sterling crisis, a funding crisis or both IIRC.

The Labour party were shadowing Tory party policies, the Tories believe in less regulation people on here say 'why wasn't there more regulation' Any budget savings that the Tories may have made would be washed away by this bank crisis :eek:

StevieJ

passau91 wrote: »

This sounds dangerously close to becoming a political slanging match, so before it all gets out of hand, a question (tongue in cheek, but probably what is on quite a few other people's minds...)

If we suspect that quantitative easing is the same thing as printing more money for all practical purposes - i.e. that whatever is intended, it actually does lead Sterling to devalue even further - is it generally thought to be sensible to get a fair whack of whatever savings we have out into something else like gold bullion, non-sterling accounts etc. (discounting purchasing property - in my case it is not currently an option)? I'm just playing devil's advocate to see what options there might be.

Thanks for any thoughts on this.

So you don't think the US and others will be using QE? No slanging match I have just given two thanks to wooster, unheard of

Wookster

passau91 wrote: »

This sounds dangerously close to becoming a political slanging match, so before it all gets out of hand, a question (tongue in cheek, but probably what is on quite a few other people's minds...)

If we suspect that quantitative easing is the same thing as printing more money for all practical purposes - i.e. that whatever is intended, it actually does lead Sterling to devalue even further - is it generally thought to be sensible to get a fair whack of whatever savings we have out into something else like gold bullion, non-sterling accounts etc. (discounting purchasing property - in my case it is not currently an option)? I'm just playing devil's advocate to see what options there might be.

Thanks for any thoughts on this.

All of the reserve currencies have their own risks - the Euro being the risk of failure if Germany pulls out & risks associated with Euro banks lending activities into some of the highly distressed Eastern European countries.

In a nutshell, if you can spot a low risk, high reward investment in a recession then you could make yourself a billion as a fund manager.

Generali

StevieJ wrote: »

The Labour party were shadowing Tory party policies, the Tories believe in less regulation people on here say 'why wasn't there more regulation' Any budget savings that the Tories may have made would be washed away by this bank crisis :eek:

I think Labour committed to Tory spending plans for the first 2 years they were in office. Since then it's been all their own work.

Banks are massively regulated already. More regulation wouldn't have done it. Different regulation perhaps. Regulators and politicians that had a clue about banking and what they were regulating might have helped.

The last bit is speculation, we can never know what would have happened if Labour hadn't been in power for the last 10 years. We can say that generally Tory Governments commit to spending less than Labour ones. My suspicion is that countries with a better fiscal position will exit the recession in better shape than countries with worse ones due to the very real potential for credit to Governments drying up. On that basis I think the Tories would have been better.

Wookster

Generali wrote: »

Banks are massively regulated already. More regulation wouldn't have done it. Different regulation perhaps. Regulators and politicians that had a clue about banking and what they were regulating might have helped.

This is such a big problem with politics - people end up in positions due to political appointments rather than out of skill. Crash studied history at university, Darling read Law.

None of them are equipped to be dealing with economic matters at a level that has such impact over so many millions of people.

The Tories are no better (though DC read politics and economics...)

passau91

Wookster wrote: »

All of the reserve currencies have their own risks - the Euro being the risk of failure if Germany pulls out & risks associated with Euro banks lending activities into some of the highly distressed Eastern European countries.

In a nutshell, if you can spot a low risk, high reward investment in a recession then you could make yourself a billion as a fund manager.

That was my thinking generally and I am only talking about preserving the value to date, so my only real thought was gold bullion. Never having considered bullion before and being scared of having that much money on me or in my home and the worry that perhaps Gold prices are very near the top, is there any way of retaining the value of what I have saved up over the last five years?

Martin has mentioned that because RPI is down to 0.1%, things aren't as dire as they appear, but if Sterling is going to take a real hit because of QE, the spectre of Weimar Republic devaluation is not completely put out of mind... again, this is tongue in cheek;)

My faith in banks was shaken recently in that I have only just received my cheque from the FSCS for my Icesave Cash ISA. The funds were going to be a deposit on buying a home, but I think I'll have to put that on hold for at least another year...

drum_3

Generali wrote: »

The most usual is for the Bank of England to credit the cash to the Government's bank account and the money used to buy back Gilts (Government bonds).

quote]

Hello

Excuse me for asking, but what impact do you think that will have in the short/medium term on Government gilt prices ? Positive? Negative?

Just trying to protect my elderly mothers portfolio as best I can

Thanks