printing money what does it mean

piggeh

OK I'll give it a go - know any good sources?

cowbutt

http://www.nationmaster.com/graph/eco_deb_ext_pergdp-economy-debt-external-per-gdp

Sadly, most figures are from 2006. :-(

lukekelly_2

That's the wrong page for this discussion. We want the public debt graphic.

If we're crippled in the long term is that also the case for Japan, Italy, Greece, Belgium, Germany, France, United States, Holland and so on?

kabayiri

I have no doubt QE will happen.

I have 2 questions :-
a) is the primary goal of this to get people and businesses spending ? (rather than restore balance sheets of banks)
b) how confident are they that the money will get into the hands of the 'consumers' in a short timescale? I'm guessing they want this to act as a 'shot in the arm' for the economy.

The interest rate drops thusfar don't seem to have an immediate effect.

piggeh

lukekelly wrote: »

That's the wrong page for this discussion. We want the public debt graphic.

If we're crippled in the long term is that also the case for Japan, Italy, Greece, Belgium, Germany, France, United States, Holland and so on?

OK so we're in "the same boat" as the others. I'm not sure if that's the right boat to be on though. I was looking at our debt per GDP hisorically and I don't believe it's been this high since the 40s. Obviously looking at International comparisons is a different POV though which is appreciated.

What I am wary of is that if you take the current percentages and look historically, whenever there has been a large increase in debt per GDP it seems to shoot back down pretty rapidly. So if we go by historic precendent it would assume that the same will happen again, it just depends how it happens I guess?

The other thing I don't like about QE is confidence - surely this must be taking a knock on the financial markets and doing further damage?

JP45

kabayiri wrote: »

I have no doubt QE will happen.

I have 2 questions :-
a) is the primary goal of this to get people and businesses spending ? (rather than restore balance sheets of banks)
b) how confident are they that the money will get into the hands of the 'consumers' in a short timescale? I'm guessing they want this to act as a 'shot in the arm' for the economy.

The interest rate drops thusfar don't seem to have an immediate effect.

I think the answer to a) is yes (in part by improving banks' balance sheets and hence their ability to lend)

and b) they're not.

If you want a fuller account, there's a useful summary on Stephanie Flanders blog at:

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/03/qe_day.html

KennyVader

Why do the government use the fancy term "Quantative Easing" and not what it actually is, "Printing More Money" ?

Masomnia

piggeh wrote: »

The other thing I don't like about QE is confidence - surely this must be taking a knock on the financial markets and doing further damage?

Not particularly, it's been obvious that the BOE was going to do this for a while so it's already been mostly priced into the markets. The Pound isn't off too much against the dollar and is up slightly on the Euro today.

KennyVader wrote: »

Why do the government use the fancy term "Quantative Easing" and not what it actually is, "Printing More Money" ?

Not sure, but it could be something to do with the fact that no money is printed.

lukekelly_2

piggeh wrote: »

OK so we're in "the same boat" as the others. I'm not sure if that's the right boat to be on though. I was looking at our debt per GDP hisorically and I don't believe it's been this high since the 40s. Obviously looking at International comparisons is a different POV though which is appreciated.

Again that's really not true when it comes to government debt.





Government debt will shoot up but is not currently on a trajectory too different from the 1990's. I suspect it will go higher, but it's unlikely to reach a different order of magnitude.

The debt problem in the UK is real, and there is a massive debt bubble. The government is not the body that's been borrowing though. It's us with the debt problem. Household and corporate debt is what's at historically abnormal levels, and it's that debt that's going to cause problems, not the government debt. The government's sin has been to create the conditions and regulatory system in which companies and individuals have borrowed absurdly. Giving people and businesses the opportunity to do something stupid is not the worst sin though. Doing something stupid -- taking out 125% mortgages, living off credit cards, takeovers with inflated quantities of borrowed money -- is.

(Which isn't quite true, the worst, the real bile at the heart of the financial crisis, is that of the tens of thousands of Americans who borrowed money from subprime lenders and haven't paid it back.)

Asheron

Printing Money = Inflation = Theft = Evil