Extra £50bn pumped into economy

halight

Graham_Devon wrote: »

I thought it was only stopped the other day!?!?

So, were now over the £150bn, now at £175bn.

I thought everything was looking up, so why the need for this?

Ad was completely right the other day when he said the BOE will give in to the banks plea for more.

I think it was last month thay were stoped.

Graham this will take us to the 175bn mark:eek:

I think that the BOE wonts to do more than is needed so no one can say that thay have not helped enough.
My bet is
The banks have been asking for more help.
The Gov has been asking for more
and i bet the big insureanse companys have also be asking, as a lot are in the same sort of buiss as the banks.

It will be good to see where this takes us as the first lot of QE should just about be starting to get into the ecommany now. The BOE i think said that it would take about 9 months to start working. So before the first round has even started thay are going to do a bit more.

I belive someone said on the news when the BOE first said that thay were going to undertake QE. "That the key to QE was knowing when to stop"

Do thay know?

neas

isnt this supposed to cause inflation oO

Really2

halight wrote: »

and i bet the big insureanse companys have also be asking, as a lot are in the same sort of buiss as the banks.

I can agree on that my wage insurance as gone up 30% this year.:eek:

Really2

neas wrote: »

isnt this supposed to cause inflation oO

Only if it is given to people to spend, if it is used to fill in a hole left by debt I cant see how it can.

prowla

Surely this means that inflation has to follow?

Graham_Devon

Generali wrote: »

My guess is that this is being done to lower the value of the pound to stave off deflation.

The trouble is that the usual method of boosting the money supply by making it easier for banks to lend and businesses/individuals to borrow isn't working as banks don't want to lend and their customers don't want to borrow.

I stick with what I've been saying for the past 3 years - there is a definite and growing risk that debt deflation is going to translate into price deflation as the money supply falls. By ramping up borrowing, the Government is making things worse.

I know I have been told off in the past for caring about what this will do to our rating, but any idea? I'm sure something was mentioned about a cap on QE before we get downgraded? Though I may be dreaming.

I guess what we have just got today though, is a prolonging of the artificial recovery.

Reaper

Generali wrote: »

My guess is that this is being done to lower the value of the pound to stave off deflation.

My guess is they want to prop up the gilt market. The UK needs vast sums to fund all their debt and I can't see an endless supply of people wanting to supply it. By buying gilts (or even saying they will soon) through QE they artificially make them attractive in the short term.

I fear QE started off as a genuine attempt to stimulate the economy and is now an addiction they daren't stop.

Really2

coordinated perhaps.

http://news.bbc.co.uk/1/hi/business/8187285.stm
The ECB last cut rates in May, when they were reduced to 1% from 1.25%. It has reduced rates seven times since last October, when rates stood at 4.25%.
As part of efforts to boost business lending and spur economic growth, the central bank has also supplied cash to the banking system and previously pledged to buy 60bn euros (£50bn) of low-risk corporate bonds.

Generali

Reaper wrote: »

My guess is they want to prop up the gilt market. The UK needs vast sums to fund all their debt and I can't see an endless supply of people wanting to supply it. By buying gilts (or even saying they will soon) through QE they artificially make them attractive in the short term.

I suspect you're right. It can't work long term of course as bond investors aren't idiots, they realise that in printing money the Govt is seeking to repay them with devalued currency.

Reaper wrote: »

I fear QE started off as a genuine attempt to stimulate the economy and is now an addiction they daren't stop.

I certainly agree there. This is a really dangerous path to go down.

Graham_Devon

Generali wrote: »

I certainly agree there. This is a really dangerous path to go down.

Which begs the question....why go down it?