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End of QE
Comments
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Thrugelmir wrote: »
Liquidity is the issue. I agree. .
It is indeed. And addressing the liquidity crisis in the markets was the sole aim of QE.
Not monetising debt, which was your implication.Originally Posted by Thrugelmir
QE has allowed the Government to continue to borrow money without tapping the money markets or raising taxes..
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »It is indeed. And addressing the liquidity crisis in the markets was the sole aim of QE.
Not monetising debt, which was your implication.
[/I]
QE is by its nature monetising.
QE is not solving the liquidity issue. As capital is fluid and there are no exchange controls.0 -
An excellent point.0
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“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Thrugelmir wrote: »QE is by its nature monetising.
:rotfl:
Yes, but not current deficits.QE is not solving the liquidity issue. As capital is fluid and there are no exchange controls.
That is supposition.
You can look at M4 and claim it's not all showing up there. But that doesn't mean outflows, it could also mean balance sheet rebuilding.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Thrugelmir wrote: »QE is by its nature monetising.
QE is not solving the liquidity issue. As capital is fluid and there are no exchange controls.
I am not sure capital is completely fluid across international barriers.
For example QE sought to purchase gilts from pension funds in order that they would receive cash that they ultimately invest in riskier assets. But most funds seem to have a domestic bias. Overseas equities are generally a smaller share of the portfolio than UK shares.0 -
Radiantsoul wrote: »I am not sure capital is completely fluid across international barriers.
For example QE sought to purchase gilts from pension funds in order that they would receive cash that they ultimately invest in riskier assets. But most funds seem to have a domestic bias. Overseas equities are generally a smaller share of the portfolio than UK shares.
RBS hit the wall due to Asian retail depositors pulling funds out of the bank. Banking is international, money is lent internally across the banking groups.
Pension funds have to hold certain % of there funds in fixed interest stocks. So they merely exchanged short dated stock for longer dated at a better yield.
Same applied to any foreign bank based in the City of London except they had the option of transfering the money home, to invest into US Treasuries or German Bonds.0 -
HAMISH_MCTAVISH wrote: »I doubt you understood a word of it.
No, I understood all of it, or I wouldn't have said that, clearly.
Don't get huffy just because Thrugelmir made mincemeat of your arguments.
He's a clever guy who knows his onions.
Enough food metaphors...
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and becoming over-leveraged by paying top dollar for the ABN deal had nothing to do with the RBS's issues. i can see what you did there with Hamish :think:Thrugelmir wrote: »RBS hit the wall due to Asian retail depositors pulling funds out of the bank. Banking is international, money is lent internally across the banking groups.0 -
and becoming over-leveraged by paying top dollar for the ABN deal had nothing to do with the RBS's issues.
Maybe so. It hit the wall though when it did, as retail cash deposits were withdrawn, and the wholesale money markets dried up. Rumours apparently were rife about RBS in the Far East a few days before.
If Lehmans hadn't of crashed. Then RBS could have raised money through a rights issue as Lloyds has done twice now, or shrunk its balance sheet. As Hester is now doing. To keep going.0
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