House prices are going to go up - unfortunatly

Really2

TruckerT wrote: »

So do you agree with me that 'inflation' should be a measure of the inter-relationship between wages and prices, rather than simply another word for price rises?

Beware, nobody else on this forum agrees with me...

TruckerT

Not really as current inflation is not caused by wages, thus inflation is not related to wages. Inflation can be caused by money or too little goods. Current inflation will turn to deflation (or as close as) without more money.

Graham_Devon

Really2 wrote: »

If it worked we would all get paid more and IR rates would rise. See wage spiral. chances are if it worked they would fall in real terms but rise nominally. See 70s.

Isn't happening now.

Didn't happen with QE1.

Why would wage rises happen with QE2?

TruckerT

Really2 wrote: »

Inflation can be caused by money or too little goods

Correction - price rises, traditionally, are caused by too much money or too few goods - currently, there is no shortage of goods, and no surplus money

Economists use three words (inflation, deflation and stagflation) to discuss these things, but none of them apply to a situation where prices and wages are moving in opposite directions - I would like to suggest that, right now, the economy is simply 'punctured'

TruckerT

Really2

Graham_Devon wrote: »

Isn't happening now.

Didn't happen with QE1.

Why would wage rises happen with QE2?

How can prices rise without more money? if you say by borrowing, think about it.
If lending causes people to make money and spend what would it do to the economy? Will althose people working now except companys could not affors it?

Unless you think 09 was caused by increased lending and there was an outstanding demand to borrow and that in turn did not cause increasing gdp?

Would that not totaly go againt what you say about demand and mortgage rationing?

HAMISH_MCTAVISH

Graham_Devon wrote: »

Isn't happening now.

Didn't happen with QE1.

Why would wage rises happen with QE2?

On the off chance that you're actually asking a serious question rather than just laying the groundwork for another 3 pages of pointless bickering interspersed with endless tedious references to can-kicking, I'll answer that.

QE1 was an injection of liquidity that basically ended up being absorbed by the banks.

QE2 is being discussed as more of a direct intervention which would bypass the banks.

The basis of massive monetary intervention as outlined by Bernanke et al for how to avert a great depression, ie, of helicopter drops of cash directly into the economy, has not been tried yet in a meaningful way in the UK.

Australia just wrote cheques to every house in the land. And gave FTB-s a big fat grant to buy houses. And it worked. No recession.

The UK gave a bunch of cash to bankers thinking they'd lend it, but instead they sat on it and used it to rebuild balance sheets. Unsurprisingly, as most of the liquidity never made it into the wider economy, it didn't work nearly as well as it should have.

Really2

TruckerT wrote: »

Correction - price rises, traditionally, are caused by too much money or too few goods - currently, there is no shortage of goods, and no surplus money



TruckerT

Correcrion of what. That is what i said. I do not agree that there are no shortages though explain food and oil. If we dont pay the price everyone else is offering we done eat or get heat oil etc.
So we are paying higher prices based on lower supply.. Not increased amounts of money.

Graham_Devon

Really2 wrote: »

How can prices rise without more money?

Quantitative easing is more money.

Unless you think Hamish's theory of handing out cheques to houses up and down the land will actually happen.

B_Blank

The BoE will buy assets. I suspect this time it will be more direct. i.e. housing/other riskier assets rather than just corporate bonds and uk bonds/gilts

DervProf

I might have been mistaken, but I'm sure I heard that Blanchflower bloke say in an interview on ITV News last night "we need to get house prices rising again" (or words to that effect).

Did anyone else hear the same thing ?

Talk about putting more eggs into the already heaving basket.

Bullfighter

HAMISH_MCTAVISH wrote: »

On the off chance that you're actually asking a serious question rather than just laying the groundwork for another 3 pages of pointless bickering interspersed with endless tedious references to can-kicking, I'll answer that.

QE1 was an injection of liquidity that basically ended up being absorbed by the banks.

QE2 is being discussed as more of a direct intervention which would bypass the banks.

The basis of massive monetary intervention as outlined by Bernanke et al for how to avert a great depression, ie, of helicopter drops of cash directly into the economy, has not been tried yet in a meaningful way in the UK.

Australia just wrote cheques to every house in the land. And gave FTB-s a big fat grant to buy houses. And it worked. No recession.

The UK gave a bunch of cash to bankers thinking they'd lend it, but instead they sat on it and used it to rebuild balance sheets. Unsurprisingly, as most of the liquidity never made it into the wider economy, it didn't work nearly as well as it should have.

I see that you chose not to use the USA in your examples of government intervention.