House prices are going to go up - unfortunatly

Graham_Devon

Really2 wrote: »

Well Read then?

QE wont/can't cause inflation unless money gets in to peoples pockets.
So if it causes growth, lending, boom etc it may well do.

House prices can't rise if people can't borrow or have no desire to buy. See this quote.

I am reading, and the bold bit is where I disagree.

QE directly increased food prices, among other things.

The US central bank was accused today of adding to soaring food prices with its new programme of quantitative easing, after oil and commodities surged on world markets.

Critics said the $600bn (£370bn) of QE announced by the Federal Reserve would hurt consumers by pushing up prices of soy, wheat and other staple foods, along with oil, copper and zinc.

The jump in commodity prices raised the prospect of an inflationary bubble reminiscent of 2008, when oil and other industrial raw materials struck all-time highs just before the crash.

http://www.guardian.co.uk/business/2010/nov/05/us-accused-of-worsening-price-rises

That is causing prices rises (inflation) to all of our pockets and we are not getting the wages to keep up.

This has been a common theme since QE was started in the UK and the US, and I'm dumfounded that you now come out to suggest otherwise.

Really2

Graham_Devon wrote: »

I am reading, and the bold bit is where I disagree.

QE directly increased food prices, among other things.
http://www.guardian.co.uk/business/2010/nov/05/us-accused-of-worsening-price-rises

That is causing prices rises (inflation) to all of our pockets and we are not getting the wages to keep up.

This has been a common theme since QE was started in the UK and the US, and I'm dumfounded that you now come out to suggest otherwise.

Well my brain would say look if it did cause it to jump?
Your article Nov 2010


Futures seem to be at the same price before it was introduced.

Zinc


If you read the article as well it talks of 2008 a great example of why assets cant keep inflation going without the money or desire to buy them.
What happened in 2008 when money could not support asset prices?

How can asset prices keep rising if people have less to buy them with? you get to the point where demand will be lower than supply when people can't afford them. Prices have to fall then.

It really is simple logic.

For people thinking inflation not deflation, money has to get in to peoples pockets. Inflation without money to back it up will turn to deflation until demand and supply meet again.

Cleaver

B_Blank wrote: »

I am a bear. I want house prices to go down. But QE2 is obviously coming and that will do what QE did and boost asset prices in the UK (espicially house prices). This sucks.

This would be a horribly irresponsible policy from the BoE

As robmatic said, if you feel that house prices will rise then you are bullish about house prices, not bearish.

Graham_Devon

LOL Really, you have actually started the price charts at 2010!?

Come on, you are better than that. At least start them in 2008...when the event actually happened.

Really2

Graham_Devon wrote: »

LOL Really, you have actually started the price charts at 2010!?

Come on, you are better than that. At least start them in 2008...when the event actually happened.

http://www.bbc.co.uk/news/business-11678022

Graham if you are going to quote things at least use you brain. Your article is clearly stating concerns over Nov 2010's QE.

4 November 2010 Last updated at 02:24
Federal Reserve to pump $600bn into US economy

The Federal Reserve has announced that it will pump $600bn (£373bn) into the US economy by the end of June next year to try to boost the fragile recovery.

The figures I have put up are for the QE in the article you posted.

So !!!!!! are you going on about, Is it muddle time again???

Percy1983

Interesting, I might sell one of my cars to get the deposit together quicker.

Loughton_Monkey

Graham_Devon wrote: »

.....All I'm saying is that further QE will cause higher inflation, or the high inflation we have to last longer than it otherwise would. At a time when we least need it as we are all getting poorer.

If you want examples of contradictory statements, then this take the biscuit, surely?

Your first sentence is true. QE is all about causing more inflation.

Your second sentence says we are all getting poorer! An understatement if ever there was one. This has currently manifested itself in two ways. Firstly, some have lost their jobs, or accept lower wages etc. Secondly, and more importantly, "we" - in respect of "we who have a government to act on our behalf with our money" has frittered it all away and run up >£1 trillion of debt!

Goats and monkeys man! Do you not understand that this cannot possibly be 'paid'? Do you not understand that if we hypothetically distribute this debt to each person you and I are much, much, much, poorer than we think? By around £20K per man, woman, and child in the UK?

There is no other way than to cause real inflation. This will make most of us "see" and "feel" the poverty we are in, and eventually this prevents us buying that Korean TV [far too expensive], but will maybe sell a JCB or two to China [because they will become much cheaper]. Eventually we move to trade surplus. Only in this way will we start to get richer again.

This will be a long and painful process. Not least because of all the bickering and arguing about how the "we are getting poorer" bit is handled by the Government.

Graham_Devon wrote: »

It may pump some liquidity into house prices, not sure, but it's artificial, and only creating a bigger problem.

What happens to house prices [as opposed to your wages, or the cost of cornflakes...] will depend upon market forces. But there is absolutely no alternative than to "realise" this debt in the only way we can. Inflate it down to an amount we can all take.

doire_2

B_Blank wrote: »

I am a bear. I want house prices to go down. But QE2 is obviously coming and that will do what QE did and boost asset prices in the UK (espicially house prices). This sucks.

This would be a horribly irresponsible policy from the BoE

Euro on its knees, banks not lending willy nilly, unemployment up, talk of another UK recession, cost of living soaring etc etc

Yeap....looks like prices are on the way up

Road_Hog

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?

People still think back to the '70s and to a certain extent the '80s business model and national/UK inflation.

We now have trans-national corporations (not companies) and a globally driven market.

We also have other distorting factors. Immigration is causing wage deflation, that wouldn't of happened in the above quoted period, in fact our population would be decreasing and wages would be rising. Commodities (wheat etc.) are being traded for profit, which is a form of gambling. Energy prices are being driven up by ridiculous 'green' policies, even though most of us are cutting down on usage of fuel, gas and electricity.

The relationship between increasing wages (more spending power) and more money chasing the same amount of goods (or perhaps less goods) causing inflationary pressure is gone, perhaps forever.

We need to understand that the old fiscal rules have gone and we are operating by a new set of rules. We are now in a plutonomy/plutocracy.

TruckerT

Road_Hog wrote: »

People still think back to the '70s and to a certain extent the '80s business model and national/UK inflation.

We need to understand that the old fiscal rules have gone and we are operating by a new set of rules. We are now in a plutonomy/plutocracy.

I think that's what I've been trying to say - I quite like the pluto-words, now that I've looked them up in my dictionary...

TruckerT