QE3 = £75bn

pqrdef

I figure they can give us £1,200 each, and we can use it to pay off our credit cards. End of debt crisis.

Really2

shortchanged wrote: »

It doesn't always work like this. Countries that are in dire straits often have high inflation as their currency weakens.

So thus why increasing rates would most likely to lead to increased inflation as the economy would nose dive.

shortchanged wrote: »

Ask yourself this Really2, why is inflation currently so high in the UK when demand is weak?

1. VAT increase.
2. We all use fuel and the price has increased regardless of exchange rate YOY. Demand is there
3. We all eat, and food prices had gone up due to supply factors and distribution costs. Demand is there.

With the exchange rate not far off it was last year it is hard to blame inflation on the value of the £.

shortchanged_2

Really2 wrote: »

1. VAT increase.
2. We all use fuel and the price has increased regardless of exchange rate YOY. Demand is there
3. We all eat, and food prices had gone up due to supply factors and distribution costs. Demand is there.

With the exchange rate not far off it was last year it is hard to blame inflation on the value of the £.

Exactly, look at your list and apart from VAT the UK government has little or no control over the other factors.

Your point about we all have to eat is totally relevant. There will always be a demand for food but can the supply always keep up with the demand?

Really2

Mr_Mumble wrote: »

So, Mugabe's Zimbabwe and Weimar Germany never had a recession?! A country experiencing 100% inflation and 99% nominal growth over a couple of quarters is in recession. Your definition is simply wrong.

Economic Decline is generally a drag on inflation, there will be examples such as your "hyper inflation ones"
But in general a recession causes inflation to fall, there are many examples of this and I do no think we are looking at hyper inflation for us? do you?

inflation encourages short term consumption and can similarly over stimulate investment in projects that may not be worthwhile in real terms (for example the housing or dot.com bubbles).
Deflation is usually caused by a drop in aggregate demand, and is associated with recession and (more rarely) long term economic depression.

Really2

shortchanged wrote: »

Exactly, look at your list and apart from VAT the UK government has little or no control over the other factors.

Your point about we all have to eat is totally relevant. There will always be a demand for food but can the supply always keep up with the demand?

So why the fuss on increasing rates, QE inflation etc?

Economic stability has got to take priority over inflation, as you have already pointed out and agreed that a worse economy would make inflation far worse.

Degenerate

Old_Slaphead wrote: »

So where will BOE eventually get the £275bn to repay the government - will it be from Treasury who will borrow from somewhere else when conditions allow ?

(Other way around, but we know what you meant.)

The same way as it gets the money to repay all gilts at maturity - either rolling over the debt with new gilt issues if we are still in fiscal deficit, or pehaps from taxation revenue if we are in surplus.

This "natural expiration" of QE will also leave the BOE with the decision of whether the economy is ready for the extra money to be withdrawn, or whether to roll-over the QE with further gilt purchases to maintain an equal stock.

Graham_Devon

Buy now, pay later, in simplistic terms.

Unfortunately it was doing that which kinda got us into the situation in the first place.

Really2

47thElement wrote: »

First you have to understand the difference between money and currency. No one can create money. Only gold and silver are money.

No, money is the measure of a value, Gold and silver have both been used as currency they are not money.
Money is the expectation of value. It could be two chickens and a cow you value something as it's monetary value to you.

Money is how we communicate our expectation of value and have done since pre history.

But can we avoid another thread about silver and how much it has lost in value recently please.

tomterm8

47thElement wrote: »

First you have to understand the difference between money and currency. No one can create money. Only gold and silver are money.

Nope

47thElement wrote: »

Anyone can create as much currency as they like the trick is getting people to mistakenly believe its worth something when it has no intrinsic value.

Gold has no intrinsic value. Paper, you can burn if you get cold.

47thElement wrote: »

I continue to believe what Mike Maloney from www.wealthcycles.com has always said is happening right now.

First there will be the threat of deflation followed by real monetary deflation, which is what is happening right now. All asset classes around the world are falling in relation to fiat currency, property, markets and commodities are falling this is deflationary.

Next he says all around the world they will abuse their currency supply, to fight deflation which means all debts surge up. Every central bank and country is in a race to the bottom, the UK is creating another 75Bil units of worthless fiat currency, the Europe central bank keeps adding trillions of units. The USA and Japan are also abusing their currencies as well as the rest of the world.

When the entire world is abusing their currencies like this gold and silver will account for the abuse just as they have done every single time this has been tried.

The definition of madness is doing the same thing again and again expecting a different result.

Blah.

The definition of madness is arguing with gold hawks.

Really2

I value your 1kg of silver at 4 potatoes, which is money in that transaction?
Gold and silver are not money, they were used as currency.

If paper money went gold and silver would still not be money, use as currency? possible but unlikely.

If we went all mad max, money would be many things to may people. Barter basically. So like above potatoes would be the money in the transaction as they were the idea of value against something.