QE3 = £75bn

tomterm8

47thElement wrote: »

All these units of fiat currency that are expanding in supply so fast will all come chasing the tiny pile of finite gold and silver. But dont worry paper is not finite trees are a renewable source.

You do realize that in those times where gold and silver were actually currencies, they were fiat currencies, don't you?

A bloke named Cesar declared that gold was money, and loe, gold was money. And it was good. Until Cesar debased the coinage.

(Look it up: one of the first recorded banking crises. Caused by Cesar debasing the currency. The gold currency).

That gold and silver are in no way stable stores of value?

And that the very basic principal in Living in the Real World is nothing can keep governments or banks honest if they don't want to be.

What was the very first thing the US government did during the Great Depression? It seized the gold. Look it up, if you don't believe me.

heathcote123

JonnyBravo wrote: »

Discuss. At length.

http://www.bbc.co.uk/news/business-15196078

bah not enough. 750 billion would be more like it.

That might even push my gold fund back up.

Graham_Devon

FTAdvisor on why QE is likely to mean "entrenching" higher inflation...but what do they know.

http://www.ftadviser.com/FTAdviser/Investments/News/article/20111006/102a1250-f02c-11e0-a5c2-00144f2af8e8/Market-view-QE2-could-entrench-high-inflation.jsp

Azad Zangana, European economist at Schroders, said: “In our view, the restarting of QE will boost confidence and asset prices in financial markets, but we remain sceptical over its power to restart lending, and therefore have a meaningful impact on the real economy.

“Where QE might have an impact is on Sterling. If the purchases of assets leads to a depreciation in Sterling, then this could boost demand for UK exports. However, this would also raise inflation for households, who are already struggling to make ends meet.

Graham_Devon

Loving the politics too.

Ed Balls comes onto the TV to complain that George Osbourne stated that QE was the last resort of a desperate government and this government has used QE. You know, make George look silly for what he stated.

Ed Balls then suggests, after the above, that the government are desperate, as they are using QE.

So it's the same insult that the tories through, that labour are now throwing at the tories.

Meanwhile, as soon as any nastiness nears the fan, BOTH parties turn round and say "BOE is independant, nothing to do with us Guv".

Now, Ed Balls suggests that the bank is stepping in to bail out the government. He needs to be careful as I've heard Merv speak up against him before. Surely though, thats also true for labour? They just had £200bn instead of £75bn.

I suppose however, it's Ed Balls. So what else should I expect? The more he speaks, the more he destroys the labour party.

Thrugelmir

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 ?

The gilts purchased in the previous QE round start to mature in 2012. Along with the fact that the BOE is receiving the interest that would have been paid out.

So the BOE have a mechanism for keeping the genie under control.

tomterm8

Thrugelmir wrote: »

The gilts purchased in the previous QE round start to mature in 2012. Along with the fact that the BOE is receiving the interest that would have been paid out.

So the BOE have a mechanism for keeping the genie under control.

Er... I think they will just roll over the QE, when the gilts come up for renewal.

worldtraveller

Graham_Devon wrote: »

FTAdvisor on why QE is likely to mean "entrenching" higher inflation...but what do they know.

IMHO I think that Azad Zangana is wrong and is overestimating the possible effect of a weaker pound against the USD on the future inflation rate. As I stated in my post earlier today, the exchange rate will have an effect, but nothing like as much as the deflationary effect of the massive recent & future drop in commodity/oil prices.

But what do I know?.....Only time will tell of course.

Graham_Devon

worldtraveller wrote: »

IMHO I think that Azad Zangana is wrong and is overestimating the possible effect of a weaker pound against the USD on the future inflation rate. As I stated in my post earlier today, the exchange rate will have an effect, but nothing like as much as the deflationary effect of the massive recent & future drop in commodity/oil prices.

Will there be a drop in commodity prices though? Mervyn King in his interview with the BBC today suggested QE will raise asset prices, therefore keeping people in jobs etc.

If the US follow suit, which is certainly a possibility, won't we just see what we saw last time round, and commodity prices increasing again?

Or is there something different happening now? Certainly seems the QE in the UK is being used in exactly the same way.

worldtraveller

Graham_Devon wrote: »

Will there be a drop in commodity prices though? Mervyn King in his interview with the BBC today suggested QE will raise asset prices, therefore keeping people in jobs etc.

If the US follow suit, which is certainly a possibility, won't we just see what we saw last time round, and commodity prices increasing again?

Or is there something different happening now? Certainly seems the QE in the UK is being used in exactly the same way.

I'm sure that QE will have some effect, but I still see too much weakness in the global economy currently, and looking forward, to hold commodity prices up to any great extent. I guess it's just my feeling on the matter, rather than anything much more. However, right or wrong, I prefer to follow my own instincts than yet another ivory towered economist.

JonnyBravo

Graham_Devon wrote: »

Will there be a drop in commodity prices though? Mervyn King in his interview with the BBC today suggested QE will raise asset prices, therefore keeping people in jobs etc.

If the US follow suit, which is certainly a possibility, won't we just see what we saw last time round, and commodity prices increasing again?

Yep I agree FWIW.