QE = Devaluing the currency....

chewmylegoff

HAMISH_MCTAVISH wrote: »

Or not.

Pound up strongly this morning against the US$, the Euro, and even the Australian $.

when i looked yesterday after QE was announced, we were down about 1% against all major currencies (and in fact for the first time i've ever looked we were down against EVERY currency listed on the bbc's market data page).

today it shows about 0.5% up.

what is your point.

Graham_Devon

wotsthat wrote: »

Nice tangent.

Is it cast iron that QE leads to currency devaluation or not? That's what you said.

You want to try reading.

DaddyBear

HAMISH_MCTAVISH wrote: »

Or not.

Pound up strongly this morning against the US$, the Euro, and even the Australian $.

Are we just ignoring yesterday's falls?

Really2

I think this is the point that is trying to be made.

wotsthat

It's a new paradigm - that's not possible under Devonian theory.

wotsthat

Interesting piece from 2008 about the monetisation and demonetisation of the deficit.

http://blogs.ft.com/maverecon/2008/11/monetise-public-debt-and-deficits/#axzz1a0fKkrr9

Graham_Devon

To back up my view, which apparently is just black and white, and simply wrong....I introduce you to the Director of Research UK at Forex.com who obviously doesn't know what they are talking about either as some housing bulls know better.

Watch out Mervyn King. The governor of the Bank of England surprised the markets on Thursday and announced another round of quantitative easing (effectively printing more money) to the tune of £75 billion.

The first thing sterling did after this announcement was plunge against every major currency and, since money printing is usually associated with a falling currency, there may be more weakness to come.

So what can the average person expect from quantitative easing (QE)? While the Bank of England and the wider banking sector deal with the nitty gritty of how to implement QE and when to buy government bonds, the main thing we will notice is rising prices.

Yes, that's right, as if prices hadn't risen enough the Bank now expects inflation to top 5% in the next month or so. If you had thought prices in the supermarket or at the petrol station would go down any time soon, think again.

The trouble with QE is that it depreciates a currency, which makes everything we import — petrol and food for example — more expensive. Added to that, a weaker currency makes foreign trips costly. On the surface then QE only benefits those who prefer staycations and grow their own veggies.

http://uk.finance.yahoo.com/news/The-slow-death-pound-yahoofinanceuk-3272909453.html

Rinoa

Graham_Devon wrote: »

To back up my view, which apparently is just black and white, and simply wrong....I introduce you to the Director of Research UK at Forex.com

A journo writing for Yahoo. :rotfl:

lvader

When you have a deficit of 122bn, buying 75bn of gilts through QE isn't adding money into the economy. 50bn is still going to be lost through private gilt purchases. Money supply is going down.

wotsthat

Graham_Devon wrote: »

To back up my view, which apparently is just black and white, and simply wrong....I introduce you to the Director of Research UK at Forex.com who obviously doesn't know what they are talking about either as some housing bulls know better.

GD. Your view is that QE automatically leads to devaluation and therefore inflation. You're wrong. You've been given at least three reasons why that doesn't have to be the case.

Do you understand probabilities and the difference between certainty (cast iron?), likely, possible etc.