Further Quantitative Easing (QE3)

Hungerdunger

creeper1 wrote: »

Hello all. So there are rumors of further quantitative easing in the works.

Are there? Where are your sources for these rumours?

meatandtwoveg

talexuser wrote: »

I agree we seem to be copying all of Japan's mistakes, without an export industry to compensate. If QE was a good thing everyone would have been doing it before. It is a panic measure when no other measures are left to prop up the bubble and prevent negative equity, more repossessions, more unemployment etc etc. Savers suffer but only history will tell if it works for a "softer" landing than would otherwise have been the case, or if it is just kicking the can down the road for the inevitable (and possibly worse) correction to come.

Japan's mistake's, i think if we know it does not make the worker/saver better off then i am sure the PhD's at the BoE, the Treasury, the DOM at al know exactly what the out come is.....They are left with no choice but to turn debt in to money then rinse and repeat.

The problem is the inflation felt as a net importer, also it makes sure Sterling stay's in Sterling, i mean have you tried a holiday in Australia recently, Sterling down crica 40%...

If we do get into a wage/cost inflation spiral, like the [EMAIL="70@S"]70[/EMAIL]'s by the way i don't think this will be the outcome, but if we did, with wages rising, so will domestic costs, outstripping wage rises, but also, with wage rises will come higher base rates, killing off nominal asset prices. If your nominal wage rises to £20 per hour, your nominal costs will rise in line.....

The only way out of this mess is deleveraging, asset prices are way out of sync, debt costs is sucking spending money out of the system.....

But investment plans, pensions et al are suffering firstly because inflation is north of 5%, and most of these financial products do not even yield 5%, then minus costs and tax well they are just as negative as a plain and simple savings account.....

I think we will see the BoE buy up all of the GILTS issued, they already own 20%. I also think we will see deficit servicing, being paid for by printing money for the next amount of years, until debt becomes serviceable again, if ever with globalization, and the global wage arbitrage......

meatandtwoveg

A savings and investments forum, QE is killing yields, killing pension pots, and hardly any debate, i'll get my coat....

MiserlyMartin

hallmark wrote: »

A straightforward stealth-tax on anyone with savings in order to bail out everyone who can't afford to service their debts.

The only reason it's being allowed to carry on almost without comment is that (A) There are plenty of ppl with mortgages who are delighted by it & (B) Not enough people even vaguely understand what it is anyway.

If this site & Martyn Lewis gave the slightest stuff about savers no doubt there'd be a campaign against it. But don't expect one anytime soon, Martyn couldn't care less about savers or the endless reaming that's being handed out to them.

BTW in advance of some bleating numbskull jumping in to accuse me of being a bitter STR-er or some other codswallop I'm not, the above is merely fact. My dough is spread far & wide precisely because of way Govts like to introduce policies such as this with zero regard for "fairness".

You are right, Martin Lewis should be making his readers and subscribers aware of QE and what it means and campaigning against it just like he has done with claiming bank charges etc. But I suspect that so many MSE readers are on the other side on the coin and are the very people QE is supposed to save. But all QE has done is increase inflation and push up the cost of living; few are better off.

I am disappointed with this site lately. It seems to side with the reckless and !!!!less and offer no help to those who have been shafted in order to bail them out. What about some help for the pensioners?

Ark_Welder

MiserlyMartin wrote: »

But all QE has done is increase inflation and push up the cost of living; few are better off.

QE was created because interest rates could not be reduced much further than the current level. And a reduction in interest rates was needed to prevent deflation from taking hold - and that would have been substantially more damaging to economies, borrowers, and ultimately, savers, than the current level of inflation: look at the 1930s for an example of what prolonged deflation can achieve. If banks and other companies had been wiped out, how many would be better off now?

Inflation has been on an upward trend since around 2001, so before QE had even been thought of, never mind implemented. And even after the £200bn of purchases carried out in 2009 (and none inbetween then and the end of last year), inflation is still lower than the majority of time periods between the early 1970s to the early 1990s.

Glen_Clark

talexuser wrote: »

it is just kicking the can down the road for the inevitable (and possibly worse) correction to come.

It is exactly that, because politicians (of both parties) focus on the next election.

MiserlyMartin

Ark_Welder wrote: »

Inflation has been on an upward trend since around 2001, so before QE had even been thought of, never mind implemented. And even after the £200bn of purchases carried out in 2009 (and none inbetween then and the end of last year), inflation is still lower than the majority of time periods between the early 1970s to the early 1990s.

Yes but, that doesn't mean a a lot when you consider in the 70's we did not have inflation at 10 times the base rate! Savers are being shafted today. In the 70's and 80's we had healthy savings returns, how does 12% Gross sound? Even with 10% RPI thats far preferable to the sorry situation today.

Deflation is a myth pandered by pro QE guys. We are in no danger of deflation. What we are in more danger of is hyper - inflation, helped by all the QE. Mervyn King says inflation will fall back to 2% next year. Hes been saying that for the last 3 years! Its all utter rubbish in order to stealth tax by inflation.

Also a bit of deflation is good. Sounds like you have been taking a page out of Gordon Browns speech book.

Ark_Welder

MiserlyMartin wrote: »

Yes but, that doesn't mean a a lot when you consider in the 70's we did not have inflation at 10 times the base rate! Savers are being shafted today. In the 70's and 80's we had healthy savings returns, how does 12% Gross sound? Even with 10% RPI thats far preferable to the sorry situation today.

RPI peaked at around 27% in 1974/75, and was above 10% for most of the time from 1972 to 1982.

MiserlyMartin wrote: »

We are in no danger of deflation

Because QE, which was designed to address deflation, has made sure of that.

MiserlyMartin wrote: »

What we are in more danger of is hyper - inflation, helped by all the QE.

The first bout of QE amounting to £200bn was competed in 2009. Just over two years after it had completed, inflation measured by RPI has been up to 5.6% and is falling. In the seven or so years before QE inflation was rising: QE restored inflation to the less-destructive path that it was on.

Plotting a graph of monthly RPI since 1948 will demonstrate what I mean.

Ark_Welder

Google Rapid fall in inflation expected from the FT for a view on prospects.

MiserlyMartin

Ark_Welder wrote: »

RPI peaked at around 27% in 1974/75, and was above 10% for most of the time from 1972 to 1982.
.

You are still ignoring RPI versus the base rate - that has never been worse than today.. I don't agree with you that QE has stopped deflation dead, due to all the other inflationary aspects I doubt it was needed. Besides, in this situation of prolonged 0.5% base rates, 2% deflation would be welcome, to offset the real terms loss to savers, which you seem to continue to ignore.