QE3 announced tomorrow by helicopter Ben?

DiggerUK

Loughton_Monkey wrote: »

For reasons unknown, it is tradition that precious metals rampers on these boards use handles IN_CAPITAL_LETTERS with underscores......

As far as I am aware HAMISH_MCTAVISH doesn't do precious metals. But what do I know....I'm bonkers.

Love and hugs, DiggerUK
..._

Loughton_Monkey

DiggerUK wrote: »

As far as I am aware HAMISH_MCTAVISH doesn't do precious metals. But what do I know....I'm bonkers.

Love and hugs, DiggerUK
..._

You're right!

Freudian slip by me I think. Mind you, in Scotland, bricks & mortar are "the new silver".

However it doesn't change my view that all posts by CAPITAL_LETTERS are far better ignored.

HAMISH_MCTAVISH

DiggerUK wrote: »

As far as I am aware HAMISH_MCTAVISH doesn't do precious metals.
..._

Well, I do come from Aberdeen, where the streets are paved in Gold....

And my hair gets more silver in it by the year.

Does that count?

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

Well, I do come from Aberdeen, where the streets are paved in Gold....

And my hair gets more silver in it by the year.

Does that count?

[Ignore]I would give a cynical and sarcastic response, but I'm afraid you're on the 'ignore' list.[/Ignore]

thriftychap_2

QE = Inflation
Inflation = Cheaper debt

Cant be all bad

sabretoothtigger

Its bad if you are owed money in future. Like a job contract or a pension, that kind of thing.
Generally instability in currency is inefficient and destructive to growing business but yea nice for big debtors like government hence we shall continue ad infinitum.
Long term the first point applies since the debt is a promise of currency, its harder to sell something of less value and uncertainty is very bad for borrowing costs
TSHTF when it affects not just future money value but present day ability to set and exchange goods in that currency.


Bernanke: "Our Tools are not Strong Enough to Offset a Major Fiscal Shock; we have to think what to do"

http://www.youtube.com/watch?v=9L-31m4UgOY&feature=g-u-u

Seems like everyone agrees, QE doesnt solve fundamental problems it just covers them for a while. They cant bring down unemployment with deficits and its inevitable by any side that fiscally they are not able to keep up this level of spending. They will stop spending either at face value by choice or in any case the loss of dollar worth, when that happens they'll need a sensible solution (ie cuts) which neither party has or will address in the foreseeable future

The mods keep censoring and removing entire threads mentioning gold or any metal which is slightly ironic when our currency is called sterling for some reason.

I find authoritative actions like that a reflection of the norm now and confirmation the world is in the majority going to plough on no matter how wrong the situation until they hit something solid derail and have to reset all preconceptions and/or we relearn history

vivatifosi wrote: »

That's a really sad story. But taking it to its logical conclusion, wouldn't we be better stockpiling food (per the infamous eating dopester's dog/window-licking thread) than precious metals?

Food is not wealth, its an essential and it doesnt keep that well. Keep as much food as possible which is not that much unfortunately

Its harder to pay someone with food and its not that transportable. Some argue for storing oil as wealth, that has more merit but still doesnt work

purch wrote: »

Without consumption their economy is doomed.

Imagine the surprise if we found the opposite were true, production served growth not consumption and that stopping spending increased jobs not decreased. It'd be a 180 degree turn from policy now I guess so we may never know, usa is 70% consumer based apparently

Generali wrote: »

causes problems in credit markets as companies struggle to repay debts from reduced prices.

Why doesnt this price problem afflict the tech industry. Prices fall 50% every two years there yet they keep investing greater amounts. Costs must fall even faster for that to work.
I dont draw the same conclusion, we'd see a greater bias to saving rather then taking debt. The assumption is this slows growth, it might just make growth more stable by requiring more equity then debt ?

If the currency was fixed value then returns cannot as easily be guaranteed which means profit sharing rather then always promising a fixed return. If its a good business there is nothing to fear. It does imply greater involvement and knowledge, less of this packaged up CDO junk dealing
We got a deceptive system at present, total gains from bonds are dangerously unstable but at face value are flawless.

It's worth remembering that not only has every fiat money system prior to this one failed but so has every other sort including metallic ones like a Gold Standard.

Sterling never failed, if >1% value counts as success

Generali

sabretoothtigger wrote: »

Why doesnt this price problem afflict the tech industry. Prices fall 50% every two years there yet they keep investing greater amounts. Costs must fall even faster for that to work.

Because their productivity and sales rise faster than price deflation. As you say, when costs fall faster than prices there isn't a problem.

Loughton_Monkey

sabretoothtigger wrote: »

.....Seems like everyone agrees, QE doesnt solve fundamental problems it just covers them for a while. .......

....

Food is not wealth, its an essential and it doesnt keep that well. Keep as much food as possible which is not that much unfortunately

Its harder to pay someone with food and its not that transportable. Some argue for storing oil as wealth, that has more merit but still doesnt work

.......We got a deceptive system at present, total gains from bonds are dangerously unstable but at face value are flawless.


Sterling never failed, if >1% value counts as success

Haven't quoted your entire post to save space.

I believe any analysis of the degree to which QE will solve fundamental problems must first of all take into account who's problems we are trying to solve.

To solve the problems of a bankrupt government is one thing. To solve the problem of the wealth of the nation is an entirely different one. To solve the problems of every diverse segement of the population (i.e. pensioners, middle-earners, youth, rich, poor, business earners, house owners, renters.....) is different yet again.

All I can suggest is that QE can 'almost' solve the problems of the Government. It is much less likely to solve problems of the wealth of a nation. I don't think it directly solves the problems of any particular individual/group - except by accident.

Why? Because we all tend to look at 'wealth' slightly differently. Rightly or wrongly, we all measure it in £notes. It is our single and only measure of wealth. [Yes, I know as well as anyone that the huge silo of grain is 'wealth' - and not £5 notes - but I can guarantee that the farmer has put an accurate value in £notes on it at the end of his Financial Year. So it is measured in £notes.]

A government sees its finances relatively simply. Number of £notes in, and number of £notes out. OK, a little bit of adjustment for foreign assets/revenues but still measured in £notes. Hence if you can't pay your debts, or can't raise enough tax etc., then print more. Problem largely solved [at least for now].

The nation, on the other hand, has a somewhat more complex understanding of 'wealth'. We still, at the end of the day, measure our wealth in £notes, but (unlike governments) we need to worry directly what each £1 can buy us. I had £10,000 before QE, and could buy 2000 loaves of bread and 10 televisions with it. After QE, I can only buy 1900 loaves, and 4 televisions (because the latter are made abroad and the £ has plummeted). So perceived wealth - universally to the nation - is considerably reduced, despite the government sitting pretty.

Come now to different groups of individuals, and we have a revolution on our hands! It all depends on our situation before the music stopped. All assets in foreign property/currency? Then quids in. All assets in UK? You're much poorer. No assets but live from hand to mouth? Even poorer still because the same money buys much less bread.

But as long as a bloody revolution can be prevented, the government has a 'balanced' balance sheet. No debts. And it can now start 'dealing' with the constituencies, and redefine tax levels, pensions, benefits, making sure it remains balanced.

So handled carefully, [and that's what I think they are trying to do], I think governments are looking first at solving their own problems. Doing it 'slowly' to avoid the inevitable blood bath. And trying to adjust along the way for the consequences. i.e. trying not to penalise the wealth creators, but trying to squeeze the big drains on taxation.

sabretoothtigger

Sounds like a deal with the devil. Yes I acknowledge they are trying to do the best they can and the government surviving its debts helps sections of society reliant on welfare but its pretty much inevitable the value of that aid is going to decline

Generali wrote: »

Because their productivity and sales rise faster than price deflation. As you say, when costs fall faster than prices there isn't a problem.

I would argue that effect can apply to other industry besides tech and also that tech improves and enhances other industry in this way.

If we have a bias to growth and savings rather then debt it would be beneficial in that those industries would receive most funding without any government schemes needed


The transition would be the nasty part and the main reason why we dont or wont try this is that government is not productive, doesnt have organic growth or drop prices to its users like this so would compare very badly.

To have this bias would be reducing its own powers. Instead we have debt then inflation and an attempt to split the spoils to the majority of voters but the actual system is inefficient, encourages loss and restricts business?
Its a negative feedback I think and will fail, none of us have to be for or against it for that to occur but it doesnt produce mutual benefit like exclusive capitalism does

JohnyT_2

thriftychap wrote: »

QE = Inflation
Inflation = Cheaper debt

Cant be all bad

Depends. At the moment there is Biflation.

Biflation = Deflation in property, I.E Mortgages are going up in relation to property values.

At the same time Inflation in Gold and Silver around 20% every year for more than a decade. Looks like its going to continue too. Gold will be over $2000 next year and silver over $50 on its way to $100 oz.