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More QE please....and interest rates...
Graham_Devon
Posts: 58,560 Forumite
Should interest rates be cut to zero?
That, is part of what the OECD are urging today. They suggest either further QE, or cutting rate to zero in order to fuel growth.
My view on this is rather simple. If 0.5% rates hasn't worked, and £375bn of QE (plus extras disguised under a different title) hasn't worked, why will more do the trick? Why would another 0.5% off base rates do the trick?
Surely theres a point where something else needs to be done? Or maybe, rather nothing is done, and a natural rebalancing allowed?
So, would extra QE or base rates cut to zero do anything other than extend things for a while longer?
OECD article here: http://www.bbc.co.uk/news/business-21357167
That, is part of what the OECD are urging today. They suggest either further QE, or cutting rate to zero in order to fuel growth.
My view on this is rather simple. If 0.5% rates hasn't worked, and £375bn of QE (plus extras disguised under a different title) hasn't worked, why will more do the trick? Why would another 0.5% off base rates do the trick?
Surely theres a point where something else needs to be done? Or maybe, rather nothing is done, and a natural rebalancing allowed?
So, would extra QE or base rates cut to zero do anything other than extend things for a while longer?
OECD article here: http://www.bbc.co.uk/news/business-21357167
0
Comments
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It was Franklin D Roosevelt who said
"Do Something. If it works, do more of it. If it doesnt, do something else"
A sound philosophy, but we seem to prefer doing the same thing over again, expecting a different result - Einstein's definition of insanity."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0 -
No, both policies have largely failed and as has often been said one form of sanity is doing the same thing over and over again and expecting different results. The answer is to encourage people to go out and spend more money instead of saving it in order to stimulate demand and improve business confidence.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
Further QE or reducing interest rates will not increase the amount of lending to businesses or encourage investment in new housing.
The banking regulators are the main reason why lending is restricted and not the lack of actual cash.
Just because some-one has a black mark on their credit file due to an issue with a mobile phone company should not preclude you from getting a mortgage
If necessary the government should open their own bank and lend direct.0 -
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Thrugelmir wrote: »Isn't LloydsHBOS, RBS and Nram sufficient?
That accounts for around 45% of the outstanding UK's mortgage debt.
They let them do what ever they like though, don't they ? Civil servants don't understand business or finance, let alone banking, so they're terrified to intervene. Politicians as always are extremely reluctant to go against the advice of officials.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
GeorgeHowell wrote: »They let them do what ever they like though, don't they ?
Hardly. Basle 3, FSA regulations, bankers bonus tax, PPI claims, Libor fines and claims.
Think its easy to run a bank at the current time?0 -
Won't do any good for the reasons PP have made.
As Generali pointed out on another thread perhaps rather than being Doves it is now time for Owls and Pooh.
Perhaps doing little and waiting for it to unravel would be better?
."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
I actually think theres scope in the government becoming lender.Thrugelmir wrote: »Isn't LloydsHBOS, RBS and Nram sufficient?
That accounts for around 45% of the outstanding UK's mortgage debt.
However, the government should also be the builder of, and owner of, the assets.
Therefore, we don't just become guarntors, we have an asset. Said asset would have been built, creating jobs.
Could be win win all round. Building = some growth and employment. Asset = protection on the loan. Lending = profit on the loans.
Or, could so a bit of both. We could have the radical idea of council housing, alongside owner occupied, bringing in 2 revenue streams, firstly, the rents, and secondly the profit on the loans from those who have bought.
Becomes a self sufficient scheme, with a huge outlay at the start. Would also kick builders into touch through competiton.#
Theres a downside for investors and BTLs, but how long can certain groups keep feeding on the struggles of society?0 -
Thrugelmir wrote: »Hardly. Basle 3, FSA regulations, bankers bonus tax, PPI claims, Libor fines and claims.
Think its easy to run a bank at the current time?
Not our problem, they get paid vast amounts to grapple with it all.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0
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