Quantitative Easing from an investor's perspective

bowlhead99

Linton wrote: »

By what mechanism can QE "shovel money away from productive enterprises"?

By making everyone put their money into risk free savings of course, so that it no longer circulates round the real economy providing revenues and employment. No, wait, that's the exact opposite of what it's done.

Maybe he means it will depress asset prices making it very difficult for businesses to raise finance for expansion and growth of production and employment. No, wait, that's the exact opposite of what it's done.

lvader

JohnRo wrote: »

What? The government borrowing continues regardless of QE.

How? They can only borrow by issueing bonds. Someone has to buy the bonds, that is difficult to do when you have to issue bonds to cover a deficit that is greater than 10% of GDP. What tends to happen is that yields go through the roof and then you need a bail out. It also removes money from the real economy because it goes into bonds instead and that is where unemployment goes through the roof. Basically the things that happened in Spain, Greece and Italy.

talexuser

Some interesting perspectives of the pros and cons.

At the end of the day it is something that did not happen in a balanced economy, so is a panic measure, a sign of failure.

The "last resort of a desperate government when all all other policies have failed" as Osbourne described it in 2009 under the last incompetents, but very quick to accept a lot more when he took over.

lvader

That is because the only other alternative was cutting government expenditure by around 25%, since the Tories didn't win a majority that was never going to happen.

sabretoothtigger

Reducing spending does help reduce or keep taxes down. As we have not done that we hope the debt will pay for itself somehow which is the castle in the sky that QE is built on

QE has been brilliant for investors.

Growth is what investors want. That QE from 2009 onwards has not helped the recession end is actually negative for investors. I know the perception is not that but the bottom line is company growth not gov debt issues

It did help traders and low rates favour trading as they invest from borrowed money. Its ideal that sterling is weak and with FTSE foreign income based we can presume that by depressing uk worth then comparatively stocks look positive.
The extreme example would be +100% in 3 months, good investment, a result of fine government; actually thats the Zimbabwe stockmarket during its currency experiment

Glen_Clark

doughnutmachine wrote: »

QE has been brilliant for investors. .......This means people like myself have seen our share portfolios go sky high

Osborne's Help to Bubble scheme has made my house price rise, but I am no better off because of that.
QE has made my share prices rise, but I still only have the same share in the same company. So I am not sure that has made me any better off either. If it had made the company more productive, that would have made me better off. But simply increasing the price of my shares is probably no more use to me than increasing the price of my house. Particularly when both are measured against a currency that is falling in value!!!

MoneySaverLog

If we were to "print our own money" it would constitute fraud. What makes it right for HMG to do the same?

lvader

MoneySaverLog wrote: »

If we were to "print our own money" it would constitute fraud. What makes it right for HMG to do the same?

They don't, De La Rue does.

cepheus

Glen_Clark wrote: »

Osborne's Help to Bubble scheme has made my house price rise, but I am no better off because of that.
QE has made my share prices rise, but I still only have the same share in the same company. So I am not sure that has made me any better off either. If it had made the company more productive, that would have made me better off. But simply increasing the price of my shares is probably no more use to me than increasing the price of my house. Particularly when both are measured against a currency that is falling in value!!!

Your shares (if sold) will have more value in our local currency, whether they will retain their value over the long term is something else.

With respect to increasing house prices, I agree this of no benefit unless you are a BTL investor, or intend to move somewhere cheaper. In fact for most of us moving up the housing ladder rising house prices makes us poorer since it is something else getting more expensive.

What a political con, you obtain votes from making something more expensive for the majority of people! How stupid can people get? It's an irony that the average person would be better off if houses got cheaper!

sabretoothtigger

lvader wrote: »

They don't, De La Rue does.

Thats what Ben Bernanke said. He literally has nothing to do with the printing of money, what a clever guy and always very carefully correct in his answers.
I guess if I push someone in front of a train I can explain similarly, train did it. I wonder if the court would let me off