Effects of Quantitive Easing on......

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Old Mar 10, 2009, 7:22pm   #11
 
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Stephen King sums up the uncertainty nicely here:
Stephen King: The policy to print money is right but we must be told how it works - Stephen King, Business Comment - The Independent
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Old Mar 10, 2009, 9:21pm   #12
 
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Originally Posted by everyonerich View Post
1st question is government doing this for profit or the opposite?
I read last week that they expect to lose about £150m from the £75bn input.
If you do the numbers this suggests that they will stay in until the gilts expire, i.e. the dividends will pay back most of the investment.
Not sure how inflation (or deflation) figures in that though. Perhaps they aren't either !
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Old Mar 12, 2009, 2:05pm   #13
 
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This is nothing more than pure CREDIT EXPANSION. The benefit is 0. In the longterm there will be another crash and another wave of credit to help pay for the ridiculous debt levels that we have. This debt needs serviced.

If you are already in debt how can you service it? Print more money in the ST?

Do we not need to rethink the fundamentals underlying our greed?
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Old Mar 12, 2009, 2:50pm   #14
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It's an expansion, but credit has massively contracted.

I heard rumours they may buy up corporate bonds, which would be good for them.

As to the infaltion question - I saw two economists completely divided and arguing with each other on that. It seems pretty clear to me that no one can say since no one knows who much money will be written off, and how much QE will take place.

I would say that IMO the hole created by the crunch/recession is already, and will turn out to be even bigger than all the mooted QE. I imagine they'll carry on QE-ing until they get some sort of effects. Unfortunately I don't see much clever lending being done in this climate. I think people still underestimate the scale, and inflation is a long way off.
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Old Mar 12, 2009, 2:54pm   #15
 
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They have, in fact, promised up to £50bn of corp bond purchases...
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Old Mar 12, 2009, 5:00pm   #16
 
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I think people still underestimate the scale, and inflation is a long way off.
Do you think it is possible that inflation will pick up faster if others follow. Demand in commodities, excluding oil, will reach the levels we saw last summer and then we will be no better off.
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Old Mar 12, 2009, 5:16pm   #17
 
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maybe in the long term
the time to react is now to avoid massive correction
but BofE has to spend money on new businesses or businesses with prospects, not just buying up everything blindly. I am not sure if they do this right, but who knows.

They should have separated the rotten firms to avoid contagion in the first place, yet there is no agreement amongs diffrent political views as usual, so in practice all looks f***d up a the moment. I guess conservative liberalism hasnt done much good to the people at the bottom of the ladder, invisible hand? Could be cruel fist of destruction.
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Old Mar 12, 2009, 5:24pm   #18
 
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If that is the case then why does the Governement not undertake infrastructural projects to rejuvenate some out dated technology in the country. Railways, underground, broadband etc... I know some of these are already underway but a lot more could be done. Take the facists of Italy and Germany; they recovered after WWI and the Great Depression with massive projects. Italy built motorways, drained large areas etc...

Just an idea... taking the train from London to Edinburgh makes you think in a strange way!
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Old Mar 12, 2009, 5:29pm   #19
 
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If that is the case then why does the Governement not undertake infrastructural projects to rejuvenate some out dated technology in the country. Railways, underground, broadband etc... I know some of these are already underway but a lot more could be done. Take the facists of Italy and Germany; they recovered after WWI and the Great Depression with massive projects. Italy built motorways, drained large areas etc...

Just an idea... taking the train from London to Edinburgh makes you think in a strange way!
------------------------------------------

Seems that you gov is pretty rubbish though. The prime minister - 14 years investment banker cant figure out cyclical movement of capitalistic economies.
And why they dont pump money in the rejuvanation of the projects - cos they dont have them, there is nowhere to borrow, thats why they print them. Even worst they have stopped subsidising green energy projects, going back to fussils and nuclear power.
Looks bad, check the UK macro figure - looking much worst than the US and EU.
Sorry
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Old Mar 12, 2009, 5:39pm   #20
 
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If that is the case then why does the Governement not undertake infrastructural projects to rejuvenate some out dated technology in the country. Railways, underground, broadband etc... I know some of these are already underway but a lot more could be done. Take the facists of Italy and Germany; they recovered after WWI and the Great Depression with massive projects. Italy built motorways, drained large areas etc...

Just an idea... taking the train from London to Edinburgh makes you think in a strange way!
They used to do all sorts of things like that, using off-balance sheet vehicles (PFI). Unfortunately, the banking shock caused the whole PFI system to get completely disrupted in a whole variety of ways. So public infrastructure projects languish 'cause the normal methods of financing them are broken. Until they can fix the banks, nothing can proceed, in my view.
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