Quantative Easing (aka Printing More Money)

Nuggs

Isn't this what led to hyperinflation in Weimar Germany, opened the door to fascism, created the second bloodiest war in the history of mankind and created a new age of austerity?

In just the same way as the US government allowing it's banking system collapse led to the great depression (cf. Lehmans)?

Short memories some people... :roll:

Stewie Griffin

Darling has denied it.

Crooky

I doubt they have short memories, I'm sure they know all about history however they're really running out of options.

To even mention printing money shows what an awful state we are now in.

sicrow

It should certainly cause inflation, but as we are likely to see deflation in some areas then one should cancel out the other, not that those muppets Darling and Brown would be able to decide which would be best so I guess we'll have to keep our fingers crossed

I've started printing my own anyway to help them out

Mettan

Crooky wrote:

To even mention printing money shows what an awful state we are now in.

+1 Agreed.

Gavin Gilbert

Just what do you think caused the current crisis? It was the banks printing money in the form of assets that didn't exist, followed by the sudden and uncontrolled withdrawl of the lending of that money when the ruse was uncovered.

Printing money is a valid method of reinflating the economy. It was used in Japan in the 90's succesfully. It failed in Germany in the late 1920's as the reinflation was uncontrolled and any wealth generated was being exported in the form of war reparations.

The UK is in a much better position than most western economies and we should be amongst the first to emerge from the storm. That day is still some time off. But things aren't as bad as The Daily Mail would have you believe.

Crooky

I hope you’re right Gavin however I have a feeling we are in for a very rough ride.

I don’t read the Daily Mail so I have no idea what they are saying however I do know we’ve had a run on a bank, other banks have virtually been nationalised. We have Ford, Chrysler and GM in the States on the verge of bankruptcy. Investment banks changing to normal banks and others, like Lehmans, who went through the depression, now gone completely. To add to that we have a man named Madoff who has lost 50 billion.

I know it’s a cliché but we’ve in totally unchartered waters and nobody really has any idea what’s going to happen next.

TheBoyBilly

Just think of the mess we'd be in if we'd joined the European Single Currency! That was one step too far even for Gormless Gordon. Still everything must be rosy in some parts of this country but down here talk in the (dwindling number of) pubs is of builders not being able to find work, stores closing, factories closing (our town's largest employer is moving to the Czech Republic for God's sake - things not as bad as you'd think? Try telling 2.000 people around here), and pensions dwindling. Yet the lazy and feckless get away scot-free. It grieves me that not only do I have to find the money to fund my own retirement but that I have to help out those who have no inclination of doing a hands' turn. Now us maligned Middle Englanders (those who are really shoring up this leaking hull of a country, not the parasitic non-jobbers) are finding our hard worked-for savings going down the tube. But that's okay, Gordon has saved the world - saving Britain should be a breeze. It's funny how Darling and Brown can conjure up a rescue package every week but can't even get New Labour back in the black.

Nuggs

Gavin Gilbert wrote:

stuff

Of course, I was over-inflating my views to stimulate a debate, although I am very concerned about the current situation and this proposal makes me feel no easier.

While I accept that Japan (relatively) successfully reinflated its economy through QE, my major concern is that the present UK ecomony is not responding particularly well to stimulus (e.g. for all the money used to recapaitalise the banks, LIBOR remains relatively high and lending criteria remain tight).

I therefore wonder how much 'new money' will need to be injected to make a significant difference. I suspect the amount required will take us very close to the thin line between inflation and hyperinflation.

Kléber

Gavin Gilbert wrote:

The UK is in a much better position than most western economies and we should be amongst the first to emerge from the storm

Unfortunately most economists suggest the exact opposite. I take no joy in relaying this message, I'm just mentioning it in case people believe you and think about starting a new business or buying a home on the basis that a turnaround is coming soon.

Jez mon

Yep, the economy is in pretty a pretty dire state and it's difficult to see if there is a genuine way out. The news just seems to get worse every day and the government has to tread a line between looking after those who have taken out irresponsible loans, but also try to make sure those who have looked after their money aren't unjustly punished.

Printing extra money (or quantitative easing if you want to be posh) won't help those who have been responsible with their money. It devalues savings. It will continue the rapid rates of inflation. In short it's generally a silly idea, Mussolini tried it, the Weimar republic tried it, (unsurprisingly) it didn't work. Of course, if it does work and allows companies to borrow money and promote healthy cash flow, then it will help. HOWEVER, if this stimulus doesn't work then it will only dent the economy. In short it is a rather risky tactic.

Furthermore all this talk of quantitative easing can't help the UK economy, it shows what a bad state it's in, foreign companies won't want to invest in such an economy.

OffTheBackAdam

Weee, my favourite Communist is back!
Hiya Gav, I thought you'd emigrated to Cuba.
Our economy's in such good shape compared to the rest of Europe, that the £'s crashed against the Euro.
Never read The Mail myself, I prefer Jeff Randall's column in The Daily Telegraph.
http://www.telegraph.co.uk/finance/comment/jeffrandall/3543693/Ignore-the-excuses-here-are-the-signals-showing-disaster-on-the-way.html
What do I think caused the current crisis?
Making banks lend money to those who've no chance of paying it back.
Complete regulatory failure by permitting 125% mortgages and such idiocy.
A Government that's policies made saving for the future a financial disincentive.
A Goverment that's policies have degraded private pension funds.
A Government that's stacked tens, if not hundreds of thousands of non-productive jobs at inflated wages.
A Goverment that dithered when Northern Rock started cracking.
Regulators & regulations allowing what were good Building Societies to become poor banks.
"My report to the country is of rising employment and rising investment; continuing low inflation, and low interest and mortgage rates... this is a Budget to expand prosperity... our fiscal discipline is the foundation of the strength of Britain's finances."
Gordon Brown
Budget speech 2007
http://www.direct.gov.uk/en/Nl1/Newsroom/DG_067074

pneumatic

OffTheBackAdam wrote:

Making banks lend money to those who've no chance of paying it back.

Bolox! Who exactly made the banks lend?

Even today I was attacked at the airport by a couple of overdressed salespeople trying to persuade me to take out a credit card. I didn't see any State officials standing behind them forcing them to force themselves on me.

Why should I borrow money I don't need? Why should I buy goods I don't need? Why should I support the gambling industry (or banking system as some call it) if I don't want to? Why should it be a crime that I've saved some money for my retirement and don't want to p1ss it up the wall?

Save the world by spending more, consuming more, wasting more, gambling more - I don't think so! No thanks! :evil:

Nuggs

pneumatic wrote:

OffTheBackAdam wrote:

Making banks lend money to those who've no chance of paying it back.

Bolox! Who exactly made the banks lend?
:

Have a look at Clinton's policies which encouraged universal home ownership and the history of Fannie Mae and Freddie Mac.

Gavin Gilbert

Nuggs wrote:

pneumatic wrote:

OffTheBackAdam wrote:

Making banks lend money to those who've no chance of paying it back.

Bolox! Who exactly made the banks lend?
:

Have a look at Clinton's policies which encouraged universal home ownership and the history of Fannie Mae and Freddie Mac.

Quite. But it takes 2 to Tango and if borrowers wake in the morning with horrific hangover and a face on the pillow next to them that makes 'em recoil then it's pretty much their fault for over-doing it the night before.

It is pretty rich of the pro-Tories to babble on about 'why wasn't there regulation' when deregulation has been the Monetarist-Thatcherite policy adopted in the West for the past 29 years. Not that I'm against regulation myself; working in an industry that has pretty much transformed itself and self-regulated successfully for the past 15 years after getting itself in a mess in the mid 80's.

My prediction is the banking industry that emerges from the wreckage will be much more conservative and interested in doing simple things and managing risk. This will take several years. In the meantime, I'm praying for Obama.

pneumatic

If we are going to get party-political about it, I seem to remember some mad witch telling us all that we should be come a "home owning democracy" where there was " no such thing as society".

Are we nearly there yet?

I agree with Gavin, there may be social pressure to do certain things (drugs, gambling, promiscuity, borrowing more than you can afford, buying what you don't need), but that is not the same as being forced to do them (doped, kidnapped, raped, mugged, swindled). Ultimately, the responsibility lies with the individual. We sign the forms and we have 28 days to change our minds.

sicrow

Gavin Gilbert wrote:

The UK is in a much better position than most western economies and we should be amongst the first to emerge from the storm. That day is still some time off. But things aren't as bad as The Daily Mail would have you believe.

Sorry Gavin but you are away with the cuckoos - where did you learn your economic education ?

schmako

Basically because the majority of british people are useless drains on society is why the economy is failing.

Gavin Gilbert

sicrow wrote:

Gavin Gilbert wrote:

The UK is in a much better position than most western economies and we should be amongst the first to emerge from the storm. That day is still some time off. But things aren't as bad as The Daily Mail would have you believe.

Sorry Gavin but you are away with the cuckoos - where did you learn your economic education ?

errr..The City of London, where I have lead a succesful career for the past 24 years. Where did get yours?

sicrow

If you're struggling to remember it's in the City of London then I rest my case