Quantitative easing (Bank of England version, oops...)

[Walterp]

So let me get this straight..

The UK Government issues gilts that are bought by banks, who then sell the same at a guaranteed (and handsome) profit to the Bank of England.

Couldn't the same effect be achieved simply by the Bank crediting the Government's account with the money? Except, of course, the banks wouldn't get recapitalised via this 'front-running'. Was that part of the idea?

And if the Bank have already bought around 30% of all outstanding public debt ( 'we' now owe 'ourselves' £370 billion - it's impossible to pay that back) why don't we just stop pretending, and accept the Government really does have a Magic Money Tree?

 

[DrWazzock]

We are in uncharted waters.

Usually this kind of exercise leads to hyperinflation, and there is time yet for this scenario to unfold, although looking at the price of machinery, land and houses I dare say that it is unfolding already. So nobody is any better off in the long run.

IMO it's another of these short term measures to make people feel better and put off facing reality for another year or two, the reality being that we aren't anything like as financially well off as we think we are.

It won't end well IMO. The only reason the pound isn't completely worthless is because everybody else seems to be doing it (in the West).

Death throes of the western economy IMO. Manufacturing has gone East. Services are hot air.

 

[rob1]

what we really need is some gold reserves to back the gov debt, oh silly me we did once, but guess who virtually gave it away

 

[turbo]

what we really need is some gold reserves to back the gov debt, oh silly me we did once, but guess who virtually gave it away

He wasn't that financial genius that had got rid of boom and bust was it?,I bet walterp will turn that round to being the torys fault or the English or both

 

[Jackov Altraids]

The government doesn't have a money tree, the Bank of England is pretending it does.
I've been trying to think of a analogy of this situation but I don't think one exists. The closest I can get is constantly mining a product while paying more for something to replace and fill the mine in as you go. Time to stop digging.

 

[Ashtree]

There is a simple solution to all this debt!!

 

[bobk]

So let me get this straight..

The UK Government issues gilts that are bought by banks, who then sell the same at a guaranteed (and handsome) profit to the Bank of England.

Couldn't the same effect be achieved simply by the Bank crediting the Government's account with the money? Except, of course, the banks wouldn't get recapitalised via this 'front-running'. Was that part of the idea?

And if the Bank have already bought around 30% of all outstanding public debt ( 'we' now owe 'ourselves' £370 billion - it's impossible to pay that back) why don't we just stop pretending, and accept the Government really does have a Magic Money Tree?

We finished QE in 2014 walt , the eurozone started in 2015 and still going .......... who's ahead of the curve .?

 

[turbo]

We finished QE in 2014 walt , the eurozone started in 2015 and still going .......... who's ahead of the curve .?

Hence why the euro is strengthening

 

[bobk]

Hence why the euro is strengthening

Not sure it is .

 

[DrWazzock]

There isn't a money tree. The problem is that people think there is one. And so a cycle of higher wage demands and accelerating inflation begins, especially if real economic output isn't increasing at the same rate as money supply.

So first the police receive a pay rise. This is reminiscent of the early '80s when Mrs T bolstered the police before the round of industrial unrest that came during the decimation of manufacturing and primary industry.

Now everybody wants a pays rise. Inflation will be stoked and those pay rises will be worthless, but hey ho, people will feel "valued" if they get another 3%.

 

[manhill]

Anyone know why internet access isn't taxed?

 

[manhill]

Best defence against inflation???
Gold? Diamonds?Art? Whisky? Wine? Property? Foreign currency? Knitting machine? Prostitution? Livestock? Land? Used tractor? Metals? Money lending? Farming? Boats? Old cars?

Going to empty my bank account now. Why should they benefit at my expense?

 

[Roger Perry]

You guys have cheap money right now, may be a great time to lock rates as interest is gearing up for upward movement.

 

[czechmate]

Best defence against inflation???
Gold? Diamonds?Art? Whisky? Wine? Property? Foreign currency? Knitting machine? Prostitution? Livestock? Land? Used tractor? Metals? Money lending? Farming? Boats? Old cars?

Going to empty my bank account now. Why should they benefit at my expense?

Who is "they" though?

 

[manhill]

Who is "they" though?

Banks and Gov. and borrowers.

 

[czechmate]

Banks and Gov. and borrowers.

Nearly everyone then

 

[manhill]

Nearly everyone then

Yeah except me.

 

[czechmate]

Yeah except me.

And me ; now

 

[manhill]

Forgot to add 'become a lender' to the list.
P to P Zopa or whatever it's called.

 

[czechmate]

Best defence against inflation???
Gold? Diamonds?Art? Whisky? Wine? Property? Foreign currency? Knitting machine? Prostitution? Livestock? Land? Used tractor? Metals? Money lending? Farming? Boats? Old cars?

Going to empty my bank account now. Why should they benefit at my expense?

Livestock if you can keep them cheaply. At least they multiply. Try putting a couple of gold bars together and see how many more you have next year.