Money supply & gold

[M_B]

Stupid novice question:

When the government prints this money how is it "injected" into the economy?

The BOE buys government bonds.

[SantaClaus]

£ is gonna sink big time today

[DimPrawn]

£ is gonna sink big time today

That will help since all our energy comes from abroad priced in $, and most of our food and clothes too.

[NetwkSupport]

So in short, the extortionate day rates we are all on right now wont buy a loaf of bread in 6 months time.

[SantaClaus]

That will help since all our energy comes from abroad priced in $, and most of our food and clothes too.

yep, pretty grim!

[BrowneIssue]

BI's doom theory version 1

My economics is somewhat rusty. Is the following right:

Bank of England prints physical money. It uses this to buy government bonds. The worth of the money is now in the Treasury.

The government uses the money in the Treasury on 'public works' from large industry. It buy roads or other infrastructure that was either on hold (or not needed).

The large industries put the money in their bank account and start using it to buy services or goods and so slowly tricke the money into the economy. This is not very important.

However, every £1 put into a bank is used to guarantee lending, typically at a 100:1 ratio. So the banks can now lend 100 x whatever large industry put in there. This is very important.

Q. is that still the ratio banks use?
The banks can now lend 100 x the original amount = £15,000,000,000,000 to businesses to do stuff thereby keeping everything going.

The eceonomy is inflated by an additional £15,000,000,000,000

The UK Gross Domestic Product is currently about £1,600,000,000,000

I think we could expect HUGE inflation. Not 5%. Not 25%. Potentially far, far worse: 1,000%

Q. Am I right in thinking GDP equates to the size of the economy?

Is my thinking right?

[Bagpuss]

So in short, the extortionate day rates we are all on right now wont buy a loaf of bread in 6 months time.

If we were acting unilaterally yes.

[DimPrawn]

I feel safe with Brown and Darling in control.

[M_B]

So in short, the extortionate day rates we are all on right now wont buy a loaf of bread in 6 months time.

The US has been printing money for a while now (I think ... I'm sure someone will correct me if wrong) and printing money helped the Japanese recover from their financial collapse in the 90's. In the case of the Japanese there was absolutely no inflation because they were stuck in deflation. Is the same true here ? Perhaps.

My feeling is that Europe will have to do this soon too.

Interesting times eh.

PS - Dont they have to get govt permission to do this first ?

[BrowneIssue]

BI's doom theory version 2

My economics is somewhat rusty. Is the following right:

Bank of England prints physical money and uses this to buy government bonds. The worth of the money is then in the Treasury.

The government uses the money in the Treasury on 'public works' from large industry. It buy roads or other infrastructure that was either on hold (or not needed).

All the large industries the government uses are either Merkin or Japanese or vast untraceable consortia based in tax havens. All the £1,500,000,000 is given to those industries and the money leaves the country.

No bank or business in the UK gets any of the money.

The £ is then immensely devalued because we have given it away by the container. The country cannot then afford to import things like wheat and sugar and oil.

We then either freeze to death before the summer, or starve to death before the winter.

Meanwhile the economies of USA and Japan benefit slightly from the brief injection of low-value £.

Is my thinking right?