Bank of England's QE2 may reach £500bn, economists warn

[AtW]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Look carefully at the face of the wizard who is so powerful that he can turn pounds in your pockets to dust and increase price of pint of beer to £100.

Sir Mervyn King, Governor of the Bank, unveiled plans to increase quantitative easing (QE) from £200bn to £275bn – a sum equivalent to a fifth of the UK economy, as it held rates at 0.5pc. The Bank was taking the "pre-emptive action to prevent the slowdown becoming too serious", he said.

Markets welcomed the decision, which was roughly £25bn more and came one month earlier than expected. The FTSE 100 climbed 3.7pc, or 189.09, to 5,291.26, outpacing similar rises of more than 3pc in France and Germany. Reflecting the higher risk of inflation, the pound crashed by more than 1.5 cents against the dollar in the aftermath of the announcement, before recovering to close 0.41 cents down at $1.5384.

Source: Bank of England's QE2 may reach £500bn, economists warn - Telegraph

He really is good at looking confident

[TimberWolf]

Euroland seem very reluctant to do this. Why? Is it because it shafts poor people?

[TimberWolf]

Nice comment on HPC:

I can't believe I'm having to write this, but nothing new will be manufactured, invented or developed as the result of this monetary splurge, no services offered, no businesses founded. Rather, the money already in circulation – the money in your bank account, in your purse, under your mattress – will be worth less. The government, in other words, is helping itself to your savings...
Where Is My £4230 ? - House Price Crash forum

[TimberWolf]

Did we do this one yet?

[AtW]

Let me guess - one is the comedian whose every word is a joke and the other one could have made a great BoE governor?

[TimberWolf]

Let me guess - one is the comedian whose every word is a joke and the other one could have made a great BoE governor?

Almost. Both of them is the comedian whose every word is a joke

[sasguru]

Euroland seem very reluctant to do this. Why? Is it because it shafts poor people?

Does it? How?

[PAH]

It shafts those with savings and little if any debt.

Yet there were only around a dozen protesting about 'save our savings and pensions' on the news, so that proves there's general apathy and no resistance to these measures.

QE causes the price of borrowing to drop, so the logical conclusion is to fill your boots with cheap/free credit. You may even get lucky with defaults and debt jubilees writing it off further down the line!

The tricky thing is deciding what to buy with all that cheap credit so when things go tits up you come out on top.

[DimPrawn]

Does it? How?

I thought you was the financial genius?

[TimberWolf]

Does it? How?

Because they don't own assets that hold their value; assets such as expensive paintings or a house. Perhaps the poor hold a small amount of cash or savings that will be inflated away. Their low wages are disproportionately affected by price inflation (wages arn't rising for the poor) or they may not have wages at all. They pay rent that will rise with inflation, benefits don't, etc.

Whereas the rich are hardly affected by these measures, as the Dim one says, the rich are in perma boom. Their houses are kept artificially high, rents are kept high, mortgages are kept low, and so on.