Reply to: Money supply & gold

[ace00]

The pound strengthened against the Euro yesterday and pretty much stayed the same against the Dollar. Santa, you know not of what you talk. You don't do a bad job at Christmas though. I guess everyone has to br right at least once a year!

More a case of the Euro weakening than the pound getting stronger.

[Foxy Moron]

The pound strengthened against the Euro yesterday and pretty much stayed the same against the Dollar. Santa, you know not of what you talk. You don't do a bad job at Christmas though. I guess everyone has to br right at least once a year!

[SantaClaus]

Funny that isn't it? No doubt our Walter Mitty friend will be back telling everyone how he knew it all along and made a killing. Again.

200 pips is a decent fall. I certainly made my day's money by midday today.

Highly likely we will continue downwards, if not tomorrow, then next week.
Markets dont go in straight lines you know

[PM-Junkie]

I've been watching it and I don't see big falls ... ?

Funny that isn't it? No doubt our Walter Mitty friend will be back telling everyone how he knew it all along and made a killing. Again.

[Platypus]

£ is gonna sink big time today

I've been watching it and I don't see big falls ... ?

[M_B]

Is it ?

I thought the theory was that the BOE buys private corporate bonds (i.e. Banks bonds) so that they have funds to then lend to customers and thereby have an overall effect of getting the credit market going again. Is that not the case ?

...or is the BOE only going to buy Government bonds in the hope that the Government will then spend its cash wisely ?

[DimPrawn]

The theory is, the Govt (Brown and Co) only buy good quality assets with the money, and later sell them on at a profit.

The danger is the Govt (Brown and Co) buy toxic worthless assets that the banks can't sell quick enough. This leaves the tax-payer up sheet creek. As usual.

You decide which scenario is going to play out.

[BrowneIssue]

the BoE simply buys assets off banks (eg government bonds) so the banks have more liquidity

So, the Treasury has just delivered £1,500,000,000 to the shareholders of the banks?

Oh tulip.

That's it then.

We're doomed.

[PM-Junkie]

Stupid novice question:

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

Not a stupid question at all. No money actually gets printed, the BoE simply buys assets off banks (eg government bonds) so the banks have more liquidity, the idea (hope) being that that increased liquidity can be passed on to customers in the form of credit, and the economy comes up smelling of roses quicker.

That is one school of thought anyway. The other is that it is tantamount to throwing petrol on a fire. The truth is, nobody knows - so lots of people have their fingers crossed right now.

[alreadypacked]

Oh yes. And just watch us start using Euros once we reach parity. Its all in the plan.

I think they will let it drop below parity, for a while arrange for it to go back to parity, then roll that plan out.

I am just not sure what problem they would solve doing that.

[Bagpuss]

The BOE have diluted the value of the £ with quantative easing.
And the UK's credit rating is questionable.

And as BrownIssue and DimPrawn say, imports will become very expensive.

Have a look at the recent Jim Rogers interview on Channel 4 and you will see we are in dire straights.
He also claims the future boom industry here will be farming. City boys will be driving taxis and farmers will be driving Porsches.

and by the 1980s everyone will be working a 3 day week thanks to computers

[icarus]

We're told that deflation is a terrible thing and we have to print and print to prevent it. If deflation kicks in, apparently, everyone will stop spending because everything will be cheaper tomorrow. But look at computer hardware: 30+ years of incredible deflation - and did people still buy computers? "Deflation" is just a smokescreen. The real point of printing money is to cause savers to bail out the debtors (through wealth destruction). I really recommend Peter Schiff's analysis of this: www.europac.net (American, but applies equally to UK).

[suityou01]

So you don't think printing money will cause the £ to devalue.
Making imported goods more expensive.
Causing inflation.

Oh yes. And just watch us start using Euros once we reach parity. Its all in the plan.

[Bunk]

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

According to this they have. The chancellor has written to Mervyn King agreeing to £75 billion of quantative easing.

[M_B]

The BOE have diluted the value of the £ with quantative easing.
And the UK's credit rating is questionable.

Have a look at the recent Jim Rogers interview on Channel 4 and you will see we are in dire straights.

Yeah but so is everyone else.