Quantitative easing

[VectraMan]

Watch this and perhaps the trick will become clearer.

Money as Debt

Excellent. Uber doomed then.

[KentPhilip]

You're right of course, but Labour know what they are doing. After all, Broon was Chancellor for a decade.

Proof, if ever any were needed, that experience doesn't necessarily make you good at your job.
True of our industry too.

[NoddY]

Money has many 'personalities'.

1. One is money collected as tax
2. Another is money released as notes and coins
3. Another is money released as debt
4. And finally money released directly into 'the economy'.

2 & 3 make up the money supply; under normal conditions most money is released this way - especially 3. 4 is 'quantitative easing' or printing money.

The primary purpose of money is to get the little people out of bed in the morning - i.e. a motivator for economic activity. Realise this and you'll understand why you can't print money for taxes. The aim is have all monies 'worked for' i.e. backed by sweat.

The trouble is the price of labour has been unable to match the incredible amount of money released by low interest rates in the last ten years (no. 3). This lead to the house price bubble/hyperinflation. This is a problem.

The solution is deflation (the increasing value of money). However, those with high mortgages have effectively locked in the higher price. If people don't like the solution then don't create the problem!

[BrowneIssue]

Watch this and perhaps the trick will become clearer.

Money as Debt

I just did.

We're fooked.

[Tensai]

£100b being used to buy government gilts

If they're newly issued, surely the BOE is buying gilts from... itself?
I assume they must be existing gilts held by individuals/companies.

£50b beign used to buy high quality corporate bonds/assets but NOT from banks, rather directly from a range of provate enterprise.

Again, are these existing bonds, or are BigCos going to issue fresh bonds, thus getting themselves even more govt money?

Quite how is this money supposed to end up in wider circulation? This doesn't make sense to me, but IANAE.

[Board Game Geek]

Dim,

Banks do create money out of thin air all the time.

Don't believe me ?

Watch this and perhaps the trick will become clearer.

Money as Debt

[Solidec]

Its actually more sensible than the sensationalist media are reporting.

Whilst its not a good sign of where we are, its pretty much required.

However BoE are not giving money to banks at all according to Merve the Swerve.

£100b being used to buy government gilts
£50b beign used to buy high quality corporate bonds/assets but NOT from banks, rather directly from a range of provate enterprise.

The hope is the latter £50b will spread around the wider economy a lot faster than if BoE just bought banking bonds as the banks are more likely to sit on the cash.

Hell thats how it has been explained, now lets see if it gets implemented as such.

[sasguru]

You're tulipting me, right?

No tulip, Sherlock?

[ASB]

You're tulipting me, right?

[DimPrawn]

You're tulipting me, right?

[sasguru]

If you have constipation and drink gallons of prune juice, that hopefully leads to "quantitative easing".

HTH

[Cyberman]

You're right of course, but Labour know what they are doing. After all, Broon was Chancellor for a decade.

[Svalbaard]

I'm not sure I understand this either.

Govmt. has already fed the banks with billions of £s of taxpayers money so that they can lend this to businesses to get the economy moving. Banks have visibly failed to pass this money on and are rather hoarding it. So why in the name of Beelzebub does Govmt. go and magic up more money which again, will probabaly get hoarded or diluted rather than passed on to business.

I have my own theory and it is that Alistair Darling is a knobend who hasn't a clue about what he is doing and just nods his head when the BoE annouce a new measure as he doesn't have the knowledge or experience to challenge it with any original thinking that would benefit anyone other than his industry cronies and/or senior donators to the Labour party.

[DimPrawn]

Can someone please explain this.

Government created money from thin air to enable them to buy assets from banks so that banks have lots more money?

If the banks can't sell their crap to anyone except govt printing money surely these assets are toxic/worthless?

In which case, banks will make a profit and pay the profit in divdends to shareholders and massive bonuses to execs.

Which means very little money will make it into more loans.

Taxpayers making the banking bosses and rich, richer. Again.