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More QE

Community Veteran
Posts: 3,826
Thanks: 44
Fixes: 1
Registered: 24-09-2008

More QE

/Rant on
http://www.bbc.co.uk/news/business-16963116
Another £50bn, that’s over £1000 per adult going to “stimulate the economy” making a total of >£6000 per adult member of the population as “stimulation money”.
Back in the 1990’s the Australian Government tried to  “stimulate the economy”  by giving a large sector of the population a ‘gift’ of $2000 with the thought that they may spend it on ‘something’, they chose the ‘over 55s' as the sector, again it didn’t work as the ‘grey heads’ just put it on deposit for a rainy day.
The BOE’s policy was to keep interest rates low to enable those with mortgages to have something left over at the end of the month to “spend” and “stimulate the economy”.
This policy failed on two counts.
Those with mortgages ‘paid down’ the mortgage repayments instead of spending the excess.
Those with savings (who would earn interest on the savings), and would have spent the interest on grand kids, helping offspring, renovating homes, just haven’t had the extra to spend.
The Greeks tried, the Americans are doing it surreptitiously, both doomed to fail
Merv it just won’t work, don’t join the club, don’t climb on the bandwagon, please read any book by John Maynard Keynes, you cannot spend your way out of debt. All you do is undermine the currency. Your heading towards MMT http://en.wikipedia.org/wiki/Chartalism ;     ..........sorry fell off the end of the original post.
/Rant off
Now I must really get back to my oats Grin Grin found a supplier of "Organic" in Scotland.
2 REPLIES
pin2011
Grafter
Posts: 109
Registered: 09-06-2011

Re: More QE

What about the DEFICIT?? Why pour money into QE when we are being told by our grate (well they grate on me every time they appear on the box promising things they know cannot be delivered) leaders that the deficit is a priority and must be repaid? How significant would this 50bn make to reducing the deficit?
Community Veteran
Posts: 5,316
Thanks: 465
Fixes: 1
Registered: 21-03-2011

Re: More QE

When some of the earlier monarchs were getting a bit short of spending money they resorted to debasing the coinage. QE is pretty much the same process, except that the people who have saved money are paying for this wheeze through loss of value and loss of interest payments. In previous centuries savers who hoarded actual coins did not lose their intrinsic value.
Now Zen, but a +Net residue.