The Finance Thread

[sage]

Personally think it wouldn't solve anything but widen the difference between the asset/debt owners and the asset less/unleveraged. Exactly what you shouldn't be doing. Give people £5k each and (as per Steve Keen's model) on the proviso where they have debt they must pay it off first then all that does is benefit the leveraged and speculators disproportionately. As their asset prices which they're paying down/off will have gone up in value due to the "new" money coming to the market pushing the prices of said assets up. So, they basically benefit twice (free money and a higher asset price) than the person who is unleveraged or without assets. I think its a nice idea on paper but in reality would be a disaster.

It worked in Australia

[SillyBilly]

It worked in Australia

I should point out that people's QE is preferable to conventional QE but I wouldn't fall into the "it worked" camp, simply because, believe it or not, printing money out of thin air has seriously negative consequences whoever you give it to. Crazy I know. If the only metric you are watching is improving retail sales quarter-on-quarter then you can say it has worked. Although it never ceases to amaze me that seemingly intelligent people can't seem to get their heads around the fact that you don't get something for nothing in life. The central bank isn't giving you that money without expecting something back in return, its effectively loaning it to you on the assumption that it will create inflationary increases (from increased spending) that rob it back from you with a little extra to boot (inflation erodes debts and steals savings). It really is ridiculous it has come to this.

A people's QE of approx. 1.25% of GDP isn't what my previous post was suggesting anyway (that'd be about £20billion and equivalent to Australia's QE programme), I am postulating a much larger QE than that (as it'd need to be in m view). 3-4% of GDP is the absolute minimum I'd say. £80-100billion. Considering we've done £375 billion of conventional QE in 3 rounds I don't believe the figures to be too wild. Under those circumstances the scenario in my previous post would develop (my opinion only). I don't think a £20billion boost or £500pp is going to do much for the U.K if the **** hits the fan. This is 2015 now and not 2009, the problem is much bigger and as such the measures have to be larger. Don't know Australian contraction figs for 2008/09 either but UK suffered biggest decline globally as such Oz would have had to do a larger QE if in U.K's position.

[sage]

I should point out that people's QE is preferable to conventional QE but I wouldn't fall into the "it worked" camp, simply because, believe it or not, printing money out of thin air has seriously negative consequences whoever you give it to. Crazy I know. If the only metric you are watching is improving retail sales quarter-on-quarter then you can say it has worked. Although it never ceases to amaze me that seemingly intelligent people can't seem to get their heads around the fact that you don't get something for nothing in life. The central bank isn't giving you that money without expecting something back in return, its effectively loaning it to you on the assumption that it will create inflationary increases (from increased spending) that rob it back from you with a little extra to boot (inflation erodes debts and steals savings). It really is ridiculous it has come to this.

A people's QE of approx. 1.25% of GDP isn't what my previous post was suggesting anyway (that'd be about £20billion and equivalent to Australia's QE programme), I am postulating a much larger QE than that (as it'd need to be in m view). 3-4% of GDP is the absolute minimum I'd say. £80-100billion. Considering we've done £375 billion of conventional QE in 3 rounds I don't believe the figures to be too wild. Under those circumstances the scenario in my previous post would develop (my opinion only). I don't think a £20billion boost or £500pp is going to do much for the U.K if the **** hits the fan. This is 2015 now and not 2009, the problem is much bigger and as such the measures have to be larger. Don't know Australian contraction figs for 2008/09 either but UK suffered biggest decline globally as such Oz would have had to do a larger QE if in U.K's position.

Err..I know there are 'side effects'. The inflation side effect isn't a major issue as we are currently on zero inflation witha chance of deflation.

Nor do I think QE is a panacea. It needs to be part of a raft of measures. When poor people get additional money they spend it. Therefore an additional pound in the hand of the poorest 20% stays in the economy.

One of the keys to an economic improvement is building more houses. We actually need to build enough houses to lower the price of house purchases and rents. Buying a house is no longer an aspiration for many young people as they will never afford one.

In the long term we can only thrive through education ans specialising in new technologies. We can't compete on wages. No one wins in the race to the bottom.   

[SillyBilly]

Err..I know there are 'side effects'. The inflation side effect isn't a major issue as we are currently on zero inflation witha chance of deflation.

Nor do I think QE is a panacea. It needs to be part of a raft of measures. When poor people get additional money they spend it. Therefore an additional pound in the hand of the poorest 20% stays in the economy.

One of the keys to an economic improvement is building more houses. We actually need to build enough houses to lower the price of house purchases and rents. Buying a house is no longer an aspiration for many young people as they will never afford one.

In the long term we can only thrive through education ans specialising in new technologies. We can't compete on wages. No one wins in the race to the bottom.   

I agree with the last sentence.

I don't agree with it needing to be a part of any measures though. You don't deal with a structural problem as a cyclical problem which is what the central banks are doing (this idea that this "temporary" lull in demand/lack of growth requires money printing rather than wholesale banking reform - its complete nonsense). And they wonder why 7 years later the economy actually requires permanent interest rates at 0% and ever more QE, people or conventional. just to stay propped up. Its the construction of the financial system and the way money is created that needs fixing, not giving poor people "additional money" which is invented from thin air from this very system. I stand by the fact that it doesn't and won't fix anything apart from delaying a harsher reality a few years down the line. If somebody can point to an example when a fiat currency or printing money hasn't failed in the long run I'd be interested to see it.

[sage]

I agree with the last sentence.

I don't agree with it needing to be a part of any measures though. You don't deal with a structural problem as a cyclical problem which is what the central banks are doing (this idea that this "temporary" lull in demand/lack of growth requires money printing rather than wholesale banking reform - its complete nonsense). And they wonder why 7 years later the economy actually requires permanent interest rates at 0% and ever more QE, people or conventional. just to stay propped up. Its the construction of the financial system and the way money is created that needs fixing, not giving poor people "additional money" which is invented from thin air from this very system. I stand by the fact that it doesn't and won't fix anything apart from delaying a harsher reality a few years down the line. If somebody can point to an example when a fiat currency or printing money hasn't failed in the long run I'd be interested to see it.

My thought is it buys time till the housing programme and investment in new technologies takes hold.

[SillyBilly]

Breaking news.......Fed holds!

How much longer can this charade go on? Seems the markets don't know what to make of it yet, I expected a rally to be honest.

[Ramarena]

Breaking news.......Fed holds!

How much longer can this charade go on? Seems the markets don't know what to make of it yet, I expected a rally to be honest.

At the moment European markets don't seem to like it. The Fed can't raise as it will impact on the economy and we can't raise either as our slowing economy will go downhill fast. 

All this talk about raising them is just to try and build confidence and promote the illusion of a rapidly growing economy, which isn't really the reality, both in the U.S and here. 

[Ramarena]

As I mentioned further back in the thread, the likelihood of them going down is looking more likely as our economy slows. 

BOE economist talking on this today. 

http://www.bankofengland.co.uk/publications/Pages/speeches/2015/840.aspx

[Ramarena]

From the article

“Surveys of output growth, in manufacturing, construction and possibly services, have also recently weakened. All of these data were taken prior to recent emerging market economy wobbles."

Interesting given the fact that the media and government have been try to sell the "Booming economy" line over the last few months. 

[Shang]

I do enjoy reading these posts even though I don't quite fully understand it.

Didn't Bush prop up the American economy to try off load it onto the next President? Is this what's happening again (as Obama's term is up in 2016)

[Stive Pesley]

Yep so basically the current economy is in the doo-doo. The current plans for dealing with it don't seem to be very effective.

But the Daily Mail would rather get hysterical about how "Corbynomics" would be a disaster?

No wonder the concept of doing things differently is starting to appeal at a grass roots level is it..

[Animal is a Ram]

The concept of money blows my mind. Not in terms of the change in my back pocket - but the really unwieldy stuff.

How does an entire country endebt itself?
Somehow the debt gets worse, yet the Tories are spending less?

I'd like to think I have enough intelligence for at least a base understanding of most things, but not this.

[Stive Pesley]

It's weird because money is obviously one of the most tangible things in our lives - we hold it in our hands and we exchange it for goods on a daily basis, but beyond that it very quickly becomes an abstract concept that is difficult to get your head around.

We hold it in our hands so we think it exists, but in actual real terms it doesn't exist in the form we know it. There is not a physical pound note/coin for every pound that exists

 

[Shang]

I watched up on Martin Armstrong after seeing the trailer, super interesting and spine tingling since there was a scene showing a PowerPoint slide he designed in 1998, with a bunch of key dates on it.

And every one has happened pretty much on the exact date he predicted. The next big one, is what he calls "The Big Bang" and is meant to happen at 2015.75 or the 1st of October, when the start of the big recession will happen. It won't be immediate but signs of it happening will start to show.

I'm taking this with a pinch of salt, but if it happens then I don't think anyone will doubt him.

[ketteringram]

Next move more likely to be a cut than an increase. Bored now. 

[Ramarena]

I watched up on Martin Armstrong after seeing the trailer, super interesting and spine tingling since there was a scene showing a PowerPoint slide he designed in 1998, with a bunch of key dates on it.

And every one has happened pretty much on the exact date he predicted. The next big one, is what he calls "The Big Bang" and is meant to happen at 2015.75 or the 1st of October, when the start of the big recession will happen. It won't be immediate but signs of it happening will start to show.

I'm taking this with a pinch of salt, but if it happens then I don't think anyone will doubt him.

If this happens be afraid, if you have savings in banks you will be the victim of bail-ins, it's been rumoured that bail-ins have been discussed at G20 meet ups. 

Socialism is back in a big way, but only for the rich, a kind of reverse Robin Hood theory. 

[SillyBilly]

As I mentioned further back in the thread, the likelihood of them going down is looking more likely as our economy slows. 

BOE economist talking on this today. 

http://www.bankofengland.co.uk/publications/Pages/speeches/2015/840.aspx

[SillyBilly]

Next move more likely to be a cut than an increase. Bored now. 

[SillyBilly]

The concept of money blows my mind. Not in terms of the change in my back pocket - but the really unwieldy stuff.

How does an entire country endebt itself?

Somehow the debt gets worse, yet the Tories are spending less?

I'd like to think I have enough intelligence for at least a base understanding of most things, but not this.

[GboroRam]

The MONEY is worth **** I'm afraid.