pslewis

..... dip yer bread!!

Bank of England pumps £75billion of new money into the system ...... grab some of it while you can!

Trout

iTrader: (1)

It's all gone.

The investment banks have eaten it!

pslewis

NO!!!!

I want some!!

tony de wonderful

The strikes of desperation.

Without trying to be too melodramatic this is the Wiemar solution.

What's more for the banks, QE is like a drug that they quickly get hooked on.

Just from a personal POV I find it outrageous that the state is devaluing my savings by fiat. It's a betrayal.

pslewis

I agree on the savings point ...... my savings are being devalued before my very eyes - luckily I can top them up hugely each and every month .. it's daylight theft from the careful and astute to save the reckless and stupid!

TelBoy

What has 5% inflation in the UK got to do with the Weimar Republic?

And what has either got to do with £275bn of QE?

tony de wonderful

Because it's monatising the debt as a solution.

Granted we don't have massive foreign currency debts though which Wiemar had.

TelBoy

Yes, it's monetising the debt. And? What's your point?

How is this relevant to Weeeeiiiiimar specifically?

tony de wonderful

Could easily lead to run away inflation, destruction of middle class' savings etc.

It's just a lesson from history, every time a state starts debasing its currency to pay its debt is has led to disaster.

TelBoy

Yes, that's a possibility. But Weimar-style hyper-inflation? Not comparable. QE does give the Government the ability to withdraw stimulus at very short notice. The fear is that it would be at fcukwit Brown gold-selling prices, but that's to be seen.

Let's be clear, QE is designed to boost the economy. You can't have growth without affecting something else, such as the exchange rate as we're seeing. You might be "outraged" that your savings are being eroded but you live in the democracy which allowed the huge consumer debts to be racked up in the first place. You can't pick and choose.

GlesgaKiss

It isn't exactly. You must find it funny, though, that when everyone (by that I mean everyone in the spotlight) is talking about the need for growth and the encouragement of investment, they're enacting policies and creating environments which discourage investment and cannot do anything but fail to create real growth.

It's a Weimar solution because they didn't want to face up to reality either. Instead of making difficult decisions, they took the path of the least political resistance, and they ended up taking it to extremes. In effect it could have been taking democracy to extremes (or at least the mob rule element of it), and you could say the people were ultimately responsible for their own misery. Maybe it's the right thing to do to let that happen in a modern utilitarian state - what do you think? That certainly seems to be where we are. The goal - what's considered 'good' - is just what the people want at that time. It could be the right thing for politicians to fulfill it? If most people are too thoughtless to consider a disciplined way to deal with a situation and reach the abstract goal they're really after, then that could be fair enough?

That's the thinking behind politics in this country now, I think. There are a few similarities to Weimar in that respect!

J4CKO

iTrader: (1)

The city obviously approve judging by how shares are rebounding a bit, ready for a nice bit drop when Greece default or Italy collapses further.

I am no economist but this feels like the end of a long, drawn out game of Monopoly where a few people have all the cash and the rest are hopping round the board trying to avoid landing on Mayfair as they have no money to pay.

TelBoy

Sorry but i'm struggling to see the parallels with Weimar in any respect, except in the sense that inflationary policies have been adopted. We're not under the control of a dictator, we don't have a war machine to blindly amass, we don't have foreign exchange controls. I can think of much, much closer analogies.

Path of least political resistance? Now i think you're hitting on something. If the previous £200bn of QE could have been demonstrated to have been effective, even partially, then i could understand today's decision from an economic standpoint. But the market needs to see that the Government are doing "something", and i think that's the worst reason for trying to dig yourself out of a hole by printing money.

Leslie

It seems a admission of failure to print all that money which does not relate to the true wealth of the country.

It feels like buying a bit more time before it all goes to the wall even worse than it might have been in the first place.

We seem to have been very badly served by the western world's financial experts while they personally have been coining it!

Les

GlesgaKiss

@ TelBoy

That's exactly the problem. There are political reasons behind this, not economic ones. Even at that, the goals are short-term political ones. In the long-term the economics matters, so, as a sustainable and truly appropriate economic policy to adapt, this is yet again a poor decision. Or is it? What's the goal? To pander to stupidity - and therefore to encourage and reward it - or to do something which will ultimately be good for the country, if your idea of good is progress and the ultimate fulfillment of the original need/desire?

We could be wrong laying sole blame with the politicians. In the past, the whole culture of the western world - or at least the UK and US - was a lot more prudent and geared towards the long-term. So those people would at least have been more inclined to consider sustainability as a key issue when it came to electing leaders. Now, I think, people are less likely to take the same kind of responsibility when they think about what they want. Just my opinion, but it would mean that there really would be some kind of permanent - or at least long-term - decline in the efficiency of western democratic economies which, taking technology into account, might not be absolute, but it would certainly be a relative decline; Relative to anyone else prepared to adopt prudent methods for getting what they want.

tony de wonderful

Well I never specifically voted for the government to turn private debt into public debt.

I believe that was an act which goes beyond what any democratic government should be able to do anyway.

A democratic government should not be empowered to 'do anything'. It needs limits on its power.

Same with this. I know it's the BofE but it's still part of the state.

tony de wonderful

Er Hitler came after the Wiemar republic, along with his war machine.

Yes we don't have the foreign currency debt that Wiemar did, but in the case of Wiemar the government took the path of least resistance which was to monetise the sovereign debt...printing money.

Now after this round of QE I read it will mean 30% of national debt sitting on the BofE's books.

Then how much after another round, and another round?

TelBoy

Plenty of other countries have printed money. Why are you picking on the Weimar (please spell it correctly) specifically? I just don't see the point.

Nobody knows where the tipping point of public (or more importantly, ratings agencies') confidence in terms of % of debt held by the Central Bank. It's uncharted territory. But again, i fail to see the conclusions we're trying to draw. Desperate times, desperate measures. Not a time for finessing.