[Closed] Quantative Easing

in my limited i-listen-to-Radio4 understanding, QE means that [i]in theory[/i] the BoE can ask for the money back - and then pretend it never existed so it doesn't cause inflation.

no, i don't really understand it either...

Ive been thinking a lot recently about this business of saving the banks..

One of the reasons given was that the gov couldn't let the banks fail, and that we came close to an Argie situation of there being no money at the cash machines and a risk of a large bank going under.

So let me get this straight.. as the gov actually already guarantees up to £85,000 that you may have in the bank through it's 'saving protection scheme', they were actually only protecting people with more that that figure by saving the banks with their colossal input.. thereby passing the protection they offered to these wealthy people onto the poor via our taxes.

I feel I've been robbed.

As I understand it, its about the 'money supply chain', which siezed up and unfortunately the banks are at the head of that.

The aim is to get the money supply chain flowing. A bit like charity in africa, give then a bag of grain to eat is OK for now, but nothing changes in the longer term, need to get most of that grain growing. Infrastructure projects are about stimulating the miriad of industry and jobs involved, which then generate tax income, which is spent on infrastructure projects etc etc - not about giving out money.

the kind of quantitive easing I want is that 40+ million lottery win..

[url= http://www.google.co.uk/#hl=en&cp=17&gs_id=2q&xhr=t&q=xtranormal+quantitative+easing+explained&pf=p&sclient=psy-ab&pbx=1&oq=xtranormal+quanti&aq=0&aqi=g1g-j3&aql=&gs_sm=&gs_upl=&bav=on.2,or.r_gc.r_pw.r_qf.,cf.osb&fp=9f471af4381f3750&biw=668&bih=191 ]Edit: Can't get onto youtube here, so I don't know if that works. If not, it's the top result here:
[/url]

So let me get this straight.. as the gov actually already guarantees up to £85,000 that you may have in the bank through it's 'saving protection scheme',

When the crisis kicked off the protected amount was £31,700 per person.

And if they'd needed to bail everyone out, they'd have needed more money anyway. I'd imagine.

As has been said, though, it was more to do with getting banks lending and money being shifted around again than safeguearding individuals' savings. Or at least, the first was a stab at ensuring they wouldn't have to do the second.

It has been expensive so far but the most worrying thing is that no real reforms have been made to prevent the problems happening again in the future.

There are some economists (Steve Keen being the most 'famous'...if you can call economists famous) who believe that governments should have written off private/personal debts up to a certain level (if an individual has no debt then they are not 'penalised' for this - they get a cash alternative), nationalised the problem banks so the structural reforms could be carried out and then starting again would have been a better option. Their theory sounds a pretty counter intuitive way of fixing a debt crisis (giving people free money) but it has been mathematically modelled and would have been cheaper than policy that been followed.

How can you cure the kind of capitalism and consumerism that underlies modern society? The underlying principle of new labour was to give the people what they (thought) they wanted? We only complain when it goes wrong - we are addicted to oil, but only really complain when the pumps run out - I mean who has stopped buying petrol since the price went 'unsustainably' high? And who has changed their way of life so that they dont get caught in the same borrowing/spending trap? Not most people, we still worship stupid non-celebrities dripping in name brands etc.

The simplest explanation I've heard of QE is as follows:

Imagine there's £100 and 100 loaves of bread. Each loaf costs £1.

The BoE prints an extra £100 (QE). Each loaf now costs £2.

So let me get this straight.. as the gov actually already guarantees up to £85,000 that you may have in the bank through it's 'saving protection scheme', they were actually only protecting people with more that that figure by saving the banks with their colossal input.. thereby passing the protection they offered to these wealthy people onto the poor via our taxes.

No, money and finance is not about numbers and maths it is about confidence in the numbers and maths. It's all an illusion which works as long as we all believe it works. If people panic and try to take all their money out of the banks there would be chaos as the banks don't actually have it anymore.

Go watch Mary Poppins.

What i dont understand is, surely if they can just print money, they dont need to charge me any tax?

edlong has it. Print too much and it simply devalues/dilutes the currency.

No, its the confidence thing.

They can print money as long as the rest of the world thinks they are good for it - i.e. will 'buy it back' at some point.

If not, the currency will get devalued and the bread will then cost £2 because the £1 you have in your pocket will be devalued to 50p

Think of a company with shares. If you just keep issuing shares the value of the (exisiting) shares is diluted.

Finance is indeed about confidence tricks. How else do you explain a facebook valuation of 100Bn. They have negligible assets and will never ever make revenue to justify that valuation.

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How else do you explain a facebook valuation of 100Bn

Well, I'm a one-man-band, small-fry business and I spent at least £500 on FB advertising alone last year...

It may be smoke and mirrors, but it does work. It's why we all have computers and nice bikes and whatnot.

it's quantitative easing BTW

It's why we all have computers and nice bikes

Do we? 😳

I'm assuming you have a computer and a bike this being a mountain biking internet forum. Apologies if not!

I'm assuming

You assume much, although I do own a bike.

Sent from my punch-card tabulating machine.

.

I sold my bikes years ago to pay for my computer. By fluke I discovered this place.