[Drd]

OK,so who can explain how printing money is going to help the crisis.Are the government going to give us all £1000 or what?I don't understand this idea.

[Buckster]

yup they print more money

we all get £20k in crisp 50s to reduce or mortgage and/or loans

which then spurs us on to spend at shops therefore helping the economy

win win situation

[Drd]

Sounds good to me,that's half an Aston V8

[Buckster]

if you're psending that sort of money the goverment will love you

[Iccz]

20k is safe in the banks right?
they need it more than anyone else
Or maybe 20k of porn, gota help the porn industry out remember...
Or maybe a wise investment of £20k of lightbulbs...


I dont see printing money helping anyone, we'll end up with hyper inflation...

[smelly]

Originally Posted by Iccz

20k is safe in the banks right?
they need it more than anyone else
Or maybe 20k of porn, gota help the porn industry out remember...
Or maybe a wise investment of £20k of lightbulbs...


I dont see printing money helping anyone, we'll end up with hyper inflation...

Or £20k in import duty and payments to parcel force for av kit from estonia......

[krish]

apparently this only works if it's done secretly

... and isn't this now called quantitative easing?

http://en.wikipedia.org/wiki/Quantitative_easing

Quantitative easing is a tool of monetary policy. It effectively means that the central bank prints new money, in order to increase the supply of money. 'Quantitative' refers to the money supply; 'easing' essentially means increasing.

Quantitative easing was used notably by the Bank of Japan (BOJ) to fight domestic deflation in the early 2000s. More recently during the global financial crisis of 2008, policies announced by the US Federal Reserve under Ben Bernanke to counter the effects of the crisis have been likened to quantitative easing coupled with the issuance of new debt on the US federal balance sheet.

In Japan's case, the BOJ had been maintaining short-term interest rates at close to their minimum attainable zero values since 1999. With quantitative easing, it flooded commercial banks with excess liquidity to promote private lending, leaving them with large stocks of excess reserves, and therefore little risk of a liquidity shortage. The BOJ accomplished this by buying more government bonds than would be required to set the interest rate to zero. It also bought asset-backed securities, equities, and extended the terms of its commercial paper purchasing operation. Despite Japan's sustained near zero interest rates, the quantitative easing strategy did not succeed in stopping price deflation.

Quantitative easing can also be called a misleading term. For to equal 'ease' with 'increase' is inaccurate on linguistic and mathematical levels. What is furthermore misleading, is the assumption that the money supply is only provided by central banks - as credit to national governments.

In reality, the money supply of a sovereign country has two sources: notes and coins also called Cash, printed and minted free of interest by the State, and Credit, issued out of thin air at interest, by banks.

To 'ease' the 'quantities' of money in circulation by increasing Credit means practicing usury.

[RMCF]

All this huge scale economics is, as far as I am led to believe, is quite simple.

In times like this the central banks can really only lower interest rates/Gov can only cut taxes to try to refire the economy.

If these 2 things don't work, then apparently its the end !!

And these 2 things don't seem to be working at present.

[shodan]

Its something to do with the amount of money owned and owed being far greater than the money which physically exists. eg You have a million pound in the Abbey National and you wander into your nearest branch and want to close your account and take the money in cash. Well the branch won't physically have that much cash they can give you there and then. Now for some business transactions, times that by ten or a hundred and the company that have to give the money won't have the physical cash.

Putting more money out there can free up more money.

[Steve.J.Davies]

its inflationary for sure. but some inflation should bring interest rates up and maybe the banks will start lending again. A fine line to walk though.
But what percentage of the money in 'UK ltd' is fiat money ? (compared to how much they are printing). arguably fiat money has more value that the stuff the banks have willfully created by using debt to create money out of thin air.
Forget anything about money being backed by resources - those days are long gone.

[loz]

Basically,

say the government has £100 in tax income this year.
And a £100 pilled up in the bank of england.
And plans to spend £250.

Someone points out they only have £200, so asks "where is the other £50 coming from. Are you going to borrow it?"

The government says "no need, we have £150 pilled up now".

"But where did that extra £50 come from?"

The government says "We printed it."

Sounds easy, but the consequence is inflation, because the government still only really has £100 in 'real terms', and the £50 just came from thin air. So now each pound note is only worth 66p of what it was before.

A big problem would be imports, because other governments would know you don't really have £150's worth of assets (like gold) to back that £150 of paper money, just £100's worth.

So whilst your £100 might have bought you 100 euros before, now £150 still only buys you 100 euros.

If you only printed £1 more you would probably be OK - and governments do that all the time. In fact they also do the reverse, and destroy £1.

But as soon as you start printing far too much, inflation sets in, confidence falls, and before you know it you have to print even more, and so it goes on. Before you know it, you need £1m to buy something that once cost £1. All because the government tried to print its way out of a shortfall.

[Import racer]

If it sounds like a bad idea it probably is.

Has no one in the Government any real good ideas or long term strategies ?

Obama seems to have a good idea, as many have been saying on here for a while and that's to put the builders back to work and invest in the country and do some work that actually needs doing.
They are rebuilding infrastructure in the US and investing in future industries.

We need more social housing for a start.

Printing more money will make us look like a joke around the world further devaluing the pound and will then lead to inflation again when import prices go back up.

We need good ideas, and banks should be made to lend by lowering the interest the rate that the Government lent all our money, from the 12% down to 4% or 5% so the banks can actually afford to lend this money back out.

And let some of the interest rate cuts play out rather than scaring everyone into stop spending big by further interest cuts and silly ideas.

Some of this was mentioned on Newsnight last night.

Some of these other ideas like printing money just smack in the face of desperation.

Do these people really know what they are doing ? or is it all just a political smoke screen.

They look like they are ******* in the wind
Just throwing good money after bad.

[Steven]

Originally Posted by Import racer

Obama seems to have a good idea, as many have been saying on here for a while and that's to put the builders back to work and invest in the country and do some work that actually needs doing.
They are rebuilding infrastructure in the US and investing in future industries.

Well the President-elect still needs to sell to Congress his $775 billion plan

Read something amusing (yesterday). "Governments can suck all of the sand out of a desert". Huh.

[Drd]

I think I'm beginning to understand this.But it still seems that the government are the only people who have this extra money,and are therefore the only people who can spend this extra money.How does that help me buy an Aston,or is it just V8's for MP's?

[eric pisch]

Originally Posted by Drd

I think I'm beginning to understand this.But it still seems that the government are the only people who have this extra money,and are therefore the only people who can spend this extra money.How does that help me buy an Aston,or is it just V8's for MP's?

banks have to lend money to make a profit, the money printed i believe goes into the banking system, then hopefully they will get large cash reserves and start lending cheaply again

down sides are terrible thou, more money means it has less worth = inflation, if it goes out of control then you get hyper inflation and a loaf of bread will cost you a million. Also causes your currency to devalue against all others so all your imports will cost a lot more.

printing money is a last desperate attempt to sort out the problems.

[Joe Slow]

Originally Posted by Drd

OK,so who can explain how printing money is going to help the crisis.Are the government going to give us all £1000 or what?I don't understand this idea.

Well doing that is a very unusual step. The problem with doing it is hyper inflation. Basically if they make more money, money is worth less. The pound has recently dropped in value against the euro because of fears the government will print more money.

They won't give this extra money to you. What they will do is to buy up low risk loans. Like loans to the government. This forces money out of the bond market and into other places like the stock market.

Though this is an extreme step it will work. But they won't do it until the repo rate comes down to 0.5% when they can't gain anymore from bringing that rate down. They may consider this extreme measure.

[loz]

Originally Posted by Drd

I think I'm beginning to understand this.But it still seems that the government are the only people who have this extra money,and are therefore the only people who can spend this extra money.How does that help me buy an Aston,or is it just V8's for MP's?

well they don't give you the money directly...

you still have to work for it, or borrow it off the bank.

It just means there is more money in the money supply now, so it can be lent. (which is the current problem - no money to lend)

However, as has been stated, the result is inflation, so wheres as the Aston might have cost you £100k, it will now cost £150k, so you are no nearer to affording it than you were before...

[mqasim82]

The money they are printing now, we will have to pay it back later.

[steptoe]

if hyper inflation sets in does that mean you get paid in millions if so,i could pay my credit card bill off in a week

[Joe Slow]

Originally Posted by steptoe

if hyper inflation sets in does that mean you get paid in millions if so,i could pay my credit card bill off in a week

Well yes you would be able to do that. But hyper inflation isn't a joke it comes with many problems.

Here is a quote about hyper inflation that explains it a little better:

The main cause of hyperinflation is a massive and rapid increase in the amount of money, which is not supported by growth in the output of goods and services. This results in an imbalance between the supply and demand for the money (including currency and bank deposits), accompanied by a complete loss of confidence in the money, similar to a bank run. Enactment of legal tender laws and price controls to prevent discounting the value of paper money relative to gold, silver, hard currency, or commodities, fails to force acceptance of a paper money which lacks intrinsic value. If the entity responsible for printing a currency promotes excessive money printing, with other factors contributing a reinforcing effect, hyperinflation usually continues. Often the body responsible for printing the currency cannot physically print paper currency faster than the rate at which it is devaluing, thus neutralizing their attempts to stimulate the economy.

Hyperinflation is generally associated with paper money because this can easily be used to increase the money supply: add more zeros to the plates and print, or even stamp old notes with new numbers. Historically there have been numerous episodes of hyperinflation in various countries, followed by a return to "hard money". Older economies would revert to hard currency and barter when the circulating medium became excessively devalued, generally following a "run" on the store of value.

[kopchoir]

the goverment will not be printing money

[eric pisch]

Originally Posted by kopchoir

the goverment will not be printing money

£10 they start printing in the next 6 months once we reach 0.5% or 0% interest rate

[kopchoir]

Originally Posted by eric pisch

£10 they start printing in the next 6 months once we reach 0.5% or 0% interest rate

deal 6 months and il make another tenen rbet that interest rates dont hit 0%

[eric pisch]

Originally Posted by kopchoir

deal 6 months and il make another tenen rbet that interest rates dont hit 0%

i pray your right and ill be happy to pay you, because if i am right as to how bad things will get we are all screwed

[Import racer]

The government says alot of things...

And many of these ideas they bring in once we have complained a bit and then got used to the idea.

The white haired one said, when asked on the subject "we are considering many options" now there's a typical response.

As i mentioned earlier the banks can not afford to lend out the billions we lent them as they are paying 12% on it.
Industry leaders and others a like are asking for the rates to be cut on these loans.

If the government borrows at 6-7% then lends to the banks at 12%
why do they think the banks are going to lend it back at 4% or less.

Why doesn't the Government forget the 12% and the 5% or so profit they will make and just ask for 6% thus now enabling the banks to actually lend the money back out decent rates to viable businesses and private individuals.

Job done.

Then we don't need all this new Monopoly money.

They are rushing in new ideas in a panic, when they need to think these ideas through abit more and try and work out what the effect of these bizare solutions may have.

Clever people, with no common sense.

[kopchoir]

Originally Posted by eric pisch

i pray your right and ill be happy to pay you, because if i am right as to how bad things will get we are all screwed

i wouldnt take your cash anyway
i really cant see them doing it i dont even think its an option to do it we will turn this corner but i do think the goverment are doing all they can to make things easier and i still would have gordon superman brown in charge than cameron

[gavan]

Originally Posted by Steve.J.Davies

But what percentage of the money in 'UK ltd' is fiat money ? (compared to how much they are printing). arguably fiat money has more value that the stuff the banks have willfully created by using debt to create money out of thin air.
Forget anything about money being backed by resources - those days are long gone.

All of the money is fiat money. Fiat money means money that has value because is decreed to have value, unlike say coins made of gold or silver which have intrinsic value.

Fiat currency - Wikipedia, the free encyclopedia

What you might mean is how much is actual legal tender notes and how much exists only as bank credit.

In that case, I believe only something like 3% of all 'money' in the UK is actually in the form of physical notes or coinage. I stand to be corrected on that one.


Note that money in the bank is not the same as actual legal tender. If you have 'x' quid in the bank, it means that the bank owes you 'x' pounds, not that it's holding 'x' pounds in a vault somewhere for you. Under normal circumstances you can go to the banks and ask for it all in cold, hard cash. Plus, normally you can transfer bank credit to another account to use as payment for goods and services - no cash required.

If the bank goes bust however, you have lost the 'money' as it was only a debt owed by them to you. You should be able to claim back anything up to £50,000 from the FSCS compensation scheme which applies to all UK bank accounts. Anything above that is not covered.

[gavan]

Originally Posted by kopchoir

i wouldnt take your cash anyway
i really cant see them doing it i dont even think its an option to do it we will turn this corner but i do think the goverment are doing all they can to make things easier and i still would have gordon superman brown in charge than cameron

Up until a couple of months ago, the very idea of 'money printing' was an absurdity that happened only in places like Argentina (pre crash) and Zimbabwe.

Now it is being widely discussed across the newspapers and TV and hinted at in government and Bank of England statements.

I assure you that they will eventually start printing money once interest rates are zero or a sliver off it.

One of the reasons being that they have committed themselves to a huge programme of spending and bailouts and the international bond markets are not showing signs of being willing to lend the government the money. It's being called 'quantitative easing' and mooted as a way to 'solve the credit crunch' but it reality it's because Britain is broke and no-one wants to lend it the money to 'spend its way out of recession' as Gormless Clown and thunderbird-eyebrows seem to think is going to save us....

[phillfyspoon]

Money is created as debt

debt = control

Bankers are the real power the goverment is just irrelevant they are puppets on the string on the bank.

But no one seems to care about this simple fact.

[kopchoir]

Originally Posted by phillfyspoon

Money is created as debt

debt = control

Bankers are the real power the goverment is just irrelevant they are puppets on the string on the bank.

But no one seems to care about this simple fact.

ah phillfy back form the matrix mate
So if the bankers are the real power how come they now work for the goverment