QE for the people?

[MintPlumbing]

 

Yep. That's called 'growth.'

 

Correction.

 

That's called 'unsustainable growth.'

[unbeliever]

QE is inflationary.

Inflation would have been lower without it. Because of the way it was done, the extra money was released slowly so we had a long term small inflationary effect, rather than a sudden large one. The net effect is much the same.

It may occasionally be necessary in times of dire need, but to talk about doing it routinely is the height of folly.

We kind of got away with it over the last few years because there were significant deflationary pressures from Labour's great recession to mitigate the inflationary effects.

 

QE is essentially a tax on savings, pensions and assets. In a fiat currency, when you create extra money you automatically devalue the money which is already out there.

If Corbyn wants to tax savings, pensions and assets, he should just say so. Then we can decide whether to support him with a genuine understanding of what he's proposing.

 

I thought the appeal of Corbyn was honesty and straightforwardness. He can't be ignorant of what QE does to savings, pensions and assets. If he is really the kind of man he's being held up to be, why not just announce a tax on savings, pensions and assets as an honest man should?

 

---------- Post added 17-08-2015 at 09:39 ----------

 

The stock market is really nothing but a gigantic gambling institution. Would you trust an economic system that puts all the money on a horse in the 3.30?

 

Money invested in the stock market is ultimately going to business which produce things. If the money is invested wisely, as it is a little more often than not, then it grows. The businesses which are invested in create more jobs and/or are able to pay their employees better. These are good things.

 

It is of course possible to lose money in the stock market if you the money you invest is spent unwisely, but in the long term it works well.

 

If you go to the bookies every day for a year, it's very unlikely that you'll end up making a profit. That's because far from being invested, the money is top-sliced and then stirred around.

 

Are these things you honestly don't know or do you just like to complain about capitalism?

 

---------- Post added 17-08-2015 at 09:43 ----------

 

And why is investing it in infrastructure, growing the economy etc such a bad idea? It's not giving it directly to the people, which, incidently, is exactly what the Australian government did. It gave about £1,000 to every man, woman and child in Australia, on condition they spent it rather than saved it.

 

The state investing in infrastructure is important and valuable. Building roads, improving the electricity supply, helping to roll out better internet etc. These are all valuable contributions.

You can't just call all public spending "investment" and expect it to work the same way. That's the mistake Labour made last time they were in office.

 

What you're suggesting with giving everybody £1000 is a tax cut.

Are you now supporting tax cuts? I thought you we're the resident neo-marxist tax-and-spend advocate on this forum. What's going on?

Edited August 17, 2015 by unbeliever

[Obelix]

QE.....if they were going to spend that much on gilts and bonds and tinkering with bank interest rates...they could have just given people money and let them spend it in shops. You know, helping the economy.

 

Except that you cannot undo that sort of QE and increasing the M0 supply is just printing money to spend. The Weimar republic tried that one....

[unbeliever]

Except that you cannot undo that sort of QE and increasing the M0 supply is just printing money to spend. The Weimar republic tried that one....

 

Quite. Still that worked out okay in the end didn't it. I mean after the biggest war in human history.

 

Hyper-inflation is not nice.

Zimbabwe anybody.

[Obelix]

So, what did the banks do with the £375 Billion created through Quantatitive Easing?

 

They lent it out to people that wanted to borrow it. And please before you start going on about how they didn't lend, they did, mainly to larger institutions and companies but the noise about the "credit crunch" disappeareed a long time ago. If you have evidence that they didn't lend it - and I mean proper real evidence, let us know.

 

And why is investing it in infrastructure, growing the economy etc such a bad idea? It's not giving it directly to the people, which, incidently, is exactly what the Australian government did. It gave about £1,000 to every man, woman and child in Australia, on condition they spent it rather than saved it.

 

An increase in M0 supply is a bad idea, as it is out there for good once issued - it's rather difficult to remove it. QE is not the same as "printing money" despite what the less well informed press bang on about. QE is reversible, so when spending picks up you can destroy the extra money that you have created in a sensible fashion and avoid any sudden inflationary tendancies.

[unbeliever]

 

An increase in M0 supply is a bad idea, as it is out there for good once issued - it's rather difficult to remove it. QE is not the same as "printing money" despite what the less well informed press bang on about. QE is reversible, so when spending picks up you can destroy the extra money that you have created in a sensible fashion and avoid any sudden inflationary tendancies.

 

How do you destroy it?

You can destroy that part of it which exists as government bonds held by the BoE.

What about the rest?

[El Cid]

QE is inflationary. Inflation would have been lower without it. Because of the way it was done, the extra money was released slowly so we had a long term small inflationary effect, rather than a sudden large one. The net effect is much the same.

It may occasionally be necessary in times of dire need, but to talk about doing it routinely is the height of folly.

We kind of got away with it over the last few years because there were significant deflationary pressures from Labour's great recession to mitigate the inflationary effects.

 

If Corbyn wants to tax savings, pensions and assets, he should just say so.

 

So if QE for the people was started during "Labour's great recession" it might have been ok? Our inflation rate is almost zero now, QE was started when inflation was around 3%

In March of 2009, the Bank of England had purchased around £165 billion in assets, I dont call that "released slowly".

 

You seem to be sitting on the fence, "We kind of got away with it", does that mean that you support using QE or not?

 

I think that anything Corbyn related, you are negative towards.

[Obelix]

Quite. Still that worked out okay in the end didn't it. I mean after the biggest war in human history.

 

Hyper-inflation is not nice.

Zimbabwe anybody.

 

If you want to see really silly inflation that makes even Zimbabwe weep look at Hungary in 1946 - they had prices doubling every 15 hours at one point. Spend it as you earnt it, literally...

[unbeliever]

So if QE for the people was started during "Labour's great recession" it might have been ok? Our inflation rate is almost zero now, QE was started when inflation was around 3%

In March of 2009, the Bank of England had purchased around £165 billion in assets, I dont call that "released slowly".

 

You seem to be sitting on the fence, "We kind of got away with it", does that mean that you support using QE or not?

 

I think that anything Corbyn related, you are negative towards.

 

I would never vote for a man like Corbyn. Because I believe that the policies he believes in do more harm than good. Is there anything wrong with that.

He's entitled to his opinions, but if he behaves in a way which seems hypocritical to me, I'm not going to shy away from saying so.

 

I'm not a supporter of QE. I said the damage it inflicted was spread out. That's all. The money sat on banks' balance sheets and was only gradually released into the wider economy.

[Obelix]

How do you destroy it?

You can destroy that part of it which exists as government bonds held by the BoE.

What about the rest?

 

There is no other "rest" that is the total of QE. It increases the M4 supply held by the banks - not "real" M0 in your wallet currency.