QE, 75Bn!

[BrainsTracy]

thankfully not real billions only 10**9 still, good or bad?
http://www.bbc.co.uk/news/
Now I know that money has not been real for half a century but can creating new out of thin air really be good? Perhaps the economists can explain but I suspect they've just watered down all our £'s

[factor-fiction]

£7.5 x 10⁹
I'll find a site which gives an explanation of QE.
It helped a few years ago It shouldn't reduce the value of the pound as is so much slack in the economy but there are risks of storing up inflation problems in the future - in fact QE may have contributed to the current high CPI/RPI fgures

[kinkajou2]

It will surely lead to an Inflation rise - many more job losses - and as you
say "a dilution in the value of the pound" - but what do the Tories care?
They care only about the wealthy!!

[jake-the-peg]

They have - and crucially they've watered down the defecit too - it's a crafty game of "How much can you devalue the currency without getting your credit rating cut".

It will drop the value of stirling a bit which makes our exports cheaper abroad ( so should help exporters ) but makes imports more expensive.

The other risk is it will push inflation up a bit - but don't get conned by those trying to pretend it would trigger hyper inflation - this is a controlled limited measure notwild printing.

Overall as with anything there are winners and losers

[BrainsTracy]

No need. I have a full understanding of what QE is and how it works.

[Gromit]

I think George Osborne summed it up best when he said

When George Osborne was opposition Chancellor

// George Osborne has warned that the Bank of England’s strategy of quantitative easing is a “leap in the dark”.
The Shadow Chancellor described the decision to effectively print more money as a “last resort”, necessary because of the “complete failure” of Labour’s other measures to tackle the recession.
He told BBC News, "I don't think anyone should be pleased that we have reached this point. It is an admission of failure and carries considerable risk.” //
http://www.conservati...leap_in_the_dark.aspx

Basically, it is a admission that their policoes have failed. It is a desperate measure.

[emmie]

If they only cared about the wealthy, why would they do this.

[BrainsTracy]

i'm asking really about what the other economic factors are.

[rov1100]

Printing more money does NOT put money in the consumers pocket. It cheapens the £ they have in their pocket so if anything the price they pay will increase.

What got us and the rest of Europe out of the last recession was the fiscal stimulus that made the shopper go out and buy. That was the reduction of VAT and the car scrappage scheme. This also allowed many workers to keep their jobs.

[jake-the-peg]

It kind of does rov

It allows the government to reduce the deficit by buying bonds which means they don't have to raise so much in tax cuts and can play good cop by doing things like freezing council tax.

Of course that doesn't focus exclusively on the British economy but neither did the scrappage scheme.

A number of people on here (not me) criticised that as propping up foreign car manufacturers

[bazwillrun]

Its called Devaluation by any other name, the GBP has been Devalued, but they prefer to use the term Quantative Easing nowdays.

Makes no difference what you call it the end result is the same the pound in your pocket is worth less it has been devalued.

[Gromit]

£75billion is about £3000 foe every tax payer in the UK. The economy is stagnant, tax payers are not spending.

So why not give them the £3000 for them to go on a spending spree and create demand again?

Instead, the Government will spend the £75billion at the banks buying back Government bonds. The theory is that the cash rich banks will then go on a loaning spree, investing in small businesses.

The only thing guaranteed, is that the banks will pay themselves mega bonuses out of this. Oh, and they will probably make the odd donation to the Conservative Party.

[rov1100]

I quite agree with that Gromit. They should in theory put money into the hands of the citizen so they can buy the products, that can increase demand creating more jobs and more profits. Coupled with protectionism we could almost become self sufficient.