Is QE a good thing?

[rov1100]

Having printed £250bn you would think the bankers know what they are doing. However it has some downsides as has increased inflation to over 5%.

Why isn't it used for Germany, France or even Greece?

[emmie]

Germany doesn't need it surely, And Greece has enough problems as it is, without printing off the stuff.

[LazyGun]

Greece cant. Germany cannot. They are prevented from using QE as sovereign countries because they gave up their currency and national bank in favour of joining the euro.

Basically, this bailout they are discussing right now is likely to be printing money, euro styley.

[jake-the-peg]

Eh?^^

Germany nas a national debt 74% of its GDP compared to our 76%

Pretty much all western countries got hit by the financial crisis to some extent or another, how they pay for it is rather up to them.

Here there have been a number of ways to rasie the money, service cuts, raising taxes directly (VAT increases) or indirectly ( student finance changes for example).

QE is to some extent a stealth tax - increasing the money supply puts those extra funds in the hands of the Government to help finance the defecit but can put up inflation and as most of us aren't seeing an increase in our pay packets it's effectively a delayed taxation mechanism.

Of course inflation also helps the defecit because it devalues the country's debt in real terms too so the Government must be careful not to do too much of it or it will endanger it's credit rating.

The Euro money supply is regulated by the European central bank which is independant of direct national control.

The European Central bank has used what they term "Long term Refinancing operations"

http://www.ecb.int/pr...ml/pr111006_4.en.html

Which some think is basically QE by another name although they're fixed term injections of money.

Basically there are a number of levers you can choose to pull but they mostly do the same sort of thing

[rov1100]

Thanks Jake, very informative. Germany when asked why they didn't go in for QE said they didn't want to devalue the Euro. I agree with you about it being a stealth tax as printing more money must make the amount already in circulation have less value. Also the inflation it causes is just taking money away from the consumers pocket and coupled this with a depreciating pound is like being hit by a double whammy.

[LazyGun]

Just explain to me again how it would be possible for either Greece or Germany or France to devalue their economy through the mechanism of QE, when they all use the Euro which is issued from the European Central Bank?