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Author Topic: Spread the word!  (Read 830 times)
RIT
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« Reply #15 on: January 08, 2019, 11:03:52 PM »


We know QE can be deployed without the sky falling in as the last round showed, next time lets use it for something worthwhile instead of peeing it up the wall.  It's got to be worth a try?

Desp

The problem is that the next time QE is deployed it will be to shore up the bubbles that the current rounds of QE have created. The issue is that currently few people recognize the issues that it has created.

The key aim of QE is to raise asset prices and so lower their yield - the % rate at which the asset pays out dividends and the like. The raising of the asset price provided a capital gain to anyone already invested, but lowering the dividend return means that most assets pay out less than inflation.

So if you had a nice pension pot invested around 2008/9 in a spread of bonds and shares there is a very good chance that you saw the pot rise in value. The problem is that if you plan to retire and purchase an annuity to give you an income for the rest of your life the cost of the annuity for a certain amount is now far higher than in 2008/9. If you were lucky enough to have your pension fully in place back in 2008/9 you are likely to break even as the rise in pot size will match the additional cost of the annuity. Anyone who is still saving or only started after 2008/9 now has to save far more to get the same pension amount.

The same is true for just about any investment if you have cash ISAs they now lose money in real terms as their interest rates are below inflation. UK company pensions are expected to invest safely which means a large % of UK government bonds, currently, the return on a 10 year Gilt is a whopping 1.374% and companies have to make up the short fall in their funds. International banks have been told that just about the only 'risk free' investment they can hold is government bonds so they purchase them rather than invest elsewhere.

QE and the supporting rules and regs are currently doing a wide range of complicated things. The issues that are visible are impacting anyone with savings, anyone who works for a company that currently has a defined benefit company pension or anyone who lives somewhere where local taxes are being increased to cover the defined benefit pensions of government workers.

You know the saying "when in a hole, stop digging". QE changes this to "when in a hole, hire a Bucyrus RH400".

    https: //www.youtube.com/watch?v=oAcgMWtkpWE
« Last Edit: January 09, 2019, 12:22:43 AM by RIT » Logged

2.4kW PV system, output can be seen at  - https://pvoutput.org/list.jsp?userid=49083

Why bother? - well, there is no planet B
desperate
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« Reply #16 on: January 09, 2019, 06:55:41 PM »

Quote
The key aim of QE is to raise asset prices and so lower their yield

Huh The Govt is free to utilise the money as they see fit, in which case the rest of your arguement is not valid, all we need to do is convince them to spend it wisely. OK OK that's a tall order I grant you.

Desp
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RIT
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« Reply #17 on: January 09, 2019, 07:05:26 PM »

Quote
The key aim of QE is to raise asset prices and so lower their yield

Huh The Govt is free to utilise the money as they see fit, in which case the rest of your arguement is not valid, all we need to do is convince them to spend it wisely. OK OK that's a tall order I grant you.

Desp

LOL, from the Bank Of England's own web site

Quote
Large-scale purchases of government bonds lower the interest rates or ‘yields’ on those bonds (this site explains more about bond yields). This pushes down on the interest rates offered on loans (eg mortgages or business loans) because rates on government bonds tend to affect other interest rates in the economy.

   https: //www.bankofengland.co.uk/monetary-policy/quantitative-easing

The result of pushing down interest rates offered on loans and bonds is that the interest paid to anyone who has money to lend is also lowered.

« Last Edit: January 10, 2019, 12:56:18 AM by RIT » Logged

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« Reply #18 on: January 10, 2019, 07:05:38 PM »

Quite so, LOL  Wink   which is one reason why it is far better to spend the created money into the REAL economy,  simple!

Desp
« Last Edit: January 10, 2019, 07:07:19 PM by desperate » Logged

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RIT
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« Reply #19 on: January 10, 2019, 07:29:52 PM »

Quite so, LOL  Wink   which is one reason why it is far better to spend the created money into the REAL economy,  simple!

Desp

That is where the confidence trick of QE hits the confidence that people have in the financial markets. No one knows the point at which QE becomes viewed as money printing and all the implications that it entails. Personally, I would prefer another country/region to find that point rather than the UK. So let's let the US go down the road that one or 2 of their political classes are talking about - a $1 trillion green deal, financed by QE. If they can run such a program for say 4-5 years without problems we can then follow on behind.
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« Reply #20 on: January 10, 2019, 08:53:57 PM »

It wouldn't take long at all to build confidence once real jobs and real infrastructure starts being built, soon after the tax take will rise and boost confidence even more.

 Or alternatively we could watch the telly about flooded hospitals for a few years, that'll do our confidence wonders wackoold

Desp
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todthedog
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« Reply #21 on: January 11, 2019, 06:17:59 AM »

Prof Richard Murphy has written extensively on the subject

https://www.theguardian.com/environment/2019/jan/03/lets-make-2019-the-year-of-a-green-new-deal


https://www.taxresearch.org.uk/Blog/2018/09/10/cross-party-support-for-the-green-new-deal/
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