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European Quantitative Easing

M

Martyn Miles

pfm Member
I was listening to Radio Four re. QE.
Complicated ?
Definitely.
I followed, to some extent, the reasoning.
Then an Economist, one I haven't heard of before, simply stated:
" It's like using a credit card to pay off a credit card."
He stated the following: "If an individual person in this Country does that, then eventually he has to pay it back."
Sensible reasoning I thought.
How does this apply to Countries rather than Individuals, I pondered.
OK, I didn't do Ecomnomics at College, but a friend who is an Economics Teacher stated to me, " Don't worry about it, Martyn."

Should I?
 
From what little I have understood it amounts to creating a greater quantity of Euros. This means that each Euro will be worth less (the exchange rates already show that). This will make Euro-humans poorer compared to Americans, Chinese, Indians, etc., but will also make their exports more competitive and therefore stimulate the economy. But, as I say, I do not have a great understanding of these things.
 
Martyn Miles said:
Then an Economist, one I haven't heard of before, simply stated:
" It's like using a credit card to pay off a credit card."
Click to expand...

It's nothing like that.

As stated in the other thread, it's just printing money and, because of treaties, giving that money to individual central banks so that they can buy their own countries debt.

The UK have been doing it which is why the pound is so weak.

It might be good for me, at least short term, because I can buy 17% more €uros this month than last.
 
deanf said:
The BBC tries to explain it in 70 seconds

http://m.bbc.co.uk/news/business-30937023
Click to expand...

OK, it sort of makes sense.
My real concern is we are raping the World of its rare resources to keep making, for instance, yet ANOTHER smartphone.
When a respected person such as Sir David Attenborough says we cannot go on like this, the Government of this country doesn't listen.
When Climate scientists tell us that consuming vast amounts of energy to make said products will cause sea levels to rise governments don't listen.
Economic Growth is God to many...

What did John say in the Bible?
" The love of money is the root of all evil."
 
I can't fault you on that Martyn!

A small and steady growth is probably about right, to reflect a growing population - but money attracts money, and continually creating false wealth to feed the super rich is not.
 
Zombie said:
It's neoliberal monetary policies...doesn't work anymore. Keynes is soon back
Click to expand...

Oh I think the days of Keynesianism are long gone, we are beginning to see the rise of cyber and crypto currency as well as open source transaction processing can only result in dismantling the old systems at a micro level. Then there is how money is ultimately abstracted to "standards", gold silver and so on, when that starts to be eroded so that money is directly tied to information rather than what that information produces, then things get really really weird.

Most old school Economists invested in today's money cannot see beyond the existing model, who can blame them it's evolved through hundreds of years and it's its own brand of weirdness... but I see crypto currency and non government underwritten electronic currencies undermining much of the day to day banking processes. It starts with buying the illegal substances but now you can buy laptops and phones with it... It will take maybe 6-10 years but it will undermine the oligopoly and centralised absolute control over money. And again, then things get really really weird.

But I am a dreamer. I'm hoping to see change happen.
 
The trouble with money, be it fiat money printed and controlled by the state, or 'magic' computer money created and controlled by god knows who, is that it is ultimately worthless if people lose confidence in it. I see the UK Royal Mint has started making and selling gold and silver bullion again for sale to the general public. Is this a sign of something?
 
Surely gold is the ultimate confidence game ? It really doesn't have any intrinsic value other than there's not much of it. Other metals are much more valuable industrially.

Everything is a confidence game when it is boiled down. Gold, money, property (sure we all need a place to live, but I suspect most of Southern England is priced WAY above utility value).

With a still growing world population perhaps arable land with a reliable water supply is the best store of value ?
 
sean99 said:
Surely gold is the ultimate confidence game ? It really doesn't have any intrinsic value other than there's not much of it. Other metals are much more valuable industrially.

Everything is a confidence game when it is boiled down. Gold, money, property (sure we all need a place to live, but I suspect most of Southern England is priced WAY above utility value).

With a still growing world population perhaps arable land with a reliable water supply is the best store of value ?
Click to expand...

Something like the Rentenmark then?
 
All of the major currencies are being inflated at the same time so major exchange rates should stay fairly stable (not sure what BRIC is doing in terms of printing but it could change the balance with them in time). The intended effect is to prop up global asset and commodity prices. We'll see if the present fallen oil price is a harbinger of failure, or a blip.

I think it's a different experiment to unilateral money printing disasters (that ended badly for Argentina, Zimbabwe and 20s Germany). We are in uncharted waters I'd say.

sean99 said:
Surely gold is the ultimate confidence game ?
Click to expand...
Some say its very lack of utility sets it apart from commodities and makes it a real currency. Although global stock grows a small fraction each year through mining and recovery, some see the fact no-one can print more of it at will as an advantage over fiat currencies. That's also the idea behind various cryptocurrencies as Clive mentioned.
 
JADISMAN said:
The trouble with money, be it fiat money printed and controlled by the state, or 'magic' computer money created and controlled by god knows who, is that it is ultimately worthless if people lose confidence in it.
Click to expand...

In theory yes, but not in reality. Governments can protect currencies could rely on other countries to help out if need be, and if the worst happened eg to the £, then people would trade with dollars or Swiss francs or invent a new currency.

Money makes the world go round, remember.
 
I still struggle to understand how the whole world can be in debt. Presumably we owe the future money.

In which case surely there is a reset button, you know we all agree its bullshit and start again? That could be fun.
 
darrenyeats said:
Some say its very lack of utility sets it apart from commodities and makes it a real currency. Although global stock grows a small fraction each year through mining and recovery, some see the fact no-one can print more of it at will as an advantage over fiat currencies.
Click to expand...

Although such people are a mixture of cranks, vested interests (i.e. the wealthy) and the ill-informed.
 
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