Question Time

karkus30

QE is an asset exchange programme as far as I know.

MikeTV

I don't know about that. I think sometimes the celebrity, with no party affiliations, can cut through to the heart of issues and say something that really resonates with audiences, often making other politicians look decidedly silly.

But I agree there are times when the celebrity just makes themselves look silly, of course. But then again, I don't have a particularly high regard for the intellectual abilities and background of many politicians either, being the cynical old chap that I am.

I guess the producers would argue it opens it up to a wider audience.

sidicks

???
Money is created to buy government bonds with.

karkus30

Yes, keep going and I might catch up....... sometimes your posts can have that 'pointing at the Sun' effect where its difficult to know if you are saying "the Sun is out lets have a BBQ" or "make sure you apply lots of sun tan cream or you might get skin cancer".  I'm sure I'm staring at something obvious and the penny will drop, but for now all I'm getting is mind induced white noise.

sidicks

I can't say it any more clearly:
- No money is created when the government issues a bond
- Money is created to buy bonds under QE (with the vague expectation that the money could be cancelled at a later date!)

karkus30

I agree with that also. There are potentially worse results from pure QE than from straight debt creation.

karkus30

Except there is no greater multiplier affect because the Government spends the money and not the producers. Keynes maths was way off. If you follow his actual formula it results in infinity so we know he fudged the equation.

Everything is predicated on the need for demand, where as without supply there can be no demand. Simply put, savings are the means to creating long term sustainable growth as long as they are utilised by being invested. Creating demand without the means of production creates a diminution of savings and establishes the mechanism of cheap money which does so much damage.

Does it matter if the Government spends instead of the private sector ? Well we see that it does. The state must remove part of the output from the private sector in order to facilitates its plans. This deprives the private sector of capital savings and shuffles the production from entrepreneurs that are providing products and services that people want, to goods and services the Government say they want.

Of course it is always pointed out that there IS a need. People need more houses and no one is building them. The first question should always be 'why is no one building more houses?'. The Keynesian response is that demand is too low. So, if the demand is too low, why is it Governments priority to start building houses ? It makes the assumption that buyers and sellers are holding onto vast quantities of ready cash because of some strange 'animal spirits'. Instead it should be far more obvious they are not. House prices are simply too high and house builders have concluded that further investment is too risky. If builders have made that connection then why can't the Government ?

johntheexpat

And did it do any good?  So why would someone want to do it again?

sidicks

What would have happened if they hadn't have done so (through slashing rates)?

domtheone

^^^^
They **** may have hit the fan even more.

Having said that, said **** really needs to hit the fan to get somebody in government to understand just how much of a mess this country is in.

Governments are still living in denial.

Devaluing the pound (even further) won't fix anything, long term.

GB once said, a Strong Country has a Strong Currency.  Least he was right about one thing.