QE3?

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superfrank
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I wish (on looks and intellect!)...

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superfrank
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How does quantitative easing work?
http://www.bbc.co.uk/news/business-16974497
Stephanie Flanders on how QE works... no mention whatsoever of any downsides of printing money e.g. the fact that it impoverishes the young and unborn to keep baby boomers "rich", inflation and increased chance of hyperinflation etc.
Iron
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Quite. The bias is palpable.

Here's a more balanced assessment of QE, which talks about things like the fact that QE is effectively a tax on pensioners: http://www.telegraph.co.uk/comment/9073 ... money.html

Jeff
superfrank wrote:How does quantitative easing work?
http://www.bbc.co.uk/news/business-16974497
Stephanie Flanders on how QE works... no mention whatsoever of any downsides of printing money e.g. the fact that it impoverishes the young and unborn to keep baby boomers "rich", inflation and increased chance of hyperinflation etc.
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superfrank
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Dennis Gartman is ‘wild-eyed bullish’ on stocks
http://www.marketwatch.com/story/dennis ... inginsight
“Investors are terrified of stocks,” Gartman told me. “You can’t get people to buy Procter & Gamble PG with a dividend of 3.3%.”

Besides bond funds, people have been sticking their cash into the proverbial mattress. “Baby boomers are laden with cash,” Gartman said. “Checking-account balances are outrageously high. They’re paying out nothing at all.”

What’s going to get these terrified people with bulging checkbooks back into stocks? “Greed,” Gartman replied simply. “Greed and the need for yield will bring them in. That’s what the Fed wants them to do.”

Take note, conspiracy theorists and Ron Paul supporters (not necessarily the same people): Gartman largely agrees with you — the Fed is behind the whole thing.

By promising that short-term interest rates will stay near zero until 2014, Federal Reserve Chairman Ben Bernanke is offering savers what is in effect a Hobson’s choice: Earn nothing and watch your capital deteriorate, or jump in the pool and take some risk. And don’t worry: The water’s fine.

“Keeping rates low and long will force boomers to … move into the equity markets,” albeit kicking and screaming, Gartman told me.
Iron
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Bank of England's £50bn QE puts Britain in 'better position than Germany' [according to Fitch] - http://www.telegraph.co.uk/finance/econ ... rmany.html
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superfrank
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Nazi forged bank notes hit sterling confidence, MI5 files show
http://www.bbc.co.uk/news/uk-17070943
The Nazis produced counterfeit sterling with a face value of £134m in total.

That was the equivalent of 10% of all sterling in circulation.
the German's gave us involuntary QE back in 1940 - after Weimar they knew how to wreck a currency and create inflation...
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Euler
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superfrank
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the one thing you can but sure of is that, in the event of any real recovery, the central banks will be far too slow in withdrawing the monetary stimulus.

always trigger happy with easing, always way too slow to tighten.

the ECB loaned out another €530 billion (that it doesn't have) today to 800 banks at 1% over 3 years. wouldn't it be nice to be a bank!
http://www.zerohedge.com/news/ecb-ltro- ... 95-billion

meanwhile the markets didn't like Bernanke's testimony that indicated that US QE3 is not imminent... (it will happen sooner or later)
http://www.zerohedge.com/news/ben-pulls ... et-unhappy
Iron
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QE was an emergency measure – it should end - by ex MPC member Andrew Sentance: http://www.telegraph.co.uk/finance/econ ... d-end.html

'If we don’t start the gradual shift away from emergency monetary policy settings soon, the MPC risks having to play catch-up in the future: pushing up interest rates sharply and triggering a large negative shock to business and consumer confidence'.
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superfrank
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Andrew Sentance was the only sensible voice on the MPC.

there is hardly any difference of opinion on the MPC now, which i guess is just how Merv likes (but it's very unhealthy especially given that the rest of the committee are essentially just representatives of private banks).
mulberryhawk
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The MPC consists of 9 members. Why should one members view or commentary be considered any more or less well informed than the other members?
Iron
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One can stand back in awe and admiration at the collective erudition of the MPC members, and say 'All of these guys know far more about economics than me. Who am I to criticise any or all of them? I'm just glad we have such brainy and educated people at the wheel of the ship.'

Alternatively, one can take a critical view of their decisions and opinions, whilst acknowledging that they know more than you and that you may well be wrong.

I prefer the latter approach...

Jeff
mulberryhawk wrote:The MPC consists of 9 members. Why should one members view or commentary be considered any more or less well informed than the other members?
mulberryhawk
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I was merely pointing out that Sentance was in the minority, and so why should his opinon carry any more weight than the rest of the other members of the committee.

8-1 majority is a pretty comprehensive majority in favour of the doves I would have thought.
Iron
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It is, but I'm always wary of consensus opinions, especially where group dynamics are involved. :)

If the B of E is like some of the companies I've worked for, the MPC will agree with Mervyn King whether they agree with him or not. It takes a strong character to challenge the leader of their organisation's cherished position...

Jeff
mulberryhawk wrote: 8-1 majority is a pretty comprehensive majority in favour of the doves I would have thought.
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superfrank
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i'm not saying that Sentance's view was more important than the others, just that he was the only dissenting voice (which made his position significant).

also Sentance took a position against the financial interest of himself and his peers (given that these are all relatively wealthy men who probably own a substantial amount of assets).

do you think we'd ever have a situation where Merv was the only hawk amongst 8 doves? no, me neither.
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