(Untitled)

[sherbetsaucers]

Now I've said many times I don't know that much about 'finance'. It confuses me. Lots. But back in 2009 the Bank of England started quantitive easing. (Printing more money) The theory being it would spark growth in the economy. We would have infrastructure projects with happy workers earning an honest wage. What happened was the banks got the money

Comments

[pmp]

Funnily enough this was in the Guardian this morning

http://www.guardian.co.uk/commentisfree/2012/jul/12/qe-bankers-swindle-liquidity-crisis

[borusa]

One thing that you've missed is that the Bank of England didn't just hand out the cash like they were a broken ATM. What they did, essentially, is swap one form of government debt (cash) for another (gilt-edged bonds, T-Bills etc). Simply "giving out money" is highly inflationary, to the extent of being pointless and damaging(1). Quantitive easing is inflationary too, but less so (2

[sherbetsaucers]

Thanks, that helps a bit actually.

[davywavy]

The QE in 2009 sparked growth into the economy in the same way that blowing air into a balloon with a hole in it keeps the balloon inflated a little longer. The idea is to try to buy time whilst the hole is fixed

[davywavy]

"If you had given that money out to those most in need rather than hoping it would be invested then they would have frittered it away on things like bills, food and travel."

How much food, cars, aeroplanes and electricity does printing extra cash create?

[sherbetsaucers]

Not sure I understand what that last bit means. I was just talking about a trickle up way of distributing money.

[davywavy]

Simply that money is a medium of exchange; when you print money, ultimately it doesn't make people richer, as they will use that money to buy things you can't just magic up out of thin air and so is limited in supply.

it's a facetious comment on my part, but one worth bearing in mind.

[ozisim]

Ooo