Bank of England to flood banking system with cash.

For the last five years quantitative easing has done nothing but make us all poorer via
inflation making food and bill prices go up.

So with the Euro having a few month at the most left to live the bank of england has
come up with a new plan.

Even more money.

The country will launch a scheme to provide cheap long-term funding to banks to encourage them to lend to businesses and consumers, and the central bank will activate an emergency liquidity tool, the Bank governor Mervyn King said in his annual Mansion House policy speech to London financiers.

The case for pumping more money into the economy via further purchases of government bonds had also increased as the outlook for the economy had worsened, King said, though he again rejected calls for the central bank to buy private assets.

With quantitative easing 325 billion pounds pop up out of thin air so whats another
£5 billion a month.

It will offer at least 5 billion pounds of loans per month via the operation. King said now was the right time to activate the scheme, which is aimed at helping banks through phases of exceptional stress.

King hinted that the central bank may also restart its QE programme, which it halted in May after having bought 325 billion pounds of British government bonds, and countered accusations that the scheme had lost its effectiveness. "With signs of a deterioration in the outlook, especially in world markets, the case for a further monetary easing is growing," King said

Ruters

This money is surpposed to be lent to the public to help the economy
but i just don't buy it.
I just keep thinking this is just another way to get money to the banks to
get ready for any fallout from the Euro.

reply to post by skuly


There should have been a scheme like this in affect since the crisis started.

This Euorzone break-up is going to hit us hard.

I am not looking forward to looking for work after my Masters. Could be time to migrate, everyone else around the world does it, why not us Brits on a larger scale?

The money goes straight to the banks at very low or zero % then the good banks lend that money at a higher rate. Why not give the money to the government to use on a rebuilding program, getting young people into jobs.
What they are doing is what caused the crisis in the first place. With much of this being used to make it easier for people to borrow for mortgages.

Maybe I've got it wrong, I'm no expert.

Originally posted by skuly

This money is surpposed to be lent to the public to help the economy

Lent to the public....? What did the public get back from giving all those billions to RBS and co. ? I can't really see anything except the fact that in England, and now massively across Europe, private debt is being turned into sovereign debt. Maybe I'm ignorant but that is what it seems like to me.

strange i've recently been for an interview for a mint in Britain, they are having to recruit as they have lots of work coming there way mainly printing english pounds, although i was told this is to replace damaged notes, even though they do that anyway.
i also heard they may be looking to print Drachma for greece if they pull out of the euro.

probably not realated but worth a mention

reply to post by woodwardjnr

Don't think any of us will see a penny of it.

Remember this from 2009

Gordon Brown says the government will do 'everything it takes' to support the economy The government has announced a second package of measures to encourage banks to lend to individuals and businesses.

The long list of policies includes a scheme to offer insurance against banks losing more money from the bad debts that started the credit crunch. Prime Minister Gordon Brown said the new announcements were vital. Meanwhile, the Bank of England is to be able to buy assets direct from firms.

While criticising the banking sector for some irresponsible lending in the past, Mr Brown said the new scheme was vital to help restore normal lending levels.

BBC Jan 19th 2009

The bank took the money and it went in to a debt blackhole.

Originally posted by Peruvianmonk
reply to post by skuly

 

Could be time to migrate,

hummm Iceland maybe.

If the banks act with this measure the same way they acted with the bailouts, they will simply stuff the money into their back pockets and say, "Thank you very much, but you ain't getting no loans from us!".
They are simply a bunch of thieves, and I find it no coincidence at all that the Conservative Party, currently in power in a Coalition Government, gets many cash donations from big business and chairmen of banks, so it is in their interests to make sure the banks are solvent, to further increase the money to themselves.
And then, they have the gall to criticise the Labour Party for accepting donations from Trade Unions!
Classic double standards.
Mark my words, this money will disappear down the same fiscal black hole where the initial bailout went, and the bankers will award themselves even more outrageous bonuses, all the while slapping each other on their corporate backs and saying "Aren't we clever to get the British Government and people to give us all this money!".
I have a theory that the first bailout happened because the banks went to the Government and told them to give them the money or they would crash the British economy, blackmail pure and simple.

Originally posted by skuly
For the last five years quantitative easing has done nothing but make us all poorer via
inflation making food and bill prices go up.

In your own words, can you explain how this can be the case.

Food prices are a slave to market forces and being a farmer is a profitable affair at the moment due to demand. The other factor in inflation (in the UK at least) has been the price of fuel and that is a slave to the price of oil and gas - again driven by demand AND the silliness of subsidising "renewable" energy such as wind farms, which is a profitable business to be in even when the wind bloweth not.

Regards

reply to post by paraphi


Again Im no expert, but increasing the amount of cash in the economy creates inflation. I appreciate the other examples you outlined, but with inflation you get less for your money. The other thing is we already have huge amounts of consumer debt and this measure is intended to increase that personal debt.

so the next cycle will be 6 months form now, people will be going default on the loans

but the banks will have hedged their bets, and make a profit either way

so who will lose?

hmmmmmmm

I know I'm talking France and the United States about 300 hundred years ago, but why doesn't anyone seem to remember the lesson learned from the Mississippi Bubble? That's a history lesson from grade school I've never forgotten, why can't any of these geniuses remember it? History does repeat itself.

reply to post by skuly

Originally posted by paraphi

Originally posted by skuly
For the last five years quantitative easing has done nothing but make us all poorer via
inflation making food and bill prices go up.

In your own words, can you explain how this can be the case.

Food prices are a slave to market forces and being a farmer is a profitable affair at the moment due to demand. The other factor in inflation (in the UK at least) has been the price of fuel and that is a slave to the price of oil and gas - again driven by demand AND the silliness of subsidising "renewable" energy such as wind farms, which is a profitable business to be in even when the wind bloweth not.

Regards

Well it is very simple. We all understand inflation. Prices go up because more money is created. The more money in circulation, the more prices go up. If there were £1million in circulation only, do you think a pint would cost £3-£4? So by printing more money, they devalue the "money" we have. Prices go up. They are subject to supply and demand of a good, but also to the supply of money available.

The worst thing is, this system requires money to be created to work. Things are going to get very messy.

I'm no economist...but maybe we are getting ready for a bank run in the UK and that's what the money is for?

Rainbows
Jane

reply to post by kcoyote


If the money supply was based against gold what you say would be true but it is not .... because the pound/dollar/ or ??? currencys are not on the "gold standard"

The reason inflation happens is because when the money floods the markets it forces up the future prices creating higher prices across the board... this is how the money dumping causes inflation ...

if you read Bernankes paper on stagflation in Japan you would understand what and how these economists think...

basically Bernanke's plan for Japan was to pump money into the system to cause about 2 % inflation year after year... Bernanke believed that through inflation they could induce consumer purchases by making people feel they had more money because they got more $$$$$ yet pricesrise erasing the $ gains brought by inflation.

www.princeton.edu...

Greece will leave the Euro

This is the reason for the (QE)

They are creating a net to ease the fall. How much longer can we continue to pump money in ? There is no comeback from this. Interest rates will have to rise at some point and when it does, that is when the trouble will start . All they are doing is plugging the hole in a sinking ship.

Greece might leave the Euro but that may be largely due to the population not voting for the technocrats, their democratic decision. I'm not saying it will be good for them in the short run economically but hey...

What is being proposed across Europe in regards to sort a of "banking union" worries me greatly. If the financial system is now centralizing control over economic and fiscal policy all over Europe, where does that leave us? The chancellor of Germany said a few days ago that control over Europe had to come from one place....wasn't this attempted before, last century? Didn't go so well

Check this out
topdocumentaryfilms.com...

Really worth a watch. Extremely enlightening in regards to the U.K banking system.

This whole thing is an absolute mess !

Again it will be the taxpayer who looses out, and in more ways than one. QE was good to do the first couple of times, just to help things along, but now this is getting riddiculous.

The worst thing is there are many out there, who won't truely understand the meaning of this announcement, because if they did, there would be uproar.

I was thinking last night as I read about this, if perhaps the banks are already failing again, and this is all being done to prop them up, without drawing attention to the fact that they are failing, for fear of a repeat of the 2008 crisis, and the bank run which ensued ?

Either way, there has to be a crunch point, where not just the UK, but the world realise we have to live a different life, because capitalism, ergo the monetary system, are no longer viable, I have no idea what the alternative would be, but we would probably need a evolutionary jump in order to achieve equilibrium.

It's a great idea, give the banks more money (as they have been doing so well lately!) and they can lend it out to the public who get further and further in debt just to live.

In one article there was talk of lending the money to companies to build more new homes. We don't need more homes at vastly inflated prices, we need to live sustainable lives and be able to build houses that are not sold for profit. Of course the public getting out of debt slavery would not be good for the system.

It is too little much too late, we all hope for the best, the moment the spanish problem comes fully out and won't go back in the box, the ECB is bankrupt, this is a sticking plaster to help maintain a facade ordinaire to provide a few drinks whilst we all find a deck chair and listen to the orchestra as the european titanic slowly dissappears beneth us.
Thank God for that, i could use a drink.