The debasement of the Dollar and the Pound – perpetual QE

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This topic contains 17 replies, has 8 voices, and was last updated by Profile photo of Anonymous Anonymous 4 years, 1 month ago.

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  • #57121
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    Anonymous
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    The chairman of the Federal Reserve Board of the US, Ben Bernanke, recently announced a programme of perpetual Quantitative Easing, indefinite money printing, in order to buy up mortgage debt from the banks and Fannie Mae and Freddie Mac. He said that the aim is to help prop up house prices because it will make Americans feel richer if they know that their property is rising in value which will cause them to spend money and keep the economy moving. However, all this Quantitative Easing is just adding more money to the monetary base which will debase the currency and will further diminish the purchasing power of money, ultimately resulting in rising inflation.

    Take a look at the video below with Max Keiser talking to Jim Rickards who wrote the book “Currency Wars” about Quantitative Easing and competitative devaluation of the World’s major currencies to help countries maintain their exports.

    Max Keiser talking to Jim Rickards who wrote the book “Currency Wars”

    Britain and America are doing the same thing in doing Quantitative Easing which is printing money to buy government debt which will debase and devalue their currencies which will ultimately lead to rising inflation.

    Every time there is another round of Quantitative Easing this results in the price off gold to rise because investors lose confidence in money being a store of value when money is being printed causing the purchasing power of money to fall and so results in the demand for gold rising as more people use their money to buy gold which has historically always been a hedge against inflation.

    Both Britain and America’s economies are being propped up by selling debt in the form of government bonds in the open market which is becoming a gigantic Ponzi scheme, Pyramid selling scam which will come to an end when people wake up and stop buying government debt causing the entire Ponzi scheme to come crashing and therefore Britain and America are both heading for economic bankruptcy around the year 2015.

  • #113142
    Profile photo of Anonymous
    Anonymous
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    First post I totally agree with you on.

    Politicians wants their subjects to not know that they are taken for a ride so they can get re-elected.

  • #113143
    Profile photo of GarySFBCN
    GarySFBCN
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    He said that the aim is to help prop up house prices because it will make Americans feel richer if they know that their property is rising in value which will cause them to spend money and keep the economy moving.

    Bernake NEVER said that.

    More hysterics and nonsense.

  • #113144
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    Anonymous
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    He may not have said it but that’s what the whole idea with artificial inflation. Making the value of money dropping quicker than salaries etc and people still think they are getting richer. Try doing it the honest way like they do it in Spain and lower wages instead and you will see what happens.

    Quantitive easing is just diluting the money supply. Stealing from the honest man and handing it over to the financial system.

  • #113145
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    Anonymous
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    So quantitive easing devalues the currencey yet the pound is stronger against the euro now than at any time in the last few years meaning we have more buying power and interest rates are still the same low rate so nothing you have said has actually happened.
    The economy is getting better, jobs are being created and gdp is coming down i would say it seems to be working ok at the moment and if inflation
    does rise i will earn more on my savings.

  • #113146
    Profile photo of peterhun
    peterhun
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    @Ardun wrote:

    Try doing it the honest way like they do it in Spain and lower wages instead and you will see what happens.

    Yes, you have a revolution and/or the economy breaks up even more. Like it or not, internal devaluation if far worse and much more painful then external devaluation (via inflation).

  • #113147
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    Anonymous
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    Ah I see so because the normal idiots out there doesn’t get what’s happening it’s ok?

    The pound has lost about 30-50% against swedish, norwegian and danish krona the last few years and the dollar is at very low also compared with those. It’s nice that you compare to a none functioning eurozone.

  • #113148
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    Anonymous
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    .I have never needed to change my weak pound into any of those and i don’t think i have bought anything made in those countries either making the strength of them irrelavent to my personal view.Does the uk import a massive amount from them like they do from the USA Europe and other major economies.I admit to not being totally up with the economics of the world maybe because i am in the building trade and an idiot.

  • #113149
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    Anonymous
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    You probably haven’t as a direct consumer but since we are net exporters the chance is quite large that you are paying more today for stuff.

    http://www.xe.com/currencycharts/?from=GBP&to=SEK&view=10Y “SEK to pound”

    http://www.xe.com/currencycharts/?from=GBP&to=CNY&view=10Y here you have the chinese yen against the pound during the last 10 years. China is the biggest assembly hall for everything made these days so just looking at those numbers the pound is down 50%. And the yen is also 20% undervalued by the chinese government.

    Don’t fool yourself into thinking that the pound is a strong currency. When the euro just was invented and pegged against national currencies you could almost get 2 euros per pound.

    It would be much more fair to just print pound notes and drop them over the UK because that way it would spread evenly to everyone and not just the financial sector like now. Quantative easing is just that but it’s specifically going to one sector making everyone else in the country poorer.

  • #113151
    Profile photo of logan
    logan
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    Actually there is little evidence so far QE does any real harm or any real good. I am fairly neutral on the subject until I see evidence of the damage claims. I read the arguments for and against and am not convinced either way.

    I dislike the idea of money printing but the economic circumstances have been so dire it’s almost justified. Good balanced arguments in this link.

    http://www.zerohedge.com/news/does-qe-really-work-evidence-date

  • #113152
    Profile photo of Chopera
    Chopera
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    QE in the UK was mainly about propping up asset prices – both the FTSE and house prices were tanking before the BoE started buying gilts. The pound was “debased” by the Forex markets because people assumed that all or at least some of the printed money would end up in the UK’s economy, but so far it hasn’t and the pound has crept back up a bit. The problem with QE is it is government interference in markets (even though the situation was so dire that the government did have to interfere) but now we have a situation whereby asset prices are based on speculation around government actions rather than whether there is any genuine market demand for them. This is unsustainable. The can has been kicked down the road (which was an achievement in itself considering the situation at the time) but the problem has not been fixed.

  • #113168
    Profile photo of Anonymous
    Anonymous
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  • #113170
    Profile photo of Anonymous
    Anonymous
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    @mark wrote:

    Try this depressing reading:

    http://www.ritholtz.com/blog/2012/10/memo-to-central-banks-youre-debasing-more-than-our-currency/

    Excellent article. Never knew that it actually had a name “the Cantillon” effect.

  • #113180
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    Anonymous
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    http://www.paulcraigroberts.org/2012/10/29/the-virtual-recovery/ he shares my sentiment in that inflation is wastly understated in most countries. Also the conclusion is that the US is still in recession. Around 5% per year since 2007 and this year 9% which is not weird when taking QE actions in consideration. Same stupid way of meassuring consumer price index is also used in Sweden but not sure how it is in Spain.

  • #113186
    Profile photo of Anonymous
    Anonymous
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    Jupiter head of multi-manager and chief investment officer John Chatfeild-Roberts sees inflation as the Achilles heel of the UK economy due to the Government’s addiction to quantitative easing.

    The current programme of quantitative easing is £375bn of asset purchases. He believes the Bank of England is trying to create inflation to reduce the value of debt.

    He says: “I suspect the Government is hooked on quantitative easing and they will find it difficult to stop it before it overflows, which in other words is inflation.That is why the prices of assets have gone up and the worry is that it will spill into the prices of what you and I buy.”

    Chatfeild-Roberts has predicted double digit inflation in the next five years but says even if this is overly pessimistic, this is only in regards to the timescale.

    ‘Perhaps my five year time horizon is not long enough, but near double digit inflation seems to me to be the inevitable outcome.”

    Inflation is ‘Achilles heel’ for UK economy

  • #113209
    Profile photo of logan
    logan
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    Bank of England policymaker Charlie Bean suggested yesterday that whilst quantitative easing is competent at bringing down gilt yields, the effect that this is having on demand is not so certain. His remarks were interpreted as firmly anti-monetary easing.

    It is not clear to me that QE actually increases inflation when it’s a negative on the demand side. That makes no economic sense since it’s demand which drives up prices. If inflationary pressures were building in the US and UK economies it would be far more apparent than it appears currently.

  • #113211
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    Anonymous
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    logan it’s only because the way they meassure inflation has changed. There is no doubt that it’s inflationairy the same way 1 plus 1 is two. It’s the same way as turning on the printing press but more accepted by the public.

    To get one thing clear. Inflation/deflation is used the wrong way by many and people using these terms often don’t explain with that they mean with it.

    That prices goes up and down on assets are neither bad or good it’s just the market correcting itself. The problem is when you deflate or inflate a currency by increasing or decreasing the amounts of it in circulation that’s when it turns bad. The last one is what austrians mean when they talk about inflation/deflation. Deflation in the first sense are often judged badly because it almost always follows a credit expansion bubble. Deflation is also frowned upon from governments because it means they can spend less of other peoples money. Deflation of the first kind is actually very good because it means stuff becomes cheaper usually because of efficience.

  • #113229
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    Anonymous
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    Because of the debasing of the Dollar by the Federal Reserve Max Keiser says that the Dollar is Warren Buffet toilet paper

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