Bank of England unleashes more QE to avert recession

When will they realize that you cannot buy your way out of slump caused by debt by incurring even more debt.. Painful as it is, the bible was correct when it says that " to everything here is a season and a time for every purpose under heaven" This slump will end when it burns itself out and not before.

Don't Shoot, I give in Mervyn.

If intrest rates were allowed to rise savers they would use their income to purchase goods. This would create work and jobs. By having low interest rates and bailing out the baks there will be little or no economic activity as the bank do NOT pass on the reduction in borrowing costs to their borrowers. How else have the banks made excess profits to reduce their bad debts.

It's sad to see the UK becoming Greece without the sunshine. Does anyone care about "work and jobs" ? Total debt is 1 trillion and the BofE is happy to keep buying.

The Boe is right to engage in QE which is a powerful weapon to be weilded to grapple with the current economic dilemma. I love the above comments from wannabe economists who don't even seem to have a basic grasp of economic fundamentals and yet perceive themselves to have enough grounding to offer critical!

The clowns clearly have not read the best book of the decade: This Time it is Different- 800 years of financial folly, by Rheinhart and Rogoff.

There can be no recovery in real GDP until all the deleveraging has taken place. The leveraging up brought forward consumption from the future, so how can there to be any growth.

Problem is governments cant tax deflation; in fact, they are desperate to create it to enable them to continue spending beyond the country's means.

£325bn is not a lot of money really

Only £5242 per head of population

Peanuts

They will need to do 100 times this amount of QE to make any real difference

If they were really serious about this, they'd stop acting in such a doleful way, almost apologetically annoucing another £50bn QE, giving the impression that they don't actually believe it's going to work.

Instead, they'd be dynamic - say that the situation faced is totally unprecedented, so it therefore requires unprecdented action.

Then they give every person of voting age £1000. The money is in vouchers that have to be spent in certain shops, and it has to be spent within three months - beyond that cut off point the vouchers become worthless.

Won't work? Well, nothing lost then - because QE in its current form isn't working either.

TH

Have read Rheinhart and Rogoff's book, which is full of good stuff. You may also be aware of Steve Keen's book debunking economics. Whilst he acknowledges the problems caused by Sovereign debt, he also argues that private household debt has been taken too lightly, and is particularly critical of Paul Krugman's thesis that private debt levels don't matter.

With regard to the voodoo economic art of money printing, can anyone delve into a history and think of a country which has reverted to the printing press and not come unstuck. Great short term way of driving up asset prices (my god the quote from BOE actually includes....."and asset prices have risen".) but it is no way to create economic growth. The debt burden is simply too large, and in any event the banks aren't lending to small businesses in anything like the volumes that the Govt wants, and most businesses don't want to borrow. And inflating asset prices will just create more problems of the same kind already witnessed.

I don't think that Keen is a fan of money printing, but interestingly he argues that if Govts are going to print money they are better off giving it direct to the public, with the proviso that those who have debts must pay them off. The downside to this is taking away from the banks a major source of income in the form of interest, thus further destabilising them. Whilst this idea (by Keen's own admission) hasn't been thought out in detail, the thrust of it is to try to remove the large private debt overhang as quickly as possible, because it is this overhang that is weighing on the economies of the west (specifically the UK and the US) so heavily. On top of this we have of course the sovereign crisis in the west, and specifically the eurozone.

Ultimately Peter Schiff has it about right. Economic forces need to be allowed to work free of Govt interference. Greenspan started this interference in 2000, and each western Govt intervention since has staved off the problem temporarily whilst making it worse and worse. Money printing doesn't work, simple. And if you are about to buy an annuity you won't thank the Govt for driving down gilt yields even further, since it is these yields upon which annuity rates are based.

pensioners forced to buy ineffectual annuities.

If the bank of eng gave the £5242 C/easing to individuals as a buy british voucher this would do more to boost the economy than this handout to the banks.

If we are in such a desperate situation how is it we can finance new wars all the time, send arms to every Arab who revolts, ministers advocating a new yacht for the queen etc? Even if their purpose is good, they are hardly priorities. We can always print more money, the poor will pay for in in inflation as they have always done and no one will complain.

Anthony O Grady

Steve Keen's proposed solution makes a lot of sense but would be a political nightmare. Imagine the backlash by those who have no debts!

Economic forces certainly need to be allowed to work without government interference. I find it quite laughable when I read journalists who announce that capitalism has failed! If capitalism has failed it is because governments have interfered too much. I found it quite disturbing that one article suggesting capitalism had failed was in the Financial Times of all places. It just illustrates how intellectually bankrupt economic teaching is at universities. They have all become Keynesian junkies. Additionally, economists in high places during the mid 2000's did the opposite of what Keynes recommended. The public deficits should be reduced in the good times so that there is room for government stimulus when the private sector contracts during the inevitable private sector downturns.

Truffle Hunter – The capitalism that has failed is the venal, unregulated variety that has been running riot over the past 30 years. Growth rates have been lower in that period than they were during the 30 years from the war to the end of the 70’s. The only thing that has really boomed in the past 30 years has been executive pay – the salaries of the top 5% have increased THIRTY times faster than the rest of us. Is that really how the capitalism you advocate is supposed to work?

Big business has bought governments (of all political colours) so that the capitalist system we have now is an utterly warped one.

Public deficits were reduced during the 90s boom – Clinton wiped out the US debt by 1999, but then GWB and his greedy mates got their hands on the tiller in 2000 and it’s been downhill ever since.

How misguided you are! During this whole period to which you refer there has been government interference in the economy. The day it became a "mixed" economy( favoured expression during the 60's and 70's to justify the interference) was the day that Capitalism died. What we have lived through is a period of socialism that has utterly failed. Socialism has gobbled up so much of the wealth created that is has created the very economic divisions to which you refer. As soon as the Bank of England was nationalised ( along time ago) the rot set in. Up to that point there was the normal oscillation between boom and contraction. Socialist government thought they would intervene to iron out the bumps. The trouble is the venal greed and desire to be re-elected by politicians has prostituted the whole system.

It is a miracle that capitalism has actually succeeded in producing iPads, mobile phones, fancy LED TV's, improved motor vehicles etc etc . Capitalism has succeeded in these endeavors despite the onslaught of taxes, regulations and general claptrap from people that are as far away from wealth creation as the man on mars.

Many valid points made, BIG mistake.

As stoking inflation, increase removal rate of civil servants and double the rate of manufactured inflation to exemption limits, i. e. if 5%, limits raised 10%, freeze unemployment and jobseekers benefits, indefinitely.

TH

RE: Steve Keen - he himself acknowledges that no Govt would have the balls to do something so radical. Govts always talk the talk (time to think outside the box/ engage in blue sky thinking etc.....) but ultimately they get cold feet and end up implementing measures which are completely ineffectual, quantitative easing being a case in point.