When I take my kids pocket money out of the bank and give them cash, the demand for sweets in the village goes up. When I do this with the wife the price of clothes goes up. Qe is inflationary, but not by the normal measures of consumer inflation. It would be interesting to break it down over the past five years and see what has and hasn't been inflated.
Fortunately, your analogy has no relationship whatsoever with QE.
Most institutions that own bonds don't rush down to the corner store with cash to buy lollies or clothes. And even if they did, QE does not help them anyway, because bonds are a very liquid asset class, and they can go to the corner store any time.
The evidence is in. QE does FA. Do yourself a favour and read the link below.
The evidence is in. QE does FA. Do yourself a favour and read the link below.
I wouldn't say that, QE as it is practiced today is the Central Banks taking reserves from Commercial banks to buy instruments (junk bonds) the Commercial Banks and their depositors don't care to buy themselves. If the central bank didn't do this the junk bonds like US treasuries would go pear shaped.
The low interest rates themselves become a problem because return is too poor to cover the risk, this was a primary factor in the GFC. The banks refused to lend to each other because again the return was too poor to cover the risk and inconvenience. So instead the Central Bank takes the risk because it is backed by the taxpayer.
Falling rates will see price rises in stuff like gold, oil, bonds. Price rises in the most liquid market elements.
The next trick of our glorious banks will be to charge us a fee for using net bank!!! You are no longer customer, you are property!!!
I wouldn't say that, QE as it is practiced today is the Central Banks taking reserves from Commercial banks to buy instruments (junk bonds) the Commercial Banks and their depositors don't care to buy themselves. If the central bank didn't do this the junk bonds like US treasuries would go pear shaped.
The low interest rates themselves become a problem because return is too poor to cover the risk, this was a primary factor in the GFC. The banks refused to lend to each other because again the return was too poor to cover the risk and inconvenience. So instead the Central Bank takes the risk because it is backed by the taxpayer.
Falling rates will see price rises in stuff like gold, oil, bonds. Price rises in the most liquid market elements.
$1190
Any expressed market opinion is my own and is not to be taken as financial advice
Gold mining stocks have been whacked after the precious metal fell below $US1200 for the first time this year.
Strong US jobs data on Friday fuelled expectations that the US Federal Reserve will start hiking interest rates soon, sparking a 2 per cent slump in the gold price that took it to a four-year low.
The precious metal on Monday extended the fall, slipping another 0.25 per cent to $US1188 an ounce in late afternoon Asian trade, extending its losses since its year peak in March to 13.9 per cent.
The stocks of Australian gold miners were punished hard in local trade on Monday. Australia's biggest gold miner, Newcrest, slid 3.4 per cent after falling as far as $9.88, its lowest since June.
Smaller gold miners have been hit even harder, with Resolute Mining slumping 11.2 per cent, Northern Star Resources down 11.4 per cent. Beadell Rescoures was off 12.5 per cent, Medusa Mining dropped 9.4 per cent and Regis Resources eased 5.3 per cent.
The tumble comes as the US dollar surged against a basket of currencies after the US Labor Department said hiring accelerated in September, with the unemployment rate sinking to a six-year low.
The Australian dollar fell 1 per cent against the greenback to a four-year low.
The US dollar's strength weakened the gold price and other precious metals, with silver slumping 1.1 per cent to $US16.80 – a four-year low.
"The US economy continues to charge forward, with unemployment breaking below 6 per cent for the first time since July 2008. However, the pessimists will note that wage inflation remains stagnant," ANZ head of markets research David Croy said.
Average hourly earnings rose just 2 percent from a year earlier, well below above 3 per cent before the recession in 2008-09.
"The Fed has all but achieved its objective on the labour market," Mr Croy said.
"Wages growth remains disappointing and that will play into Fed chair Yellen's dovish hands, but the pendulum in favour of normalisation is swinging towards action, rather than continued inertia."
Expectations of a US rate hike has dented gold's safe haven appeal, despite uneven growth in Asia and Europe.
The gold price is now close to the ANZ's end-of-year target of $US1180 an ounce.
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy