Jimbo wrote "Maybe 10 trillion dollars of new sovereign debt since 2007 might have had a hand in it? "
I understood Jimbo to be suggesting that the unemployment and GDP apparent improvements were perhaps due to the massive increase in government spending rather than QE (which did not increase government spending or debt at all).
I tend to agree with Jimbo on this. Issuing another $10T of debt and pumping the proceeds back into the economy on day to day government spending probably had a much more stimulatory effect than the FED QE action of giving rich people cash for their bonds (which the rich could have converted to cash at any time anyway). That $10T has given the Treasury a future liability to return it to the private sector with interest. The Treasury can, by law, only do that by additional taxation or by issuing more government debt.
Jimbo wrote "Maybe 10 trillion dollars of new sovereign debt since 2007 might have had a hand in it? "
I understood Jimbo to be suggesting that the unemployment and GDP apparent improvements were perhaps due to the massive increase in government spending rather than QE (which did not increase government spending or debt at all).
I tend to agree with Jimbo on this. Issuing another $10T of debt and pumping the proceeds back into the economy on day to day government spending probably had a much more stimulatory effect than the FED QE action of giving rich people cash for their bonds (which the rich could have converted to cash at any time anyway). That $10T has given the Treasury a future liability to return it to the private sector with interest. The Treasury can, by law, only do that by additional taxation or by issuing more government debt.
'You could probably use the same argument on the UK, but what about Europe? And if all the growth is debt driven, what purpose has qe served. Also, do you see any benefit in jeremy corbyn type people's qe that he has planned?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
The scary thought is the US does not appear to have created any sustainable abilities to keep all the balls in the air since this all began back in 2000 or 2007 or whenever it started.
'You could probably use the same argument on the UK, but what about Europe? And if all the growth is debt driven, what purpose has qe served. Also, do you see any benefit in jeremy corbyn type people's qe that he has planned?
The purpose of QE is to stimulate in the hope that growth will accelerate and create a feedback, ultimately reducing debts.
Previous big spending has generally been on infrastructure (ports, dams, railways) allowing business to grow and thrive. This time around, it is more about kicking the can down to the next guys watch.
As for Corbyn, he is talking about money printing pure and simple. Watch the pound turn into confetti if ever he gets into power.
Strindberg
7 Oct 2015, 11:51 AM
I understood Jimbo to be suggesting that the unemployment and GDP apparent improvements were perhaps due to the massive increase in government spending rather than QE (which did not increase government spending or debt at all).
QE increased the governments ability to borrow by holding down interest rates to artificially low levels.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
The purpose of QE is to stimulate in the hope that growth will accelerate and create a feedback, ultimately reducing debts.
Previous big spending has generally been on infrastructure (ports, dams, railways) allowing business to grow and thrive. This time around, it is more about kicking the can down to the next guys watch.
As for Corbyn, he is talking about money printing pure and simple. Watch the pound turn into confetti if ever he gets into power.
QE increased the governments ability to borrow by holding down interest rates to artificially low levels.
Therefore, QE increased government borrowing.
I don't understand your hostility.
The problem is too little demand. To combat this you have three weapons.
1. Monetary policy until ZIRP
2 Fiscal stimulus
3. QE
QE did not trash the dollar, has not trashed the euro, why would it trash the pound?
And even if it does take it down a few notches who cares? Good for .local producers.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
I Guess my original post was to understand whats the penalty Govt face for keeping the interest rate at 0% ? USA has been doing it for so long and I don't see their money collapsing! What would prevent the RBA from putting interest rate at 0%?
I Guess my original post was to understand whats the penalty Govt face for keeping the interest rate at 0% ?
None. Low interest rates are good for governments. Zero percent interest rates cause private sector incomes to decline, which leads to rising demands for welfare payments. As an increasingly large percentage of the population receive increasing sums of welfare, a co-dependency forms between the welfare state and it's recipients. The recipients are deeply dependent on welfare, but democratically elected governments are increasingly dependent on votes from those recipients. The only way to get elected is to never unwind the welfare state,and even expand it. However, this gives the government popular support for raising taxes on the productive classes and instituting a pervasive and intrusive system of surveillance and social control to protect the state that provides the welfare payments.
Quote:
USA has been doing it for so long and I don't see their money collapsing!
Because they have the world's reserve currency.
Quote:
What would prevent the RBA from putting interest rate at 0%?
Absolutely nothing if inflation remains persistently low and unemployment continues to rise. They will jawbone their concern about frothy house prices, but ultimately, if inflation remains low or unemployment continues to rise, they will keep cutting.
I Guess my original post was to understand whats the penalty Govt face for keeping the interest rate at 0% ? USA has been doing it for so long and I don't see their money collapsing! What would prevent the RBA from putting interest rate at 0%?
Interest rates are just the means of controlling the pace of bank lending(money supply) which leads to increased economic activity. Zero interest rates are a sign that 1.Economic growth is weak 2.Borrowers are already too indebted and don't want to take on more debt. 3.There is a lack of worthwhile investment options that will provide a return greater than inflation.
There is nothing preventing the RBA from going to 0% and they will in the not too distant future.
None. Low interest rates are good for governments. Zero percent interest rates cause private sector incomes to decline, which leads to rising demands for welfare payments. As an increasingly large percentage of the population receive increasing sums of welfare, a co-dependency forms between the welfare state and it's recipients. The recipients are deeply dependent on welfare, but democratically elected governments are increasingly dependent on votes from those recipients. The only way to get elected is to never unwind the welfare state,and even expand it. However, this gives the government popular support for raising taxes on the productive classes and instituting a pervasive and intrusive system of surveillance and social control to protect the state that provides the welfare payments.
Because they have the world's reserve currency.
Absolutely nothing if inflation remains persistently low and unemployment continues to rise. They will jawbone their concern about frothy house prices, but ultimately, if inflation remains low or unemployment continues to rise, they will keep cutting.
That is illiterate nonsense.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Just something else I'm thinking.. How serious deflation would be in reality, yeah we do know the stuff that went on in Japan in the past. However I'm seeing everyday stuff like electronic equipment. People still buy computers, add on memory stuff, TVs. Although later in time the same stuff is cheaper or have more functions for the same price. When something new it's inflated, but wait till the hypes over and buy later.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$ It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do. Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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