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| Hetzer |
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Hetzer
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 Posted: 23:11 - 20 Jan 2009  Post subject: Sounds like Itchy may be right. |
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For the first time on the news (that I've seen) they've mentioned the govt may find that it has to print money, somehow tied to deflation and low interest-rates?
The shite's getting ever closer to the fan it seems. Yay!  
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Kris
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ColdInsomnia
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Clanger
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ColdInsomnia
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| ThoughtContro... |
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ThoughtContro...
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| Itchy |
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Itchy
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| Kris |
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Kris
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| Posted: 00:42 - 21 Jan 2009 Post subject: |
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Itchy, you're such a terrorist-cum-fearmonger.
Currency inflation isn't real. The Bank of England doesn't exist. The bank bailouts will help us get out of this mess. Obama will save us. Bilderberg meetings don't exist.
Tisk tisk. What are you? Alqaeda?
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| ThoughtContro... |
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ThoughtContro...
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| Posted: 00:48 - 21 Jan 2009 Post subject: |
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What? He's the toilet?  |
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| OssY |
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OssY
Nearly there...
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| Posted: 00:55 - 21 Jan 2009 Post subject: |
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if i try printing money (to hel out the gov) will i affect the system... |
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| Kris |
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Kris
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| OssY |
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OssY
Nearly there...
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| Posted: 01:00 - 21 Jan 2009 Post subject: |
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WOO HOO, i got the go ahead and my get out of jail free card now... If anyone asks i will say Kris said i could do it... |
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| JonB |
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JonB
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| Itchy |
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Itchy
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| Posted: 12:00 - 21 Jan 2009 Post subject: Re: Sounds like Itchy may be right. |
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| Hetzer wrote: | For the first time on the news (that I've seen) they've mentioned the govt may find that it has to print money, somehow tied to deflation and low interest-rates?
The shite's getting ever closer to the fan it seems. Yay! |
Effectively just for this quarter the government needs to borrow 150bn or there abouts, with interest rates being 1.5% nobody wants to buy our bonds.
Hence they have to jack taxes up or print.
In deflation money is destroyed as people pay down debt, and thus destroys money or default, as people spend less meaning circular money does not happen. This means both less taxes and less spending = less taxes..
In effect they are creating more money so thus more money chasing the same amount of goods , hence they are trying to reignite inflation....
If managed VERY carefully it has a chance of working if not it leads to zimbabwe, quantitive easing ie printing isn't free however in that it debases the £ in your pocket , hence they print out 1 trillion pounds then the £ in your pocket is now only worth 60p. The nominal amounts stay the same but the purchasing power collaspes. As businesses jack up their prices to compensate..
This gets worse in that Kickstart seems to think it will encourage more home grown food, but if farmers can get a better price importing it then they will import and not sell here leading to even high inflation...
The trick here is to avoid hyper inflation , I don't think they have the self restraint to turn off the printers the second enough is printed, as to them its "free money" , would you stop a free money printing machine other people pay the running costs of?.
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| Kickstart |
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Kickstart
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| Posted: 12:34 - 21 Jan 2009 Post subject: Re: Sounds like Itchy may be right. |
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| Itchy wrote: | In effect they are creating more money so thus more money chasing the same amount of goods , hence they are trying to reignite inflation.... |
Yep, ironic that they have spent decades trying hard to kill inflation, and now need to restart it.
| Itchy wrote: | This gets worse in that Kickstart seems to think it will encourage more home grown food, but if farmers can get a better price importing it then they will import and not sell here leading to even high inflation... |
Not really. Current UK agriculture is uneconomic (remember Stinkwheels comments on putting down new born cattle as they were not worth breeding for meat). If prices go up in the UK then it becomes economic. Goes too far and we are still better off as exported food brings in income (far better than the large amount of the population whose jobs bring in nothing to the country). Basically it is a win / win situation for that. Prices drop and stuff gets produced here , or prices really drop and some of the stuff is exported bringing income into the country.
Food is a small proportion of most peoples expenditure, and in many cases one that can easily be reduced (you yourself have commented on buying stuff at the markets for far less than the supermarkets). Bit more expense, but with more of the money staying in the country it is not really a massively bad thing.
| Itchy wrote: | The trick here is to avoid hyper inflation , I don't think they have the self restraint to turn off the printers the second enough is printed, as to them its "free money" , would you stop a free money printing machine other people pay the running costs of?. |
Depends what your definition of hyperinflation is. If you mean Zimbabwe style then it would take massively more than just printing a bit more money. If you mean 100% inflation over 3 years then that might be a bit easier to manage but also far less of a problem.
All the best
Keith
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| Itchy |
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Itchy
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| Posted: 12:55 - 21 Jan 2009 Post subject: Re: Sounds like Itchy may be right. |
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| Kickstart wrote: |
Depends what your definition of hyperinflation is. If you mean Zimbabwe style then it would take massively more than just printing a bit more money. If you mean 100% inflation over 3 years then that might be a bit easier to manage but also far less of a problem.
All the best
Keith |
I don't see just how it is avoidable in that you borrow or print, you can't borrow so then what?. You print...
Shops everywhere have been getting rid of their stock through virtual fire sales for christmas, so they have to replace their stock, guess what , most of their stock is imported from CHINA , and guess what the Yuan is pegged to the USD, and guess what again the UK £ has been tanking against the USD.
I bought some SW mototech bars in December for £95 they are now £108...
And many more such examples...
The huge issue recently is RBS, previously before China was reasonably happy to buy bonds denominated and paid in £... thus devaluing the £ devalued the debt....happy days sort of...
RBS however has close to 2 trillion of liabilities 1.6 trn of assets which means 400bn in the red... unfortunately their assets impaired ie losing value ie house prices falling and people defaulting on their mortgages.
RBS's liabilities are in USD , Yen and Yuan, hence if the £ falls against the USD 10% , the liability of 2 trillion jumps 200bn to 2.2trillion. And so on and so on...  .
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Spain 2008France 2007Big one 2009 We all die. The goal isn't to live forever, the goal is to create something that will. In the end, your life will flash before your eyes. Make sure it is worth watching. |
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| Kickstart |
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Kickstart
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| Posted: 13:12 - 21 Jan 2009 Post subject: Re: Sounds like Itchy may be right. |
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| Itchy wrote: | I don't see just how it is avoidable in that you borrow or print, you can't borrow so then what?. You print... |
Because it requires you to print in massive amounts for a hell of a long time. There is a massive difference between a bit of inflation (and 10% a year doesn't really worry me, yet would be a massive increase) and hyperinflation. You seem to think that things are normal or just flip instantly into a Zimbabwe style inflation. In bike terms that would be like saying any bike is brand new or a complete knacker, with nothing in between.
The pound has been over priced for ages. Sure putting its value down will cause some inflation, but much of that inflation will be on stuff that people don't really need (for example who cares if a DVD player from Asda goes from £15 to £30).
| Itchy wrote: | Shops everywhere have been getting rid of their stock through virtual fire sales for christmas, so they have to replace their stock, guess what , most of their stock is imported from CHINA , and guess what the Yuan is pegged to the USD, and guess what again the UK £ has been tanking against the USD. |
They don't need to restock like that. They have had a "fire sale" as they stocked up well in advance with cheap crap to sell in the sales. Stock levels can reduce easily (you can sell 100 bits of rubbish for £1 profit each or 50 for £2 profit each, and with higher prices profit margins are easier to grab), low value of the pound makes internet shopping from abroad far less competitive.
| Itchy wrote: | RBS's liabilities are in USD , Yen and Yuan, hence if the £ falls against the USD 10% , the liability of 2 trillion jumps 200bn to 2.2trillion. And so on and so on... . |
Depends what their assets are in relative to the liabilities, and the relative safety of each. And likely a large part of the liabilities are in the same currencies as the assets.
All the best
Keith
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| Itchy |
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Itchy
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| Posted: 21:08 - 21 Jan 2009 Post subject: Re: Sounds like Itchy may be right. |
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| Kickstart wrote: | Because it requires you to print in massive amounts for a hell of a long time. There is a massive difference between a bit of inflation (and 10% a year doesn't really worry me, yet would be a massive increase) and hyperinflation. |
10% ? , have you looked at BoE statistics (which they are going to hide soon) money supply ie creation of money has been running at 13.5% for the last ELEVEN YEARS , if you look at the MoM stats its currently running at 1.7% or 16.3% p.a , and this is before outright quantitive easing ie printing more money.
| Kickstart wrote: |
You seem to think that things are normal or just flip instantly into a Zimbabwe style inflation. In bike terms that would be like saying any bike is brand new or a complete knacker, with nothing in between. |
No in that high inflation is a positive feed back look in that it self perpetuates until something kills it stone dead..... in that things are repriced to take into account the currency devaluation, on a regular basis. And there is always an upward pressure througout the supply chain.
| Kickstart wrote: |
The pound has been over priced for ages. Sure putting its value down will cause some inflation, but much of that inflation will be on stuff that people don't really need (for example who cares if a DVD player from Asda goes from £15 to £30). |
Yes but also an awful lot of inflation will be on the things that people do need , as again the UK has not been food self sufficient for a VERY long time pre WWI maybe Boer war. And home grown food needs imported things like feed stock , I audited a farm supplier recently and an awful lot of their fertilisers come from Europe.
| Kickstart wrote: |
Depends what their assets are in relative to the liabilities, and the relative safety of each. And likely a large part of the liabilities are in the same currencies as the assets. |
I'm not so sure just reading RBS's balance sheets is giving me a headache, but even if the assets vs liabilities are in the same currency you still have a huge problem in that house prices are falling hence the asset base is falling against increasing liabilities. Ergo there is still an incredible debt problem.
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| Kickstart |
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Kickstart
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| Posted: 23:10 - 21 Jan 2009 Post subject: Re: Sounds like Itchy may be right. |
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| Itchy wrote: | 10% ? , have you looked at BoE statistics (which they are going to hide soon) money supply ie creation of money has been running at 13.5% for the last ELEVEN YEARS , if you look at the MoM stats its currently running at 1.7% or 16.3% p.a , and this is before outright quantitive easing ie printing more money. |
Which at least shows how very weak the link is between printing money and interest rates.
At 16.3% increase in nothing compared to the Zimbabwe currency that you like to compare it with. Random figure, Zimbabwe money supply went from 25 billion ZWD in January 2002 to 46,882 billion ZWD by July 2006. That is an 1875 fold increase.
| Itchy wrote: | No in that high inflation is a positive feed back look in that it self perpetuates until something kills it stone dead..... in that things are repriced to take into account the currency devaluation, on a regular basis. And there is always an upward pressure througout the supply chain. |
Which is the same whether inflation is 1%, 5% or 10%. No sudden jump in inflation just because inflation has gone up. Prices go up, have done so for decades. Inflation does not just lead to hyperinflation.
| Itchy wrote: | Yes but also an awful lot of inflation will be on the things that people do need , as again the UK has not been food self sufficient for a VERY long time pre WWI maybe Boer war. And home grown food needs imported things like feed stock , I audited a farm supplier recently and an awful lot of their fertilisers come from Europe. |
And you miss the point that things come from Europe because the pound being strong makes it uneconomic to source things from the UK. And food is such a small part of people budgets (compared to hideously over priced housing) that with a reasonable realignment of prices there is plenty of room for it to go up.
| Itchy wrote: | I'm not so sure just reading RBS's balance sheets is giving me a headache, but even if the assets vs liabilities are in the same currency you still have a huge problem in that house prices are falling hence the asset base is falling against increasing liabilities. Ergo there is still an incredible debt problem. |
Very true, and that is the basic problem that has caused the debts you complain about. Not in addition to those debts.
All the best
Keith
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Kickstart
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ThoughtContro...
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Old Thread Alert!
The last post was made 17 years, 279 days ago. Instead of replying here, would creating a new thread be more useful? |
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