I dont get Quantative Easing either, how it works or what is, but if someone is printing money I'll have some to pay off my mortgage, ta.
But seriously, why don't they use it pay off some of the national debt? Reducing the interest hm gov has to pay, and decreasing public spending that way? Or is that what they are doing?
Inclined to agree, QA; collusion and conspiracy ..... it has a certain ring to it.
Doesn't matter what colour the monkeys are; or even which shade of grey .....we buy their broken promises and vote for them.
Over and over.
And as you say, we are the stupid one's for allowing it to happen at our cost. But then no one held a gun to our heads and insisted we take out a mortgage, loan or line of credit.
They suck you in, take your money, then spit you out, that's how it works. The rich get richer, the poor end up supporting Charlton lol
Apparently Albert Einstein once said that "...if you can't explain it simply, you don't understand it well enough". Clever fella Bert. Unfortunately, not enough Berts in global governments, banks or anywhere else!!
Anyway, quick simple attempt at QE...
The primary instrument of stimulating the economy is to reduce interest rates, but when that isn't enough QE can be used to further boost the economy.
(razil)...Unfortunately the Bank can't just pay off the national debt with it as it does sit on their balance sheet. The idea is to sell the assets that it buys back to the market when conditions and the economy improve. In the meantime, it is putting money into the economy with the intention of providing liquidity to the markets and credit to institutions/companies to spend. The problem comes when those that benefit, whether they are banks, pension funds, companies etc don't use these monies, but hoard them or repair their own balance sheets. We see the latter with the banks, but the former is also a problem as the big companies are sitting on huge sums and not investing. Understandable...there's a huge fear factor about what could happen and everyone just wants to make sure that their business has the ability to ride through a helluva storm, but it's also a helluva vicious cirlce!!
The attached link is a pretty good explanation of QE, how it works and when it is generally used.
The point is that Greece and similar economies should never have been in the Euro in the first place. They have consequently been deprived from using the economic levers that would be most succesful for them.
Or lets say 10m and 10k, but give it to them in form of vouchers that must be spent by a certain date in a shop so could not be hoarded in a bank. This would guarantee shops and businesses get this money filtered through to them.
The objective would be to get the money into the wider economy for the benefit of the nations' citizens. That could be in the form of shop vouchers as you say, holiday vouchers that must be spent on holidays to Greece/Spain/Portugal/Italy or even debt reduction as I suggested earlier. A good economist would know which would work the most efficiently. The most important thing would be that the funds are injected directly into the economy, rather than giving it to the banks in the hope that it will eventually find it's way to where it's needed. It never will, the banks are far too greedy and too clever for that to happen.
You'll be able to confirm but I thought I'd read somewhere that the Aussie government effectively did just this did they i.e. gave everyone $x thousand to spend rather than give it to their banks to prop up their balance sheet?
Not sure about the Aussies, Bournemouth, but the Taiwanese did it a few years ago. Every individual, regardless of age, got a voucher to spend on consumer goods, including food, which was worth just over $100. Cost them $2.5BN for the 22.7m population. The government believed it would boost the economy by 0.6%, but I can't find any research to say whether it was a success or not.
You'll be able to confirm but I thought I'd read somewhere that the Aussie government effectively did just this did they i.e. gave everyone $x thousand to spend rather than give it to their banks to prop up their balance sheet?
Yes, thanks to the previous Howard government handing them a $21 billion surplus, they were able to give each household $950 dollars, which some believe helped us escape the GFC. It was based on your previous taxable income. Because I had zero taxable income (I had lost 000's on investments) no job and no benefits, I got zilch. So much for the welfare state looking after you when you're desperate! Three years on and we are now $220 billion in deficit.
You'll be able to confirm but I thought I'd read somewhere that the Aussie government effectively did just this did they i.e. gave everyone $x thousand to spend rather than give it to their banks to prop up their balance sheet?
Yes, thanks to the previous Howard government handing them a $21 billion surplus, they were able to give each household $950 dollars, which some believe helped us escape the GFC. It was based on your previous taxable income. Because I had zero taxable income (I had lost 000's on investments) no job and no benefits, I got zilch. So much for the welfare state looking after you when you're desperate! Three years on and we are now $220 billion in deficit.
I know you're a dyed-in-the-wool Howard fan but that is very misleading to non-Australians.
Howard racked up his surplus by - in the same way Thatcher did - selling off everything that was not nailed down (I got here in 1997 when he started doing this), introducing a national GST in 1998 and chronically under-investing in infrastructure from 2004-2007.
The only time he did spend money was post-2004 when the electorate turned against him and he tried to buy them back with cash handouts like the ridiculous non means-tested Baby Bonus $1,000 - which resulted in a mini population boom as every Bogan around the place started knocking out chavvies to get the cash.
Not forgetting his genius First Home Buyers scheme where he handed out $14,000 to everyone buying a home....thereby massively inflating house prices for everybody else.
Every serious Liberal I know (that's Conservative here for UK readers) thinks that Howard's 2004-2007 term was a disaster for the country because it established an "entitlement mentality" to the electorate who now feel that the government will and should bail them out of any economic problem.
There are people here in Australia now - and this is not a joke I assure all of the UK readers - on household incomes of £95,000 PER ANNUM (AUD$150,000) who receive government benefits for Child Support etc. (its called Family Tax Benefit A and - that is the sort of madness that Howard introduced.
On a leading discussion show the other night there was a woman in the audience berating the Prime Minister for "not doing enough for families like mine," - it later transpired the woman's family had an annual income of AUD$160,000 PA AND sent their kids to a private school and yet they had their hand out for a cheque from the government.
The current Liberal opposition parties are continuing this middle-class warfare by - and again I kid you not - proposing a paid maternity leave program whereby women earning up to AUD$150,000 (YES! That's £95,000 PA) should be paid AUD$75,000 PA maternity leave from government funds! That is coming from a so called Conservative party.
By the way, readers should also be aware that Australia will be returning to financial surplus next year, one of the few western economies to be in this position.
I don't wish to get involved in a political argument here Ormy because it could go on and on and on. I will just point to the opinion poll's which are consistently saying that Labor is currently on 26%-30%, the lowest in Australian history. They are heading for annihilation at the next election, just as they were recently slaughtered in the Queensland election by 78 to 8. Queensland Labor alone, left behind a debt exceeding 80 billion BTW! Ormy, Federal Labor last year also said that we would have a budget surplus this year, but we ended up with another 40 billion deficit. In any case a budget surplus is only for the one tax year, the $220 odd billion debt that they have racked up will still remain and need to be repaid by our kids! This is widely regarded as the worst, most incompetent government in Australian history and everyone I speak to, can't wait to get rid of them and that includes former Labor supporters. You obviously move in very different circles than me Ormy, because I know of no one around here that earns the kind of money you speak of. I have never known of so many marriage break ups and people under such financial stress that they are having to clean houses, do other peoples ironing, or try to sell their goods at a market just in order to put food on the table. There are very few jobs here that pay more than $20 per hour that's $40,000 pa, and that's if you can get full time, which is getting more and more difficult. Thanks to the incoming Carbon Tax @ $23 per ton (Europe's in currently around $8) we will have highest electricity prices in the world, with New South Wales yesterday announcing another 18% increase. As a regular visitor to the UK, I can attest to the fact that food is at least 40% more expensive here than the UK, as is clothing. In fact the only thing cheaper is petrol, but we have to cover far greater distances. We are supposedly in a booming economy, whilst the UK is in recession and yet, when we visit, we cannot believe how cheap things are in the UK. So if you put it all together, $40k income, huge and increasing cost of living expenses, the majority of Australians are not happy bunnies ATM. That fact is reflected in the opinion polls, consumer confidence figures, business confidence figures, record business failures, shops closing down and so on. The difference with the Howard hand outs was that we had a surplus, he could afford to give some back to the people and also establish a $70 Billion Future Fund. In contrast, the Gillard government is $220 billion in debt, and guess what? they're are giving everyone handouts of around $900 in the next couple of weeks to try to compensate for their crazy carbon tax scheme! Despite their free handouts the opinion polls have not budged, still 26%. That indicates that the majority of Australians have stopped listening and just want them out ASAP. I wasn't political before I came here, but I've seen so many lives destroyed (including my own) so much deceit, arrogance, devisiveness the list goes on, that I hate them with every cell in my body.
Should add, just to add to the cost of living pressures, mortgage interest rates here in Australia are 6% and were until recently, 7%. Uk 3 %, US 2-3% ? US stock market is up 100% since the depths of the GFC, Australia's up a pathetic 20%. In fact we have the worst performing stock market in the developed world. All this, and turning a 21 billion surplus into a 220 billion debt during the biggest mining boom in Australian history! It doesn't make sense and perhaps explains why 74% of the electorate are extremely p*ssed off with this current Labor government.
Comments
But seriously, why don't they use it pay off some of the national debt? Reducing the interest hm gov has to pay, and decreasing public spending that way? Or is that what they are doing?
Anyway, quick simple attempt at QE...
The primary instrument of stimulating the economy is to reduce interest rates, but when that isn't enough QE can be used to further boost the economy.
(razil)...Unfortunately the Bank can't just pay off the national debt with it as it does sit on their balance sheet. The idea is to sell the assets that it buys back to the market when conditions and the economy improve. In the meantime, it is putting money into the economy with the intention of providing liquidity to the markets and credit to institutions/companies to spend. The problem comes when those that benefit, whether they are banks, pension funds, companies etc don't use these monies, but hoard them or repair their own balance sheets. We see the latter with the banks, but the former is also a problem as the big companies are sitting on huge sums and not investing. Understandable...there's a huge fear factor about what could happen and everyone just wants to make sure that their business has the ability to ride through a helluva storm, but it's also a helluva vicious cirlce!!
The attached link is a pretty good explanation of QE, how it works and when it is generally used.
http://www.bankofengland.co.uk/education/Pages/inflation/qe/video.aspx
For the purpose of my maths ability - Yes....
Or lets say 10m and 10k, but give it to them in form of vouchers that must be spent by a certain date in a shop so could not be hoarded in a bank. This would guarantee shops and businesses get this money filtered through to them.
The objective would be to get the money into the wider economy for the benefit of the nations' citizens. That could be in the form of shop vouchers as you say, holiday vouchers that must be spent on holidays to Greece/Spain/Portugal/Italy or even debt reduction as I suggested earlier. A good economist would know which would work the most efficiently. The most important thing would be that the funds are injected directly into the economy, rather than giving it to the banks in the hope that it will eventually find it's way to where it's needed. It never will, the banks are far too greedy and too clever for that to happen.
You'll be able to confirm but I thought I'd read somewhere that the Aussie government effectively did just this did they i.e. gave everyone $x thousand to spend rather than give it to their banks to prop up their balance sheet?
You'll be able to confirm but I thought I'd read somewhere that the Aussie government effectively did just this did they i.e. gave everyone $x thousand to spend rather than give it to their banks to prop up their balance sheet?
Yes, thanks to the previous Howard government handing them a $21 billion surplus, they were able to give each household $950 dollars, which some believe helped us escape the GFC. It was based on your previous taxable income. Because I had zero taxable income (I had lost 000's on investments) no job and no benefits, I got zilch. So much for the welfare state looking after you when you're desperate!
Three years on and we are now $220 billion in deficit.
Yes, thanks to the previous Howard government handing them a $21 billion surplus, they were able to give each household $950 dollars, which some believe helped us escape the GFC. It was based on your previous taxable income. Because I had zero taxable income (I had lost 000's on investments) no job and no benefits, I got zilch. So much for the welfare state looking after you when you're desperate!
Three years on and we are now $220 billion in deficit.
I know you're a dyed-in-the-wool Howard fan but that is very misleading to non-Australians.
Howard racked up his surplus by - in the same way Thatcher did - selling off everything that was not nailed down (I got here in 1997 when he started doing this), introducing a national GST in 1998 and chronically under-investing in infrastructure from 2004-2007.
The only time he did spend money was post-2004 when the electorate turned against him and he tried to buy them back with cash handouts like the ridiculous non means-tested Baby Bonus $1,000 - which resulted in a mini population boom as every Bogan around the place started knocking out chavvies to get the cash.
Not forgetting his genius First Home Buyers scheme where he handed out $14,000 to everyone buying a home....thereby massively inflating house prices for everybody else.
Every serious Liberal I know (that's Conservative here for UK readers) thinks that Howard's 2004-2007 term was a disaster for the country because it established an "entitlement mentality" to the electorate who now feel that the government will and should bail them out of any economic problem.
There are people here in Australia now - and this is not a joke I assure all of the UK readers - on household incomes of £95,000 PER ANNUM (AUD$150,000) who receive government benefits for Child Support etc. (its called Family Tax Benefit A and
On a leading discussion show the other night there was a woman in the audience berating the Prime Minister for "not doing enough for families like mine," - it later transpired the woman's family had an annual income of AUD$160,000 PA AND sent their kids to a private school and yet they had their hand out for a cheque from the government.
The current Liberal opposition parties are continuing this middle-class warfare by - and again I kid you not - proposing a paid maternity leave program whereby women earning up to AUD$150,000 (YES! That's £95,000 PA) should be paid AUD$75,000 PA maternity leave from government funds! That is coming from a so called Conservative party.
By the way, readers should also be aware that Australia will be returning to financial surplus next year, one of the few western economies to be in this position.
I don't wish to get involved in a political argument here Ormy because it could go on and on and on. I will just point to the opinion poll's which are consistently saying that Labor is currently on 26%-30%, the lowest in Australian history. They are heading for annihilation at the next election, just as they were recently slaughtered in the Queensland election by 78 to 8. Queensland Labor alone, left behind a debt exceeding 80 billion BTW!
Ormy, Federal Labor last year also said that we would have a budget surplus this year, but we ended up with another 40 billion deficit. In any case a budget surplus is only for the one tax year, the $220 odd billion debt that they have racked up will still remain and need to be repaid by our kids!
This is widely regarded as the worst, most incompetent government in Australian history and everyone I speak to, can't wait to get rid of them and that includes former Labor supporters. You obviously move in very different circles than me Ormy, because I know of no one around here that earns the kind of money you speak of. I have never known of so many marriage break ups and people under such financial stress that they are having to clean houses, do other peoples ironing, or try to sell their goods at a market just in order to put food on the table.
There are very few jobs here that pay more than $20 per hour that's $40,000 pa, and that's if you can get full time, which is getting more and more difficult. Thanks to the incoming Carbon Tax @ $23 per ton (Europe's in currently around $8) we will have highest electricity prices in the world, with New South Wales yesterday announcing another 18% increase. As a regular visitor to the UK, I can attest to the fact that food is at least 40% more expensive here than the UK, as is clothing. In fact the only thing cheaper is petrol, but we have to cover far greater distances. We are supposedly in a booming economy, whilst the UK is in recession and yet, when we visit, we cannot believe how cheap things are in the UK.
So if you put it all together, $40k income, huge and increasing cost of living expenses, the majority of Australians are not happy bunnies ATM. That fact is reflected in the opinion polls, consumer confidence figures, business confidence figures, record business failures, shops closing down and so on.
The difference with the Howard hand outs was that we had a surplus, he could afford to give some back to the people and also establish a $70 Billion Future Fund. In contrast, the Gillard government is $220 billion in debt, and guess what? they're are giving everyone handouts of around $900 in the next couple of weeks to try to compensate for their crazy carbon tax scheme! Despite their free handouts the opinion polls have not budged, still 26%. That indicates that the majority of Australians have stopped listening and just want them out ASAP.
I wasn't political before I came here, but I've seen so many lives destroyed (including my own) so much deceit, arrogance, devisiveness the list goes on, that I hate them with every cell in my body.
Uk 3 %, US 2-3% ?
US stock market is up 100% since the depths of the GFC, Australia's up a pathetic 20%. In fact we have the worst performing stock market in the developed world. All this, and turning a 21 billion surplus into a 220 billion debt during the biggest mining boom in Australian history! It doesn't make sense and perhaps explains why 74% of the electorate are extremely p*ssed off with this current Labor government.