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    (Original post by crazycake93)
    Think of a baloon.

    Then think of some stupid kid poking it with a needle.

    That's what is currently happening.

    In this analogy, the baloon is the Economy.
    I thought you said bacon at first, had me confused for a minute
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    (Original post by FSP)
    I fully understand Fiat Money . There are alot of arguments to oppose Printing money. Its day light robbery . You may think its a "cheap price" to pay, but the majority of hard working people do not

    Inflation was low in late 2008 because people where cutting back on spending at VAT was Cut.Why talk about 2008 ? why not talk about 2011 when inflation is closer to 8% ? and 15% for students who have lower incomes

    QE2 has led to the speculation bubbles in gold and price of oil . the UK imports most of its thing we need a strong pound.

    Do you have any figures to suggest Printing Money has worked for anyone other than the banks ?
    Good old mervy helping the City
    So you think these 'Hard working people' would have been better off if QE, the life line for banks, had been cut off. Ask yourself this, if banks had no way of taking off bad assets from their balance would they be lending more or less to people.

    How was QE2 led to speculation bubbles in Gold or oil markets? Have you actually seen the markets since the announced? No one is expecting rising inflation, most investors have factored in low inflation over the next year with oil prices reducing. Seeing as OPEC have recently come out and said they're seeing a bear market; this coupled with recent slowdowns in production shows you have no idea what you're talking about. No one is predicting high inflation, because all indicators are pointing the other way.

    If you look above you MagicNMedicine just posted a link to the figures where it shows 1.5-2% increase in GDP. But I guess an increase in GDP only benefits the banks.
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    (Original post by FSP)
    I fully understand Fiat Money . There are alot of arguments to oppose Printing money. Its day light robbery . You may think its a "cheap price" to pay, but the majority of hard working people do not

    Inflation was low in late 2008 because people where cutting back on spending at VAT was Cut.Why talk about 2008 ? why not talk about 2011 when inflation is closer to 8% ? and 15% for students who have lower incomes

    QE2 has led to the speculation bubbles in gold and price of oil . the UK imports most of its thing we need a strong pound.

    Do you have any figures to suggest Printing Money has worked for anyone other than the banks ?
    Good old mervy helping the City
    Your first line is "I fully understand Fiat Money"....but the rest of your post is full of mistakes.

    Inflation was low in late 2008 because people where cutting back on spending at VAT was Cut.
    When do you mean by late 2008? Here are the CPI figures in late 2008:
    Aug 4.7%, Sep 5.2%, Oct 4.5%, Nov 4.1%, Dec 3.1%. VAT was cut at the end of November 2008. It's currently 4.5% so inflation back then was in line with inflation now. When you say "people where cutting back on spending at VAT was Cut" I am guessing you mean "people were cutting back on spending as VAT was cut" which is wrong, consumer spending was being squeezed just like it is now but as VAT was being cut for one year only then that was an incentive to spend they wouldn't cut spending because of it.

    Why talk about 2008 ? why not talk about 2011 when inflation is closer to 8% ? and 15% for students who have lower incomes
    We are talking about 2011 and CPI inflation is currently 4.5%, I don't know where you get these 8% and 15% figures from, and saying it is higher for students? In July the IFS produced a study on the effects of inflation on the rich and poor and their conclusion was that the poorest fifth were experiencing inflation of 4.3% and the richest fifth experiencing inflation of 2.7% so yes there is a disproportionate impact of inflation on the poor but it is nothing like this 15% you are saying. Also the reasons why the poor have been suffering a disproportionately high rate of inflation is because of price rises in food, petrol and energy costs which take up a higher percentage of their spending. Those are all price rises due to changes in the supply and demand of those commodities on the world markets, not monetary reasons.

    QE2 has led to the speculation bubbles in gold and price of oil .
    Again an unfounded statement, QE2 in the US was launched in November 2010, the price of gold was on an upward trend during 2010 and it continued to grow (albeit at a slower rate) after November 2010 but it was hardly a 'bubble' - the 'bubble' came in August this year when it rose about 18% in three weeks at the height of the panic over the Eurozone and fears of US recession...then it fell pretty much the same amount in three weeks in September - that's the bubble. As for the price of oil the rises in early 2011 will have been influenced a lot more by the instability in the Middle East particularly the trouble in Libya which reduced the supply, because there are delays before the Saudis and Americans can increase their own supply to bring down the price again.

    As a general point anything that causes the dollar to depreciate (which QE2 would have done) will be likely to lead to price rises in gold and oil, oil because oil prices are generally denominated in dollars, and gold because the US is a big economy and when the dollar depreciates investors are moving out of a lot of dollar denominated assets to look for something else (eg gold). But that is the USA. The UK announcing a £75bn round of QE in the UK is hardly going to have the same effect on the price of gold and oil.

    the UK imports most of its thing we need a strong pound.
    Imports as a share of GDP are around about 30-32% however a stronger pound would make imports relatively cheaper than domestic goods so in any tradeable sector where UK firms face foreign competition, a stronger pound gives foreign exporters a competitive advantage over UK firms. This not only reduces UK domestic output but also increases our trade deficit (ie increases our debt to foreigners). So whilst a stronger pound may create some downward pressure on inflation it would be likely to also create downward pressure on UK GDP and increase unemployment and the trade deficit.
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    (Original post by MagicNMedicine)
    Your first line is "I fully understand Fiat Money"....but the rest of your post is full of mistakes.



    When do you mean by late 2008? Here are the CPI figures in late 2008:
    Aug 4.7%, Sep 5.2%, Oct 4.5%, Nov 4.1%, Dec 3.1%. VAT was cut at the end of November 2008. It's currently 4.5% so inflation back then was in line with inflation now. When you say "people where cutting back on spending at VAT was Cut" I am guessing you mean "people were cutting back on spending as VAT was cut" which is wrong, consumer spending was being squeezed just like it is now but as VAT was being cut for one year only then that was an incentive to spend they wouldn't cut spending because of it.



    We are talking about 2011 and CPI inflation is currently 4.5%, I don't know where you get these 8% and 15% figures from, and saying it is higher for students? In July the IFS produced a study on the effects of inflation on the rich and poor and their conclusion was that the poorest fifth were experiencing inflation of 4.3% and the richest fifth experiencing inflation of 2.7% so yes there is a disproportionate impact of inflation on the poor but it is nothing like this 15% you are saying. Also the reasons why the poor have been suffering a disproportionately high rate of inflation is because of price rises in food, petrol and energy costs which take up a higher percentage of their spending. Those are all price rises due to changes in the supply and demand of those commodities on the world markets, not monetary reasons.



    Again an unfounded statement, QE2 in the US was launched in November 2010, the price of gold was on an upward trend during 2010 and it continued to grow (albeit at a slower rate) after November 2010 but it was hardly a 'bubble' - the 'bubble' came in August this year when it rose about 18% in three weeks at the height of the panic over the Eurozone and fears of US recession...then it fell pretty much the same amount in three weeks in September - that's the bubble. As for the price of oil the rises in early 2011 will have been influenced a lot more by the instability in the Middle East particularly the trouble in Libya which reduced the supply, because there are delays before the Saudis and Americans can increase their own supply to bring down the price again.

    As a general point anything that causes the dollar to depreciate (which QE2 would have done) will be likely to lead to price rises in gold and oil, oil because oil prices are generally denominated in dollars, and gold because the US is a big economy and when the dollar depreciates investors are moving out of a lot of dollar denominated assets to look for something else (eg gold). But that is the USA. The UK announcing a £75bn round of QE in the UK is hardly going to have the same effect on the price of gold and oil.



    Imports as a share of GDP are around about 30-32% however a stronger pound would make imports relatively cheaper than domestic goods so in any tradeable sector where UK firms face foreign competition, a stronger pound gives foreign exporters a competitive advantage over UK firms. This not only reduces UK domestic output but also increases our trade deficit (ie increases our debt to foreigners). So whilst a stronger pound may create some downward pressure on inflation it would be likely to also create downward pressure on UK GDP and increase unemployment and the trade deficit.
    I know what my first line is...dont need you to tell me

    Do you actually still believe CPI ? . Since when have government statistics been right.
    Inflation was initially low because a) VAT cut B) consumer where cutting back on spending C) Sales and stock clearing
    I reject that the price rises ar due to supply and demand, largely asset bubbles build up in oil and other good because of the printing of money. Oil Prices where high even before the Libya War . Yes the dollar weakens because of printing of money and oil prices go up in $ terms. Whilst yes inflation is higher for poorer people because they spend mainly on food it doesnt change the fact it effects the poor the most.

    Whilst UK QE2 is smaller in amount, it still has ramification for the british economy and pound though not the same global effect as American QE2
    Reducing the value of the pound increases the value of British Debt . Like I said we import mainly, a cheaper pound has not resulted in massive export boom. If the BOP deficit becomes too big the pound will fall naturally no need for artificial injection.

    QE2 results in hot money causing imbalances which is why China and Brazil introduced capital controls.

    http://www.ft.com/cms/s/0/9ba381d0-e...#axzz1b0P6E73J


    I cant believe you are arguing printing money does not cause inflation.Its not a price worth paying for many families . Combined with low intrest rate pushing down return on savings.
    http://www.guardian.co.uk/commentisf...banks-pensions


    QE2 is a “total failure,” except for those folks who work on Wall Street,” Rep. Paul says. “It hasn’t done anything for Main Street; hasn’t done anything to give us real jobs; hasn’t done anything for people who are losing their houses.”

    As for inflation, “I think there’s plenty,” Rep. Paul says, citing “skyrocketing” commodity prices and rising food prices. One problem is the Fed’s reliance on core CPI, which famously excludes food and energy and relies on hedonic adjustments. “They rig that number,” he says. “[Bernanke] looks at government stats that are fudged to reassure him he doesn’t have to do anything.”
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    It's crumbling. The economic system has failed.

    The rich get richer while the poor suffer and get poorer.

    This economic system cannot and never will survive, the world is going to see a dramatic shift in how the economy and how democracy is managed.
 
 
 
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