This will probably sound ridiculous but why don't we print more money in order to balance the budget. I.e. use the new money to pay off our loans?
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123banana123
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- 28-07-2009 01:44
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- 28-07-2009 01:47
Inflation.
EDIT: Also, quantitative easing isn't actually printing money. It's the central bank buying government assets using money created ex nihilo - it encourages lending. It's quite risky, and there's already been a fair bit of quantitative easing to tackle the financial crisis.Last edited by CocoPop; 28-07-2009 at 01:50. -
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- 28-07-2009 01:55
Your £20 note will be worth less than toilet paper... and no one wants to wipe thier **** on the Queen.
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123banana123
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- 28-07-2009 01:55
(Original post by CocoPop)
Inflation.
EDIT: Also, quantitative easing isn't actually printing money. It's the central bank buying government assets using money created ex nihilo - it encourages lending. It's quite risky, and there's already been a fair bit of quantitative easing to tackle the financial crisis. -
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- 28-07-2009 02:16
(Original post by 123banana123)
So where did the money lent to the Government, under Gordon Brown's say so, come from? -
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- 31-07-2009 20:04
(Original post by 123banana123)
So where did the money lent to the Government, under Gordon Brown's say so, come from? -
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- 01-08-2009 11:39
(Original post by 123banana123)
So where did the money lent to the Government, under Gordon Brown's say so, come from?
In answer to your original question, if the UK was to basically print more money to fund the budget then that would cause the value of the pound to be worthless. Just by simple supply and demand, if you supply more pounds without a change in demand, the value of the pound will fall - for example if I were to find 10 billion bars of gold next to my bed and put them all on the market the value of gold would probably go down. That has the main problem of vast inflation, as services have to raise their prices in order to accommodate for the worthless value of the pound. -
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- 01-08-2009 12:03
(Original post by dn013)
The government sells bonds to the public, basically they are IOUs that last for a fixed amount of time before the UK has to give the money back to the buyer. In this economy they are quite attractive because bonds are safe and they give a little return, depending on the bank base rate - which is 0.25% right now..... (so people will be buying bonds more to keep their money safe than anything else) The fact that the UK base rate is only 0.25% (meaning that if you were to buy a £10 bond you would only earn 0.25% of £10 every year on that investment) and the fact that the UK govt budget is in such a large deficit is one reason why the UK govt found it difficult to sell bonds earlier this year.
In answer to your original question, if the UK was to basically print more money to fund the budget then that would cause the value of the pound to be worthless. Just by simple supply and demand, if you supply more pounds without a change in demand, the value of the pound will fall - for example if I were to find 10 billion bars of gold next to my bed and put them all on the market the value of gold would probably go down. That has the main problem of vast inflation, as services have to raise their prices in order to accommodate for the worthless value of the pound.
Believe value is a separate issue -
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- 01-08-2009 12:25
(Original post by Chrrye)
Price of gold
Believe value is a separate issue
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