Hey there! Sign in to join this conversationNew here? Join for free
x Turn on thread page Beta

Quantitative Easing to pay off Government loans? watch

    • Thread Starter
    Offline

    2
    ReputationRep:
    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?

    Thanks
    Offline

    15
    ReputationRep:
    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.
    Offline

    13
    ReputationRep:
    Your £20 note will be worth less than toilet paper... and no one wants to wipe thier **** on the Queen.
    • Thread Starter
    Offline

    2
    ReputationRep:
    (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.
    So where did the money lent to the Government, under Gordon Brown's say so, come from?
    Offline

    15
    ReputationRep:
    (Original post by 123banana123)
    So where did the money lent to the Government, under Gordon Brown's say so, come from?
    I'm don't know as much about the british economy, but I would guess it came from bonds/securities. The rest of their money just comes from taxpayers.
    Offline

    15
    ReputationRep:
    (Original post by 123banana123)
    So where did the money lent to the Government, under Gordon Brown's say so, come from?
    What money?
    Offline

    14
    ReputationRep:
    (Original post by 123banana123)
    So where did the money lent to the Government, under Gordon Brown's say so, come from?
    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.
    Offline

    15
    ReputationRep:
    (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.
    Price of gold
    Believe value is a separate issue
    Offline

    14
    ReputationRep:
    (Original post by Chrrye)
    Price of gold
    Believe value is a separate issue
    If we are being pedantic then..... ye you are right.
 
 
 
Poll
Do you agree with the proposed ban on plastic straws and cotton buds?
Useful resources

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.