QE4, 5, 6 (Ctrl+P)

[superfrank]

But my point is that by distorting the price of assets the policy is preventing the necessary structuring of the economy. Artificially high land prices, property prices, rents, commercial rents etc. all make Britain a less competitive place to do business. The policy is sold as "pumping money into the economy", but it isn't really. It just makes credit dirt cheap, but there is no demand for new credit. The flip side is more inflation that further reduces real incomes and purchasing power.

Mervyn King, in a rare moment of honesty, once said: “House prices are a matter of opinion whereas debt is real.”

As an investor, Euler will have benefitted greatly in the short-term from ZIRP and QE - but he knows it is no solution the the debt crisis. By distorting prices and the natural business cycle the policy reduces investment opportunities and causes malinvestment.

[mulberryhawk]

I know what your saying Frank and you`re not wrong. Like it or not inflating asset prices for highly geared up households is unfortunately whats needed to maintain some semblence of growth in the ecoomy.

The necessary restructuring of the economy that is needed as you say would result in a massive economic and banking sector crash.

deflation or inflation, as morally unpalatable as it is to hayekians inflation is the route of least pain for the population and the ruling classes.

[superfrank]

deflation or inflation, as morally unpalatable as it is to hayekians inflation is the route of least pain for the population and the ruling classes.

you sum it up pretty well with this, and i appreciate your arguments, but to think that ZIRP and QE are anything other that a temporary fix with huge risks attached is complacent.

market manipulation always, always ends in failure.

keep short of the £.

[mulberryhawk]

against what though.....it seems to be a race to the bottom with most fiat curencies these days

hard to find one to buy with all the loose monetary policy flying around

[superfrank]

yeah that's the difficult bit!

tbf it's only GBP, EUR and USD that are in the race to the bottom.

the problem with shorting against other currencies is that the £ has already dropped massively and there's always a danger that a foreign central bank will say enough is enough (like the Swiss did with their Euro peg).

i'm wary of the EUR because what the ECB is doing is not technically outright printing yet (unlike the BoE and FED), which is why the Euro has held up pretty well despite all the EZ problems.

i'm just gonna keep shorting mini-peaks in GBP/USD - at least the US has had their housing crash (sort of) and the BoE seems far more aggressive in their approach to printing (soon to be officially outright monetisation) because there is less opposition to the policy here than in the US. also, i'd never bet on the UK outperforming the US economically (without a credit bubble). i'd be very surprised if the pound ever breaks 1.70 again.

[mulberryhawk]

Have to agree with you on that one, anything near the 1.62 level on cable is very tempting short, with the euro crisis still unresolved, the fiscal cliff in the US not tho mention political change in China surely a risk off move into the doller cant be too far off

[superfrank]

Bank of England hands QE income to Treasury
http://www.bbc.co.uk/news/business-20268679

so the BoE prints money with which it buys govt debt;
it receives interest on the debt from the govt;
it gives the interest back to the govt.

you couldn't make it up. total ponzi scheme.