Next Round Of QE In England Now A Virtual Certainty

Tyler Durden's picture

In a speech before the Imperial College in London, Bank Of England Policy Committee member David Miles made it almost a  virtual certainty that Quantitative Easing will continue in England, saying it is "entirely plausible" that further QE will be appropriate. According to Market News, Miles said that the minutes of the February meeting of the MPC showed QE could yet be expanded, and said that for him the decision to keep QE unchanged at that meeting was "finely balanced".

Full Miles quote:

"It is entirely plausible that as economic events unfold it will become clear that an even more expansionary monetary policy will be appropriate," Miles said.

 "To deny such a possibility must mean that you either cannot imagine significant downside risks for economic activity and inflation - which suggests an imagination deficit disorder - or believe that monetary policy has become ineffective."

Good thing the UK is not part of the EMU, or else Miles would would be lamenting a "printer deficit disorder" a condition prevalent among the Club-med disasters formerly known as PIIGS.

And to critics of QE, Miles had just one thing to say:

"The QE policy can have beneficial effects even if the injection of additional money by the Bank of England does not, in the end, have much impact on the M4 measures of money. Less than a year since the beginning of the QE policy it is probably too early to have observed the full (or maybe even much) impact of asset purchases on the real economy. But by keeping the stock of asset purchases in place one will be letting that play through."

And this pearl of wisdom, which Miles no doubt learned from his American counteparts: "if QE facilitates corporate securities issuance to pay off bank debt or facilitates banks to issue bonds and equity capital, these would not bolster broad money growth."

So now you know why not only UBS will be correct in their estimate of the cable hitting $1.05 in the not too distant future, but why Ben Bernanke is close on Mervyn King's heels with a comparable currency suiciding announcement.

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SDRII's picture

 but, but greenspan said rising equity prices are "real" wealth

Mr Lennon Hendrix's picture

Greenspan also used to say gold was a valuable asset.  Demagogues will do anything for their NWO Masters.

Anonymous's picture

Who listens to Greenspan anyway? He should be in jail sharing a cell and a single cake of soap with Bubba.

Mr Lennon Hendrix's picture

They started the mess that is global economics, and now they will finish it, in hopes that the phoenix will be reborn.  Brown wants new currencies (global), and more global regulations.  The Anglo-American Empire is ushering in the New World Order with great speed!

Divided States of America's picture

They should rename the British Pound the British Ounce.

Mr Lennon Hendrix's picture

haha, and change Great Britain to just, Britain.

economessed's picture

and the farthing to the far-out thing.

scaleindependent's picture

No, the farthing should be changed to that fart-thing.

Anonymous's picture

or....Little Britain

"The Economy says NO!"

masterinchancery's picture

Holy crap--better to destroy the currency and eventually default than to destroy the temporary illusion of prosperity in the City.

Anonymous's picture

+1

A new wave of QE (2.0) is around the corner for the UK & US.

Everybody knows anyway.

Artful_Dodger's picture

Got to save house prices somehow. The UK is being propped up until the Olympics is over.

AnonymousMonetarist's picture

Fail Britannia ... Londonistan calling

Shameful's picture

Good, now hopefully King can really put the pedal to the metal. I would love to see the pound on par with the dollar, but King has his work cut out for him. Maybe if the UK melts down the USA will decide to not follow their lead.

House Atreides's picture

This is awful. Having to short your own currency to make sure you won't have to buy bread with money you carried to the bakers in a wheelbarrow.

Shameful's picture

We're all racing to the bottom. I don't like it I just don't want to be the one to hit the pavement first, so I root for "Someone else!". I still am intellectually interested what will happen with a hyperinflation in a digital currency. It is something new facing the world after all.

Also love the avatar and name, big Dune fan.

Anonymous's picture

Regular computer programs aren't designed to handle large numbers and it takes time for programmers to upgrade them. (Y2K was caused by programs having only two digits for years.)

One of the 64-bit game I'm playing can support numbers as big as 9,223,372,036,854,775,807. So, the game currency can be accumulated up to $92,233,720,368,547,758.07 and no more.

There is over 1.6 quadrillion dollars of derivatives in the world economy. If they are all monetized, we'll need a New Dollar to replace the current Dollar.

Shameful's picture

I was not even thinking of dealing large numbers.  My thought was we might see the dropping off of digits in the currency to happen like in Zimbabwe, but would be even easier in a digital currency.  You would wake up one morning to find that your bank has knocked 3 digits off the end of your account and the money has been revalued.  Though when this cycles starts those digits will rapidly turn up again and then be removed and add until the nightmare finally ends at some point.

G. Marx's picture

 

Paul McCartney - The Pound Is Sinking (1982)

Precient

http://www.youtube.com/watch?v=njbXGlzTNaY

john_connor's picture

UK is screwed; nothing to see here.

Cog, I don't know if you are out there, but based on the way this wave is scaling up and the fractal equivalency to the prior early Feb. drop, I think we may be looking at a 140-160 point haircut on the SnP within the next 3-5 trading days.  Sheer ugliness.

I know that is bold but that is what I am seeing.

Anonymous's picture

One of the things you Prechterites always fail to account for is the power of the Plunge Protection team. Do some fractal wave analysis on that.

john_connor's picture

I'll call an up wave if I see it.  I just see carnage right now, that's all.  It may take another day or so to develop and actually the time frame could expand to maybe 2-3 weeks, but the price targets seem about right.  Should be interesting.

A Man without Qualities's picture

They have no option but to keep this option available to face the threat of bond vigilantes.  Sterling stealth devaluation will be the consequence.  

It is wise to remember that the FTSE gets about 70% of earnings from overseas, so it's the price in US Dollar that really matters. 

Anonymous's picture

It may be the Bank of England - but the decisions it makes affect the United Kingdom (of which England is only one part). Basic geography please.

Anonymous's picture

Waiting for the immanent announcement from the Fed and Treasury on the indefinite extension of the stunningly successful of the MBS programme.

Yophat's picture

Rep. Brad Sherman, California Democrat, asked Mr. Bernanke directly whether the Fed would consider such a strategy, especially since IMF officials endorsed it.

"We're not going to monetize the debt," Mr. Bernanke declared flatly, stressing that Congress needs to start making plans to bring down the deficit to avoid such a dangerous dilemma for the Fed.

"It is very, very important for Congress and administration to come to some kind of program, some kind of plan that will credibly show how the United States government is going to bring itself back to a sustainable position."

http://www.washingtontimes.com/news/2010/feb/25/bernanke-delivers-warnin...

Anonymous's picture

Bernanke is a bald faced liar. He's already started monetizing the debt, to the tune of $1.5 trillion dollars. Anyone who believes a single word coming out of the man's mouth deserves the fate that's headed our way.

Yophat's picture

Bernanke hasn't monetized anything....all he's done is orchestrate a game of musical chairs where paper was exchanged (MBS for cash) or exchanged liability positions (GSE bondholders for taxpayers).  Show me the printed money!

saturno_v's picture

 

Hello?? Anybody home???

QE is money printing by definition. Taking trash (MBS) for cash is money printing.

Yophat's picture

You can call it whatever you want.....when it hits the street....then I'll call it money printing!  Until then deflation, deflation, deflation!!!

Anonymous's picture

Is that you Mrs. Bernanke? Bennie's been a bad boy.

Anonymous's picture

Ah, reminiscent of the 1790's in France!

Anonymous's picture

It still amazes me that people all over the world continue to hold fiat currencies and government debt. Central bankers have not been subtle; they've gone out of their way to convince folks that they'll continue to print money. They hope that the risk bubble will reignite based on what's been done so far, but if that doesn't work the printing will clearly resume.

Debts will be cured through elevated inflation, because payment in real terms is impossible and straight default takes the power of wealth away from politicians and places it in the hands of those who were frugal. That won't be allowed. Please write this 500 times on the blackboard:

"Ben Bernanke does not care about my savings".

Stuart's picture

it's an absolute certainty this would not have been decided without discussions with the Fed and clear evidence that the Fed will be following suit.   

Anonymous's picture

They are all screwed, for sure.

Now I know why bloody england didn't want to join in the euro party. It's much better and easier to print your own funny money.

Crime of the Century's picture

Time to ditch the "sterling" and upgrade from 92.5 to 99.9 fine

Miles Kendig's picture

Please do not confuse the ideas and solutions espoused by that Miles with this one.  That Miles continues to support what is, in its essence, a policy of continuing to smoke opium because the risks of attempting to move beyond addiction would be too painful to bear, most especially for those who find themselves codependent with the addict.  In this Miles's solution is to not only sustain the addicts addiction, but to permit the addict to steal and otherwise destroy our property and vocation all in the name of stability for the addict.

Anonymous's picture

Tyler, do you have a source for the UbS cable projection?

jmc8888's picture

Exactly not just extended, but EXPANDED. 

 

Then of course when the crap finally comes to light how bad off the Inter-Alpha group is doing, we'll be right back in the Greece/Dubai boat once again but it'll be Spain/Brazil/U.K. that's on the chopping block, and their troubles are much, much bigger.

 

 

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