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EUROPICIDE! They've Pointed The Liquidity Pistol At Their Collective Heads, Cocked It, Now Hear The Trigger Pull...

Reggie Middleton's picture




 

And now that BoomBustBlog foretold reality comes to bite UK ass, as reported by Reuters/CNBC: Inflation-Wary Bank of England to Halt Money-Printing Press

The Bank of England looks set to call a halt to its asset-buying program, despite the economy having slipped into recession and renewed risks rising from the euro zone debt crisis, as UK inflation remains stubbornly high. 

Uh Oh!!! In case the gravity of this situation is not weighing on any of you blokes yet, the UK has to step back into a gun fight but cannot fire any more shots due to the fact that it has already hit too many innocent bystanders...

Ending its program of quantitative easing, or QE, may make life more difficult for Britain's Conservative-led ruling coalition, which was battered in local elections last week and relies on loose monetary policy to soften the pain of austerity measures aimed at cutting the country's huge public borrowing.

Therein lies the problem, no? Did they truly try to stimulate the eonomy or did they attempt to overdose on cheap, irresponsible liquidity to save the extant oligarchy?

But after buying 325 billion pounds of government debt with newly created money, 50 billion pounds of which has been purchased in the last three months, the bank is likely to judge that its policy stance is already supportive enough.

You don't need to be an economist to understand the utter foolishness, the circular logic supported folly of the aforementioned statement - "But after buying 325 billion pounds of government debt with newly created money, 50 billion pounds of which has been purchased in the last three months".  So, an allegedly fiscally responsible regime leading one of the most powerful countries in the world lends money to itself in order to get some money (What the f@ck!!!), but must print fresh new money in order to afford to buy the money that it just lent itself in order to use the money it just let itself to pay some important bills, you know the thing that it needed the money for in the first place.

Well, what the hell are you staring at your screen for?  Don't you get it? Apparently, you must either be a politician or a economist to get it, actually. The UK obviously have the best suited guys for the job leading the way!

Policymakers, most prominently deputy BoE governor Paul Tucker, have also indicated that inflation may not fall as fast as forecast below the bank's 2 percent target after it rose for the first time in six months in March, touching 3.5 percent, the highest rate in the Group of Seven major advanced economies.

Only five of the 58 economists polled by Reuters expect the central bank to announce further asset buying when it publishes its decision at 11:00 a.m. GMT.

The minutes of the Monetary Policy Committee's (MPC) April meeting showed that inflation worries had become more dominant, and that long-standing quantitative easing advocate Adam Posen had dropped his vote for more QE.

Bank of England Governor Mervyn King has also said that the economy looks set to recover slowly and steadily later this year while inflation is too high.

 As clearly stated in the BoomBustBlog susbscriber document: File Icon UK Public Finances March 2010

UK_Public_Finance_Analysis_2.0_Page_01

UK_Public_Finance_Analysis_2.0_Page_02

  • UK_Public_Finance_Analysis_2.0_Page_03
 

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Fri, 05/11/2012 - 13:42 | 2417969 cranky-old-geezer
cranky-old-geezer's picture

 

 

The Bank of England looks set to call a halt to its asset-buying program, despite the economy having slipped into recession and renewed risks rising from the euro zone debt crisis, as UK inflation remains stubbornly high.

Recession (depression?) with inflation.

Inflationary depression.   Exactly what I've been saying will happen.  And all thru the Eurozone too.  And here in America too.  And in Japan too. 

Everywhere central banks are printing currency (it's not money) to buy government debt, inflationary depression is the result.

Currency printing to buy more government debt inflates the money supply robbing wealth from the people.

With less wealth, people can't buy as much. Including necessities like food and fuel.

When people can't buy as much, the economy sinks into recession and eventually depression.

While the people get poorer the government is living high on all the wealth robbed from the people.

So yes, QE leads to a feudalistic society where wealth is stolen from the people and given to the ruling oligarchy.

It's happening in Britain, all thru the Eurozone, here in America, in Japan, everywhere central banks are printing currency to buy more government debt.

And yes it's called inflationary depression.  That's the proper term.  

It's not "stagflation", "biflation", or any of that nonsense.

Home prices fall sharply during an inflationary depression because people simply can't afford to pay high prices for homes.

Yes, demand for homes is very elastic, rising sharply in a good economy with loose credit, falling sharply in a bad economy with tight credit.

We had a decade of good economy and loose credit.  Home prices rose sharply.

Now we're in a decade of poor economy and tight credit, and yes home prices are falling sharply.

But there's no end to it this time.  Governments are borrowing so much money forcing so much currency to be printed, inflation and economic depression will go on and on.

No, home prices won't recover.  Not in the foreseeable future.  Because central banks aren't going to stop printing currency and buying government debt.

Yes, it's an end-game situation.  Inflationary depression is the future ...until the currency collapses (from so much printing) and becomes worthless.

That's the future for the British Pound, Euro, US dollar, and Japanese Yen.  Because BOE, ECB, Fed, and BOJ will keep on printing and buying government debt (and keep bailing out banks), guraranteed.

It's luxury living for the government (and banks) and grinding poverty for the people ...until the currency collapses, then it's total anarchy.

Fri, 05/11/2012 - 12:43 | 2417778 GreatUncle
GreatUncle's picture

When the music stops ... then what? QE is the music.

Nowhere to go, nowhere to hide and alot of angry people.

The UK already so heavily taxed and government has in previous years sold most of the assets it had such as energy, water, housing, ... actually only the Royal Mail left and not alot else. Add the value of those assets sold to the national debt to see the real spending that has happened! Well where did all the lovely money go?

Why no feasible IMF bailout?

So increasing taxation and selling assets to pay off a future IMF bailout is not exactly possible this time round so it is devalue the population into poverty and slavery with QE. There is nothing else left the elite can do.

From that you can write the last chapter yourself and how it will likely play out.

Fri, 05/11/2012 - 12:20 | 2417677 Herkimer Jerkimer
Herkimer Jerkimer's picture

Out of the park, Reggie!

 

Love your stuff.

 

Just a muppet that hardly comprehends 10% of what's going on, (thought I'd give myself a pat on the back at 10%!) what I do know scares the ba-jezus out of me.

 

Keep it up.

 

•J•

V-V

Fri, 05/11/2012 - 11:29 | 2417448 moonstears
moonstears's picture

This is why they(UK) never entered the Euro. Anyone see the idea here? All non Euro currencies(even the Dong?) float higher in the toilet bowl than the Euro because of just this idea: Sovereign Govts can print to cover last weeks almost bounced check. Then float a bond to cover the printing. Loose confederations which were, prior to 2002, at war for 1000s of years must check with Germany first. Germany don't likee others floating checks and printing notes, unless they agree to sell them Islands or piss off their entire populations. See how it works? 

P.S. "Wannabe, gonnabe, pussy-eatin' cocksuckin' prankstas 

When the shit jumps off what the fuck you gonna do 

Damn it feels good to be a banksta" 

Fri, 05/11/2012 - 10:31 | 2417270 stocktic
stocktic's picture

The circular logic you post is marvelous.  Here it is "...... (England) lends money to itself in order to get some money, but must print fresh new money in order to afford to buy the money that it just lent itself in order to use the money it just let itself to pay some important bills, you know the thing that it needed the money for in the first place".

Your description correctly portrays the self-abuse that Europe and America are inflicting upon themselves.  My analogy has been "printing money is like a hungry snake that eats its own tail to satisfy the hunger.  The end game is not good for the snake".

Fri, 05/11/2012 - 09:58 | 2417056 GMadScientist
GMadScientist's picture

"innocent bystanders"

Excellent metaphor for the unintended consequences of Queen Easing.

Fri, 05/11/2012 - 08:57 | 2416843 rsnoble
rsnoble's picture

Sure was nice seeing the look on my retired dads face when he opened his cd statement yesterday and seen the interest rate going down yet again, clost to zero now. He said as soon as it goes negative he's withdrawing it all and burrying it. Old school. He won't touch gold. I've talked to him about it.  He won't hear it.

Fri, 05/11/2012 - 12:38 | 2417765 mick_richfield
mick_richfield's picture

Old school my ass.

I'm old school, because I know what money is, apparently from all my past lives. 

Your father (and mine, unfortunately) are children who still want to believe in a fairy tale that's eating them alive, and that was pure evil even when it worked.

 

Fri, 05/11/2012 - 07:58 | 2416649 jmcadg
jmcadg's picture

Labour are the Keynsians in the UK. Good luck on that idea too. Ed Balls - aptly named.

Fri, 05/11/2012 - 11:18 | 2417477 falak pema
falak pema's picture

maybe he has an extra pair, grown on keynesian magical powder short-hair spray. You never know with the fruits of labour. 

Fri, 05/11/2012 - 07:54 | 2416639 MrJingles
MrJingles's picture

Reggie is the man!

Fri, 05/11/2012 - 06:44 | 2416528 Reggie Middleton
Reggie Middleton's picture

It's ironic that I made this post while sitting across from a bunch of bankers at Heathrow Airport yesterday. :-)

Fri, 05/11/2012 - 07:23 | 2416592 Ethics Gradient
Ethics Gradient's picture

I'm a fan Reggie, but you're yet to overcome your disadvantage in terms of appreciation of irony.

Fri, 05/11/2012 - 04:00 | 2416436 monkeyshine
monkeyshine's picture

The Tories want fiscal austerity, which is why they printed $600 billion to circulate around. Imagine if they were keynesian!

Fri, 05/11/2012 - 11:03 | 2417316 Zero Govt
Zero Govt's picture

imagine if "austerity" was more than just a word bandied about by dishonest politicians pretending they had a backbone

..imagine a politician actually cutting a budget for once in their worthless irresponsible lives

All the Con-Liberal coalition scum in Westminster have 'achieved' to date is raise yet more taxes on the private sector to afford their increased spending and increased shovelling of money across to the bankrupts in Brussels

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