I was deep asleep this morning but woke up quickly when I got the sound of someone on Morning Ireland saying 'Quantitative Easing'. They had been talking about undoing the deflationary economic pressures by pushing all the buttons they could like a captain of a submarine pulling all levers to keep the submarine from sinking. Interest rates are being lowered, banks recapitalised, bailouts flying right left and centre yet the deflation is still happening. One of the major indicators if not THE major indicator of which has to be the price of oil .. The final nuclear button for the sinking captain is ... quantitative easing.

No it's not a medicine ending in --lox it's the wanton and gleeful printing of money ! How this is distributed is beyond me but a Christmas bonus and double week for people on JSB would be a first step. Anyone know how this money is going into the economy ? Will the banks distribute it to the traditional 'big knobs' of the towns we live in who will trickle it down to the Great Unwashed coming from the dole/Fás office ? Will it be given to folks wanting to start a business ? How about students - that would be money well spent I think - especially if those whose parents were on the dole were given money (that would be about 0.5% of the student population though hence no good - have to give it to all students) What about education programmes generally ? Pour the quantitative easing into the education sector. Low interest loans for housing renovations another one. Give it to farmers who want to plant trees and employ lads to do that.

I think though that a bonus should be given to anyone who is training for the marathon or involved in an exercise club in any way. Well, they'd have to exert themselves first but even walking to the local badminton club would be better than staying at home and deflating the economy further.

How should the quantitative easing be seeped into the economy and if you know how it is being seeped in please tell us.

Quantatative easing ? Who comes up with these phrases ?

Did they really say we were printing more money ? Zimbabwe is down that road ..

EvotingMachine0197 wrote:

Quantatative easing ? Who comes up with these phrases ?

Did they really say we were printing more money ? Zimbabwe is down that road ..

Lol. The "liberal application of vaseline," might be more truthful and descriptive.

They are pouring cash into a colander in which the holes seem to be getting bigger, rather than smaller. No-one knows the extent of bad debt, and the more the economy shrinks the worse the position gets. Its a downward spiral.

The economy was overvalued, which in part initiated the whole thing. Now it is shrinking rapidly as well.

There is something to be said from the British point of view for reducing the value of the currency to make exports more competitive, but if no one is buying anyway? and it makes any foreign debt more expensive.

All around, I can't see how it is going to work.

Could we use this?



It's not mine, you understand.

You said to use my imagination.

Do you mean start an industry run on penis enlargers ? There's enough gigantic pr*cks in Ireland as it is

No, what I'm saying is that there's deflation happening and if we try to pump up the volume of Quantitative Easing or lubrication as Hermes rightly calls it, then it can be imagined that money will start flowing and stuff will start moving off shelves and people will start moving to work and there will be all round lubrication.

What appears to have happened is what cactus is saying - overvaluation. Massive prices of houses which are now collapsing in price so people won't sell - no easing there. So, people who are earning are bringing a lump of their cheques to the Bank, a bit to the supermarket and the last bit to the other bare necessesites - nappies, ESB, satellite.

Money has literally been petrified for about 10 years. I.E. turned to stone. There will be a lot of quantitative easing to ease that.

The danger is hyperinflation in 18 months unless strictly controlled because the narcotic printing presses once started might be hard to turn off. How can it be done - quantitative easing and barriers against hyperinflation at the same time ?

If I understand you, what you are talking about is the American and British solution: turn the printing presses up to 11.

But we don't own the printing presses anymore, unless someone in the Labour Party still has the old Workers Party gear? Allegedly.

The only way we can increase the supply of em, vaseline, in this economy is by borrowing more money. Which we can't do, beacuse the State is broke. I wonder what the total value of cash injected into the economy in the last three months by the 1.75% cut in interest rates amounts to? They were talking €250 per month on a €300,000 mortgage. What would that be avergaed over the whole economy? Say it saves 250,000 houselholds 2 grand a year, that's a €500 million stimulus package right there. That's likely to dwarf anything the government will borrow to fund.

As for petrified money, I agree. Anyone with any sense would use the 2 grand a year to pay down the debt or stockpile tinned food in the attic. I can't imagine anyone answering the call to patriotic duty and spending it all on rubbish. (Like penis pumps for example, though they'd have to be imported from Sweden, so that definitely wouldn't help. Unless Brian reconsiders the VAT rate on such things.)

Hope Worldbystorm doesn't mind me printing this from just over a week ago but it might deserve a bit more looking into .. How did we manage to reject a chunk of an EU stimulus package ?? The interest rate lowerings will just about cover people's credit card debt I'd say. More money going into banks which would be great if it was lent right back out again but I believe banks are er short of cash lately.

There's not much of an economy where people work in the Dept. of Z and collect their cash at month's end, go to the shops, the bank, collect their kids from school and hope they get some breathing space for a holiday in 2012 or maybe 2013. Many people (who still have jobs) are spending on sweet shag all else. Flights to Santa are being cancelled, Monaghan shopping centre car park is empty, numbers are down and mattresses are seeing a lot more action - you know what I mean - so how do we get people doing something different than the congealed economic pattern of the above? How about run more "competitions" on TV, papers and radio and give people holidays at home and abroad (only fair if it's EU stimulus), give people stuff - goods, give people money ?

Does this even make sense? Ireland shuns the EU financial recovery plan… and continues to obssess about public service reform.

Yes. Of course, paying down credit cards is a good thing, but I take your point.

Maybe the reality is that no amount of stimulus in the form of handouts (whether it be to builders, bankers or just the great unwashed) is going to remove the sand from the gears. The only stimulus that is going to do that is direct investment in job creation. Even that only helps if the number of jobs created more than offsets the number lost through the general unpleasantness.

I think we are screwed to be honest.

coc wrote:

Yes. Of course, paying down credit cards is a good thing, but I take your point.

Maybe the reality is that no amount of stimulus in the form of handouts (whether it be to builders, bankers or just the great unwashed) is going to remove the sand from the gears. The only stimulus that is going to do that is direct investment in job creation. Even that only helps if the number of jobs created more than offsets the number lost through the general unpleasantness.

I think we are screwed to be honest.

I agree that we're screwed. The reason though that we can't afford a stimulus package is that the NDP and day to day public spending was already pushed up to "stimulus" ie overheating levels over the past five years. Now that the damage of the overheating is done, and the global economy is deflating and ours with it, carrying on with both types of spending, in so far as government can raise the readies by borrowing, is probably the best thing to do. The big proviso is that things like Metro North (crap plan, 10 billion euro, small number of jobs) should be pulled and the money put into education, start ups, broadband and renewables.

coc wrote:

Yes. Of course, paying down credit cards is a good thing, but I take your point.

Maybe the reality is that no amount of stimulus in the form of handouts (whether it be to builders, bankers or just the great unwashed) is going to remove the sand from the gears. The only stimulus that is going to do that is direct investment in job creation. Even that only helps if the number of jobs created more than offsets the number lost through the general unpleasantness.

On the debts - my image is of people just paying their debts for the next ten years or more. No disposable income to squander on all sorts of crap that keep people in meaningless but apparently gainful employment. Your analogy with the gears is appropriate but I'd adjust it to this: there's no sand in the mechanism, we'd hope, but somehow the master or slave cylinder on the clutch got damaged and we can only get it into first gear. The tank is full of petrol and there's still plenty of gas coming out of production but we're not getting any speed up. That can't be so bad for the likes of the environment or people who are sick of working but apparently we are told it's a bad deflationary hole to be sinking into. The analogy might be with a submarine sinking to the ocean bed but that is not what is happening. The world economy is taking a rest, a needed break perhaps. Time out. Time to enjoy it and go for a walk and lose some weight and get some air before that broken cylinder gets repaired and we're all having brain haemorrages driving the two miles to work again.

coc wrote:

I think we are screwed to be honest.

If oil runs out we will be otherwise, whatever they do to us I don't mind as long as it's not too painful.

James Kunstler put it this way:

Quote :

To switch metaphors, let's say that we are witnessing the two stages of a tsunami. The current disappearance of wealth in the form of debts repudiated, bets welshed on, contracts cancelled, and Lehman Brothers-style sob stories played out is like the withdrawal of the sea. The poor curious little monkey-humans stand on the beach transfixed by the strangeness of the event as the water recedes and the sea floor is exposed and all kinds of exotic creatures are seen thrashing in the mud, while the skeletons of historic wrecks are exposed to view, and a great stench of organic decay wafts toward the strand. Then comes the second stage, the tidal wave itself -- which in this case will be horrific monetary inflation -- roaring back over the mud flats toward the land mass, crashing over the beach, and ripping apart all the hotels and houses and infrastructure there while it drowns the poor curious monkey-humans who were too enthralled by the weird spectacle to make for higher ground. The killer tidal wave washes away all the things they have labored to build for decades, all their poignant little effects and chattels, and the survivors are left keening amidst the wreckage as the sea once again returns to normal in its eternal cradle.

http://www.organicconsumers.org/articles/article_15343.cfm

I'm merging this with the Ideas for Irish Economic Recovery thread. The two threads remits overlap to quite a significant degree.

Ard-Taoiseach wrote:

Hello Ard Taoiseach. I was just thinking of you and you appeared. The power of the imagination indeed.

Really cactus? That's interesting. It's quite a coincidence.

Ard-Taoiseach wrote:

I'm merging this with the Ideas for Irish Economic Recovery thread. The two threads remits overlap to quite a significant degree.

Zhou might not be happy - have you seen his opening post ? Very strict. Mine was specifically about printing money / deflation / hyperinflation .

Threads unmerged - we'll try not to deflate too much the thread level in the machine nation economy

Hendry betting on deflation
http://www.thepropertypin.com/viewtopic.php?f=19&t=16061&start=0

cactus flower wrote:

James Kunstler put it this way:

Quote :

To switch metaphors, let's say that we are witnessing the two stages of a tsunami...

http://www.organicconsumers.org/articles/article_15343.cfm

An organic megadose of metaphors. Still, strangely interesting. Sort of pessimistic, and then a hint of optimism. Fairly accurate, I'd say. If I could see clearly through the fog of metaphor, I might even say "pretty accurate".

One other nit-picking editing point: Folks, we need to avoid that phrase "begs the question". Don't say "begs the question" when you mean "poses the question".

Auditor #9 wrote:

Ard-Taoiseach wrote:

I'm merging this with the Ideas for Irish Economic Recovery thread. The two threads remits overlap to quite a significant degree.

Zhou might not be happy - have you seen his opening post ? Very strict. Mine was specifically about printing money / deflation / hyperinflation .

Threads unmerged - we'll try not to deflate too much the thread level in the machine nation economy

Hendry betting on deflation
http://www.thepropertypin.com/viewtopic.php?f=19&t=16061&start=0

Hendry is a cheerful divil:

Quote :

Dec. 1 (Bloomberg) -- Hugh Hendry, who oversees about $500 million as co-founder of Ecletica Asset Management in London, said he’s buying World War I debt on the bet the U.K. is due for its worst round of deflation since the Great Depression.
The gilts, known as perpetuals because they have no maturity date, have a coupon of 3.5 percent compared with the U.K.’s 4.5 percent inflation rate. Investors hold about 1.9 billion pounds ($2.9 billion) of the securities that still pay interest 90 years after the end of the Great War, according to the U.K.’s Debt Management Office.
“If you have a deflationary shock, the only instrument that will perform will be government debt,” said Hendry, 39, whose Eclectica Fund returned 38 percent this year, putting it in the top 1 percent of 1,817 funds tracked by Bloomberg. “Inflation is going to be back some day. But forget the next 12 years; it’s the next 12 months that matter.”

For those of us who cant or wont buy Bonds, I think its the tins of spam we should be buying.

Its not just money and the economy that's deflating, its peoples' lives. There are young people I know who were just starting what they had presumed were going to be good careers, and that they studied hard for, who are unemployed now at a time when they should be cutting their teeth and using their energies and who are completely confused about their situation. Auditor is right I think that it will be very hard to prevent war, as the impulse will be there within the system to wipe out the surplus unusable assets and lives. Half a million lost their jobs in the US this month.

This thread looks good for a chat but anyone that recommends government bonds should not be listened too except out of politreness. They have not been this expensive since the 50s

youngdan wrote:

This thread looks good for a chat but anyone that recommends government bonds should not be listened too except out of politreness. They have not been this expensive since the 50s

Perhaps there is a reason for that ?

cactus flower wrote:

I agree that we're screwed. The reason though that we can't afford a stimulus package is that the NDP and day to day public spending was already pushed up to "stimulus" ie overheating levels over the past five years. Now that the damage of the overheating is done, and the global economy is deflating and ours with it, carrying on with both types of spending, in so far as government can raise the readies by borrowing, is probably the best thing to do. The big proviso is that things like Metro North (crap plan, 10 billion euro, small number of jobs) should be pulled and the money put into education, start ups, broadband and renewables.

Yes. Whatever resources can be mustered need to be channelled into two areas:

1) Undoing to whatever extent possible the social damage done by the celtic tiger squanderfest.
2) Investing in areas of the economy that will return the investment in the medium to long term. Your list is a good start. I'd add rail and motorways to that, but obviously not the monorail metro north.

The next 5 years are going to be shit for everyone. The government needs to cut the fat from the public sector, since it's the only direct thing it can do. Public sector workers are going to have to suck it up and thank their lucky stars they have jobs at all. My shirt is by no means blue but Ivan Yates said on Vincenzo last night that IBM regard anyone more than two levels from the customer as expendable and he'd be looking for 20,000 public sector redundancies. Easy for him to say I know.

The private sector workers need to hope they don't get fired. Anyone trapped in negative equity who loses their job has but one choice: Death or Canada.

Just to completely tie up the loose metaphors:

• The tide has gone out.
  
• We're sitting in the mud in a 1997 Fiesta wondering if we're not moving due to sand in the gearbox, no engine oil or a flat tyre.
  
• It's time to abandon the car and get as help as many of us as possible to higher ground.
  

The question of why we foolishly followed the tide out into the mud is no longer relevant, other than to make sure the driver is never put in a position of responsibility again.

Auditor #9 wrote:

Ard-Taoiseach wrote:

I'm merging this with the Ideas for Irish Economic Recovery thread. The two threads remits overlap to quite a significant degree.

Zhou might not be happy - have you seen his opening post ? Very strict. Mine was specifically about printing money / deflation / hyperinflation .

Threads unmerged - we'll try not to deflate too much the thread level in the machine nation economy

Hendry betting on deflation
[url=http://www.thepropertypin.com/viewtopic.php?f=19&t=16061&start=0

http://www.thepropertypin.com/viewtopic.php?f=19&t=16061&start=0[/quote[/url]]

*shrugs* I'm easy. It's just that the discussion seems to be getting a tad duplicated and it would be good to have the discussion on a more cohesive basis.

Zhou will keel you if you roon his tred.

Ard Taoiseach do you know what's going to be done with all the printed money ?

Auditor #9 wrote:

Zhou will keel you if you roon his tred.

I wouldn't be so sure. I can take him.

Quote :

Ard Taoiseach do you know what's going to be done with all the printed money ?

Well printing money is a very bad idea as it leads to a huge increase in inflationary risks. Inflation is evil, inflation is the cancer of the economic world and it must be kept to a strictly benign, ie, between 1 and 2% range.

Printing money didn't work in Italy, Japan or in Zimbabwe. For an economy to recover properly, demand should not be the side upon which the stimulus should concentrate, but on supply. Supply creates its own demand in any case so you can put demand to one side as you concentrate on reigniting supply. That's why I'd be much more in favour of tax cuts and reliefs on the productive sectors of the economy than a printing of money. It increases the incentive to produce and helps reverse the vicious cycles and negative feedback loops already in train in the economy.

Printing more money devalues savings, destroys currencies, ruins competitiveness, crushes pensioners and is the road to wrack and ruin.

Appropriate tax cuts lead to production, activity, dynamism, recovery and a return to the economic Promised Land.

Quote :

Printing more money devalues savings, destroys currencies, ruins competitiveness, crushes pensioners and is the road to wrack and ruin.

But the printing presses have started now, haven't they ? There's stimulus packages coming right left and centre now which means that Europe is either printing or borrowing. Would Europe borrow squillions of money ? It'd be very easy to print and then create an "Enterprise Fund" or something.

I'm not sure if printing leads to inflation all the time. I'm sure it does eventually if relied on continuously but could it be done in any controlled way in like little squirts to get the lubrication going and the economy gently inflated then allowed to settle and then .. Squirt! another dart of dough and so on until some stage is reached where the kick start kicks in and then off it goes by itself then again.