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1.93's A$ to the Pound!!!

1.93's A$ to the Pound!!!

Old Feb 24th 2010, 4:30 am
  #1231  
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Default Re: 1.93's A$ to the Pound!!!

Originally Posted by MartinLuther
Paper notes or numbers in a computer; it's the same thing. It's a representation of money. By printing more notes or just adding numbers to a computer you are not creating more money you're just creating more representations of the existing money (or wealth). That's why if you do print more money or add more numbers to a computer the currency devalues. Each individual note or digit in a computer becomes worth less.
Agree with all of that apart that printing notes or purchasing treasuries by the central bank IS creating money and thus devaluing the currency. It is the dictionary definition of inflation - increasing the money supply,
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Old Feb 24th 2010, 7:22 am
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Default Re: 1.93's A$ to the Pound!!!

Originally Posted by charlie brown
Probley go up and down like tarts knickers, will I get told off for that comment
The ones I know dont have any
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Old Feb 24th 2010, 7:39 am
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Default Re: 1.93's A$ to the Pound!!!

Originally Posted by renth
Agree with all of that apart that printing notes or purchasing treasuries by the central bank IS creating money and thus devaluing the currency. It is the dictionary definition of inflation - increasing the money supply,
Maybe my use of money is not kosher. By money I was referring more to wealth of the nation than paper or computer digits.
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Old Feb 24th 2010, 7:52 am
  #1234  
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Default Re: 1.93's A$ to the Pound!!!

Originally Posted by charlie brown
Probley go up and down like tarts knickers, will I get told off for that comment
How very apt!
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Old Feb 24th 2010, 7:57 am
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Default Re: 1.93's A$ to the Pound!!!

Originally Posted by renth
It does create new money. QE doesn't involve literally printing more notes but by purchasing treasuries the central bank literally magics up money out of thin air.

http://en.wikipedia.org/wiki/Quantitative_easing
Here's a glossy video defining it:

http://www.dailymotion.com/video/x8k...ve-easing_news
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Old Feb 24th 2010, 10:04 am
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Default Re: 1.93's A$ to the Pound!!!

Thought the below was pertinent, from Mish Schedlock...

The U.K. is the poster child for Keynesian stupidity carried out to extreme levels. In an extremely well written article, Matthew Lynn, a Bloomberg columnist discusses the sorry state of British affairs in Deathbed of Keynesian Economics Will Be in U.K.

The U.K. has produced notable economists over the years, but John Maynard Keynes, the guru of government intervention, was one of truly global significance.

So it may be fitting that the U.K. will also become the deathbed of Keynesian economics.

Britain has been following the mainstream prescriptions of his followers more than any developed nation. It has cut interest rates, pumped up government spending, printed money like crazy, and nationalized almost half the banking industry.

Short of digging Karl Marx out of his London grave, and putting him in charge, it is hard to see how the state could get more involved in the economy.

The results will be dire. The economy is flat on its back, unemployment is rising, the pound is sinking, and the bond markets are bracketing the country with Greece and Portugal in the category marked “bankruptcy imminent.” At some point soon, even the most loyal disciples of Keynes will have to admit defeat, and accept that a radical change of direction is needed.

The U.K. has been in Keynes overdrive for the past 18 months. The budget deficit is already more than 12 percent of gross domestic product, on a par with Greece. And while the Greeks are cutting spending, the British deficit is widening. Figures for January showed another fiscal blowout. At the same time, interest rates have been slashed to 0.5 percent. And the pound has slumped in value, which is supposed to boost demand for British goods, and help close the trade gap.

Just about everything possible has been done to encourage consumption. The results have been miserable.

Retail sales excluding gasoline in January fell 1.2 percent from the previous month, twice as much as economists forecast. The number of people receiving unemployment benefits jumped to 1.64 million in January, the highest level since April 1997. The yield on U.K. government debt is now higher than on Spanish or Italian bonds, a sure sign that investors are losing faith in the country’s ability to pay its debts. The inflation rate has also accelerated to 3.5 percent.

Triple Whammy

In reality, Britain has the worst of all possible worlds: a stagnant economy, a crippling budget deficit and rising prices.

The Keynesian consensus is that things would have been far worse without the stimulus provided by government. And if the economy isn’t pumped up with inflated demand, it will collapse back into recession. If it’s not working, that just proves the stimulus should be even larger.

It is the argument quacks always push: If the medicine isn’t working, increase the dosage.
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Old Feb 24th 2010, 10:08 am
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Default Re: 1.93's A$ to the Pound!!!

£ is up today across almost all currencies. 1.74 against the AU$. Almost no rhyme or reason sometimes.

They really need to scale back the QE now. I've been off sick for a couple of days and watching CNBC at nausea. Across the board sentiment was that the Government, whoever it is, will grab the debt by the horns once the election is over. Until then though we are in limbo land which is damaging.

Last edited by 77hil; Feb 24th 2010 at 10:12 am.
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Old Feb 24th 2010, 10:20 am
  #1238  
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Unhappy Re: 1.93's A$ to the Pound!!!

the statement concerning Keynesian economics is on the ball--but where do we go if and when it fails??.The recipe of cut and then cut some more will aggravate the unemployment problem mightily.Yet sitting with you fingers crossed is hardly a formula for success.But one thing is certain debt is debt--whether its your mortgage in the housing bubble or gov't borrowing---and it will have to be repaid with interest and probably fairly soon.
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Old Feb 24th 2010, 10:40 am
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Default Re: 1.93's A$ to the Pound!!!

Originally Posted by wilf70
the statement concerning Keynesian economics is on the ball--but where do we go if and when it fails??.The recipe of cut and then cut some more will aggravate the unemployment problem mightily.Yet sitting with you fingers crossed is hardly a formula for success.But one thing is certain debt is debt--whether its your mortgage in the housing bubble or gov't borrowing---and it will have to be repaid with interest and probably fairly soon.
The choide is taking the medicine now or worse later, we're choosing later.

Every epiosde of rapid monetary expansion in history has lead to hyperinflation. Yes, cuts now would cause a very nasty recession (far worse than what we've just had/are still having), continuing down the path we're on risks decades of depression.

Last edited by freebo; Feb 24th 2010 at 10:42 am.
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Old Feb 24th 2010, 11:20 am
  #1240  
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Default Re: 1.93's A$ to the Pound!!!

Originally Posted by freebo
The choide is taking the medicine now or worse later, we're choosing later.

Every epiosde of rapid monetary expansion in history has lead to hyperinflation. Yes, cuts now would cause a very nasty recession (far worse than what we've just had/are still having), continuing down the path we're on risks decades of depression.
To be fair, I don't think you can equate Hyperinflation with QE in the same breath.

I believe this comment puts it a little more into perspective...
http://depressionwatch.blogspot.com/...inflation.html
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Old Feb 24th 2010, 12:04 pm
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Default Re: 1.93's A$ to the Pound!!!

I'd seriously think again if I was going to sell up in the UK to go to Australia. Seems pointless heading out there to be poor and hot!
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Old Feb 24th 2010, 12:11 pm
  #1242  
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Default Re: 1.93's A$ to the Pound!!!

Well we're being squeezed both ends & our end-of-the-day pillow-talk always involves an analysis of the economic sitution. Not romantic.

In the UK, we have significant savings from the sale of our properties, which are devaluing by the day...interest rates in real terms are in the minus figures thanks to inflation & increasing taxation. Even our kids think we should take our money out of the banks after the very real scare we had a year or so back when several banks went to the wall & the government only guaranteed that the first £50K would be safe.

Earnings-wise, OH has taken a 30% pay cut as his company can no longer pay bonuses on work that simply doesn't exist any more. We know that his field is still healthy in Melbourne & that for him to progress in his career an early move to take advantage of the situation is better than sitting here in a struggling industry.

Yet is migrating to Oz the right thing to do either? At the moment probably not. If we go straight away we will have to take a huge kick on the exchange rate...if we go & leave our money behind then we risk a double-whammy in terms of taxation when we do bring it over, unless we do it within 6 months of landing, I think.

And that's without factoring in the variables of the housing market in Oz...if prices are dropping then we can concievably win back a little we lose on the exchange rate, but to be honest, the areas in which we would like to live are maintaining their values well at the moment.

It's tough...our situation is that we're caught between a rock & a hard place financially & without the benefit of a crystal ball, there are no right answers.

Best of luck to you all

Last edited by JenniGee; Feb 24th 2010 at 12:14 pm.
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Old Feb 24th 2010, 12:14 pm
  #1243  
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Default Re: 1.93's A$ to the Pound!!!

Originally Posted by DownUnderPaddy
To be fair, I don't think you can equate Hyperinflation with QE in the same breath.

I believe this comment puts it a little more into perspective...
http://depressionwatch.blogspot.com/...inflation.html
well thought out,
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Old Feb 24th 2010, 12:27 pm
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Default Re: 1.93's A$ to the Pound!!!

Originally Posted by DownUnderPaddy
To be fair, I don't think you can equate Hyperinflation with QE in the same breath.

I believe this comment puts it a little more into perspective...
http://depressionwatch.blogspot.com/...inflation.html
Maybe so, but when was the answer to too much debt to take on more debt? And one year on we're looking at the prospect of further QE and the £ reflects the confiidence the rest of the world has in the UK economy.
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Old Feb 24th 2010, 12:33 pm
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Default Re: 1.93's A$ to the Pound!!!

Well I did the smart thing and converted half my savings from £ into Euros in 2003 - best investment I ever made, even better than my BTL portfolio!
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