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England now printing money

Discussion in 'The Economy' started by pcj821, 10th Mar, 2009.

  1. pcj821

    pcj821 Member

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    Hi all,

    I just heard on the 7:30 Report that the Bank of England has began printing 75 billion pounds in an effort to prop up their economy. Now, I don't hold a degree in economics, but from my basic understanding and knowledge of history, I'm pretty sure this isn't a good idea and is generally regarded as a big no no.

    Maybe I'm wrong, I hope so, but either way I would like to know the opinion of others on this site about the implications of taking this course of action.

    I also believe that this action won't just be limited to England. Does anyone have any idea about how this will affect the global economy if more countries start following England's lead?

    (I can only hope that Rudd doesn't get any ideas)

    Cheers
     
    Last edited by a moderator: 10th Mar, 2009
  2. dudek

    dudek Well-Known Member

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    This is English fast way to replace Pound with Euro. I think few people may regret they didn’t do it earlier. :D
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I don't think they have much choice in the short term.

    The ramifications of this action in the medium term though are potentially rampant inflation (requiring high interest rates to keep under control).

    So while we enjoy very low rates now, be prepared for them to go up quite a bit in the future.

    That being said, the whole system is in such a mess that I'm not sure any economic theory really holds that much water right now.
     
  4. Shady

    Shady Well-Known Member

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    Wont this devalue their currency? Which means cheaper holidays in the UK:)
     
  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Currency is a relative thing. If everyone devalues their currency at the same time by doing largely the same thing, it probably won't change relative to ours. That being said, there are a lot of things which affect currency exchange rates.
     
  6. Chris.R_WA

    Chris.R_WA Well-Known Member

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    Zimbabwe have been great at it the last few years !! :eek::eek:

    I went over to a mates house the other day and he had a genuine Z$50,000,000,000 (50 BILLION) note stuck on his fridge. I must have had last weeks exchange rate in my head, coz I thought it must be worth a couple of Aus dollars...

    ...nope - one fifth of one cent !!

    What happens to a Z$500K Zim mortgage fixed rate in Zim dollars taken out a few years ago?? Do you just take your pocket change in to the bank to fully discharge your loan?? (assuming your house hasn't hasn't had its title forcefully transferred :eek:)

    Chris
     
  7. Chris C

    Chris C Well-Known Member

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    The Euro has a long list of its own problems, and there is more than enough members of the EU screaming for the ECB to do the same thing as the BoE, but that's the drawback of having one central currency - our country loses its ability to employee monetary policy.

    It will be really interesting to see how the Euro holds up through this crisis, in reality the British deciding not to convert to the Euro may end up being the best move they made in avoiding a depressionary level recession. Even if they did opt for a Zimbabwe style solution to their problems, they have the fall back plan of just joining the Euro once they have inflated away their massive national debt...

    Whilst running the printing presses at this stage will most likely ensure currency depreciation, it will be quite interesting to see if their is a world inflationary problem at the end of all this... it's very difficult to tell at this point.


    Well I'm expecting the the supply and demand theory to still hold true...

    :rolleyes:

    They'll definitely be cheaper, but with the UK being the hole it is, that doesn't mean anyone will want to holiday there!

    I don't know about what others here on the forums think, but I don't plan to travel around the UK again anytime in the near future...

    Actually the England is just following the US, who were following the Japanese. The FED has doubled the base money supply in the US in the last 5 months alone, but sssshhhhh don't tell anyone...

    :rolleyes:

    The reality is that printing money when we are in a world deflationary period as powerful as this one, printing more money is going to go essentially unnoticed in the short term. The effects in the medium to longer term are much harder to gauge, but no doubt central bankers around the world have a poorly thought out plan to cross that bridge when they come to it...
     
  8. dudek

    dudek Well-Known Member

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    For the fist time I have to agree with you. :D