SkydiveJonathan 0 #1 August 23, 2012 The richest 10% of households in Britain have seen the value of their assets increase by up to £322,000 as a result of the Bank of England's attempts to use electronic money creation to lift the economy out of its deepest post-war slump. Threadneedle Street said that wealthy families had been the biggest beneficiaries of its £375bn quantitative-easing (QE) programme, under which it has been buying government gilts for cash since early 2009. The Bank of England calculated that the value of shares and bonds had risen by 26% – or £600bn – as a result of the policy, equivalent to £10,000 for each household in the UK. It added, however, that 40% of the gains went to the richest 5% of households. Quote Share this post Link to post Share on other sites
rehmwa 2 #2 August 23, 2012 DD - it's idiotic - printing your way to get a VERY brief relief for a small group is a crappy tradeoff for making everybody relatively poorer in the mid and long term ... Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants Quote Share this post Link to post Share on other sites
SkydiveJonathan 0 #3 August 24, 2012 Mitt Romney's offshore financial holdings are coming under new scrutiny following the publication of internal audits and private letters related to his $250m fortune. His wealth is held in a convoluted series of holding companies in tax havens including the Cayman Islands and Luxembourg, as well as the US. Romney's investments include stakes in funds invested in high-risk derivatives like the credit default swaps that contributed to the credit crisis, and an investment vehicle that loaned money to the parent firm of the National Enquirer, a racy US tabloid. Quote Share this post Link to post Share on other sites
Gravitymaster 0 #4 August 24, 2012 Where is the link to Alternet? Quote Share this post Link to post Share on other sites
Andy9o8 2 #5 August 24, 2012 QuoteWhere is the link to Alternet? Google the first sentence exactly & you'll see a zillion blogosphere hits quoting it. Same thing, really. This shit about the Romney clan's wealth (like it's some new revelation) is as irrelevant to the election as Obama's Moozlim middle name or Rev. Wright - it won't influence any significant number of swing votes one way or the other. Quote Share this post Link to post Share on other sites
SkydiveJonathan 0 #6 August 25, 2012 QuoteDD - it's idiotic - printing your way to get a VERY brief relief for a small group is a crappy tradeoff for making everybody relatively poorer in the mid and long term Tell that to the super rich. That's the game they're playing. Quote Share this post Link to post Share on other sites
SkydiveJonathan 0 #7 August 25, 2012 QuoteQuoteWhere is the link to Alternet? Google the first sentence exactly & you'll see a zillion blogosphere hits quoting it. Same thing, really. This shit about the Romney clan's wealth (like it's some new revelation) is as irrelevant to the election as Obama's Moozlim middle name or Rev. Wright - it won't influence any significant number of swing votes one way or the other. Romney is all for austerity - apart from him of course. I think swing voters may have more judgement than you credit. Quote Share this post Link to post Share on other sites
SkydiveJonathan 0 #8 August 27, 2012 The Tax Justice Network estimated in 2011 that $337 billion is lost to the U.S. every year in tax haven abuse. It's probably more. A recent report placed total hidden offshore assets at somewhere between $21 trillion and $32 trillion. Using the lesser $21 trillion figure, and considering that about 40% of the world's Ultra High Net Worth Individuals are Americans, and factoring in an annual 6% stock market gain based on historical records, the tax loss comes to $500 billion. Quote Share this post Link to post Share on other sites
masterrig 1 #9 August 27, 2012 You're getting back to the 1%-er. thing again. What you want is to be able to sit-back, do nothing and have the wealthy take care of your every whim and want. You need to realize, DD or SJ or whatever your handle is... it don't work that way in the real world. Maybe, if people like you would put forth some effort you might come out a little better off. Chuck Quote Share this post Link to post Share on other sites
SkydiveJonathan 0 #10 August 28, 2012 A new report from the Congressional Budget Office says that allowing the high-end, ill-conceived Bush tax cuts to expire on schedule at the end of the year would save almost a trillion dollars over ten years. Quote Share this post Link to post Share on other sites
ManagingPrime 0 #12 August 28, 2012 100B a year?!?! That's will make a huge dent in the annual budget deficit of......1.2T. It's sad that the HOT debate among politicians is over a 10% budget deficit reduction. Quote Share this post Link to post Share on other sites
ShcShc11 0 #13 August 28, 2012 QuoteDD - it's idiotic - printing your way to get a VERY brief relief for a small group is a crappy tradeoff for making everybody relatively poorer in the mid and long term lol small relief... More like preventing the U.S from contracting 4% in GDP / year. see CBO analyses. The QE is crucial for liquidity trap recession such as the U.S post-2008 Lehman. People will continue to deny this unfortunately. Cheers! Shc Quote Share this post Link to post Share on other sites
billvon 2,991 #14 August 28, 2012 >It's sad that the HOT debate among politicians is over a 10% budget deficit reduction. It's the biggest deficit reduction I've heard about. If they can do one of these every six months we solve the problem in 5 years. Quote Share this post Link to post Share on other sites
ManagingPrime 0 #15 August 28, 2012 Quote lol small relief... More like preventing the U.S from contracting 4% in GDP / year. GDP does not account for externalities like wealth distribution. The OP was about how QE tends to be of most beneficial to the wealthiest households. It's a fair argument against QE. Quote Share this post Link to post Share on other sites
ManagingPrime 0 #16 August 28, 2012 Quote>It's sad that the HOT debate among politicians is over a 10% budget deficit reduction. It's the biggest deficit reduction I've heard about. If they can do one of these every six months we solve the problem in 5 years.\ If....but, It would be political suicide. Not only would bush tax cuts have to expire, so would most all deductions....and every tax bracket would need to be taxed at a higher rate progressively....AND there would have to be substantial cuts to government spending. Quote Share this post Link to post Share on other sites
billvon 2,991 #17 August 28, 2012 > Not only would bush tax cuts have to expire, so would most all deductions....and >every tax bracket would need to be taxed at a higher rate progressively....AND there >would have to be substantial cuts to government spending. Good, good and good. Quote Share this post Link to post Share on other sites
ManagingPrime 0 #18 August 28, 2012 I don't disagree. I just don't have faith in the intestinal fortitude of the american people to demand what needs to be done to get our financial house in order. Quote Share this post Link to post Share on other sites
ShcShc11 0 #19 August 28, 2012 Quote GDP does not account for externalities like wealth distribution. Completely missing the point of QE. It is to add to the money supply in the economy. Its like adding oil into your car engine so that it would work more efficiently and smoothly. Restrict monetary supply and your economy will contract. Why do you think the Euro is in such a predicament? (hopefully you can guess the correct answer than the usual myth of "debt") Quote The OP was about how QE tends to be of most beneficial to the wealthiest households. It's a fair argument against QE. A very narrow view of QE. One of the goal of QE is to discourage savings; who would tend to "save the most". The rich. It also helps erode previous debts (who has the most debts? the poor). You and I have 2 tickets for babysitting each. I babysit for you twice and get your 2 tickets. I hog the tickets. What's happening in our economy? In a recession. QE is an option to fix this. Cheers! Shc Quote Share this post Link to post Share on other sites
ManagingPrime 0 #20 August 29, 2012 As someone in the banking industry I'm a beneficiary of QE. I understand how it works, but I don't agree that it's in the best interest of all. To believe that I would also have to be a subscriber to other ideas like trickle down, but I'm not particularly interested in going there now. I did not say that the economy would not contract. The question is, who would it contract for the most? Regarding the "intended" effects of QE: "The rich" don't tend to keep their wealth in the bank. They tend to keep it in real estate, stocks, etc. QE tends to increase the values of those assets. If you are poor, I'm not giving you a loan. What QE does do is increase the cost of goods and services. The poor typically live check to check. They have are not going to see awesome year end bonuses as a result of the QE, thus resulting in them paying off those old student loans. I'm not saying that if there was another round of QE that people on whole would "feel good" for a while. But, cocaine feels good for a while. Alcohol feels good for a while. Going to the mall/DZ and maxing out all the cards on new toys and jumps feels good...and then the bill comes due. ....I think the euro is in the predicament it is because it was an ill conceived idea from the start. Quote Share this post Link to post Share on other sites
StreetScooby 5 #21 August 29, 2012 Quote The QE is crucial for liquidity trap recession Quote Completely missing the point of QE. It is to add to the money supply in the economy. What am I missing? How is this going to get us out of the liquidity trap?We are all engines of karma Quote Share this post Link to post Share on other sites
ManagingPrime 0 #22 August 29, 2012 QE is an end run on interest rates. When the fed has already lowered rates to zero or near zero, QE is employed. In therory it should lower intetrst rates or at least keep them low. More people are drawn to save when rates are high. People are more likely to payoff high interest debt. Conversely, people are more likely to borrow and invest, in theory, when rates are lower. To a degtee you are right with your example. Current rates paid on savings are less than the rate of inflation. So, if your money is parkef in a bank, under a matress, etc., you will see its value erroded. Quote Share this post Link to post Share on other sites
ShcShc11 0 #23 August 29, 2012 Quote "The rich" don't tend to keep their wealth in the bank. They tend to keep it in real estate, stocks, etc. QE tends to increase the values of those assets. And? That would be a tax system's problem. The thing is: if an economy goes well, the rich would disproportionately be the beneficiaries as well. There were stats in 2010 that showed that people who suffered disproportionately in the Great Recession (up to March 2009) were the rich (in terms of %). Based on your logics, we should encourage a recession and discourage economic recovery because it disproportionately affects the rich? Of course not. If its such a problem, go straight for the cause (i.e: the tax system). But then we'l just be going into a long-discussion of ''what people are entitled to'' and someone will end up bringing the simplified beer tax story. Quote If you are poor, I'm not giving you a loan. What QE does do is increase the cost of goods and services. The poor typically live check to check. They have are not going to see awesome year end bonuses as a result of the QE, thus resulting in them paying off those old student loans. I'm not saying that if there was another round of QE that people on whole would "feel good" for a while. But, cocaine feels good for a while. Alcohol feels good for a while. Going to the mall/DZ and maxing out all the cards on new toys and jumps feels good...and then the bill comes due. Another allusion of the ''we are under credit card''. Not fixing the economy has its long-term effects. The longer one stays unemployed, the less employable he is. The less start a college graduate gets, he or she will receive a less-successful career (this is a fact done by studies). So this comparison to cocaine is just false. Its one of those comparisons where we think its true (it sounds true!) but has no reality in a real-life scenario. Quote....I think the euro is in the predicament it is because it was an ill conceived idea from the start. Yes and why is it an ill conceived idea? Because it prevents the peripheries from augmenting their money supply in times of recession. These countries are essentially living as if they were under the gold standard and/or pegged to a currency they can't control (ESPECIALLY the money supply). If you think 24% Spanish-style unemployment is good for the middle and poor class........... Remember what BANKIA president said: ''if only Spain had 1/5 of what Ben Bernanke can do!'' Cheers! Shc Quote Share this post Link to post Share on other sites
ShcShc11 0 #24 August 29, 2012 Quote Quote The QE is crucial for liquidity trap recession Quote Completely missing the point of QE. It is to add to the money supply in the economy. What am I missing? How is this going to get us out of the liquidity trap? QE is essentially an unconventional monetary policy more or less used in emergencies or special scenarios. It emulates like lowering the interest rate of a (conventional) monetary policy. But because the Fed can't lower interest rate (already at near-zero, can't go into negative), they are using QE instead. Liquidity trap is when people have much more incentive to save than to spend in the economy (e.g: companies making a lot of profits but are hogging money is not because they are evil, but because there's not enough demand in the economy). Usually with interest rates, we can fix that by discouraging people to save and playing with the money supply. QE's goal is discourage savings and encourage spending (thus more demand in the economy and thus companies have more incentive to invest in new machineries, etc...) Cheers! Shc Quote Share this post Link to post Share on other sites
ManagingPrime 0 #25 August 29, 2012 So say we have another round of QE. Banks will have more reserves, but what assurances are there that banks will lend these funds? I don't question how QE is supposed to function. At the core, i take isdie with the fed and banks administrating something as important as money supply. As opposed to QE, which we can agree is money creation, why not just take those credits and distribute to all citizens? Quote Share this post Link to post Share on other sites
