Buying Hardware in times of Quantative Easing

blop · 5 Mar 2009 at 16:18

Now that the government has warmed up the printing presses and kindly created £75 billion from thin air.....a trick in a similar vein to Jesus Christ's fictional Quantitive Fish and Bread Quantative easing which led to the feeding of 5,000 people.

As a forum has worked out that £1 is now 96.25p:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=106990

What is likely effect on PC prices.

I say this as someone who keeps waiting for a 'right time to buy' and never finding one!!

antijoke · 5 Mar 2009 at 16:20

In this country and in the company I work for the price is actually increasing thanks to the falling £.

csmager · 5 Mar 2009 at 16:33

£1 is worth what you can buy with it, not an arbitrary figure that bloke's worked out by adding it to the existing money supply and redividing it.

£1 this afternoon is still pretty much worth what it was this morning.

The problem is that, due to massive price slashing by all and sundry, it won't be long before £1 can buy you what £1.05 used to be able to. Deflation is dangerous, as people will just wait for lower and lower prices sending the economy into a downward spiral. Increasing the money supply should cause inflation - or at the very least, stop deflation.

PC parts will very much depend on exchange rates, unfortunately.

eXor · 5 Mar 2009 at 16:53

Quantative easing

I hope that this doesn't turn into another buzzword, like 'Credit crunch'. :mad:

Dj_Jestar · 5 Mar 2009 at 16:59

too late eXor, it already is.

Sukh · 5 Mar 2009 at 17:41

I think peoples main gripe with Quantitative Easing is that there has never been a case were it has been successful (and proven).

arknor · 5 Mar 2009 at 17:48

Sukh said:
I think peoples main gripe with Quantitative Easing is that there has never been a case were it has been successful (and proven).

its all good the banks mess up nearly collapse the goverment bails them out massively and then creates money out of thin air as if by magic to give to banks so they can start loaning money out again lol.

isnt the banks giving out credit like candy what got us into this mess? maybe they should just give the money directly to the bloody consumers if they want the consumers to consume things from shop shelfs and save them selfs a lot of trouble with the banks!

just cut out the middle man the end outcome will probably be the same anyway atleast my way the people would profit

Dj_Jestar · 5 Mar 2009 at 17:48

Sukh said:
I think peoples main gripe with Quantitative Easing is that there has never been a case were it has been successful (and proven).

Quite.. and it goes completely against the idea of reducing inflation, by artificially increasing it!

N9ne · 5 Mar 2009 at 17:51

Economic theory is well and truly out of the window. There will be long-term consequences to most of the government's responses to the crisis. Political incentives mean that their actions now are actually optimal for them. The short-sightedness of the general voting public means they believe, irrationally that the actions are optimal too. Thus, we have government failure. Nice.

ScarySquirrel · 5 Mar 2009 at 17:53

eXor said:
I hope that this doesn't turn into another buzzword, like 'Credit crunch'.

The term "credit crunch" makes me want to stab someone in the face. It really is beginning to grind my gears.

scorza · 5 Mar 2009 at 18:10

I don't understand the point of this - it seems to me that they're just going to print money and give it to the banks, who will most likely keep it to themselves. Like other people have pointed out, the banks' lending policies are largely to blame for this mess in the first place. Personally I'd like to see inter-bank lending banned altogether eventually, so that in future if one bank falls over we can let it fail without all the other banks falling like a house of cards.

Jobs and people staying employed are the key to resolving crisis, if you're going to print money then then you spend that money on creating jobs e.g. road building/upgrading programme, airports, clean energy research. Harold Wilson knew this and did just that back in the '60s, building things like the Mersey tunnel and Lancaster University, sure we had inflation of 10-20% but it also meant that people's debts became trivial. Surely if we have a bad debt problem in this country then trivialising it would be a good solution?

footman · 5 Mar 2009 at 19:06

scorza said:
I don't understand the point of this - it seems to me that they're just going to print money and give it to the banks, who will most likely keep it to themselves.

Spot on. They'll use it to bolster their balance sheets and their share prices will go up. The upshot of that is the bank executives who take bonuses in the form of share options will become richer.

Sankari · 5 Mar 2009 at 19:08

blop said:
Now that the government has warmed up the printing presses and kindly created £75 billion from thin air....

No, they didn't.

The government has injected money into the economy by purchasing financial assets, such as government and corporate bonds.

In other words, there is more money around the place because the government has just bought a ton of assets. It has not conjured money out of thin air; it has conducted a series of perfectly mundane transactions on a very large scale.

The US government has been doing the same thing for some days now.