littlebabyjesus
one of Maxwell's demons
I posted that when drunk last night, so I was overdramatic. I was actually asking you to treat me with some respect.
Fat fucking chance, eh?
Fat fucking chance, eh?
Taking on the currency cranks
- Thread starter Jean-Luc
- Start date
love detective
there's no love too small
so when you're drunk and post overdramatic shite it's my fault that I'm not able to discern the reasons for you posting overdramtic shite and instead I should just automatically respect you regardless of what you actually post/say to me? I'm sorry but it doesn't work like that for me, i'll respect you if I respect what you write here, you can't shift that burden away from you and onto me so that I have to 'respect' you no matter what you come out with (you even admit yourself you were far too overdramatic but still you demand that I respect you nonetheless)
and come on, you were asking me to have some respect for people (like you) who have the guts to post about something on a message board - can't you see how absurd and pompous this is - there's only one response appropriate here and that's what you got (and something I would expect to get from others if I did similar)
for what it's worth i generally do respect people initially on here, it's only if they continue to post unsubstantiated crap and assert that they are correct without any basis from which to do so, then I return fire and often take the time to post in some detail showing why they are talking crap. That this often gets met with claims of 'relentless bullshit' and 'not respecting others' just because i don't let someone get away with posting bollocks about stuff they don't particularly understand that well is a reflection on their wooly liberal sentimentalities and not me.
but yes, well done on turning the discussion away from the actual points and into a nice liberal wooly one about how we should all automatically respect each other regardless of what is said
and come on, you were asking me to have some respect for people (like you) who have the guts to post about something on a message board - can't you see how absurd and pompous this is - there's only one response appropriate here and that's what you got (and something I would expect to get from others if I did similar)
for what it's worth i generally do respect people initially on here, it's only if they continue to post unsubstantiated crap and assert that they are correct without any basis from which to do so, then I return fire and often take the time to post in some detail showing why they are talking crap. That this often gets met with claims of 'relentless bullshit' and 'not respecting others' just because i don't let someone get away with posting bollocks about stuff they don't particularly understand that well is a reflection on their wooly liberal sentimentalities and not me.
but yes, well done on turning the discussion away from the actual points and into a nice liberal wooly one about how we should all automatically respect each other regardless of what is said
free spirit
more tea vicar?
I find it annoying when people put words into my mouth, deliberately misunderstand fucking obvious points being made (such as what someone might mean by reserves when talking about cash, and hard currency), then attempt to ridicule them on the basis of points they've not made, and words they've not spoken.
I particularly find it annoying when the person in question is wrong, but resorts to this sort of crap to disguise that fact.
no you prick, that was in a different post, this one was responding directly to your claim before it that people withdrawing money from the banks was just an effect of the credit crunch and not a cause of it.
You also quote that out of context
Note that I'm specifically not saying it was the cause of the crunch, or even the initial cause of it, just that it acts as a feedback mechanism to help turn a bad situation into a potentially catastrophic situation.
This should be pretty clear from the entire paragraph posted above, given that I specifically state it in the bit you deliberately missed out in order to misrepresent my position again.
I'm attaching a copy of the results for a search for the term 'liquidity crisis' by the poster 'Free Spirit' on this thread. As you can see, I've not used those words on this thread, and having checked all my posts, neither have I said anything else with a similar meaning, so once again you're putting words into my mouth. Please stop doing this.
Once more then, QE was not an immediate response to the immediate liquidity crisis in 2007, but this in no way means that it wasn't a longer term response to the same underlying issue.
The immediate response was to issue short term cash loans to the banks. A cash loan pretty much by definition doesn't actually solve the underlying issue of low levels of actual cash across the entire banking system, it merely postpones the data when a long term solution needs to be found to the point at which those loans get paid back.
QE was that long term response, taking over directly from the previous loan scheme, and effectively resulting in those loans being repaid without impacting on the banks overall cash position, or the government's ability to sell new gilts in the open market (as would have happened if the banks had also been offloading several hundred billion of government gilts at the same time to repay their loans and bolster their cash reserves).
Right, so after January 2009 no more money could be drawn down from the scheme?
Therefore it was closed, at least to the extent that it could provide no further support to the banks beyond the level they'd already been supported. The fact it remained open to allow the banks to repay their loans is fairly obvious from the fact I then discussed the loans being repaid over the next 3.5 years, and actually means that the scheme beyond Jan 2009 was then acting to reduce the volume of cash available in the banking system, not improve the situation.
your point being?
how do you work that one out then?
The sentence and the entire paragraph referred to the APF scheme, which includes the APF scheme for corporate bonds, and the APF scheme for Gilts. It doesn't differentiate between the 2 schemes in that paragraph at all.
Stating that one APF scheme worth less than 1% of the other was to provide cash liquidity into the market, and the other had nothing to do with it is nonsensical when both had the exact same affect of injecting cash liquidity into the banks.
The summary you quote, only lists the 'Primary Purpose' of the scheme anyway. It may well be that monetary policy was the primary purpose of the gilts scheme (or at least the stated primary purpose), but this in no way excludes the possibility that a significant secondary purpose of it was to take over from the SLS scheme to bolster the banks cash reserves, and increase / maintain the higher rates of cash liquidity in the banking system that the SLS had temporarily supplied.
The argument that this was all about Monetary Policy really falls down when you consider the fact that the banks inflation target is 2%, yet they authorised a further £75 billion QE spending round in October 2011 when RPI stood at over 5%.
I think this paragraph is also pretty telling
boe
So QE has increased the liquidity in the market to such an extent that they've had to entirely abandon the previous system of regulating money flows between the BoE, the banks and the interbank lending market because of the excess of cash sloshing around in the banks.
Yet you maintain that QE didn't have the purpose of increasing liquidity.
Your position looks pretty untenable to me tbh, no wonder you have to repeatedly resort to misrepresenting my position.
Attachments
free spirit
more tea vicar?
fwiw I'm quite willing to both address the points made and disrespect you in the same post.
You on the other hand seem determined not to address points I've actually made, but instead to make up alternative versions of what I've actually said, then argue against them, then somehow claim to have won the debate on that basis.
I assign respect to posters on merit rather than automatically and your conduct in this thread shows you don't merit respect.
Unless of course you actually do have severe reading comprehension issues, in which case I'll cut you some slack.
littlebabyjesus
one of Maxwell's demons
No. You did this by making it personal, which is your usual trick.
free spirit
more tea vicar?
tbh, if someone used the term kW but obviously meant kWh as happens regularly, then I may point this out to them, but would still be capable of understanding what they actually meant when taken in the context of the entire post.
You on the other hand appear to ignore all the context of the post, and focus on the use of the incorrect term as being somehow more significant than the rest of the post, despite it being entirely obvious to anyone with half a brain cell engaged what the meaning of the post was.
This isn't the mark of real expertise in the field, it's the mark of someone who's actually got very little expertise in the field, but chooses to attempt to flaunt that expertise by demonstrating that they've learnt the precise terminology by rote, and therefore their views must somehow be more valid than someone who slips into using more basic terminology.
If you were a true expert in the field, then I wouldn't have been able to rip your argument apart so easily. BTW, in terms of evidence, I seem to have been the only one posting up facts and figures to support my argument, you're relying on bluff and bluster.
free spirit
more tea vicar?
I really should have stuck with my first post on this thread.
love detective
there's no love too small
If you can't articulate what you are trying to say, and furthermore don't understand what you are trying to articulate, then once again that is a failing on your part, not the part of the unlucky ones who have to listen to you.
In this case you shouldn't be as annoyed because I am correct and use easy understandable facts & sources to prove that is the case
very convenient you slip and slide all over the place here as and when you get pulled up on your shite
You were talking about the time that the money markets froze up and the resulting stepping in of the state to provide support - this happened from late 2007 to early 2009 - that you did not formally label this 'liquidity crisis' is neither here nor there, that's what it was.
It wasn't a response to the liquidity crisis full stop - it was a response to the economic & fiscal crisis. This was a crisis not for the banks (primarily) but for the state. QE was a response to this in the fuckwited hope that it would do something to reverse the economic & fiscal crisis. It was not about helping them banks out as you continually assert.
QE was that long term response, taking over directly from the previous loan scheme, and effectively resulting in those loans being repaid without impacting on the banks overall cash position, or the government's ability to sell new gilts in the open market (as would have happened if the banks had also been offloading several hundred billion of government gilts at the same time to repay their loans and bolster their cash reserves).[/quote]
absolute nonsense - that you link QE to something to help the banks when it patently is not and was never that, shows how little you grasp of this kind of hting
After January 2009 the liquidity crisis was pretty much over, so there was no need for the scheme - your assertion that it stopped and QE started in its place is totally incorrect. The special liquidity scheme stopped because it had served its purpose, the money markets had opened up again and funding was available from the wholesale markets again, so banks used that as they were a) cheaper and b) didn't carry the stigma of state help
It provided that liquidity support until the last bits of it had been repaid in 2012. That the banks no longer needed to draw down anymore on it beyond January 2000 (unlike in August 2009 when they did and it had to be extended) shows that your assertion that QE then came in to take its place is utter bullshit
that you can't even get your basic facts right as to when things happened and in what volume they happened
can you not read? It clearly talks off two components to the APF scheme - the first which was to provide liquidity and was based on the purchase of corporate bonds by the bank of england (and done so not through the creation of money by the central bank). The purpose of this was to provide liquidity. A total of £0.3bn was transacted under this scheme, and this scheme is nothing to do with the £375bn of QE we have been discussing here. The second component of the APF scheme involved the creation of money out of nothing by the central bank and the subsequent usage of that to buy gilts from banks with it. The stated purpose of this was not to provide liquidity, but for monetary policy purposes.
If you'd read the document on the SLS you would see that the liquidity arrangements by the central bank were revamped to ensure sufficient ongoing liquidity support was available to banks going ahead (and that one page summary I linked to from the BOE, shows what those schemes are). These ongoing liquidity schemes specifically make clear they are about providing liquidity to banks, as that is what they were for. QE was not. This news may upset you as it means you are wrong, but that's just something you need to deal with it.
Pillock - monetary policy is based on future expectations of interest rates, not current ones. this is because it takes a while for things done under monetary policy to actually have the impact that they are hoped to have. So something done today is not done in response to inflation today, it's done in response to expectations of future inflation. And tellingly inflation indeed has come right down since October 2011. RPI inflation was high in 2011 due to a mixture of oil price increases, increases in VAT and weakness in sterling. These things (well the last two anyway) were not seen as being ongoing things so the forecast was that inflation would be falling (which is in line with reduced demand and sluggish growth) , and it did. So sorry, but as usual you're way out with this again.
you don't really understand what you're reading there - which comes as no surprise to me
As stated at the beginning, i respond to the shite you post. I don't have to misrepresent your position, I only need to point out your actual position and show how it is incorrect. that you continually slip and slide and hide behind different interpretations of what you said, shows how little grasp you have of this.
love detective
there's no love too small
it's you who poncing around like some kind of weird butt hurt hybrid of Catman from southpark and Sheldon from big bang theory
but yeah man, you had the guts to do it on the internet
love detective
there's no love too small
If i was as wrong as you i wouldn't have even bothered going as far as you did, so you've done pretty well in perseverance terms
free spirit
more tea vicar?
right then dickhead.
If the money markets were so ticketyboo in 2009 how come the libor rates were still sky high, and actually higher than they were in 2007-8?
and if QE wasn't a response to this, how come that the libor rates instantly dropped like a stone when QE started in March 2009, and within months had fallen to their pre credit crunch crisis levels?
Something that none of the previous schemes had achieved.
see, facts and figures, not just bluff and bluster.
free spirit
more tea vicar?
erm right, so following their intervention, what's happened to RPI rates? Have they
A - returned to the BoE target inflation rate
B - dropped from their previous high, due mainly to temporary fuel price reductions, and the ending of the impact of the VAT rate rise, but remained 1% above the target rate?
and also what was it that necessitated that QE increase in October 2011?
Was it the inflation rate which stood at more than double the target rate, or was it maybe more to do with the fact that the libor rates had been climbing steadily again since the summer, reflecting a tightening in the interbank lending markets, probably because the banks had found a none liquid home for most of the initial liquidity injected by QE, mainly in the form of the commodities bubble they were (still are) pushing ever higher?
free spirit
more tea vicar?
never let the facts and figures stand in the way of your opinion that you must be right eh.
free spirit
more tea vicar?
firstly, would you like to try again with your dates?
Scondly, all loans were made by the end of January 2009. No further loans were made after that point, and all activity beyond that point was related purely to these loans being repaid.
Oddly enough, banks repaying loans actually removes cash from the market, rather than adding cash to the market, so it only continued to provide liquidity support to the market in the same way that a bank continues to supply financial support to a customer by not immediately calling the loan in, but giving them 2 years to repay it.
After January 2009, the only impact of this scheme was to reduce cash in the market over the next 3 years by the full amount that the scheme had initially injected into the market. SLS had no overall long term impact on the cash available within the banks, it was therefore incapable of actually solving the long term underlying issue that the entire banking system had massively over extended itself in the preceding decade, and held too little cash reserves as a whole compared to its liabilities.
Therefore SLA was just a temporary fix, a sticking plaster to keep the system going until surgery could take place to solve the problem long term. QE was that surgery.
love detective
there's no love too small
swear and bluster all you like - the graph shows what i've been saying all along
the disruption starts in late 2007, reaching a peak throughout 2008 and then by mid 2009 rates were back to what they were - rates fell because the immediate liquidity crisis subdued, banks started to lend to each other again - QE came about after all this, not before
And for you to say that rates in 2009 were still sky high when they were at least half the level they were at the peak of the liquidity crisis in 2008 is stretching the levels of acceptable hyperbole to the limit
i've certainly not denied that one of the intended outcomes of QE was to lower yields, i've been saying that all along - that you are now saying back to me what i've said previously doesn't allow you to bask in any glory - for example in this post here many many pages ago, i said to you
me said:
I've said many times before, the impacts of QE are not disputed - one of these is to lower yields, this has been something i've been saying all along. that you think that this is what the argument is about shows how little you understand about the whole thing. Now you can get all uptight and call me a dickhead if you want, but i'll for as long as you continue to be wrong, i'll be pointing out that you're wrong.
littlebabyjesus
one of Maxwell's demons
No, that graph doesn't show this. It shows QE starting at a point where libor rates were still high and had started rising again. It shows libor rates plummeting back down to previous levels after QE had started.
love detective
there's no love too small
RPI has pretty much halved since it's peak of 5.2% with the current forecasts set for it to continue to decline (reflecting the sluggish state of the domestic economy), hence the need for more QE in a fuckwited attempt to stimulate the economy
amongst other things a whole load of bad news coming out of the eurozone with the predicted impact that this would also have a knock on impact on UK's 'growth' hence more QE, exactly the same reasons for all the QE done to date. Plus the fact that in October 2011 it was looking more and more likely that a double dip recession was on it's way, which it was.
And of course the latest batch of QE had nothing to do with the fact that in October 2011 the domestic economy was projected to be heading into a double dip recession (which it did in Q1 of 2012) so more fuckwited attempts to stimulate the economy through QE were required. But no, you stick to the fact that it was done for liquidity reasons for banks, and not to try and get the economy out of trouble. Discount all of that as it's an inconvenient truth for your stupid assertions
love detective
there's no love too small
QE started in March 2009 with a paltry amount of £75bn, when according to that graph spreads were at around 100 basis points, compared to a high of 240 during the liquidity crisis - the biggest drop in rates occurred in the period before QE started,during the SLS, but as already pointed out - no one is disputing that QE drove down market rates, that was part of the reasoning behind it
love detective
there's no love too small
OK - clearly that was a typo, it should have said January 2009 not January 2000 - well done, you've got one thing right eventually
The liquidity given was still in force however, the graph doesn't show significant repayments until mid 2010. In addition £250bn of liquidity assistance was also delivered thorugh the Treasury's scheme which I linked to earlier, you seem somewhat silent on this
which is still a pretty good amount of support, not sure what you're actual point is here
And you're off again into not having a clue what you're talking about. Do you think QE is forever, QE will eventually be reversed which will do exactly what you say above. That you think QE is a long term solution to what the SLS provided temporarily shows no understanding of what these two things are and what they were for.
SLS was about providing liquidity to banks, specifically to help out banks. QE was about trying to stimulate activity in the wider economy, specifically to help out the wider economy. Two completely separate things, done at different times for different reasons in response to different problems with the ultimate (intended) beneficiary being two different things
free spirit
more tea vicar?
do I think QE is forever?
how do you mean?
QE is an asset purchase scheme, a scheme to purchase something being fundamentally different to a scheme to loan someone some money on a short term basis using that asset as security for the loan.
If you don't understand the difference, well I'd suggest that's your problem not mine.
As for QE being reversed... well, if it is then this will be an entirely voluntary arrangement where the BoE offer the gilts back for sale, and the banks decide to buy them back, as opposed to being obliged to buy them back as part of their original loan agreement.
how do you mean?
QE is an asset purchase scheme, a scheme to purchase something being fundamentally different to a scheme to loan someone some money on a short term basis using that asset as security for the loan.
If you don't understand the difference, well I'd suggest that's your problem not mine.
As for QE being reversed... well, if it is then this will be an entirely voluntary arrangement where the BoE offer the gilts back for sale, and the banks decide to buy them back, as opposed to being obliged to buy them back as part of their original loan agreement.
littlebabyjesus
one of Maxwell's demons
The BofE now owns a whole load of govt gilts. At some point, it will have to sell these, thus reversing QE: raising yields by reducing demand for govt debt. I would think that the hope was that QE would have stimilated the economy such that it could reach a point where such a flooding of the market with govt gilts would be fine - with a healthy economy, the govt wouldn't need to borrow so much, but could take revenue from taxes instead.
free spirit
more tea vicar?
but the banks are under no obligation to buy that debt back are they, which is a crucial difference to the previous scheme under which they were obliged to buy it back.
also, the BoE could as easily sit on those gilts themselves, they're under no actual obligation to sell them if they don't want to.
littlebabyjesus
one of Maxwell's demons
Doesn't matter. At the moment, banks and others are very keen on buying govt debt - hence govt can borrow at very low rates of interest. If the BofE were to introduce a whole load more govt debt for sale, that would be effectively changing the supply/demand balance.
tbh the more I think about this, the more I think qe's primary purpose was to provide a short-term solution to keeping government debt cheap to finance for government.
It isn't working, but I can see the logic of QE in using it to try to get people doing stuff. A money trick designed to encourage investment that will eventually be paid for by the real value that the extra investment enables. But imo that ignores the real problem here, which is a lack of demand for loans. That deeper lack of confidence in the economy isn't solved by keeping interest rates low.
Eventually the lesson has to be that the state itself is going to have to make that investment, I would have thought. Already seeing signs of that with the tentative initiatives to back house builders. I expect to see a lot more in the coming years as the lack of willing of the private sector to get into deeper debt continues.
free spirit
more tea vicar?
so £75 billion is a paltry amount yet this is 3/4 of the initial amount lent under the SLS scheme, and almost exactly the same amount that was lent during the extension in the scheme from the Autumn to January 2009.
How come that the same paltry amount was capable of achieving all you suscribe to it when given as a loan, but when it's actually used to buy the assets directly it suddenly becomes a paltry amount?
btw you seem to have missed the fact that the LIBOR rate had started increasing dramatically again between the end of January and March 2009 between the ending of the SLS scheme, and the start of QE, prior to nose diving as soon as QE kicked in.
so wtf have you spent the majority of this thread arguing if not this precise point?
It drove down these rates by dramatically improving the cash reserve situation of all the banks to the point where they were more than happy to lend it out to each other at more normal levels again.
hmm, I didn't say I would actually abolish interest. Perhaps let's say that if the interest paid on savings accounts was closer to zero, that would in my view fit a more desirable scenario.
I don't fully know exactly how my alternative (full-reserve) economy would be exactly. I don't feel that it is necessary for me to have it perfectly planned in order to argue that the current one is unstable and extremely biased in favour of the bankers.
By creating money ourselves (yes, via government body) of course it would be crucial to create the right amount of money. I don't see why this is not possible. I would much rather we controlled this, than private entities who are not only taking a huge cut for doing so but as I have argued can wreck economies to their advantage should they operate as a cartel. At present, if private banks stopped money creation, then our money supply would be fast reducing as we paid back existing loans - so initially we would to create plenty to keep our money supply topped up.
I would like to see money introduced into the economy as a "citizen's income". Wouldn't that be a nice way of getting it in there? In fact, if you had that, and in the long run taxed demand deposit accounts, then you could have savings account paying zero interest which people would use (use it or lose it). I'm not necessarily saying this would be ideal, I've only just thought of it, but mention as a way in which you could have savings accounts at zero interest.
You say that "economy's demand for loans wouldn't [reduce]", which is not quite the thing - if large amounts of government-created money was coming into the economy via citizen's income (my suggestion) or publicly funded works (as Henry Ford and Edison suggested) or indeed anything the government pays for, like salaries of civil servants (NHS the largest employer in the world!) - then clearly the demand for loans would reduce - why borrow the money when you already have it? We are so used to having to borrow money for everything, that I think we forget - it is absurd that we have to. Why are we all having to pay for our houses three times over, when our ancestors have already built them?
I would say it is quite likely that the Co-operative bank does make loans to ethical projects. I would hope so anyway.
Where's the problem?
Blagsta
Minimum cage, maximum cage
This proves ld's point.
The Co-operative Bank does indeedy claim to make loans to "ethical" projects, and yes indeedy, depending on the current reserve ratio rules it operates within it can use the perfectly normal functioning of fractional reserve banking to lend out to these "ethical projects" a lot more cash than it has taken in as deposits.(eg, £900 in cash based on £100 of deposits, if the cash reserve ratio is £10% for instance) So What ? It's ability to "create money" isn't unlimited , it can't give out loans of unlimited money value for each £100 of deposits, but is governed by the rules, and structures, enforced by the Bank of England and FSA ...ie, by the state.
Unlike Jazz I think the idea of 100% Reserve banking is a "money crank" pipedream - a dream held by non-socialists who long for a "better", less dominated by the banking sector, capitalism. Whereas I think Fractional Reserve Banking is a vital component of an expansionery, dynamic, capitalism,in all its ghastly exploitative horror, and the "answer" is to abolish capitalism, not tinker with the banking system. Doesn't make the basic operational feature of Fractional Reserve banking - its ability to increase the money supply , a "myth" though - on that at least , Jazz is quite correct.
Unlike Jazz I think the idea of 100% Reserve banking is a "money crank" pipedream - a dream held by non-socialists who long for a "better", less dominated by the banking sector, capitalism. Whereas I think Fractional Reserve Banking is a vital component of an expansionery, dynamic, capitalism,in all its ghastly exploitative horror, and the "answer" is to abolish capitalism, not tinker with the banking system. Doesn't make the basic operational feature of Fractional Reserve banking - its ability to increase the money supply , a "myth" though - on that at least , Jazz is quite correct.
Blagsta
Minimum cage, maximum cage
Eh? Its £90 loan for £100 deposit with a 10% reserve.
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