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| Monetary Easing 'Rob from the People to give to the Banks' |
"The Bank of England and the UK Treasury have revealed plans for a £100 billion support program in order to stimulate British banking to provide cheaper loans during the time of recession.
British Chancellor George Osborne explained the emergency plan, called “funding for lending” scheme, requires the Bank of England to provide cut rate lending to banks in order for them to pass on the lower interest rates to customers.
Osborne pointed out the scheme was developed in order to avoid a possible credit crunch and higher interest rates in Britain, as the banks are reluctant to lend at the time of economic uncertainty. The plan could secure an £80bln in loans to businesses and households within weeks, according to the Chancellor.
He also warned that British economy should rely on tight fiscal policy and active monetary policy in supporting its economy, while “things could get worse before they get better” in the eurozone with a probable Greek exit.
Meanwhile the Bank of England Governor Sir Mervyn King raised hopes on a new round of quantitative easing, saying that “the case for a further monetary easing is growing”. On Friday the Bank of England starts pouring £5bln a month into British banking to boost its liquidity."There is something of a lie hidden within this article, firstly where exactly is this £100 billion coming from? Is it from some previously unexplored vault beneath Westminister? A kind philanthropist who took pity on the poor nation of Britain? A white knight riding to Cameron's rescue?
I suspect it is from the printing press... Just a few weeks ago their Bosses in the White House were saying that England will need to put money into the "system" to simulate growth and naturally the servant has obeyed it's master.
This is 'monetary easing'. Why then does the Bank of England Governor proceed to state that “the case for a further monetary easing is growing” whilst the Chancellor states that monetary easing will continue at a rate of £5 billion per month for the next twenty months? Confused, you will be.
Apr Mar Feb Jan Dec Nov Oct
Country 2012 2012* 2012* 2012* 2011* 2011 2011
------ ------ ------ ------ ------ ------ ------
China, Mainland 1145.5 1144.0 1155.2 1166.2 1151.9 1254.5 1256.0
Japan 1066.1 1076.3 1085.4 1082.8 1058.0 1066.8 1006.9
United Kingdom 154.2 121.9 116.1 114.1 111.7 124.9 106.8
The above chart courtesy of the US Treasury shows that whilst China has cut it's holding of US treasuries by some $100 billion, the slack has been taken up by Japan and the United Kingdom. Of course the US has issued a total of $250 billion of new debt in this period.
If the total assets in the world can be expressed as having a value equal to the total supply of money in the world and the total supply of money in the world increases by 10% then the value of the world's total assets when expressed in monetary terms increases by 10%, but clearly the actual value of assets never changes and the value of money decreases.
This is inflation. It is happening before your very eyes, the government is not hiding it but proclaiming it.
What does it mean for you?
The value of your salary, savings and pensions is decreasing. Every time your house does not go up 10% in value, you are losing some of your wealth.
The UK government has decided that it is more important that the banks do not have to recognise their bankruptcy than you be allowed to retain whatever value you currently hold. The banks appreciate your sacrifice!
What does it mean to me you ask?
ReplyDeletePerhaps you could explore the maths from the Jersey perpsective more fully - after all Jersey people are not contributing directly to any of these huge loans directly although presumably borrowing from banks trading from Jersey will be eased by these huge sums. So where does that leave Jersey's morality - in the same old s**t hole I suppose.
We take the money and benefits from the rest of the world - especially the UK - and still moan and moan about the British government when it tries to close down our tax loopholes and evasion schemes.
So come along Darius - put the economic microscope on this particular little economy and tell us whether the finance houses here are coining it at the expense of others - yet again!
Ok, that is going to take a full post to answer.
ReplyDeleteIt doesn't actually you are just operating on flawed assumptions:
ReplyDelete1) That this money will be lent out to people and businesses, which it will not, it is simply to shore up bank balance sheets and buy US treasury bonds to shore up the US sovereign debt crisis. Believe it or not the UK government is every bit as deceiving as the Jersey government and is probably more so.
2) That the Jersey Finance Industry matters. It is not what accountants would term 'significant' in the grand scheme of things.
3) Narrowing our view to just Jersey itself, the finance industry pays for our government, so if we were to look only at Jersey, then the finance industry can only be viewed beneficial as it is the only thing preventing us from having to pay 80% tax, which is what the States of Jersey would require without it. The issue within Jersey is that the government is too big, too inefficient and vastly over-paid.
The problem therefore is that when the finance industry collapses, what is the States of Jersey going to do? 80% of the population are utterly dependant on the government, who is going to feed them?
Stop wriggling Darius - just lie on your back and admit your gratitude to the taxpaying publics of the UK and so many other countries who are propping up international finance and banking and as a result this miserable little community can survive. In other words express some thanks for their generosity no matter how misguided it might be in a global sense.
ReplyDelete