Bank of England Ignites Quantitative Inflation

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By Nadeem Walayat
The Market Oracle
2009 Mar 05, 2009 – 04:30 PM

Economic Shock and Awe as Interest Rates are cut to 0.5% coupled with £75 Billion conjured out of thin air by Mervyn King Waving his “Central Bank Magic Wand”. The government through what should be more accurately termed as “Quantitative Inflation” than “Quantative Easing” sanctioned £75 billion in the initial print run which will have a multiplier effect through fractional reserve banking and leverage of anywhere from between X10 to X20 the amount depending on how it filters through the economy, therefore £75 billion increase in the money supply implies the supply of credit should jump by anywhere between £750 billion to £1.5 trillion, but more probably in the region of X10 at £750 billion over the next few months, with expectations of several more doses of “Quantitative Inflation” during 2009 that seeks to devalue the British Pound towards parity to the U.S. Dollar.

UK Interest Rates

Frankly interest rates being cut from 1% to 0.5% makes little if no positive difference to the economy as the problem is the lack of credit and not the level of the base interest rate, if anything it further reinforces the fact that Monetary Policy has Failed, therefore the government may have been wiser to have left interest rates at 1% which would have sent a stronger message out to financial markets rather than look here. We have panicked again and cut to 0.5% ! 0.25% Next, then what ? The end of monetary policy that’s what! I would be surprised if rates were cut again, but with the lack of competent decision making I am afraid it remains a distinct possibility.

[…]

via Bank of England Ignites Quantitative Inflation :: The Market Oracle

h/t: Global Research

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Retirement plans of millions of Britons at risk after Bank of England ‘prints money’

Dandelion Salad

By Edmund Conway Economics Editor
Telegraph
Last Updated: 10:35PM GMT 06 Mar 2009

In a mere 24 hours the size of the pension deficits facing some of Britain’s biggest companies has jumped by around £100 billion to a record £390 billion – the equivalent of over £150,000 for every member of a final salary scheme.

The increase is a direct result of the Bank’s announcement this week to create £150 billion and pour it directly into the financial system, experts said.

The ballooning deficits sharply increase the chance that a swathe of companies shut down their pension schemes – not only for future employees but for those already paying into them.

It sparked further criticism of the authorities for endangering the financial future of Britons’ savers in their efforts to bring the financial crisis to an end. The Government and Bank have already been accused of obliterating the incentive to save by slashing interest rates on savings accounts and visibly attempting to stoke up high inflation in the years to come.

[…]

via Retirement plans of millions of Britons at risk after Bank of England ‘prints money’ – Telegraph

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The Bottomless Bailout by Ralph Nader

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by Ralph Nader
The Nader Page
3.6.09

Does anybody in the federal government know or could know “who, what, where and when” of the massive, complex, vertical, horizontal, global collapse of Wall Street and its planetary tentacles in over 100 countries abroad? Step forward if you exist! Uncle Sam needs you!

Is the multi-million dollar bailout of this financial mess and house of cards, this phantom wealth mummy hitting air beyond the federal governments’ salvage capability?

It is relatively easy to announce hundreds of billions of dollars of corporate rescue programs here and hundreds of billions of dollars of guarantees of corporate recklessness there and trillions of dollars of assorted stimulus, loan availabilities and foreclosure prevention initiatives in all directions. Now comes the rubber hitting the road.

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The U.S. Financial System Is Effectively Insolvent by Nouriel Roubini

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Nouriel Roubini
Forbes.com
03.05.09, 12:01 AM EST

There is a grave risk of a global L-shaped depression.

For those who argue that the rate of growth of economic activity is turning positive–that economies are contracting but at a slower rate than in the fourth quarter of 2008–the latest data don’t confirm this relative optimism. In 2008’s fourth quarter, gross domestic product fell by about 6% in the U.S., 6% in the euro zone, 8% in Germany, 12% in Japan, 16% in Singapore and 20% in South Korea. So things are even more awful in Europe and Asia than in the U.S.

There is, in fact, a rising risk of a global L-shaped depression that would be even worse than the current, painful U-shaped global recession. Here’s why:

[…]

via The U.S. Financial System Is Effectively Insolvent – Forbes.com

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

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