to think we should be angry about qe making the rich richer and poor poorer

[alittlethyme]

Why isn't there public uproar about qe? It has proved again and again to make the asset rich people richer while making everyone else poorer.

So why should a landlord living in Devon be paying council tax for a property in Kent? Tenants always pay the council tax on a property, to say otherwise makes no sense at all.
Because that newly surfaced road, additional bus stop better play facilities in the area increased the value of the landlords property.

Is it right that if I had enough money I could buy all available free/for sale properties in the country, massively cutting off the supply chain and driving up costs. Then sit on these properties renting them out at increasingly high rates to people who my investment strategy priced out of the market. Whilst the council tax that my tenants pay is used to make the local area more attractive, which again increases the value of my investments, (in the mean time I've contributed nothing to my investment, just sat and watched the suffering of others add to my wealth.)

Rational thought and analysis ('thinking slow') requires cognitive effort.
knee jerk' (thinking fast') is the default option unless we train ourselves otherwise.
even then if we are afraid and stressed our cognitive capacity and therefore propensity to think things through is reduced.
Politicians and the media use rhetoric to engage our knee jerk responses the better to manipulate us

We're not all socialists but people still want the police, fire service, NHS, street lighting and other things that we pay for for the good of society

Meh, I feel politicians only care about and say things that they think will make people vote for them anyway. Lots of things can be spun to make them say whatever you want them to. I'm quite disillusioned with the whole system.

In the 60's/70's The company director earned more that the shop floor staff but it wasn't as disproportionate as it is now. This is what needs to be addressed. The profits aren't being shared. We need to get better pay. I don't know much about economics but I am interested in its effects. This thread is an eye opener, even as a lay person I couldn't work out why quantative easing was being used. Seems an obvious long term mistake.

Exactly notaunique, no one becomes rich entirely by their own efforts much of what they have depends on the existing infrastructure and institutions which have been collectively built over long periods of time

Because we're not all bloody socialists

^^And there it is, the belief that everyone questioning the status quo are all radical leftys that should should be kept at length with a shitty stick

even as a lay person I couldn't work out why quantative easing was being used.
If they question is why QE? then the answer appears to be, "ran out of other stuff to try."

If the question is whether QE is a good idea? (individually) it depends on your circumstances...

If you have debts, (arguably yes, QE is good, you are advantaged by inflation and QE will help drive inflation, Since the real term value of money is eroded over time)

If you have savings (arguable no, QE isn't good, since inflation outstrips interest rates, your money looses value faster than it appreciates.)
(most banks are paying interest at less than 2%, but the aim of QE is to drive inflation at 2%.)

If I have £50 right now, then I can buy 50 loaves of bread. (breakfast of toast for a year!)
in ten years inflation at 2% will have driven the cost of a loaf of bread to £1.20, but interest rates being 0.5% will have driven my money pile to £56.60
Now I can only afford 34 loaves of bread (no breakfasts after august)

the analogy of no breakfasts in winter is particularly good since it's pension savings that suffer the most from this policy of driving inflation above interest rates and thus devaluing savings, essentially taking away provisions set for the winter of our lives!

Making saving for the future, or at all not worthwhile means that you may as well spend what you have today, it feed nicely in to a consumer driven economy.

nota Ah I see what you mean is it a question of how much qe then do you think? If a small controlled amount helps in the short term it won't impact the long term but if it gets out of hand the consequence will indeed impact later? Very interesting thread!

Ah I see what you mean is it a question of how much qe then do you think?
Sadly I work in IT, not economics, it means I've got plenty of time to play on forums, but can't offer a real working solution.

Like most people on here I have Children...
So... I'd rather take a hit now, up to and including a hit that disadvantaged me. (i.e increased the real term value of my debts) rather than sell off my child's future. (because lets face it, they will be the ones paying taxes to make up for a pension shortfall.)
The borrow today and repay tomorrow ethics of government used over the past (30?) or more years is what's gotten us into the situation that 48 billion pounds a year (almost half the what we have to borrow to balance the budget) is spent making "the national debt" repayments. (that's quite aside from personal finance debt repayments!)

For me, ideologically, any amount of QE is too much.
Practically, I've got a lot of debts, and deflating the economy would cause the value of that debt to rise, possibly trapping me for life...

So I'm left with let the fat get fatter, and hope they choke some scraps fall my way.

Thanks for explaining, I am definitely going to look into this more. We are also trying to cut down our debts and get some savings built up. The recession may be over but it is still scary times for those of us in the 99%

MissYamabuki I don't think we ever had nominal wage deflation, "only" real wage deflation . That's bad for everyone's standard of living but it won't kill demand stone dead in the same way as nominal deflation i.e. everything getting cheaper. When people expect deflation, they put off buying things, and you get a recession.

lois, nota, totally want to muscle in on your convo...

The way QE is supposed to work is to increase demand, through a few channels:

1. It makes more money available to the banks to lend (because the money is released into the economy by the Bank of England "printing money" and using it to buy debt off the banks) so they can offer more mortgages, loans to businesses etc. This hasn't really worked, as the banks are really risk averse now and also because not many people want to start a new business. The mortgage side of it did work, giving us a house price boom (great, just what we needed).
2. Because the banks can get access to all this funding, they don't have to pay much for your savings, so interest rates are really low meaning it's less worth to save.
3. Because there is a bigger supply of the currency, the price of the currency - the exchange rate - goes down. So exports are cheaper, and imports are more expensive. This means more foreigners will buy our products and we will buy fewer foreign products (and probably will substitute some local products instead).

If it works, demand will increase and then the inflation rate will start to pick up on its own. Then the Bank of England can raise the base rate/undo some QE and retail bank interest rates will come up. Then savers will be a bit better off.

The way I think about it as regards savings is that your savings are basically a loan to someone else for a mortgage or a business. The economy's so slow at the moment that businesses don't have anything useful to do with your money so you can't make any interest.

As regards do I like QE... I'd like it a lot better if it did what it was supposed to! While nobody is interested in investing, it's like pushing on a piece of string.

3) Because there is a bigger supply of the currency, the price of the currency - the exchange rate - goes down. So exports are cheaper, and imports are more expensive. but surely this can only work whilst everyone co-operates and allows it to work?
We want to export to Europe, so we QE in the UK and drive our currency down, and great it's stopped recession, (or so we're told) except people in Europe want to remain "rich and exporting" too, so they QE too. driving their currency down against ours, meaning that our export partners no longer want to import our exports. so we QE a bit more in the hope that we can drive the pound down against the Euro and import less from them and have them buy more of our exports. but because we're buying less the QE a bit more too...

If the winner of the game is who can print the most money then I predict that Russia (Siberia forestry) or Brazil (rain forest) will win, simply because they have the most resource to make paper in order to print money on!

nota spot on. We would have all saved ourselves a load of time in Europe and the US if we'd just drawn an extra zero on all the banknotes.

Switzerland have just stepped off this particular merry go round and I don't think it will be long till we start feeling the pain.

Wow NOTauNIQUE thanks for the lesson in tax revenue and spending 101. First of all I have read the article you linked to and many others like it and I have an economics degree so can readily understand things like 'numbers' but as for your long explanation, so what??

My general premise was just a tangent re QE---that the public don't seem to be up in arms about our debt either and get irate if the govt talk about cuts because the public are used to a level of service that is now no longer sustainable. I used the example of the welfare bill because it is massive and the fact that it is as much as income tax revenue - sorry it is not £86m but thx for your creative accounting - is shocking. But making a statement such as mine on MN is always deemed heresy and 'nasty' which merely illustrates my point that the public don't want to engage in discussions about public finances because they want the govt to keep on spending like lemmings to preserve a life we can't, as a country, afford. Even if we were to gather more corporation tax! The debt should be the major priority for the govt and at the next election but it won't be will it?