It's right there in black and white, I responded at 10.37 am after I had listened to - like I said - around 20 minutes. Your response straight after was to ask if I had listened; to which I replied (@1.58PM) yea around 20 minutes this morning. How can this possibly be confusing you, seriously ? Can you comply to the forum rules or not regards posting links. It would be nice if you were going somewhere with this other than wasting peoples time. Thanks.
From the link "Moreover, the influx of cash has inflated the price of assets, and led to a relative widening of the gap between rich and poor, which now threatens to upset our economic and political order. Even QE's deliberate objective to lower interest rates has also served to make homes and shares more expensive, while those already holding such assets have seen the greatest benefit. Britain's own 'Magic Money Tree' might have saved the economy from meltdown almost a decade ago, but it seems its many side-effects might have been far less beneficial."
By misreading an AM as PM of course! sorry about that! I think the entire podcast was relevent, and I did write a small section which summed up the main points, if Mods ask me to change It will, but your not a Mod....... Ps is it just me that feels this tension between us..... Do you need a hug??
lol, if you're still not sure, yes I did listen before I responded. I got bored waiting for how it related to property or housebuying. But it was nothing new to me anyway! QE being the provider or catalyst for cheap money is something I have mentioned several times in previous discussions on MAP. Seeing as the podcast wanted to make a point about "the magic money tree" and you also mentioning spending on infrastructure.. I'm led to believe that you are falling for BBC propeganda, you wouldn't be the first. So either say something to the contrary, or confirm my suspicion. If you wouldn't mind that is.
Whilst I'm sure house prices rises have been helped by this, the main reason behind property rises is the economic rent for land value. All those years before; the property market rises had nothing to do with cheap money. Cheap money is just really more fuel on the fire to an already rising market, but it's easy to miss that. Don't forget there was a really decent crash to recover from. Not to mention huge financial instability.
Since you asked so nicely, What point do you feel is untrue/propaganda? I think that certainly we can do better in terms of government policy, and that austerity policies are generally not the cure all the tories have pretended them to be. For a source of why I think austerity isn't the entire answer _ Austerity policies do more harm than good, IMF study concludes
Why did you mention spending on infrastructure other than as an alternative to the QE program, and why do you think the BBC chose to use that magic tree phrase from May in this context ? It smells 'wrong' to me, and or leaves a certain impression but if you can join the dots it might help. Or not, who knows anymore..
If you had just posted the contextual take away you had in mind with the link people wouldn't have to guess or get the wrong impression would they.. Like I said those are the rules I believe, I didn't make them.
Also, whilst I agree with you regards 'austerity', it's hardly an excuse for a massive spending spree. And it's very very far from being an either or proposition.. Surely your alternative involves a huge amount of spending. No/Yes? That it's with money we create ("magic up") through our CB, should be more serious cause for concern, not less. Or to be used for cheap point scoring like so much is these days.. I'd rather we raised the money conventionally, either taxation or Gov. Bonds.
In the end ten minutes of the podcast, there's an interview with the bank of England, who explain that QE as is, is a very blunt tool, and that there's a good argument for a national investment bank or infrastructure spending paid for by QE instead, but it's not within the Bank of England's remit to this, it would have to come from Government itself, which is why I mentioned it. The reason they used the term, is that may has very publically been called out for using it incorrectly, QE is a form of creating money from nothing, there are consequences, but it does exist, and as its currently used, Its not very efficient. If we're going to do it, maybe we should look at tweaking it.
Thanks for the response. Interesting reply/opinion. How high would you say the interest rates could potentially go over next 10 years? Also, after the two year slowdown, how long is the 2nd half of cycle? How big a crash could there be at the end? Obviously, I'm not asking for financial advice, just looking for different opinions on the matter!
Fair enough. Remember though, all new fiat money is created from nothing essentially - that part is nothing new. It's really a modern form of turning on the printing presses, only rather than going directly out to the public it get's pumped through financial instituations through that bond buying exercise. In the outset it was really a liquidity measure. The more of something that you have (higher supply) the cheaper it will be. We literally got the point of talking about negative interest rates! The remarkable thing is that we are still living with and talking about emergency measures from so many years ago. One of the effects of circulating("printing") more money is devaluation, but QE was as much a global exercise in many ways. 'Helicopter Money' as it's been dubbed could be something, but like QE, it might have consequences we don't particularly like. It would be another experimental leap into the unknown in a lot of ways.
The cycle is about 18 years. 7 years, 2 years slowdown another 7 years then another 2 years 'corrective phase'. That's all 'roughly'. It does look like rates will firm up, but that's a super difficult question: Central Banks around the world have shown that they are prepared to cut and keep things low for as long as it takes for economies to be able to sustain it. Like I was telling the other guy, the financial system can scare the life out of you. It's so complex that crisis like the last one can stay almost hidden untill it's ready to almost break the system. It's like thinking about that bit of snow that finally sets off the avalanche, you just don't know when or where it will be. But what you do know is that the danger is there building away in the background. The strategy of the Central Banks is (has been) basically one of inflation, as inflation has the effect of making your debt smaller. We're living in a credit based world the likes of which were probably beyond our imagination 30 years ago, the growth has been that dramatic. Basically, I don't have any idea where rates will be in 10 years ! I'm hoping for a slow and steady rise to at least 3-4%, maybe 5%. That would represent a 'nice' normalisation. I found a few links though talking about the land/property cycle: land value cycle - Google Search
Something else to consider.. If we're concerned over rising land/property prices and understand how that works through economic rent, then spending a shedload of cash on "infrastructure" is about the surest and most direct way we know of that increases land/ property values in a given area/ location. How exactly that money is raised or 'found' would be pretty immaterial.
EdiSco I said: 7 years, 2 years slowdown another 7 years then another 2 years 'corrective phase'. That's how I recalled it.. But looking at one of those links the recession phase lasts 4 years end of the cycle. I knew it was some configuration of 14/4.. but was mistaken to allocate 2 years to the mid cycle slowdown/ dip.. This link Understanding the 18-year property cycle | Property Geek Has it as 1-7 the recovery phase and between this and the next is the mid cycle dip; then proceeds the explosive phase years 7-14. As I recall the last recession phase was 2008-2012, the dip is due around 2019.. and then till 2026 there should be an almighty melt up.. Next recession due 2026-2030. This is also a good background read The Boom/Bust Cycle
Looks interesting...the pattern HAS been repeating itself for the last 200 years! Good info. cloudz! Thanks.
