UK interest rates lowered to 0.5%

Now if the GuvernMint was to double Old-Age pension we would definitely spend it! All this Quantitative Easing (lets call it PM for short) will just end up on the bankers balance sheet.

R.

yebbut, even if the govt. did give the money to people, and they spent it, it wouldn't help much. The UK doesn't make many things that people want to buy, so it would go "out the door" on imported goods.

What committee designed the term Quantitative Easing for printing money? The same one that though up Special Rendition for torture?

Rob Graham

Isn't it a pity they don't introduce the money into the economy by adding

Bound to encourage more almost immediate liquidity - most people are spenders not savers anyway, surely?

They could even tie it in to ID cards if they wanted a double whammy - sign up for an ID card, get £1000. How could it go wrong?

Plenty of people would simply use it to pay off debts.

So what? That's irrelevant. There are basically only three things you can do with money you've been given, you can either spend it, or save it, or pay off debt with it (or just give it to someone, in which case we consider the donee instead).

If you pay off debt, then the person to whom the money thereby goes can, in turn, do any one of the aforementioned three things with it. If he pays off debt with it, it will go to someone else, and so it goes from person to person until it eventually reaches someone who doesn't pay off debt with it. The end result is that in effect there are really only two things you can do with money, namely spend it or save it.

I agree. So you pay your bank £1,000 that you owe them. They just say: "Great, we got that loan paid back". They don't rush out and lend it or buy a printer with it. They'll most likely repay the Bank of England.

But... that's one person/family with no debt. So they spend more.

And that won't apply to everybody anyway - I know a lot of people who would just spend it, regardless of current debts.

Debt is a 'sometime in the future' thing. £1000 in the bank is a 'hey let's have a party' thing.

At least for enough people that the consumer economy would get a good kick in the rear...

Exactly. A debt-deflation is the economy's way of telling such people that the future just arrived and the piper wants paying.

FoFP

Wrong again. There is only one thing that you can do with money and that is to spend it. Saving it is only a temporary measure.