Coronavirus (OLD)

[downquark1]

Originally Posted by jfman

That's not how quantitative easing works. It may be the case that the money does need removed at a later date however there's no guarantee it would. You are another one confusing macroeconomics with your household budget.

Even if the money did have to removed from money supply - there's strong support for the lockdown. Would people be willing to may minimal amounts of increased tax or VAT over the next 5-10 years to literally support themselves now for a mere few months? A move that would protect employees, protect small businesses and leave the economy better placed to bounce back?

Of course they would. However nobody wants to raise the question of tax reforms when the human price of underfunded public services is so prevalent on their TV.

I would put money on there not being any tax rises when it reopens. The demand for things is going to be very low and they will be wanted to get people spending again. It is not going to be as simple as borrowing money to pay back.

[jfman]

Originally Posted by downquark1

I would put money on there not being any tax rises when it reopens. The demand for things is going to be very low and they will be wanted to get people spending again. It is not going to be as simple as borrowing money to pay back.

Short term I agree. The economy needs stimulated, but that means keeping people in work, protecting small businesses and giving people security to get through the crisis.

While the health crisis is about 'flattening the curve" the economic response is about "sharpening the V". The quicker the economy goes down, the shorter timescale that it needs supported and by protecting incomes, jobs and businesses the quicker it recovers.

Otherwise we just have a recession that drags on for years because 'household budget capitalism' can't simulate the recovery required.

[GrimUpNorth]

Originally Posted by Hugh

Using the Government COVID alert scale of 1 to 5, and using the formula

COVID alert level = R (rate of infection) + number of infections

We are at a COVID alert level of between 223060.5 and 223060.9...

From that equation a quick bit of algebra tells us that R(rate of infection) = Covid Alert Level - number of infections

So according to Borris we're moving to alert level 3

So R = 3 - (approx) 226000

So R = approx -225997

Quite a bit below the target of 0.5 to 0.9

[Carth]

Originally Posted by GrimUpNorth

From that equation a quick bit of algebra tells us that R(rate of infection) = Covid Alert Level - number of infections

So according to Borris we're moving to alert level 3

So R = 3 - (approx) 226000

So R = approx -225997

Quite a bit below the target of 0.5 to 0.9

I'm too old to remember much algebra, but pretty sure some of it being in brackets alters the working of it

[jfman]

BODMAS!

brackets ofs divide multiply add subtract.

[Pierre]

Originally Posted by RichardCoulter

It was on TV last night that the money that we borrowed from America to fund WWII didn't get repaid until 2006.

Your point being?

---------- Post added at 20:53 ---------- Previous post was at 20:36 ----------

Originally Posted by jfman

That's not how quantitative easing works.

Well it sort of is, as the BofE purchases government bonds to pump in the cash into the economy, those bonds must have a return for the BofE, eventually, or the BofE goes out of business.

It really is amazing that you think money is “free”.

Increased risk of inflation. But granted inflation has not been an issue for over a decade, but this is a different issue to 2008 so we have to remain “alert” on that.

You are another one confusing macroeconomics with your household budget.

You’re confusing QE as magicking money and not having to pay for it..........you do.

[mrmistoffelees]

Originally Posted by downquark1

I would put money on there not being any tax rises when it reopens. The demand for things is going to be very low and they will be wanted to get people spending again. It is not going to be as simple as borrowing money to pay back.

https://apple.news/AXOJ0kGp_TV-F14TFJJz2sw

[jfman]

Originally Posted by Pierre

Your point being?

---------- Post added at 20:53 ---------- Previous post was at 20:36 ----------



Well it sort of is, as the BofE purchases government bonds to pump in the cash into the economy, those bonds must have a return for the BofE, eventually, or the BofE goes out of business.

Oh dear. And here's your fundamental misunderstanding of macroeconomics. A Central Bank simply isn't a business.

It really is amazing that you think money is “free”.

Increased risk of inflation. But granted inflation has not been an issue for over a decade, but this is a different issue to 2008 so we have to remain “alert” on that.

You’re confusing QE as magicking money and not having to pay for it..........you do.

I think you'll find that you continue to fundamentally understand the subject matter.

It's not surprising, as right wing political parties have for ideological reasons sold the myth (and you have unquestionably bought said myth) that national economies and household budgets are essentially the same. They are not. However it's an easy sell to people who don't understand the subject matter, and a prelude to selling off the profitable functions of the state while leaving the taxpayer to fund the unprofitable bits and underwrite losses where the market fails.

I'll stick with Comrade Rishi here. And literally it's the first time in my life I've agreed with a Conservative Chancellor about anything.

[Sephiroth]

What the country must pay for is the deficit due to borrowing. Nothing to do with QE.

As far as I am concerned, QE is an off-balance sheet exercise with essentially zero sum gain. You can read about it at: https://www.bankofengland.co.uk/-/me...ance-sheet.pdf

[Pierre]

Originally Posted by jfman

Oh dear. And here's your fundamental misunderstanding of macroeconomics. A Central Bank simply isn't a business.

Ok, I’ll break it down for you. Government bonds have to repaid. Yes or No?

[jfman]

Originally Posted by Pierre

Ok, I’ll break it down for you. Government bonds have to repaid. Yes or No?

Exactly the kind of obfuscation I've come to expect from you, Pierre - is the Bank of England a business - yes or no?

I will now note the absolute lack of response to my post the other evening which I will quote now:

Originally Posted by jfman

I fail to see how I can reasonably be accused of lacking vision when I’ve correctly identified a number of variables for any successful risk assessment.

There’s no obligation to try to unfurlough workers as soon as possible - that’s simply your personal preference in the matter principally because of your political ideology. For some businesses opening up will remain not commercially viable for the foreseeable - in these cases unfurloughing staff “ASAP” as you put it would make no commercial sense and actually would leave some company officers in breach of their legal obligations in respect of foregoing Government assistance and incurring needless losses.

Great business owners and entrepreneurs know state hand outs are a great idea instead of them taking losses themselves.

I think you lack vision in this regard.

Have you had enough time to consider a response to this yet?

I'd call you a junior economist but for the fact I'd not discredit novice economists and I'm doing my best to stay in this thread.

[Sephiroth]

Originally Posted by jfman

Exactly the kind of obfuscation I've come to expect from you, Pierre - is the Bank of England a business - yes or no?

I will now note the absolute lack of response to my post the other evening which I will quote now:



Have you had enough time to consider a response to this yet?

I'd call you a junior economist but for the fact I'd not discredit novice economists and I'm doing my best to stay in this thread.

Hmmm!

[jfman]

Originally Posted by Sephiroth

Hmmm!

We've even agreed!

Pierre appears to however throw around insults here and there, selectively quote posts and then wilfully misinterpret them. I'm only asking him to respond to points made in full rather than cling in desperate hope to a single sentence in a much wider point.

[Stuart]

Guys, please calm down.

[Sephiroth]

Originally Posted by jfman

We've even agreed!

Pierre appears to however throw around insults here and there, selectively quote posts and then wilfully misinterpret them. I'm only asking him to respond to points made in full rather than cling in desperate hope to a single sentence in a much wider point.

He doesn't have to respond. I don't want you banned given we're having each other's babies!

There's no doubt that Coronavirus will cost us dear when the virus is no longer a threat QE has little to do with that other than any borrowings made by the bank to finance liquidity would be repaid from increased taxes etc.