Why cant we just print a load more bank notes and share them out

[paulatky]

Genuine question to which I have never really understood why not

[FactualFrank]

That would simply spread the value of the existing goods and services.

If everyone has more money, prices go up instead. And people find they need more and more money to buy the same amount of goods.

[Bosscat]

Genuine question to which I have never really understood why not

Google these

Germany 1923...

Zimbabwe 2008...

[IanMcL]

Government can enforce a price freeze! They did, back in the day. Mr Callaghan or Mr Healey, from memory.

[Steve1956]

That would simply spread the value of the existing goods and services.

If everyone has more money, prices go up instead. And people find they need more and more money to buy the same amount of goods.

Just print more and more money Frank...

[TVC15]

Government can enforce a price freeze! They did, back in the day. Mr Callaghan or Mr Healey, from memory.

Was that the “winter of discontent” in the late 70s ?
The world is a very different place now - as in the way people buy & sell goods etc.
As for the OP the simple answer is supply and demand and the direct correlation to price.

Things like quantitative easing where we are actually seeing measures from the government and more will be no doubt announced in the coming days / weeks are kind of “printing money”....without the physical bit of actually printing more bank notes. They are there to make more money available to consumers and SMEs etc whether it be through taxes, reliefs, cheaper and easier borrowing, delaying payments etc etc

[levraiclaret]

By the time the billionaires, bankers and flat taxers had taken their share there would be none left for the poor.

[IanMcL]

This is the Spring of Discontent!
Where's my football?!

[2 Bee Holed]

Now I thought we did this in the aftermath of the financial crash in 2008.
It had a posh name though, wasn't it
'Quantative Easing' ?

[ralphdpomeroy]

Genuine question to which I have never really understood why not

Mmm I've just done a lesson plan on the Weimar Republic and Germany during the interbellum
...printing money I would advise against

[Gordaleman]

Now I thought we did this in the aftermath of the financial crash in 2008.
It had a posh name though, wasn't it
'Quantative Easing' ?

And I believe we'll be announcing more of it today. The Chancellor is joining the PM for today's statement.

[KateR]

while a simple question not a simple answer, except to say it doesn't work, been tried before, so many variables.

[Claret-On-A-T-Rex]

while a simple question not a simple answer, except to say it doesn't work, been tried before, so many variables.

When? Why didn't it work? What variables?

[Fretters]

The more you have of something, the more worthless it becomes.

[KateR]

do you want War & Peace or are you trying to score points again, read the thread, go google what was advised and then come back and tell us all why it will work and what variable we all have to look out for and avoid.

[AndrewJB]

Mmm I've just done a lesson plan on the Weimar Republic and Germany during the interbellum
...printing money I would advise against

The Germans brought about inflation to deflate their war repetitions.

Printing money can stimulate demand when there’s deflation.

[AndrewJB]

The Germans brought about inflation to deflate their war repetitions.

Printing money can stimulate demand when there’s deflation.

War reparations

[yorkyclaret]

You can, but when caught you can expect about 15 years.

[ralphdpomeroy]

War reparations

Yes that is one interpretation...

I was hinting at the possible result more than the cause

An extreme example I concede but nonetheless there it is ...

[Spiral]

Business rate holidays aren't sufficient. Businesses are going to need interest free loans and the govt will need to guarantee these loans so banks are solvent enough to actually make those loans. Massive financial market stimulus might counteract the mass sell-offs we're seeing, but this is different from the 2008 crash in important ways. The 2008 crash came about because of bad investments which tumbled because of mis-sold financial products becoming untenable and unsustainable (mortgage tranches were fraudulently rated, the house of cards collapsed). This impacted the corporate sector, resulting in insolvency which caused ripple effects on the 'real' economy. Basically, the financial sector dragged the bread and butter economy down.

This crisis is different because the a pandemic has caused the world to be flipped upside down which is causing massive supply-side shock, to use economic language, which basically means things aren't getting made or sold. Factories closing, businesses no longer able to provide services etc. The demand side shock - nobody wants to buy anything - comes from redundancy and lack of consumer confidence which impacts business profitability and thus the financial markets. So the real economy and the financial markets are pulling each other down. The biggest economic danger is a deflationary spiral.

How to counteract this? Incrementally, basically, firstly by assuaging market fears by injecting money into the system: quantitative easing, as mentioned above, where the central bank of a country buys crap financial products that investors (banks) can't sell or make money on. The intension is for govt to sell those crap products back at a later date, but the immediate impact is that banks get new money - hopefully some of this will be loaned out to smaller businesses.

But, what if this doesn't stop the rot? To answer the OP's question, the theory of giving money away is sometimes described as helicopter payments, where the govt just writes a cheque to every adult citizen with the intention of it being spent on the basics to keep businesses afloat. This, theoretically, is done is a time of deflation (which we'll see within months), where the markets - financial and real - runs away from themselves and intervention is required to stop the world resorting to a barter economy. The theory was initially invented by American economist Milton Friedman, gained a revival during the 2008 crash by former governor of the board of the US Federal Reserve, Ben Bernanke (a republican), and has even been suggested this week by former republican presidential candidate, Mitt Romney. Essentially, the market has run out of tricks, and it may soon become a reality that this is the only way of preventing an outright crash of the global fiat money system.

[Gordaleman]

https://moneyweek.com/503370/money-prin ... -a-disease

[bob-the-scutter]

There'll be nothing to spend it on anyway!

[AndrewJB]

Yes that is one interpretation...

I was hinting at the possible result more than the cause

An extreme example I concede but nonetheless there it is ...

You might enjoy this novel, if interested in that history:

https://en.m.wikipedia.org/wiki/Wolf_Among_Wolves

[Spiral]

In answer to the question the OP asked, the Chancellor Rishi Sunak has basically just suggested in today's briefing that it's a possibility, following a question in reference to the ideas being suggested in the US. The logic of first shoring up employment as a priority goal is sound, though.

[ralphdpomeroy]

You might enjoy this novel, if interested in that history:

https://en.m.wikipedia.org/wiki/Wolf_Among_Wolves

Thanks I'll have a look at that

[tarkys_ears]

This isn't a financial crisis.

The money is there, unlike back in 2008/9.

Think of it more like a war economy, how it'll end I don't know but the wheels are turning for most business. I just hope the boozers and family run places get the help they need to make it through alright.

[TVC15]

This isn't a financial crisis.

The money is there, unlike back in 2008/9.

Think of it more like a war economy, how it'll end I don't know but the wheels are turning for most business. I just hope the boozers and family run places get the help they need to make it through alright.

Is this a serious post ?
There is a worldwide financial crisis.
The money is not there at all. Have you checked the level of debt that Trump and his cronies have lumbered on their economy in his pathetic attempt to con his dumb red neck supporters ?

Are you watching any of the news at all ? The economic impact of this will be felt for many years to come and will he felt by everyone.

[IanMcL]

Money being printed, as we type.

[tarkys_ears]

Is this a serious post ?
There is a worldwide financial crisis.
The money is not there at all. Have you checked the level of debt that Trump and his cronies have lumbered on their economy in his pathetic attempt to con his dumb red neck supporters ?

Are you watching any of the news at all ? The economic impact of this will be felt for many years to come and will he felt by everyone.

yawn

[mdd2]

Government can enforce a price freeze! They did, back in the day. Mr Callaghan or Mr Healey, from memory.

Sometime after Mr Healey had to cancel a trip abroad whilst at the Airport to come back to London and get IMF to bail us out with a large loan and demands to change economic policy.
All this money needed to deal with Covid-19 may stoke up inflation later unless we are able to rein in the spending later as the economy picks up and companies and folk don't milk the system.

[TVC15]

yawn

You won’t be yawning when you get sacked from your paper round

[mdd2]

He could make a small fortune from his newspapers if he cut them up and had a few nails

[Tribesmen]

Funny when i come to think of it as i spent a year in Israel in 84 and inflation was running at around 400% , i headed to Greece and was shocked that i paid the same price for a item a couple of days apart .
Just shows you get used to things going up every day .

[AndrewJB]

Is this a serious post ?
There is a worldwide financial crisis.
The money is not there at all. Have you checked the level of debt that Trump and his cronies have lumbered on their economy in his pathetic attempt to con his dumb red neck supporters ?

Are you watching any of the news at all ? The economic impact of this will be felt for many years to come and will he felt by everyone.

The money is there, but we’ll have to prise it out of the hands of a few tens of thousand extremely rich people. The free market isn’t going to fix our problems - and of course it was never meant to in this kind of circumstance. This will be the second major economic shock for the world this century, and after the last one the very richest people managed to persuade governments to enact policies that saw their losses made up and then some, while the bill was passed on to the poorest. Will they manage this a second time?

[TVC15]

The money is there, but we’ll have to prise it out of the hands of a few tens of thousand extremely rich people. The free market isn’t going to fix our problems - and of course it was never meant to in this kind of circumstance. This will be the second major economic shock for the world this century, and after the last one the very richest people managed to persuade governments to enact policies that saw their losses made up and then some, while the bill was passed on to the poorest. Will they manage this a second time?

Unfortunately it’s these extremely rich people who are invariably in cahoots with the politicians. Why would they be asked to give up any of their fortunes ? These are the same people who will be making the politicians non executive directors on their boards when they retire from politics.
But all that said the money wasn’t really there before this crash in terms of the most powerful economy in the world - America. As I said just look at the debt since Trump came into power.
Unfortunately whatever quantitative easing measures come in it won’t stop a world recession and millions of redundancies. History tells us it will bounce back at some point but who knows how many years this could take.

[LS7]

Some of you would be less annoying if you used the word “may” rather than “will”.

[LoveCurryPies]

Forget notes....let’s have gold bars.

[paulatky]

Reports that the BOE are to “print more money “ to help support stock markets.

Maybe my idea was not so stupid and I was just 24 hours ahead of the curve

[Spiral]

Reports that the BOE are to “print more money “ to help support stock markets.

Maybe my idea was not so stupid and I was just 24 hours ahead of the curve

It's part of modern financial crisis management. As you say, the BoE has announced unlimited 'commercial paper' which is, in simple terms, making available to trustworthy companies short-term loans funded by creating new sterling. For companies receiving the loans, it's an alternative to corporate bonds. The Zimbabwe comments further up the thread are reasonable observations in certain circumstances, but this isn't one of them. You can't go rogue as a country and print excessive new currency in 'normal' times without it impacting your exchange rate and import costs, but this is a deflationary global crisis and the responses are more or less coordinated. Govts need clear objectives and exit-strategies. It's not even stimulus, strictly speaking. These measures are intended to salvage, rather than stimulate the economy.

[paulatky]

I believe it’s an inevitability that we’re quickly heading towards a financial *depression* like the last global depression between 1929 – 1939 (or possibly much worse) and not a recession, like in 2008.

The world has changed forever . I can foresee a global currency and that currency might not be cash.

[1968claret]

The world has changed forever . I can foresee a global currency and that currency might not be cash.

Toilet roll would be a good bet!

[rob63]

Forget notes....let’s have gold bars.

Can't, we sold most of our gold reserves in the last couple of financial meltdowns

[RingoMcCartney]

From May 2019

"Dubbed ‘Brown’s Bottom’, the sale of half of the UK’s gold reserves between 1999 and 2002 by then-Chancellor Gordon Brown is considered a particular low point in British history.

Today marks the 20th anniversary of this event, so we revisit Gordon Brown’s mistakes; how a cautious Chancellor let down his guard and undersold more than half of Britain’s gold reserves.

.

The Backstory:

In 1999, Chancellor Gordon Brown sought to sell off 401 tonnes (56%) of the UK’s gold reserves. The logic was that gold wasn’t being used as a safe haven as much as it had been before, and that foreign currencies like the US Dollar and the imminent Euro would generate much better returns.

The price of gold in the late 1990s was roughly between $254 and $312 per ounce. A 20-year bear market - since the abandonment of the Gold Standard by President Nixon - had been pushing global prices down. Brown was worried that the price would continue to drop even further, so he sought to sell as soon as possible. At the same time, nearing the Millennium, the US Dollar was getting stronger under President Clinton’s administration, and stock markets were making steady gains as interest in tech stocks grew (into what would become the Dot Com Bubble of 2000/01).

.

The Sale:

Originally intended to be a secret, the planned sale was brought up in a question for the Treasury in the House of Commons on Friday May 7th. The confirmation of intention from the Treasury subsequently alerted the gold market, and the gold price fell by $10 per ounce. There was also the issue of auctions; 17 were planned, suggesting that the UK Treasury did not expect the price to improve any time soon and were thus looking to hedge their bets and make multiple sales to maximise the money made.

The total sale of the gold bullion sold was $3.5 billion, at $275 per ounce average sale value. It is somewhat ironic that Gordon Brown’s attempts to make as much money as possible from a staggered sale resulted in over $100 million less for the gold compared to when the sale hadn’t been announced, but it’s damning just how much more that gold would have been worth further down the line. Gold was $921 per ounce early in May 2009, which would put the gold sold at $11.8 billion in value - $8.3 billion more than Brown got. The 20-year price rise is worse still, with gold currently at $1,279 per ounce. This would make the gold bullion worth $16.4 billion - $12.9 billion more than was received in 1999.

.

Ignoring the Bank of England:

The bear market, combined with the rise of stocks, shares, and major currencies, was a very tempting prospect for Gordon Brown and a way of making the UK’s assets generate more income for the country. On paper, it looked like a fair move, but the advice from the Bank of England was not to sell – especially when large quantities were already being sold from countries including the Netherlands, Australia, and Argentina.

Gold is known as a safe haven asset that has a traditionally negative correlation with the stock markets. It is strange then that Gordon Brown did not appreciate the bull/bear nature of markets and the fluctuations that come part and parcel with trading.

One reason for this oversight and ignoring the guidance of the BoE could be the Special Relationship between the UK and the US; a temptation to please the USA and back the US Dollar and present a united front for geopolitical reasons internationally, and PR reasons domestically.

Nobody blames Brown for not predicting the market crash after the Dot Com Bubble burst but given the benefits of gold as a diversification of assets it’s hard to forgive the then Chancellor for the oversight, and he was warned.

.

The Aftermath:

The UK gold reserves still total between 310 and 314 tonnes of gold bullion – the remnants following Brown’s sale. Britain has not bought or sold gold since, and in the case of selling such large quantities of bullion, sales were curtailed by a central bank gold agreement signed in September 1999.

The agreement was coordinated to prevent another major slump in the gold market – such as the one experienced following the Treasury’s decision to hold gold auctions – but the current trend as of 2018 and into 2019 is of growing demand for central bank reserves, with the likes of Russia and China leading the way in demand for gold; as a replacement for the US Dollar as a reserve asset."

Today the price of gold is around $1500 an ounce and predicted to rise further

[RingoMcCartney]

Alternatively, you could give George a bell.

https://youtu.be/XN1F-DWpCo0


https://youtu.be/xbuTTOXQQFc


Totally legitimate.

[RingoMcCartney]

Genuine question to which I have never really understood why not

In the 90s , although for a different reason, deflation. The Japanese government gave all it citizens, a "gift" of, say, 1000 yen. This was intended to get them to go out and spend their gift and increase demand, stimulate the the economy and therefore help fight against deflation.

However, during deflationary periods, people are aware that as prices drop the pound in their pocket, or yen in this case, becomes relatively more valuable. So they hang onto it knowing that 50 inch screen tv , that's priced 500 yen today. Will be 400 yen next week! Once that cycle begins, it's very difficult to get out of. And the inertia that an individual has in making a purchase spreads throughout the country. So the 1000 yen gift had the totally opposite effect of what it was intended to do.

[Spiral]

Except the majority of people will be feeding themselves and paying bills, not buying televisions. What a lazy trope, anyway. If the govt forces a population to be locked down, it has an moral obligation to ensure its citizens don't starve, and a practical duty to provide means for them to feed themselves lest blood be shed on the streets over the innate human need to sustain its own biological metabolic functions.

I'll say it again, if it comes to a global depression, unemployment at 20%+ in countries like the USA and the UK, money printing (borrowing) and helicopter payments are for the purpose of sustaining the fiat money system. Monetary policy is virtually exhausted. Never in history have interest rates been so low. A poster above said toilet paper could become currency. He joked, but there's a kernel of truth in that notion - that our currencies become meaningless. It'll cost a lot, and debt will skyrocket, and we might be looking at debt to GDP numbers similar to after the second world war or the end of the Napoleonic wars, but inaction under such severe circumstances could contract the economy to such a degree that debt to GDP is even higher still, and in that scenario a citizen's bailout would be more economically viable. It's possible lockdown could last a year or longer because the fundamental flaw in the lockdown strategy is that there's no exit-plan without a vaccine or herd immunity. There's only the hope that in the autumn rebound we'll be better prepared and be able to (hopefully) contain it a little bit better, should lockdown measures be lifted in the summer. There's no case study that exists for this climate. We're approaching uncharted territory.

[paulatky]

Google these

Germany 1923...

Zimbabwe 2008...

Reports this morning that the BOE is looking at Zimbabwe-style monetary policy in a last ditch attempt to save the economy.

[Rodleydave]

I already am...

[levraiclaret]

I already am...

Are mine in the post?

[RingoMcCartney]

Except the majority of people will be feeding themselves and paying bills, not buying televisions. What a lazy trope, anyway. If the govt forces a population to be locked down, it has an moral obligation to ensure its citizens don't starve, and a practical duty to provide means for them to feed themselves lest blood be shed on the streets over the innate human need to sustain its own biological metabolic functions.

I'll say it again, if it comes to a global depression, unemployment at 20%+ in countries like the USA and the UK, money printing (borrowing) and helicopter payments are for the purpose of sustaining the fiat money system. Monetary policy is virtually exhausted. Never in history have interest rates been so low. A poster above said toilet paper could become currency. He joked, but there's a kernel of truth in that notion - that our currencies become meaningless. It'll cost a lot, and debt will skyrocket, and we might be looking at debt to GDP numbers similar to after the second world war or the end of the Napoleonic wars, but inaction under such severe circumstances could contract the economy to such a degree that debt to GDP is even higher still, and in that scenario a citizen's bailout would be more economically viable. It's possible lockdown could last a year or longer because the fundamental flaw in the lockdown strategy is that there's no exit-plan without a vaccine or herd immunity. There's only the hope that in the autumn rebound we'll be better prepared and be able to (hopefully) contain it a little bit better, should lockdown measures be lifted in the summer. There's no case study that exists for this climate. We're approaching uncharted territory.

To be fair, I did say.

In the 90s , although for a different reason, deflation.