Besides as I pointed out the consequence would be seen by other countries so regardless of how that affects politicians in the domestic country the foreign countries that invested will be affected by the loss of income from the investments.
good discussion. that vis a vis part of economics sure can make predicting the outcome a tough trade. its very hard to predict relative outcomes when most or all the currencies in the basket are being debased. plus all of sudden you start becoming concerned about what happens if you are really right, or you are really really right but Ron Paul wins?
QE may be the only method of SAVING the banking system if things continue to progress along the current path. As stated before, with no safety net (ie assurances that the ECB will support sovereign debt) yields will continue to climb as the debt loads continue to mount. There are no assurances that Greece won't default, even if they meet the bailout conditions and receive the necessary funds. As well, that piece of the puzzle is contingent on somehow cramming the haircut down and avoiding a credit event. When the credit derivatives are unleashed, the real meltdown starts... The scariest part is the increasing lack of faith in the euro from the EU states - That's a problem that could be mitigated if the debt markets were to stabilize.
If what I am saying is true then QE in itself could create a break down of banking. If the QE reduces return of the foreign investor through the fall in the exchange rate then there will not be enough money in payment to cover the banks withdrawals, unless the foreign investors country then QE's itself. So either way it will spread.
QE is naked shorting your own currency. Two solutions: - Cover the shorts by paying off debt. (depression) - Naked short more and more and more and more and eventually the markets stops believing you will cover your naked short (hyperinflation) Why does Yen appreciate? The Japan has been naked shorting their own currency for 30 years or so.
No I am making a valid point. Other people have seen it and they can appreciate the point I am making. Why do you not understand the affect a currency debasement has on foreign exchange? Is that what you are disputing? Or is it that there is a difference between QE to stimlulate growth and QE to pay off foreign debt?
I have already said everything I have to say on the subject. A few times, if I am not mistaken. Hence, my point above. As to other people, frankly, dear, I just don't give a damn.
You don't seem to appreciate the exchange rate consequences of the debased currency. QE in the UK has nothing to do with the exchange rates because it is not being used to pay off foreign debt. Most of it is sitting in a reserve account. So I fail to see your point. Just simply answer are you contesting whether the debasement of currency will have and impact on exchange rates or are you contesting that the UK QE is different a debt pay off QE, which would be seen in the Euro?
I don't want to argue with you. You're not listening to me (or not hearing what I am saying). If you were, you would realize that I have already responded to you regarding the first part of your query. As to the UK QE being "different to debt pay off QE, which would be seen in the Euro", that's just pure unadulterated nonsense. There's no way for anyone to tell a priori whether a central bank's QE program constitutes debt monetization (I guess you call it "debt pay off QE") or is used to "stimulate growth". If you believe QE is debt monetization and its primary effect is to debase the domestic ccy, this effect should be observed in all economies where the CB is engaging in QE. Finally, how the hell do you know that QE in the UK is NOT being used to pay off foreign debt? Do you have a direct line to George Osborne/Robert Stheeman, who are telling you things nobody else knows? What "reserve account" could you possible be referring to?