No you are still missing my point. The QE is and has been stated to be to stimulate the economy in the UK. The QE I am talking about in the Euro would only be done to pay off debt under that scenario. The mechanism that creates the problem is when the actual payment happens from the debased currency to the foreign currency. There is actually a trade or transaction made which pushes the price up or reduces the relative purchasing power of the debased currency. As this was not the reason for the QE in the UK and as the transaction does not happen, at least not on a pay off instead of default level, there is nothing to push the relative price up on the pound. Trust me you have completely missed my point. I can tell by your response that you still haven't understood it. The other posters on the thread have understood it and appreciate what I am saying. So I know there is some validity to what I saying. However the extent of the situation is debatable. Good Luck to you.
I am not missing your point, which, incidentally, is trivial. You don't need to explain the basic exchange rate mechanism. As to the UK QE, do you always believe 100% what is stated by the CB/govt? Please... What do you expect them to say? "Yes, we're doing QE to devalue the currency and improve terms of trade"? (Funnily enough, if you read Merv's comments carefully enough, you'll realize he's been saying precisely that; if you look at trade-weighted GBP after QE1, you'll realize that he's been doing it, rather than just saying it). Moreover, what on Earth do you mean "the transaction does not happen"? What, are you telling me that foreign investors are refusing to accept gilt coupon payments? As I said, you're hopelessly confused. Don't know about the other posters. Good luck to you as well.
For the record, the only point I can somewhat agree with is your econ 101 statement regarding inflation theory. As far as your thoughts concerning QE, I believe you are way off base... but this horse has been beaten well past dead. I respectfully agree to disagree with you.
I like the Kyle Bass point. When he saw Barney Frank, Frank informed him that the US had just given the IMF fund $50billion (or some such number). Bass said 'how can we afford it', Frank replied 'we didn't actually give them any cash, it's just an entry in a ledger'. So Bass said why not 'give them' £20trillion