The recent discussion of money and its inherent value (only of that for which it can be exchanged) sent me back to my sketchy records of something I read back at the start of the present financial debacle (when the CDO’s first hit the fan so long ago). I posted this way back then on that other awful site, but it is still a good read and even has some familiar seasonal references.
Since ancient times, the notion of debt has been deeply interwoven into our culture, literature and social structure. With the global markets in turmoil, Margaret Atwood looks at the history and meaning of being in hock. Continue reading “Debtor’s Prism”
Quantitative Easing supposes to improve the economy through purchase of British Government bonds (gilts) and high quality (investment grade) bonds from private sector companies (banks, pension funds, insurance companies and non-financial institutions). By doing this the Bank is able to inject money directly into the economy and the companies that need it. This is in the belief that printing money and rising prices mean that they are creating value. But wait a minute ‘purchase government bonds’? That is, buy gilts to provide the exchequer with money that the government needs to meet a budget deficit! Gilts that creat more debt that the government needs to honour in terms of returning any capital invested plus any promised interest. A debt serviced through taxation. An article by Frank Chodorov with the title Don’t buy Government Bonds puts it this way: –
Continue reading “Cognitive Teasing or Quantitative Easing?”