US to inject a further $800 billion into financial system!!

alternative-energy · Post by **alternative-energy** » 26 Nov 2008, 17:25

Just recently I have heard guests on radio 4, newsnight etc mentioning the phrases relating to "printing presses and the creation of money bank by the central banks."
Have you tuned into these phrases as well?
The chris martenson website is very interesting, one trillion dollars equals a stack of £1000 dollar bills reaching 68 miles. So far nearly 4 trillion has been injected and still they need more...
Luck enough to have bought some land today before the value of my £ are seriously eroded.

happychicken · Post by **happychicken** » 26 Nov 2008, 17:38

I really don't get how printing more and more money can possibly get the world out of this financial mess. What will stop the whole world economy from heading the same way as Zimbabwe's?

I realise that as the economy continues to go down the pan the fact that different countries have different currencies with different exchange rates means that some countries may be protected by this, but since commodities like oil are bought and sold with dollars I presume the value of the dollar affects every country.

Post by **kenneal - lagger** » 26 Nov 2008, 17:43

happychicken wrote:I really don't get how printing more and more money can possibly get the world out of this financial mess. What will stop the whole world economy from heading the same way as Zimbabwe's?

I realise that as the economy continues to go down the pan the fact that different countries have different currencies with different exchange rates means that some countries may be protected by this, but since commodities like oil are bought and sold with dollars I presume the value of the dollar affects every country.

Unless the governments increase taxes when/if the world economy picks up, it will be like Zimbabwe. They will have to take all the extra money back out of the system again which will slow it down. Can anyone see that happening?

skeptik · Post by **skeptik** » 26 Nov 2008, 19:10

Andy Hunt wrote:Apparently more US government money has now been spent on this financial crisis than on World War II, in real terms when adjusted.

Kind of puts things in perspective a bit dunnit.

Well... 'committed' if not actually all spent/lent yet. Something North of $7 Trillion according to various studies - everybody's coming up with slightly different figures.

about the $800 billion pledged just *yesterday*
http://globaleconomicanalysis.blogspot. ... r-600.html

kenneal wrote: Unless the governments increase taxes when/if the world economy picks up, it will be like Zimbabwe. They will have to take all the extra money back out of the system again which will slow it down. Can anyone see that happening?

Yup. A period of low inflation/deflation followed by an interest rate moonshot as confidence returns and things pick up. Whatever happens they wont allow hyperinflation to get a grip - hyperinflation is all about expectations, and those will be controlled by interest rate hikes. Central bankers know the Weimar story by heart, and the Germans especially ( and quite understandably) have a pathological fear of going down that route again.