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posted on 6-3-2009 @ 09:21 AM
Reply to 44soulslayer:
They've announced about £75bn, and another £75bn. This will just about compensate for the wage losses in this year, and the writedowns, negative equity quotient etc.
If they start printing any more than £500bn at a go, that will mark the start of hyperinflation.
I would agree with you on that at the moment, although it is a worrying move, maybe they're just testing the water, otherwise it could be blatantly obvious what they are trying? I dunno, just guessing.
[edit on 6-3-2009 by ElectroMagnetic Multivers]
However, economists warned that the scheme could cause a major swell of inflation around the world as the newly-created money filters through the system. The idea has been suggested by a number of key figures, including billionaire investor George Soros and US Treasury adviser Ted Truman.
Forget the media PR. Today it is in anticipation of large dollar and/or US treasury international sales hoping that rather than flooding the market with dollars in exchange for Euros, Swiss Francs, Cando’s and so on that SDRs would be sought after.
The problem with this reasoning is the same as it was at its last big introduction over 35 years ago. It is paper, worse an index against swaps, that lacks the ability to attract confidence required as we move into a hyperinflationary world. This was the meat of the objecting speech on the Senate floor more than 35 years ago and is the weakness today.
I had the privilege of writing the speech many years ago when SDRs were first introduced. The same problem with SDRs then is the same problem now - they are backed by nothing. SDRs are nothing more than pure paper and are incapable of offsetting the fear of such paper