Bank of England pumps more cash into economy to support recovery
Sven Egenter and David Milliken / Reuters / February 9, 2012... The central bank said on Thursday it would buy another 50 billion pounds of assets - mostly government bonds - with freshly printed money, taking the total to 325 billion pounds, as economists had expected. The BoE also left its key interest rate at a record-low 0.5 percent.
... This time around, a majority of analysts polled by Reuters had penciled in a 50 billion pound injection over three months.
Who are they kidding? The sales of the government bonds will put new money into the hands of those who will turn around and send it to China by purchasing securities there. We will see another round of China food inflation. It will be visible as a new RJA bubble. The only question I have now is when is the exact time it will start and the exact duration of the cash injection? All I have now is the schedule about the release of the schedule:
The minutes from the two-day Monetary Policy Committee meeting will be released in two weeks, but economists will get an earlier steer when BoE Governor Mervyn King presents fresh quarterly inflation forecasts next week.
50 billion pounds is about $78.6 billion USD. The rate at which they release this less the rate at which China "puts on the breaks" by fiddling with interest rates will affect the size of the bubble. Another consideration is whether there will be any concurrent programs by other nations that add to the hot money.
QE2 was around $600 billion USD from November 2010 to (supposedly) June 1, 2011 but there were indications that the fixed amount of money was released too quickly and ended in May 2011.
There's been nothing left in England to invest in for a while now and sending the money to China is a well known response to that.
China's "Hot Money" Problems
MF Martin / July 21, 2008... There is no formal definition of “hot money,” but the term is most commonly used in financial markets to refer to the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts. These speculative capital flows are called “hot money” because they can move very quickly in and out of markets, potentially leading to market instability. Many economists maintain that the rapid outflow of “hot money” first from Thailand and then from other Southeast Asian economies was a significant contributing factor to the onset and severity of the East Asian Financial Crisis of 1997.
