As the Bank of England veers into insanity and prints up ANOTHER £50bn – get ready because they will print MORE
Well they did it, the Bank of England have printed up another £50bn taking the total money printing by the BoE to a staggering £375bn. But more importantly it makes all the talk about “will-they won’t-they” look rather silly. It was NEVER in doubt – as we laid out last month the central banks have to pretend that they might not print in order to keep the printing presses rolling.
From the BoE release:
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £50 billion to a total of £375 billion.
UK output has barely grown for a year and a half and is estimated to have fallen in both of the past two quarters. The pace of expansion in most of the United Kingdom’s main export markets also appears to have slowed. Business indicators point to a continuation of that weakness in the near term, both at home and abroad. In spite of the progress made at the latest European Council, concerns remain about the indebtedness and competitiveness of several euro-area economies, and that is weighing on confidence here. The correspondingly weaker outlook for UK output growth means that the margin of economic slack is likely to be greater and more persistent.
CPI inflation fell to 2.8% in May and is likely to edge down further in the near term. Commodity prices have fallen, which should help to moderate external price pressures. And pay growth remains subdued. Given the continuing drag from economic slack, that should ensure inflation continues to ease into the medium term.
At its meeting today, the Committee agreed that the Funding for Lending Scheme, which would be launched shortly, was a welcome initiative. It also noted recent and prospective actions to ease liquidity constraints within the banking system. Taken together with reduced pressure on household real incomes, on the back of lower commodity prices, and the continued stimulus from past monetary policy actions, that should sustain a gradual strengthening of output growth.
But against the background of continuing tight credit conditions and fiscal consolidation, the increased drag from the heightened tensions within the euro area meant that, without additional monetary stimulus, it was more likely than not that inflation would undershoot the target in the medium term. The Committee therefore voted to increase the size of its programme of asset purchases, financed by the issuance of central bank reserves, by £50 billion to a total of £375 billion. The Committee also voted to maintain Bank Rate at 0.5%. The Committee expects the announced programme of asset purchases to take four months to complete. The scale of the programme will be kept under review.
And by way of reminder here’s what we’ve been saying since the last round of money printing in February this year about the likelihood of more money printing:
So for those trying to keep scores the BoE has now taken its money printing limit to £325bn. However, we’re quite sure it won’t end there and by the end of 2012 the combined balance sheet of the BoE could be as high as £530bn – that would represent a staggering 40% of UK GDP…
… Sadly as we’ve being saying since our very first post the money printing will not stop – in fact it hasn’t just re-started it is now accelerating. This is very slippery path we’re now on and there is absolutely no desire to by the government of the BoE to change direction – instead they’ve just put their foot on the gas.
At the moment the BoE had increased its money printing to £325bn – which means that the BoE will be looking for every excuse they need to pull the trigger on an a potential £175bn of money printing for the rest of the year.
And this data point today is a perfect example of something they can hold up and say that more money printing is needed. Look for more and more poor data about the UK economy to come out in the next few months that support the BoE’s view that what the UK needs is more inflation – and look for gold to react accordingly.
The excuses for the Bank of England to print more money sure are mounting up.
Since last week we said to prepare for bad data coming out of the UK so the Bank of England can justify printing much more money this year. Then today we got some more poor retail sales figures (no, January wasn’t a good month at all like some in the MSM were reporting). And now we have news that house prices fell some 1.9% over the last three months compared to the same 3 months a year ago.
Get ready to start to hear that ‘phantom-menace’ of DEflation from the BoE and the talking-heads on bubble-vision louder than ever over the coming months.
The reason we point out these poor data points is because the worse the UK economy performs the more likely it is that the BoE will reach for the levers on the printing press once again.
So here we will make another rather easy prediction. The response to the UK being in another recession, that it never actually left, will be for the BoE to open up those printing presses at a faster rate and diminish the value of the £ in your pocked even more than it already has.
But the real point is not weather gold is using Phase 2. or Phase 3. for support to bounce off – the real point is that the fundamentals for owning gold that kicked off this bull run some 12 years ago haven’t changed a bit. In fact each and every year they get stronger and stronger. And the money printing around the world is accelerating not slowing.
As much as there are attempts now on by the central banks of the world to pretend that the crisis is over and the money printing is coming to an end (something we’ve heard over-and-over since 2008, only to be proved wrong time and again), they know that it isn’t – they simply have to pretend that it is otherwise their interventions would fail in a heartbeat as people rush out of paper and into something tangible.
This is all that matters in gold, not the week-to-week or month-to-month price swings – in the end gold will be the last thing standing, but knowing ‘when’ that end ‘is’ is impossible.
Just another metric to let the UK public know that all is not well under the bonnet of the UK economy. The talk that there will be no more money printing by the BoE will be proved wrong, again. Also don’t forget, the recession ended 2 years ago
Translation [from BoE minutes]: we can still print if we want to… and we will.
So when we predict that the BoE’s response to this official recession will be another massive bout of money printing that simply will never, ever end (until the big reset happens), you only have one question you need to ask yourselves. Will we be right… again?
Yes, that really is what a grown man with a very grown-up job, and apparently an expert in economics, is suggesting to fix the worlds problems. Print…More…Money.
The sad thing is, is that the above is a classic view of those who are also in control of the levels of the printing presses around the world.
Be under no illusion – they will print, print and print again. And it is exactly and precisely for these reason that people should be clinging on to all the gold they can get at these prices right now.
So to sum up, the UK economy is much, MUCH weaker than we are all being led to believe . And don’t think for one second that King et-al at the BoE believe these fudged numbers any more than we do. They know the UK economy is in serious trouble – and they will do the only thing that central bankers know when an economy is depressed, print. And today’s horrible report all but guarantees it.
So there you have it, this is about an overt an admission as you will get from the BoE that higher than target CPI inflation is officially the policy of the BoE, and de-fact the government.
Get ready, because after this speech you should be in no doubt what-so-ever that the BoE stands by ready willing AND able to steal more of your wealth by printing much more money – and you can’t say they didn’t warn you… sort of.
And this paragraph probably seals the fate of money printing either next week, or next month:
Regular readers will know that we’ve been predicting (and been proved correct each and every time) that the money printing by the Bank of England (and the other main central banks for that matter) will not end.
The report however will be music to the ears of the BoE, it effectively means that can get away with printing more money and point to falling producer prices, and the risk of that imaginary beast deflation, to save their credibility when they do.
This is making our point all along – how can a group of bureaucrats sat round a table know what the price of ‘anything’ should be? They can’t, but now even the BoE admits this obvious point – but incredibly, despite this, they still want to print more money and ‘buy private assets’. What can possibly go wrong when people with infinite ‘money’ admit they don’t know how much they should pay for stuff, but do it anyway?
… So there you have it folks – this is what the ‘best and brightest’ at the BoE has to offer, two massive ‘fail’s’ that will guarantee to make the situation in the UK much, much worse – oh, and the value of the pound that much lower.
Also note last time Posen was out with a speech calling for money printing he got his way within a couple of months. Expect this time to be no different… unfortunately.
Another bank bailout – again, just how bad are those balance sheets really?
So there you go folks, it couldn’t be any plainer than that. The BoE sees the solution to all that ails the UK is a LARGE depreciation in sterling, and he then lays out not one but three ways the BoE will set about doing this, with ALL the the risk dumped once again on the taxpayer’s back – they must really think we’re suckers.
Now, let us make this next statement as clearly and unambiguously as possible. THIS WILL NOT BE THE LAST TIME THE BOE PRINTS MONEY – THE MONEY PRINTING WILL NEVER END THIS SIDE OF “THE BIG RESET”.
Also, it’s worth pointing out that not only is the money printing increasing – it is accelerating:
We now fully expect the total money printing by the BoE to be nearing £500bn by the end of the year – meaning that with just the money printing (QE) alone the BoE will have printing up more than 35% of the UK’s entire annual GDP. Prepare accordingly.
- The Bank of England goes beyond madness and prints up another £50bn – gold price rises
- UK manufacturing PMI plunges at second fastest pace in 20 years – so will the Bank of England print next week in response?
- UK production contracts 1.7% – Bank of England to print more money early in the New Year?
- Producer prices in the UK fall giving the Bank of England more scope to print
- David Blanchflower says the Bank of England will print more money before November
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