MV=PT, quantitative easy in the UK, will it work?

The equation at the heart of prices, the ‘Quantity theory of money‘, centuries old but redeveloped by the likes of Irving Fisher, Ludwig Von Mises and Simon Newcombe, as well as being an equation restated by Milton Friedman which resulted in a Nobel prize. The equation, known as the “quantity theory of money” is MV = PT.

M is the quantity of money, V is the speed money flows round the economy, P is the level of prices and T is the number of transactions.

The formula has had one consistent feature, namely controversy. If you believe V and T are stable, then control of the money supply guarantees control of inflation. Quantitative easing (which they are talking about presently in the UK) raises M, so if V is fixed, it will push up P or T or both.

In today’s recessionary and deflationary world, that would be a welcome result. However, if …

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Will Specialist or Sub-Prime lenders be better off?

With the news coming out daily about prime lenders facing higher and higher impairment charges it begs the question of who will do better during a downturn, specialist/sub prime lenders or prime high street banks?

Banks stated that they feel impairments of up to 90 basis points were likely, some have revised this figure higher several times with NIB predicting impairment of upwards of 300 basis points. Sub-prime lenders on the other hand start off with predictions of high impairment and they price and gauge the risk accordingly from the outset. Given that starting point, could it be a case that Irish specialist lenders may come out the other side of the liquidity crisis with an overall book that fares proportionately on margins than other prime lenders?

To answer this question we must first consider margins, with many banks typical margin is from 1% to 1.5% on average, however, with many prime lenders this margin is  lower because of low margin trackers that were a point of heavy competition between …

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Ludwig von Mises, Economist, Libertarian.

What kind of man was Ludwig von Mises? As this unique film shows, Mises (1881-1973) was a man who never stopped fighting for freedom: not when the Nazis burned his books, not when the Left blackballed him at universities, not when it seemed as if statism had won. With courage and genius, he fought big government until the day he died in 25 books, hundreds of articles, and more than 60 years of teaching.

Mises’s battles against Communists, Nazis, and other socialists, are featured in this film, as are his ideas of Liberty. There is also the old Vienna he loved, the Bolshevik prime minister he dissuaded from Communism, and a cast of villains from Lenin to Hitler, as well as such supporters and students as Murray Rothbard, Ron Paul, Bettina Greaves, M. Stanton Evans, Mary Peterson, Joseph Sobran, and Yuri Maltsev.

Among his many accomplishments, Mises showed that socialism had to fail, that central banking causes recessions and depressions, that the gold standard is honest money, and that only laissez-faire capitalism is fully compatible with Western civilization.

Mises …

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A simple way to understand Liberty & the Free Market

This is a simple video, and yet a compelling one about some of the fundamental rights of people and of our right to self determination. How does this tie into mortgages or economics? Simply put it shows that the government of a country don’t have the right to force the state to underwrite banks, in fact, it only rewards bad behavior and the end result is that we all pay for a business issue which we did not create, if a bank lends you money it does so by choice, when in reverse (such as our state bailout plan) we were never given any right or choice as to how it would work, or if it was even a good idea. The guarantee was given first and conditions attached last, ill thought out and moral hazard is merely the beginning of it all.

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A simple way to understand Liberty & the Free Market

This is a simple video, and yet a compelling one about some of the fundamental rights of people and of our right to self determination. How does this tie into mortgages or economics? Simply put it shows that the government of a country don’t have the right to force the state to underwrite banks, in fact, it only rewards bad behavior and the end result is that we all pay for a business issue which we did not create, if a bank lends you money it does so by choice, when in reverse (such as our state bailout plan) we were never given any right or choice as to how it would work, or if it was even a good idea. The guarantee was given first and conditions attached last, ill thought out and moral hazard is merely the beginning of it all.

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Now that everything is Guaranteed (bank deposit outlook)

Now that countries are standing behind their national banks what will happen? Greece has backed deposits, Germany did the same. France, Britain, and Italy may follow. The leaders of these countries met earlier today to seek some resolution. The news is now unfolding fast enough that even industry experts are struggling to keep up with it. Alistair Darling is initiating a plan to buy shares from the banks.

Iceland is seeking to guarantee deposits and Fortis was taken over by BNP Paribas. The latest news is that the Fed cash auctions have been boosted to $900 billion. The current issue is that banks …

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