Financial Spread Betting Markets Rise as BoE Adds ?75bn Quantitative Easing
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Financial Spread Betting Markets Rise as BoE Adds ?75bn Quantitative Easing

Financial Spread Betting Markets Rise as BoE Adds ?75bn Quantitative Easing


The next round of money printing is designed to prevent a dip back into recession and the first round of QE back in 2009 was fairly successful at doing just that.

It did indeed give companies more cash to throw around and thus contributed to the recovery that we’ve been through in 2010.

But, as we’ve seen, it was only a temporary measure that has actually shot itself in the foot by causing inflation to remain way above target.

In the past we’ve often written about high inflation and once again the Bank of England’s actions will cause asset prices to remain inflated and make life even more difficult for not just pensioners and savers, but almost everyone.

It is no wonder that this week we saw Tesco saying that their UK market has seen sales contract as consumers tighten their belts for tough times ahead. Whilst the temporary boost to the economy might be welcomed by many, it doesn’t mean that anything beyond this growth will be maintained by this artificial assistance.

I would be pretty happy to bet that in two years time we’ll be in the same position and the Bank of England will simply print more money.

What the UK really needs is to be more competitive. OK we can’t raise rates just yet in order to tackle inflation but the price rise needs to be stopped. The only other way we can get competitive is to cut back the state which is draining the funds dry.

With no money to go around the government’s cuts so far have barely touched the sides and the UK deficit is still a huge balloon. It’s worrying to think that our annual deficit now is greater than it was when we needed assistance from the IMF back in the 1970s.

If state spending isn’t cut back more soon then the financial spread betting markets will become tired of the UK’s fiscal position and we could see bond yields heading the way of France and Italy.

This would put us in a dangerous position, but for now at least the bonds spread betting markets are giving us the benefit of doubt.

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'Financial Spread Betting Markets Rise as BoE Adds ?75bn Quantitative Easing' by DB, updated 07-Oct-11

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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

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