Quantitative easing.

[123everton]

The world's banks have all been printing money to get us out of the credit crunch, yes?
So when the crisis is over, what's going to happen to all that extra money?
Is it not an inflationary bomb just waiting to explode in all our faces?
Could the Pound the Euro and the Dollar end up like the Reichsmark of the Weimar Republic?
Will this inevitably bring about the return of the gold standard?

[LazyGun]

There is indeed a risk of hyperinflation, as a consequence of QE. The colloquial slang for QE, "printing money", is somewhat misleading though. The extra money created is used by the Central Bank to purchase gilts on a short term basis, affecting the market, and allowing money to flow. They also monitor interest and inflation rates very closely. So far, I dont think there have been any indicators that Hyperinflation is going to kick in, in the UK at least.

A good wiki article on QE, if you are interested ;
http://en.wikipedia.o...i/Quantitative_easing

[buildersmate]

So when the crisis is over, what's going to happen to all that extra money?
Money supply is reduced again when the BoE, European central bank, Federal Reserve etc. pulls money back in and burns it

[rov1200]

I can't help thinking it has gone the same way as QE2. We shipped it to Dubai and we know what happened to that country, deep in debt and needed a bailout.

[R1Geezer]

The worlds banks have not been printing money. Some central banks have been generating money and buying actual securities to ease money flow as lazy gun says. The level of QE is tiny compared to the German game. Inflation is still a danger but hyperinflation unlikely.

[123everton]

I'm not big on finance, as I understand all F.I.A.T currencies have eventually been replaced by the gold standard.
I hope not, it was disastrous for Britain when Churchill took us back into it.
But I do wonder if currency is going to go to a commodity standard like gold or silver.
They'll just burn the extra money?
Somebody owns that money, the state must have to buy it off them in order to destroy it, surely?

[R1Geezer]

yes in order to reverse QE they'd have to cash in the investments and effectively burn the cash in some way. Probably just electronically. I don't think that as ever happenned though. So yes we have watered down the whole currency pool.