What it is:
The 21st century equivalent of printing money.
In stead of physically printing it, you simply adjust the bank balance of the government's coffers upward.
How does it work.
To use a metaphor:
If you have a party and 20 bottles of wine are not enough, poring some of each bottle into 5 empty bottles gives you more bottles, but not a lot more wine.
The drunks at the party will only notice that there are plenty of bottles and as long as there is something in them, they don't worry.
Works a treat, so the wine is now spread over another 5 bottles, and again, and soon there is only one small drop per bottle.
This is the point where a pint of diesel will cost £2.49
Imagine you have invested your pension fund in share of a company.
There are a hundred shares, each paying 1% of the company's profits as dividend, let's just say one pound a year.
The company is short of money due to poor management, so the print 10 more shares and sell them to people.
As the profit of the company has not gone up, you now get 88 p dividend per share that you have bought.
Why 88 p? In stead of 100 pound company profit, there is now only 98, because the consultant advising the printing of more shares has to be paid for their advice, and printer does not work for free either.
The remaining 98 pounds are now shared out between 110 people in stead of 100.
The company: UK plc.
The company assets: the total of all our possessions, personal, commercial and industrial.
The shareholders: All the people in the country
The shares: all the money, whether physically in the form of notes and coins, or as electronic bank accounts etc.
Whenever the government orders or allows "money to be printed", they water down what you own, and it will increase the price of imports, and reduce the value of the things we make and try to export.
The 21st century equivalent of printing money.
In stead of physically printing it, you simply adjust the bank balance of the government's coffers upward.
How does it work.
To use a metaphor:
If you have a party and 20 bottles of wine are not enough, poring some of each bottle into 5 empty bottles gives you more bottles, but not a lot more wine.
The drunks at the party will only notice that there are plenty of bottles and as long as there is something in them, they don't worry.
Works a treat, so the wine is now spread over another 5 bottles, and again, and soon there is only one small drop per bottle.
This is the point where a pint of diesel will cost £2.49
Imagine you have invested your pension fund in share of a company.
There are a hundred shares, each paying 1% of the company's profits as dividend, let's just say one pound a year.
The company is short of money due to poor management, so the print 10 more shares and sell them to people.
As the profit of the company has not gone up, you now get 88 p dividend per share that you have bought.
Why 88 p? In stead of 100 pound company profit, there is now only 98, because the consultant advising the printing of more shares has to be paid for their advice, and printer does not work for free either.
The remaining 98 pounds are now shared out between 110 people in stead of 100.
The company: UK plc.
The company assets: the total of all our possessions, personal, commercial and industrial.
The shareholders: All the people in the country
The shares: all the money, whether physically in the form of notes and coins, or as electronic bank accounts etc.
Whenever the government orders or allows "money to be printed", they water down what you own, and it will increase the price of imports, and reduce the value of the things we make and try to export.
