There’s no real surprise this is being run in The Guardian. They don’t understand enough economics to know that it’s tosh.
The next year, 2011, I placed a bet. It was a bet that the hundreds of billions of pounds of economic stimulus being poured into the UK and US economies would not reach the people who needed it. It would settle in the pockets of the richest, who would use it to buy the homes of the poor, and the economy would never recover. That year, I was Citibank’s most profitable trader in the world. They paid me $2m and asked me to do it again. It was around about then I realised the whole economic system wasn’t working.
That wasn’t a bet, that was a certainty. On the basis that the Fed and the BoE actually announced that they didn’t want that QE cash flowing into the real economy. The entire point and aim wsa that it should sloh around the financial markets. The effect – the desired effect – was to lower long term interest rates and thereby push people out along the risk curve in pursuit of yield.
If they’d actually desired QE to be money that govt then spent into the real economt then they’d have done tens of £ billions of it, not hundreds of £ billions of it. Because – as lockdown QE showed – if you then spend vast waves of newly printed money into the real economy then you trigger inflation.
Traders do not care about the budget, because the budget is not for traders and the budget is not about the economy. The budget is a piece of theatre meant for your consumption. It is a cute moment – a photogenic moment where a multimillionaire can hold up a red box and bribe you with a bit of your money, while they and all the other multimillionaires bankrupt the government with monetary and fiscal stimulus packages that seem somehow to always end up in their own pockets. They then use that money to buy assets such as all the houses that your children will need but never be able to afford to own.
Very Guardian economic analysis, isn’t it?
And the traders, traders like me, we sit in skyscrapers and we laugh. Because we know that Jeremy Hunt and Rishi Sunak, who are multimillionaires just like we are, will never tax us. We know that we will get richer and you will get poorer, and our lives will get better, and yours will get worse year after year after year. And each of us are paid millions of pounds every year to bet on it. To bet on it, instead of telling you.
Very, very, Guardian.
Are you suggesting the Treasury & the Bank of England understand the economy better than a Guardian hack? You have evidence for this?
As soon as I heard about QE I plunged every cent I could into NASDAQ index funds, why, because the natural home of money is the markets and sure enough, the NASDAQ doubled and more. Thanks to which my meagre pension is now a lot less so. The US housing market also went crazy, why, because the natural home of money is the markets. Every penny of QE went into inflating stock and property prices. The ongoing results of which we see now a decade and more later as all those investments based on cheap money are folding. So it’s strange that with the benefit of hindsight some are still trying and failing to justify QE.
I’ve seen some of Gary Stevenson’s YouTube content. Think of him as a young trendy version of Spud, with about as much grasp of tax and economics.
He ‘cares’ about the poor but ask him how much he’s prepared to give of his own wealth to help the poor and he goes quiet.
‘That year, I was Citibank’s most profitable trader in the world. They paid me $2m’
You’ve only got to read that sentence to know the rest is BS
He cant be that good a trader negotiating only a $2m bonus when the year before the most successful trader at Citibank – Andrew Hall received a $100m bonus
I think there is a reason this person is sharing his BS on YT and the Guardian and its not because he was the ‘most profitable trader in the world’
Andrew C
My thoughts were that Murphy has younger competition when I read through the article. The only real difference is the spelling is a good degree better but then am guessing even the Guardian can stretch to a spellchecker or two.
If Tim had posted to him must have been on a day when I was on holiday – he looks like one for the future certainly!!
The article essentially says that more government interventions (and also Labour) leads to poor outcomes for poor people. But I’m sure that will not be how the Guardianista interpret it
“If they’d actually desired QE to be money that govt then spent into the real economt then they’d have done tens of £ billions of it, not hundreds of £ billions of it. Because – as lockdown QE showed – if you then spend vast waves of newly printed money into the real economy then you trigger inflation.”
I repeat my question (which you refuse to answer) – how exactly is the QE that was done in 2009-16 different mechanically to the QE that was done in 2020/21? As far as I can see the process was exactly the same. The BoE announces a QE program of £Xbn, thus allowing the State to issue at least that amount of debt (and possibly more), safe in the knowledge that it will never hit a funding crisis, because the BoE hoovers it all up using the money its just created by pushing a button. The only difference between the covid QE and all the previous rounds of it is the amount and the timing. Covid was a massive chunk in a short space of time, the other rounds of QE were smaller and spread over a longer period.
So the idea that 2009-16 QE just ‘sloshed around the markets’ and covid QE ‘was spent in the real economy’ is utter bollocks. Both were spent into the real economy, by the State that issued all the debt that was bought up by the central bank. The reason for the different inflationary reaction was that 2009 was the aftermath of a deflationary financial crash, and the money was fed in slowly over time, and in 2020/21 the economy was artificially restrained by lockdowns and little of the money the State gave everyone could be spent until they were lifted. Both were money printing, and in both cases the money hit the real economy. The only difference is scale and timing, with the added problem in 2020/21 that the entire world artificially constrained its production capacity so the extra money was hitting production limits everywhere.
@ Jim
The CV-19 cash went straight into people’s bank account because they couldn’t go on holiday or buy a new car (plus they didn’t need either of those because the government was paying vast swathes of the workforce to do fuck all at home).
Once the pandemic lockdowns eased, everyone went on a spending spree and inflation rose (especially since supply was still constrained whilst demand rocketed).
I can see what you’re getting at Jim. The only real money in an economy is created by commerce when a transaction is made between a buyer & seller. In reality there is nothing else. Government paper is just a token of value we use for convenience. So printed money always ends up n the commerce economy.
$2m bonus will be a fortune to your average Guardian reader who thinks earning more than £100k requires near punitive rates of taxation.
UK trader at Citi will have bonus declared in USD. That’s real. The rest is more bull. Are we seriously to believe he was a prop trader with a huge risk allocation? I didn’t think Citi had that large a prop trading operation. Or was he really part of the market making team and did a huge volume due to hedge fund trading and the flow of funds from QE?
Andrew – previous interviews Gary indicated his first trading job was in Forex, which he described as a sleepy place pre-2008 home for 40 year old cast offs from sexier operations.
His recent J’O’Brian interview Gary he said he made a lot betting on asset prices rising mid lockdown which turned out was him spread betting on gold. I mean yeah ok all that uncertainty you’d expect Gold to go up, and he backed himself, fair enough. But that wasn’t the rationale he was stressing to Jobbie why he invested. His analysis was that —Government borrowed a ton of money to pay furloughed workers, ‘Wealthy’ stopped buying luxury goods, because workers were on furlough. Wealthy bank balances went up as a result (they got wealthier!). Therefore Inequality worse. And there’s more…. the money the government borrowed ended up in the wealthy’s bank accounts and its the workers who are on the hook for the repayment.
@Zaichik @worzel
He is quoted as saying “They paid me $2m” but “paid” could mean a bonus, salary, or some other measure of remuneration. The meaning of “most profitable trader” is also unclear. Is that most profitable in terms of the absolute amount of money gained, a percentage increase on a (possibly quite small) trading account, or some more technical measure that isn’t described? Is it most profitable among all traders of every kind, or only within a certain specialisation? We can’t evaluate his claims without knowing which definitions apply.
@ worzel he means Syrian Pounds which at today’s exchange rate is about USD150.
– So the idea that 2009-16 QE just ‘sloshed around the markets’ and covid QE ‘was spent in the real economy’ is utter bollocks. Both were spent into the real economy . . .
Indeed, for the line, ” . . . push people out along the risk curve in pursuit of yield” is just fancy talk for people moving money into “real economy” investments. Shares instead of bonds, etc.
The Bank of England explains:
https://www.bankofengland.co.uk/monetary-policy/quantitative-easing
“We first began using QE in March 2009 in response to the Global Financial Crisis. At that time Bank Rate was already very low. In fact, it couldn’t be lowered any further at that point. So we needed another way to lower interest rates, encourage spending in the economy, and meet our inflation target.”
There are many other references on the page illustrating that the aim, and effect, of QE is to boost the “real economy”. It’s just a variation on the Keynesian style. The only significant difference to other methods of government money printing is that QE has a theoretical method of deprinting the money.
I wonder why the traders on the floor were so glued to the budget every year then… must be that they like losing money-making time to watch the BBC.