Quantitative Easing, Infinite Growth, Physical Precious Metals and U.S. Bonds

Listeners’ Questions, Peter’s Answers- December 1, 2011

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Darren from Inverclyde, Scotland
The Bank of England has created £250 billion to buy assets in a “quantitative easing” program. Under a fractional reserve banking system, won’t this massively inflate the amount of “money” in the system? Using a 20 percent reserve ratio I believe the economy could be inflated by more than a trillion pounds. Correct?

Radmir from Perth, Western Austrailia
How can we build an economic model that faces the fundamental point: infinite growth can not occur on a planet of finite resources? Since perpetual motion is not possible, one day there will be no energy left to harness any growth, then what economic model can we use?

Paulina from Toronto, Ontario (Canada)
My husband is trying to convince me that investing in physical precious metals as a hedge against inflation is the way to go. How difficult will it be for us and others who have accumulated physical silver and gold to eventually liquidate their positions to either invest in another asset or simply use their wealth in purchasing day to day items such as groceries or paying bills? I feel my husband’s thinking is unrealistic.

Umesh from San Jose, CA
It’s my understanding insurance companies have a fair amount invested in U.S. bonds. If the bond market collapses, what affect would that have on life insurance policies such as whole life policies?

Dan from Patchogue, NY
I’ve been buying silver and as much gold as my meager budget allows and paying the minimums on my debt. What happens to this debt in the event the dollar collapses? Would it vanish? Would I still be obligated to pay? Does the same go for a mortgage on a house?