Force up interest rates
newOAP
Posts: 3 Newbie
Although it might be very hard to motivate a large enough group of debt free savers, would it make banks, etc and even the government re-think their savings interest rates if every saver threatened to withdraw their savings at the same time. We probably all moan about the low savings interest rates but if everyone withdrew their money, interest rates would have to increase to attract it back again. Could this be a way of forcing up interest rates ?
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More likely cause a run on the banks...........
and therefore even more problems.
If you want a high return then you'll have to take a risk.0 -
Withdraw and do what with the money?0
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No real intention of withdrawing the money and sitting on it - if everyone actually did withdraw their cash at the same time then it would cause a run on the banks - but a real threat of that happening may just be enough to push the rates up a little bit. Even just back to where they were before the government loan guarantees allowed the banks to take advantage of the savers who, after are the people who provide the wherewithall for the banks' to make a profit.0
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a real threat of that happening may just be enough to push the rates up a little bit.
In the hypothetical situation that this was a genuine threat, then the banks would be sensible to hold greater levels of cash than at present. They'd get the cash by reducing lending.
But ... they only receive 0.5% interest on cash held at the Bank of England.
And so they could be justified for paying savers less than they do at present, in order to cover the extra costs of holding this additional cash.0 -
...and when you owed money on a mortgage, what would YOU have thought about your idea?British Ex-pat in British Columbia!0
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Savers threatening to withdraw their savings will achieve precisely nothing because
- the overall money in savings is peanuts in the grander scale of things. The BoE could print the "missing" money before breakfast (and reduce the interest rate to 0.25% or just make it 0%)
- the amount that people would withdraw is even more peanuts since roughly about 98+% (my un-educated guess) of all savers wouldn't participate in the "run"
- my earlier questions hasn't been answered - - what would you do with the withdrawn money? Origami? Bonfire? Paper planes?
- paying people more money to keep their money in savings accounts is precisely the opposite what the economy needs to get out of the doldrums.
Note I am not anti-savers - got a fair wad myself in accounts that are about to pay next to no interest.0 -
Agree with 1, 2 & 3, not sure about 4.Savers threatening to withdraw their savings will achieve precisely nothing because- paying people more money to keep their money in savings accounts is precisely the opposite what the economy needs to get out of the doldrums.
People are clearly not saving enough for emergencies, let alone retirement, and negative real interest rates (by that I mean net interest rates below the real rate of inflation) is exacerbating that problem and storing up a bigger financial catastrophe for the future - (after the next election
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Low interest rates and excessive debt are what got us into this mess. They are clearly not going to get us out of it, as the situation is getting worse.
What is really needed is a drastic cut in unproductive spending, like the bloated overpaid Government, So called Universities funding mickey mouse degrees in subjects we have no jobs for, and miltary spending - the highest in Europe.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
Although it might be very hard to motivate a large enough group of debt free savers, would it make banks, etc and even the government re-think their savings interest rates if every saver threatened to withdraw their savings at the same time. We probably all moan about the low savings interest rates but if everyone withdrew their money, interest rates would have to increase to attract it back again. Could this be a way of forcing up interest rates ?
Interest rates are a bit of a distraction. The real problem for savers is inflation. If inflation was 0%, current interest rates would be great for savers. By focusing on interest rates, savers tend to alienate a large sector of the population who see them as the idle rich demanding money for nothing. Only a handful of people turned up for their demonstration in London. If they focused on inflation they would get a lot more support because everyone suffers from that.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
Savers threatening to withdraw their savings will achieve precisely nothing because ...The BoE could print the "missing" money before breakfast....
Indeed. It works this way:-- Saver requests withdrawal of £10,000 in cash from Bank.
- Bank asks the BoE issue department for £10,000 of the folding stuff.
- BoE gets De La Rue to print 1000 crisp £10 notes and delivers them to Bank.
- Bank pays BoE £10,000 and hands notes over to customer.
- BoE issue department deposits the £10,000 it received from Bank with BoE banking department.
- BoE banking department deposits £10,000 with the Bank.
Cash (as in the folding stuff) is simply an interest free loan to HMG.0 -
I agree, it's obvious inflation is one secret policy to deflate the debt, and they are juggling to maximise what the voters will let them get away with without too much electoral fallout. So zero or negative returns for savers for a lot of the time into the future, borrowers bailed out to avoid house price collapse, negative equity, large increase in unemployment, recession etc, err... we already have recession.0
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