FED cuts by 0.5%

kennyboy66_2

!!!!!!? wrote: »

I've explained many times why I think recklessly cutting interest rates would be bad - how many more times do you have to hear it?

Yes but remind me again exactly where you see inflationary pressures over the next 12 months.

House prices ?
Oil ?
Food Commodities ?
Industrial raw materials ?
Wages ?

StevieJ

kennyboy66 wrote: »

some of the "interest rates up brigade" think they will be buying houses at 18th Century prices.

They don't seem to realise that once the media switch sides again and interest rates/house prices are a bit lower there will be mass movement of FTB's competing for the dwindling housing supply, prices will increase under the competition. Those with cash should be OK, except for the bods on here who will be thinking BULL TRAP or is that CLAP TRAP? and still be waiting for the 70% reductions.

WTF?_2

:o

setmefree2 wrote: »

But I'm not a regular on this board so can you explain again for me. I'm not trying to get into an argument, I'm just trying to understand. I see 2 economic systems (here and the US) which have suffered a massive decrease in money supply due to the collapse in their banking systems, I see falling commodity prices, rising unemployment....and I can't understand why people are worried about inflation?

Because the governments are loosening monetary policy to a ridiculous degree and will likely end up printing money to fight the deflationary effects of credit contraction.

In the meantime, sterling is sliding to an alarming degree. In a country that is massively dependent on imports that should set a few alarm bells ringing. It's not like someone can flip a switch and the UK will return to it's former status as a net exporter again.

WTF?_2

kennyboy66 wrote: »

some of the "interest rates up brigade" think they will be buying houses at 18th Century prices.

Hmmm, you'd do better to stick to debating the facts instead of attributing made up opinions to those you disagree with.

I've got no time for someone who depends on constructing strawmen to argue against.

WTF?_2

Regarding banking funding:

http://ukhousebubble.blogspot.com/2008/10/uk-customer-funding-gap-737-billion.html

Back in the early part of this decade, loans and deposits were broadly equal. Since then, the amount of household loans rapidly outstripped household deposits. By the middle of this year, the difference was about ₤737 billion, which is about 50 percent of GDP.

How did banks bridge this gap? They went to the wholesale money markets. They issued dodgy asset backed securities, with much of this funding coming from overseas.

There's a good graph there which I can't link to because it's a GIF file.

kennyboy66_2

!!!!!!? wrote: »

I've got no time for someone who depends on constructing strawmen to argue against.

:rotfl::rotfl::rotfl:

StevieJ

setmefree2 wrote: »

But I'm not a regular on this board so can you explain again for me. I'm not trying to get into an argument, I'm just trying to understand. I see 2 economic systems (here and the US) which have suffered a massive decrease in money supply due to the collapse in their banking systems, I see falling commodity prices, rising unemployment....and I can't understand why people are worried about inflation?:o

You are wasting your time, some of us have tried, no one has succeeded. BTW you must have noticed that it is not just him. In the short term interest rates must come down, in the longer term I am sure they will go back up to counter follow on inflationary pressures. One battle at a time please.

setmefree2

!!!!!!? wrote: »

:o

Because the governments are loosening monetary policy to a ridiculous degree and will likely end up printing money to fight the deflationary effects of credit contraction.

In the meantime, sterling is sliding to an alarming degree. In a country that is massively dependent on imports that should set a few alarm bells ringing. It's not like someone can flip a switch and the UK will return to it's former status as a net exporter again.

But do you not think that the massive decrease in money supply from the collapse of the banking system (the fact that they are no longer lending) swamps a half percent cut in BOE base rate and the bringing forward of some public capital expenditure? Surely this deflationary pressure is far greater?

setmefree2

StevieJ wrote: »

You are wasting your time, some of us have tried, no one has succeeded.

I'm not trying to express an opinion here, I'm trying to understand his/her's. I just don't get it? Everything around me says deflation - HPs are falling, stock markets, the cost of cars, everything - where is the inflation?

StevieJ

!!!!!!? wrote: »

Regarding banking funding:

http://ukhousebubble.blogspot.com/2008/10/uk-customer-funding-gap-737-billion.html



There's a good graph there which I can't link to because it's a GIF file.

Love your source of data :rotfl: :rotfl: :rotfl: :rotfl:

How come these charts always start and finish at opportune dates? I am not saying they are fibbing but I would like to see a wider timeframe, and more up to date.