We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Deflation bad for savers?
Comments
-
OK - here is my take.
What matters for savers is real (net of inflation interest rates).
If savers have a 100k pot, get 6% interest and inflation is 4% then either they can spend 2k and remain as well off as they are now or spend 6K and reduce the real value of their savings by 4k (In start of period pounds)
Effect is the same if interest rates are 0% and inflation is -2% - spending 6k reduces the value of their savings pot by 4K (pot down to 94K but this is worth 96K in start of period pounds)
Only thing is that the lowere inflation/interest rate world the saver may benefit - from the tax and benefits system as spending from capital is not taxable (Consider the case of 12% interest rate snad 10% inflation - the 12k of interest earnings would certainly be taxed thus reducing the savers real income to probably a negative amount). And on the other side of this coin, with constant real interest rates, the higher the nominal rate the more money is transfered from the saver to the government by taxing icome which is actually just adjustment for inflation.
A consequence I am sure Rachel and her friends at the treasury are all to aware of...I think....0 -
</p>Only heard this on Victoria Derbyshire's PMQs programme on R5:
Rachel Reeves (a v intelligent university peer of mine, and a labour MP after the next election unless there's total melt-down) saying that "for savers, Gordon Brown is right, the worst thing for savers is deflation, because that will erode the value of their savings..."
Our mutual aquaintance is mistaken IMHO.Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable. J. K. Galbraith0 -
She's quite a hottie, if I could just think of some way to stop her making silly remarksSir_Humphrey wrote: »</p>
Our mutual aquaintance is mistaken IMHO.
"Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
Guy_Montag wrote: »She's quite a hottie, if I could just think of some way to stop her making silly remarks
You haven't met her (she has also lost quite a bit of weight). She is rabidly Blairite and worked for the BoE as an economist on graduation. I also know some other gossip that has no place on a public forum, as she could find it rather embarrassing! Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable. J. K. Galbraith0 -
Sir_Humphrey wrote: »You haven't met her (she has also lost quite a bit of weight). She is rabidly Blairite and worked for the BoE as an economist on graduation. I also know some other gossip that has no place on a public forum, as she could find it rather embarrassing!
PM me here or back at GHPC! I love salacious gossip, but I'm very discreet!"Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
In New Labour-speak, facts, logic, reason, and integrity are in short supply. So It is possible that this person meant what she said. As for attributing it to Brown, I can't believe he is stupid enough to have said that, other than as slip of the tongue.
No doubt Labour would like very low interest rates coupled with high-ish inflation (not hyper-inflation because then the country would be crippled by pay strikes) in order to minimise the cost of servicing the crippling debt that they have built up. Fortunately they are unlikely to be in power long enough for their way of doing it to sustain. The Conservatives will inherit a terrible shambles -- as always after a Labour government -- but at least their actions will not be dominated with thoughts of buying votes from a client state. Therefore, however painful the necessary treatment might prove to be, perhaps those who have been prudent with their money will get no worse a crack of the whip than anyone else.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
In New Labour-speak, facts, logic, reason, and integrity are in short supply, and spin is everything. So It is possible that this person meant what she said. I suspect that in Leeds West you could put up a mangy sheep wearing a red rosette as the Labour candidate and it would still get elected, so her apparent stupidity is probably no impediment. As for attributing it to Brown, I can't believe he is daft enough to have said that, other than as a slip of the tongue.
No doubt Labour would like very low interest rates coupled with high-ish inflation (not hyper-inflation because then the country would be crippled by pay strikes) in order to minimise the cost of servicing the crippling debt that they have built up. Fortunately they are unlikely to be in power long enough for their way of doing it to sustain. The Conservatives will inherit a terrible shambles -- as always after a Labour government -- but at least their actions will not be dominated with thoughts of buying votes from a client state. Therefore, however painful the necessary treatment might prove to be, perhaps those who have been prudent with their money will get no worse a crack of the whip than anyone else.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
Apologies for double -post.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
In effect she is probably right, the retail inflation pensioners might see does not follow their falling interest returns.
I believe they do sometimes calculate various measures of inflation according to peoples spending habits just like levels of money supply is monitored.
I can easily see pensioners becoming worse off, a stable economy is probably best for them either way as healthy competition will always see some low prices if businesses thrive.0 -
GeorgeHowell wrote: »In New Labour-speak, facts, logic, reason, and integrity are in short supply, and spin is everything. So It is possible that this person meant what she said. I suspect that in Leeds West you could put up a mangy sheep wearing a red rosette as the Labour candidate and it would still get elected, so her apparent stupidity is probably no impediment. As for attributing it to Brown, I can't believe he is daft enough to have said that, other than as a slip of the tongue.
No doubt Labour would like very low interest rates coupled with high-ish inflation (not hyper-inflation because then the country would be crippled by pay strikes) in order to minimise the cost of servicing the crippling debt that they have built up. Fortunately they are unlikely to be in power long enough for their way of doing it to sustain. The Conservatives will inherit a terrible shambles -- as always after a Labour government -- but at least their actions will not be dominated with thoughts of buying votes from a client state. Therefore, however painful the necessary treatment might prove to be, perhaps those who have been prudent with their money will get no worse a crack of the whip than anyone else.
A party political, with repitition as if it isn't bad enough once.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.2K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.2K Work, Benefits & Business
- 600.9K Mortgages, Homes & Bills
- 177.5K Life & Family
- 259.1K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards