Student loans negative interest, pay cuts, pensions & savings gains!

lana22

stephen163 wrote: »

Golden rule, never voluntarily pay your student loan! You are better off sticking the money in a high interest savngs account. I guess with 0% interest on the loan and ISA's at around 3.5%, this has never been more true.

Last year the interest was something like 4.5% though.

Lokolo

lana22 wrote: »

Last year the interest was something like 4.5% though.

It was 4.8%. Then 3.8% and now 1.5%.

Even when it was 4.8% you could get better rates in ISAs as interest rates were a little higher back then!

hermoine_2

I really don't understand.

I am worse off even though I am now working part time, our money just does not meet the outgoings, so whatever the figures, the actuality for me is that prices are going up for all the things I use and our money is staying the same - even though we have £400 a month that we didn't have before, we also did not have the childcare to pay for or the fuel to get to work or the parking fees!

I am not too frightened to give up work but I feel we are worse off than when I stayed home.

On top of all of that, after hearing Martin on the radio, my hubby has decided that what Martin was saying was that we should spend our savings :eek:. I am off to open my own saving account and not tell him where I put it!

H

Kaibil

We may have deflation but it is not good news for pensioners on fixed income. The supermarket prices are rising very sharply and their tactics to trick you are getting more devious. In Tesco, so called discount brands can be more expensive than even value products and the comparison labels make it virtually impossible to compare like with like. Although fuel is now a lot cheaper than it was some months ago it is still very high relative to the price per barrel on the open market. All the problems are magnified when you live in a rural area with no public transport as you have to go many miles to visit another supermarket to compare prices and even then the choice is limites compared to the variety of choice in any large town.

It is all very well Martin doing his "drop down two levels" TV programme but what we need is some clarity is shopping.

Andreg

Everyone's on about deflation, but we dont have it. Just because RPI has been artificially, and temporarily, depressed by cuts in mortgage rates, the chattering classes are getting all excited about a deflationary spiral. Its rubbish! People don't hold off spending because prices are falling. People don't put off paying the rent, fuelling the car or eating because it might be cheaper next year - they need to live today. We have had deflation on flat screen TVs etc for years, and that certainly hasn't put people off buying them.

Before long this year interest rates will need to rise to head off rising CPI, and the feed through to mortgage costs will make RPI rocket.

themanbearpig

Andreg wrote: »

Everyone's on about deflation, but we dont have it. Just because RPI has been artificially, and temporarily, depressed by cuts in mortgage rates, the chattering classes are getting all excited about a deflationary spiral. Its rubbish! People don't hold off spending because prices are falling. People don't put off paying the rent, fuelling the car or eating because it might be cheaper next year - they need to live today. We have had deflation on flat screen TVs etc for years, and that certainly hasn't put people off buying them.

Before long this year interest rates will need to rise to head off rising CPI, and the feed through to mortgage costs will make RPI rocket.

Well said, and completely true. The government is clearly messing with the data, or using irrevent figures to justify their own agenda. Anyone with half a brain can see we arn't experiencing Deflation on anything worth worrying about.

bigheadxx

This so called deflation is nothing more than a blip and has come about because of 2 things:

1. Inflation is based on the increase in prices over 12 months, April to September 2008 saw an accross the board rise in prices, particularly food and petrol, brought about by the sudden increase in the price of oil. It stands to reason that a 30% reduction in the price of petrol will push inflation down and as petrol is cheaper the cost of distributing goods is also cheaper leading to lower prices.

2. The sudden and rapid economic downturn means that retailers and suppliers have huge quantities of unsold stock which they need to shift. The demise of several large retailers has also "dumped" liquidated stock into the supply chain which is generally being sold for less than it cost to produce. A lot of stock already ordered for this year was ordered based on forecast sales that will now not materialise. Therefore there is currently an over supply of consumer goods especially TVs, sofas, clothes, furniture and retailers are desperate to shift stock.

This current moment in time is therefore entirely unique because petrol / fuel is likely to be more expensive this time next year which will mean higher inflation. This will mean that distribution costs are higher leading to higher prices, more inflation. The current glut of excess stock that companies have found themselves with will have largely been sold. Companies will have made more cautious purchasing decisions and will be holding less stock. This will reverse the supply / demand ratio we currently have meaning prices can be higher because there are fewer goods and therefore higher demand.

The CPI is way above the 2% target that the government set and after this very short period of seeming deflation it is likely that recent actions by the government will see inflation back to the historic highs of the 1970s and if you think that cant happen then remember that the guy responsible for this disaster told us that he had abolished boom and bust therefore implying that what is happening now could never happen.

poppy10_2

Without the VAT cut CPI would be 4.6% currently.

MPD

hermoine wrote: »

my hubby has decided that what Martin was saying was that we should spend our savings :eek:.

My wife was way ahead of Martin on this one!

Lex555

It's interesting listening to everyone here, the media, the government/banks, businessmen and so called experts harp on contradicting each other and trying to sound like they know what they're talking about. The bottom line is very few of them actually do!

And many of those who do only seem to understand it from their own perspective, or understand it within their specific area of expertise. The fact is that the biggest cause for concern from this whole economic crisis, is runaway INFLATION!

To understand all this, you need to understand the way they system really works which is unknown to most, not listen to the rubbish they barf in the media.

1st of all, people say that excessive lending caused the economic so called crisis. This is partly true, but the whole reason the banks began excessive lending practices in the 1st place was precisely to prevent the system from collapsing. But someone lost confidence and it all spiralled out of control anyway. But the system it's self (fractional reserve banking) is flawed as it basically functions much like a pyramid scheme.

But the most important thing to understand is that when a bank makes a loan or a government takes a loan, it is not taken from any kitty! I mean think how ludicrous it is and think how naive the public/media are for not questioning WHO the government are actually borrowing from money from when they take out these massive "loans" to bail out the banks. Or maybe it's deliberate and they have a hidden agenda? The fact is they are borrowing it from.... (wait for it)... THE BANKS!! And who are the banks borrowing it from? Nobody! They are typing it into a computer and then the money simply comes into existence as if it came out of thin air. But they can only legally do this if it is an official "loan" to somebody. Which is why the government need to borrow it from them to give back to the banks - as ludicrus as it sounds. Otherwise the banks could create all they money they liked and then they really could destroy the economy! This process is what causes inflation as inflation is a result of more money being in the economy than there are goods and services for it to represent, therefore it's value decreases and prices increase. I suspect the goverment want to carry on this practice but without the mug public thinking it's a bad thing and getting us into more debt, which is why they changed the way they did it slightly and just started calling it "Quantatitive Easing" instead! lol. Nice big words that they dont even understand themselves but to make it seem like they know what they're doing.

So the bottom line is, if delation loomed, the government could counteract the effect by simply borrowing/QE as much money as it liked! The important issue is who they are giving the money to. Giving it straight to the banks may be great for the banks, but not so good for the economy. i.e It's no good lining the pockets of a few if that money is simply going to stay with them and not filter through to the rest of the economy. People harp on about how bad the government debt is without realising government debt can be good if that money is redistributed to the right places, as the only negative effect of not "paying it back" should be inflation. Infact if they did pay of the national debt we'd be in trouble as all that means it that the money is destroyed and ceases to exist! However If there is no inflation, but no deflation from mass government debt/QE, then it's probably doing it's job just fine, however if there is still deflation then it may not filtering through to the right places.

The government ministers are stupid and are probably just following the advice of their advisors who for all we know could be be on the payrol of the big bank bosses and this whole thing could have been a conspiracy from the very beginning. With every stage being thought through so that by the time the world realises whats happened, it's too late and nothing can be proven/pinned on individuals. If, however the government were to redistribute that new found wealth elsewhere, then the economy would not go into deflation, unless there were large psycological forces at work. These are controlled by the media of course, but the effect would only be short term. Infact, in theory, the media could begin to end the recession tommorow if they wanted. All they would have to do is say it is over, and eventually people would believe it and it would therefore be over, as the biggest factor in the recession is psycological. Google "debt as money" and "chris martenson" for more information on all of this. Although what they say is gloomy and not just about the economy, so if you have a history of depression it's perhaps best not to dig too deep to avoid a relapse!

However, if defalation does not stop immediately, it may be due to a delay effect and may be caused by companies having excess stock and a short term issue as bigheadxx said. Therefore once this short term issue has ended and companies have sold and corrected their manufacturing rates, the delayed inflationary effect of the borrowing/QE may kick and as we realise that the government have overcompensated big style and we go into hyper inflation! I think people perhaps need to stop thinking about the whole recession issue and bank bailouts as one of the same aswell, but see them as separate issues. Bailing the banks out could be argued as making the whole economy worse as the end result could be that eventually the bankers will have enough money to buy the world and own everything in it, and will therefore control the world almost entirely. The charging of interest is the biggest factor to have started all this and the only way to solve the problem permanantly may be to nationalise the whole industry and abolish interest rates, then the government wouldn't need to pay interest on loans from banks that it is taking out, (often of late) for the banks own benefit!