The story from the inside: David Blanchflower

Graham_Devon

purch wrote: »

The Base Rate will drop to 1/4 %, sometime in the next 2 quarters.

Interesting.

Why do you think this?

Wouldn't that just say we are still in trouble, but, its getting worse, so further mesaures needed?

Heyman_2

They recently did this in Sweden (i.e. rate drop from 0.5% to 0.25%).

I'd be surprised if it happens - they would have to think that we are still headed towards deflation despite all the QE and interest rate cuts thus far.

Would be great for my lifetime tracker though :cool:

chucky

Graham_Devon wrote: »

Interesting.

Why do you think this?

Wouldn't that just say we are still in trouble, but, its getting worse, so further mesaures needed?

not because things are getting worse but to force banks to stop depositing funds with the central banks and hoarding funds and to force them to lend.

Graham_Devon

chucky wrote: »

not because things are getting worse but to force banks to stop depositing funds with the central banks and hoarding funds and to force them to lend.

Umm ok, just sounds like getting worse if were having to go down option "force".

I know we shall disagree on this, so shall we leave it here

Afriend_2

Sounding a bit reasonable today Graham. Are you feeling o.k?

chucky

Graham_Devon wrote: »

Umm ok, just sounds like getting worse if were having to go down option "force".

I know we shall disagree on this, so shall we leave it here

you can have the 'getting worse view'.

it's part of the economic process to getting back to normality not the getting worse scenario. banks see it as more 'profitable' and 'safer' to deposit with the central banks or hoard it than lend it on the inter-bank market.

by lowering it again it would make it less attractive than deposit at the central banks. the banks as they are profit orientated will have to put the money back on the markets.

purch

Wouldn't that just say we are still in trouble, but, its getting worse, so further mesaures needed?

Partially.

Yes we are still in trouble.

No it won't get worse.

But it won't improve unless money starts to slow through the system.

purch

Is that a sign that the medicine is working so well we need ever increasing doses of it?

Dunno about you mate, but I certainly need ever increasing doses.

mewbie_2

purch wrote: »

But it won't improve unless money starts to slow through the system.

Do you mean slow? Or flow?

purch

I meant Flow..........but as i was typing it Cadillac Williams scored a TD.

Either that or it was a Freudian Slip.