BoE urges savers to spend spend spend to save the economy!

Hamstar

Hypothetically, if savers staged a unified grand withdrawal from banks, building societies etc, could we force the institutions to raise saving rates in order to tempt the money back? It would make me feel so good in driving the banks rather than the other way round. Or would we simply collapse the economy? Shades of limited withdrawals imposed (aka Equitable Life, Northern Rock)?

Paul_Herring

Hamstar wrote: »

Hypothetically, if savers staged a unified grand withdrawal from banks, building societies etc, could we force the institutions to raise saving rates in order to tempt the money back?

Hypothetically, yes.

It wouldn't happen though. People aren't organised enough. Even the unions are having problems getting the public sector to go on strike on the same day round Europe to attempt to have any meaningful effect - what hope is there for a significant percentage of British savers to act in unison?

And where would the money go?

It would make me feel so good in driving the banks rather than the other way round. Or would we simply collapse the economy? Shades of limited withdrawals imposed (aka Equitable Life, Northern Rock)?

I think it would require the withdrawal of not only cash savings, but equity as well to collapse the economy, or get anywhere near it.

LardyCake

LongTermLurker wrote: »

nah, doesn't have the same ring - too many syllabals

but accurate!

Loughton_Monkey

The big problem is that no-one (least of all Government) knows what "The Economy" is!

The last so-called Government, in the form of GB, was insistent that Government Spending is "putting money into the economy". A completely facile, ignorant, and almost Marxist view, since ultimately - over time - us taxpayers pay for Government spending. Therefore, what he is doing, is actually taking a few quid from every one of us (i.e. taking it out of OUR economy) and paying it back out to a relative handful of extra middle management in public services, and a few more tax-credit-cruisers.

So the truth is that, at any one time, the same money (plus what the Government prints!) is always in the economy. The only questions being under who's mattress it is and/or who is controlling what it is spent upon.

Time was when Monthly Balance of Payments was a headline statistic. For the last 15 years or so, over which time it has become frighteningly negative, it seems to be 'forgotten' as a headline statistic (surprise, surprise). The fact is that it now consistently runs in the order of £10 billion negative per quarter.

So there is actually £40 billion less money 'in the economy' every year, and has been for quite a while. Governments spend 99% of time trying to engineer which of us should get our grubby little hands on it, and extremely little on working out how to reverse the tide. This is a case of 'arranging the deck chairs on the Titanic' if ever I saw one.

All UK citizens are extremely cold, and sitting in a "Jacuzzi of Life" with some warm water in it. For 13 years, the water has been consistently leaking out an inch or two a month, and all Gordon Brown has ever bothered to do is lamely stir it around, dictating who get's the deeper end. Message to Dave and Cleggy: Mend the bl***y Jacuzzi!

Primrose

I can't help raising a wry smile at Mr Bean's comments that older house owners have benefitted from a rising house market over the years. They haven't really unless they sell their properties and go and live in a tent. Yes, the value of our house has appreciated considerably but we get no benefit from it. It has moved us into a higher Council Tax band and as we have no plans to move, there is no way of capitalising on that increase.

Paul_Herring

Primrose wrote: »

It has moved us into a higher Council Tax band and as we have no plans to move, there is no way of capitalising on that increase.

There's always equity release. Not that it would be cheap....