Time to raise interest rates, time to stop false BRICK economy

SuperV

It is time to raise interest rates. It is time to stop false BRICK economy.

Only bankers are making themselves rich while skinning everyone else based on paper gains of the housing market. It is time to stop support for moribund mortgage market. It is time to stop paying absurd salaries and benefits to civil servants - £100k at most. It is time to stop paying absurd pensions at absurd levels for civil servants agreed when their salaries were much smaller and when the economy was much better - their average should be the same as the average pension in the private sector. It is time to stop making and waging wars and cut military budget more than 50%.


It is time to start making, thinking, exploring!


Let's start:
1) Government savings ~£50 billion a year.
2) BoE should stop any kind a support for mortgage market in the next 5 years. That will free additional ~200 billions.
3) For each 0.5% of interest rate increase £100 billion should be created and put only into research and development. Fields - space, marine research, high technologies and production.


This should result in:
1) Estimating that the interest rate should rise to 2% in the next 12 months, that will create 300 billions for new value creation based on real facts, not paper gains. Including £200 billions from mortgages and £50 billions a year of savings from bloated public sector, that will make 750+billions in the next 5 years.
2) Increase tax on £200k a year income to 60%. Decrease tax on capital gains. Increase dividends 0% threshold to £200k.


With above investments in R&D it will create a nation of entrepreneurs instead of rich paper-pushers.


Simple, isn't it.

Graham_Devon

Whatever people think of the opening post, was refreshing to see something new, with some ideas, regardless of your opinion on them.

TedButler

Everyone says no do not raise rates until the recovery is stronger.

Well what if the recovery was just a cover up and going to get far worse, but inflation forces interest rates up?

Graham_Devon

Graham_Devon wrote: »

Whatever people think of the opening post, was refreshing to see something new, with some ideas, regardless of your opinion on them.

My post don't make much sense now that the "you are an idiot" posts have been removed!

vivatifosi

Graham_Devon wrote: »

My post don't make much sense now that the "you are an idiot" posts have been removed!

I thought something was missing.... Did someone get PPR'd?

lisyloo

1) Government savings ~£50 billion a year.

In thoery I'm all for that. We can't live beyond our means.
Personally I'd shut down all libraries.
But on the whole very difficult decisions.

2) BoE should stop any kind a support for mortgage market in the next 5 years. That will free additional ~200 billions.

I disagree. Household spending provides money for business.
Regardless of any morality it's essential that household spending isn't crippled for the health of the economy.

3) For each 0.5% of interest rate increase £100 billion should be created and put only into research and development. Fields - space, marine research, high technologies and production.

You are assuming the money is available.
Putting up interest rates will harm businesses and banks.
It will increase repossessions and bankruptcies.
I don't think it's a good idea.
We need to keep rates down and deflate away some of our debt, and repay it gradually.

1) Estimating that the interest rate should rise to 2% in the next 12 months, that will create 300 billions for new value creation based on real facts, not paper gains. Including £200 billions from mortgages and £50 billions a year of savings from bloated public sector, that will make 750+billions in the next 5 years.

No it won't because lots will not be able to afford it and default.
You cannot get blood out of a stone.
You cannot get increased interest from bankrupts.
Banks will suffer, so will business and the whole economy.

2) Increase tax on £200k a year income to 60%. Decrease tax on capital gains. Increase dividends 0% threshold to £200k.

I'm not against it in theory but we have to be careful not to disincentivise good people and have a brain drain.
I don't know enough to comment on when a brain drain would kick in.

geneer

Graham_Devon wrote: »

My post don't make much sense now that the "you are an idiot" posts have been removed!

Hamish got deleted...as did my pot vs kettle addition. :rotfl:

Caveat_Mortgagor

SuperV wrote: »

2) Increase tax on £200k a year income to 60%. Decrease tax on capital gains. Increase dividends 0% threshold to £200k.

With above investments in R&D it will create a nation of entrepreneurs instead of rich paper-pushers.


Simple, isn't it.

Your tax changes highlighted will encourage and incentivise the exact opposite of the aim you state underneath.

You intend to reward profit that has been made with no effort (lets call them 'paper gains') but will penalise the successful entrepreneurs who declare an income.

If person A makes £1m of paper gains over the next four years and person B (an entrepreneur) delares £1m income over the same time period, you are saying that you would change the tax system in favour of person A to the detriment of person B.

You also talk of creating money as interest rates go up. The point of putting rates up would be to curb inflation. Creating money (Q.E. to you and me) would do the exact opposite.

You are right though that we need to create conditions in which innovation & high technology industries can thrive and create more new production jobs in this country.

brit1234

By increasing interest rates you encourage savings, these extra savings can be lent out to business investment or mortgages.

House prices will fall quicker, allowing those who borrowed irresponsibly to be repossessed. Lower prices with stable lending will boast the housing market and associated merchandise sales.

lisyloo

By increasing interest rates you encourage savings

Not necessarily.
If you increase my borrowing rate, I will withdraw my savings and pay off the borrowings.

If you increase interest rates a lot of people will have less to save from their income.

FTBFun

brit1234 wrote: »

By increasing interest rates you encourage savings, these extra savings can be lent out to business investment or mortgages.

Hang on - people aren't consuming as much as they used to (fairly obvious from the pretty crap retail statistics that have been around in recent years) - at least on non-essentials. Food and fuel costs have gone up a lot mainly hence the belt-tightening. Where on earth do you think these "extra savings" are coming from - underneath a load of mattresses?

House prices will fall quicker, allowing those who borrowed irresponsibly to be repossessed. Lower prices with stable lending will boast the housing market and associated merchandise sales.

You've said above that more will be leant out on mortgages if there's increased savings - surely the reason why the market is stagnant at the moment is because of a lack of mortgage financing - easing this will, given that the supply side issue hasn't changed substantially just lead to increased demand. Quite how you get house prices falling from this is beyond me.