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Time to raise interest rates, time to stop false BRICK economy
Comments
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Caveat_Mortgagor wrote: »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.
An entrepreneur will take money through dividends. A paper-pusher will take money as income. So, an entrepreneur (person
will get much more.
QE for RD will be offset by interest rate increase ~ inflation neutral. I believe that 12 months after the QEfRD sterling will rise 10-20% and curb inflation. R&D is what creates wealth.0 -
In theory 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.
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.
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.
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.
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.
QEfRD will create money for Research, Development and Production. Those in wrong jobs will suffer. Those that adapt will prosper.
QEfRD will be inflation neutral if BoE rate is increased.
Changes in Tax will push changes in economic landscape from paper gains (house prices and banking) to a real wealth creation.
Those used to earn easy money will suffer. Those that are creating wealth will prosper. Easy.0 -
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.
Exactly! Those that create real wealth will profit even more. Start preparing to run your own High tech company.0 -
foreversummer wrote: »Nice to see SuperV back.
Does anyone remember the massive thread he started in 2008 called "Interest Rates - BoE should cut them or the governer should go!?
A lot of folk on here though he was crazy to suggest such a thing.
Foreversummer
Thank you!
It is time to address the real reason behind all problems - the wrong incentives in economy. On a back of a paper figures are generally neutral in the first 12 months, but then I expect QEfRD to start giving first positive results.0 -
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.
QEfRD + increase in interest rate ~neutral affect on economy.
QEfRD provides a stimulus for the real wealth creating professions, not paper ones. Those in the right professions will have much more to spend.0 -
thescouselander wrote: »So what percentage of civil servants are paid more than £100k pa? The vast majority aren't even on a quarter of that amount. I suspect your proposal on this front will save the square root of FA.
Here's a better idea - Double to minimum wage and stop all benefits to people who are working (working tax credits etc). That should save the tax payer a few quid.
GP average is 100k...0 -
The lack of mortgage finance is due to the banks not having enough capital. The traditional source of capital is savings however during the bubble they moved towards selling mortgage backed securities.
Low interest rates and high inflation is discouraging savings and thus the reason for the lack of mortgage financing.
The other point is banks use to lend at about 3.5 times salary. This limited the money they lent out per person. With property prices at 6 times salary and relying back on savings again the money pot can't go as far and reduces further the amount of people that can be lent too.
We need higher rates to encourage savings to allow more lending. These saving funds can come through life style changes or asset transfers.
For example the weak pound is making people invest in precious metals, buy to let properties etc.
Also if people can see that their savings are beating inflation then more people will encourage savings.
The original idea of lowering interest rates was to encourage people to ditch their savings and spend them stimulating the economy in the short term. The problem is once those savings are spent the stimulation ends.
Mortgages are a problem of this economy - BRICK economy based on inflated value of housing.
The only way to avoid bubbles is to create real wealth, not to play a zero sum game.
So, quantitative easing for research and development will create money (print them) for wealth creating professions - so they have more money.
Interest raise will take money out of the other professions.
If you want to do better - have your own company, create jobs and take money as dividends. If you want to be an employee that earns a lot, pay more tax. If you want to be a co-owner, take some money as dividends.
Create wealth = be rewarded. Simple.0 -
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Well according to:
http://www.thisismoney.co.uk/money/news/article-1607881/Interest-rates-News-predictions.html
it now says interest rates won't go up until... the end of 2014! Gosh... That's a very long time!Feb 2012 - onwards MF achieved
September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
April 2018 down to 28.00 months vs 30.04 months at normal payment.
Predicted mortgage clearing 03/2047 - now looking at 02/2045
Aims: 1) To pay off mortgage within 20 years - 20370
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