Inflation: an undemocratic stealth tax

hallmark

HAMISH_MCTAVISH wrote: »

Utter rubbish.

The credit crunch had precisely nothing to do with UK lending default rates, and everything to do with the global freezing of credit markets thanks to the mis-allocation of risk by the ratings agencies on American toxic debt.

Lol, can you even hear yourself?

Who mentioned UK Lending? I never. Thanks for agreeing with everything I said by blaming the credit crunch on toxic debt. That'll be the toxic debt that arose directly because of subprime lending to people who couldn't pay their debts yes? Are you able to follow along?

HAMISH_MCTAVISH wrote: »

Utter rubbish.

You should be grateful you're getting the return of your money, rather than whining about low returns on your money.

Yawn. I haven't whined about low returns on my money & you've jumped to the conclusion I had money in savings that I should be grateful for getting back. Once again you're entirely wrong.

Keep trying though, if you post enough eventually you're bound to get something correct.

ILW

HAMISH_MCTAVISH wrote: »

Every 1% rise in base rates takes 12 billion pounds a year out of the economy from mortgage holders alone.

A 7% rise in base rates equates to 84 billion pounds a year.

Now add another few tens of billions being added to company costs as a result of increased corporate debt service costs.

Then increase unemployment by another million or more, adding cost to the government's benefits bill and reducing tax revenue, widening the budget deficit.

Throw in a devastated housing market, share prices plunging and removing money from pension funds, and you have a recipe for economic Armageddon.

It takes a truly special kind of lunacy to think our current level of moderate inflation is a bigger threat to society and the future of our country than turning a recession into another Great Depression.



Alrighty then. :cool:

This money paid in interest is not taken out of the economy. It is recycled back into the economy. It is mainly an exercise in redistribution.

Whereas inflation is reducing the value of the money in the economy.

IronWolf

Like it or not, inflation is a necessary evil. Cash has never been a good long term investment, it is almost guaranteed to decrease in value in real terms, that's nothing new to 2010.

If you want inflation beating returns, you have to get out of risk free investments and start learning how to invest wisely.

HAMISH_MCTAVISH

ILW wrote: »

Whereas inflation is reducing the value of the money in the economy.

Well yes, that's exactly the point of inflation and why every major society in the world chooses to have an inflationary monetary system.

To prevent hoarding and ensure money is always being re-invested for productive gain.

And what better time to incentivise the investment of money in the productive economy than in a time of reduced liquidity and recession?

I think you've just argued yourself into a corner.:)

ILW

HAMISH_MCTAVISH wrote: »

Well yes, that's exactly the point of inflation and why every major society in the world chooses to have an inflationary monetary system.

To prevent hoarding and ensure money is always being re-invested for productive gain.

And what better time to incentivise the investment of money in the productive economy than in a time of reduced liquidity and recession?

I think you've just argued yourself into a corner.:)

But the vast majority of savings are not put undr the mattress. They are put into banks which then invest (or should) on behalf of the savers.

If by investment you mean buying gold, already built domestic property, or just trading existing shares on the stockmarket, that is not actually very productive.

HAMISH_MCTAVISH

ILW wrote: »

But the vast majority of savings are not put undr the mattress. They are put into banks which then invest (or should) on behalf of the savers..

Banks don't invest your money. You lend it to them, they lend it on through mortgages and other loans.

You are simply lending through a middleman.

You expect a risk free return. So you expect the banks to absorb losses on your behalf.

Yet you advocate policies that will decrease the ability of borrowers to pay you back, and increase those losses.

Why?

the_flying_pig

HAMISH_MCTAVISH wrote: »

Kids should be taught to get out there and invest their money with the associated risks rather than just holding out their hands and expecting risk/effort free returns from savings accounts in banks.

Sorry to break it to you, but the economy is getting exactly what it needs.

A good few years of moderate inflation to inflate away debt, and ultra low base rates to stimulate the economy and compensate for government cuts.

I wouldn't expect to see base rates of 5% again for the next decade or more if I were you.

H do you [AFAIK an uneducated Scottish estate agent] really presume to know far better than Alistair Heath? I mean, straight up?

Without even touching on the downsides of inflation that he mentions.

nearlynew

This thread has certainly sorted out the debt junkies from the rest.


(Not that it was that difficult to work out anyway)