Mervyn King: Raising rates would cause another recession

suburbanwifey

ILW wrote: »

The more people put into banks as savings, the more the banks have to lend out to small businesses etc. Savers cash does not just sit in a vault doing nothing.

Yes, that is true, but the savers on here who complain all the time, they want interest to spend, so they can leave their savings untouched. They are being selfish. Why should the BOE praise financially those that can afford to save? The majority in this country are scraping by and they are the majority and ignoring those people would be suicide for this country as a whole - the economy, small businesses and individuals. A collapse of the housing market would hurt everyone! a saver losing some interest only hurts them.

Graham_Devon

suburbanwifey wrote: »

Its not savers who keep the economy afloat. Its not savers that keep people in jobs. It not savers who give more money to the Govt. in VAT etc. its spenders. Raising rates would ruin this country. Too many borrowed too much to buy a home (and I wish people would stop criticizing those that bought expensive homes to live in) - people need to live somewhere! (paying rent to a landlord is lining the landlords pocket, paying off his mortgage, you may as well line your own pocket and pay off your own mortgage as pay off his!)

They are right to not give a stuff about savers, savers don't help anyone but themselves. The savers whine because they want more interest on their money, so they can just spend that and leave their savings alone.

If people are interested in the UK economy as a whole, they would agree with the BOE's decision to keep rates are virtually zero, as they should be. Thousands would be repossessed, homeless, claiming benefits to pay to live in landlords homes with high rents that are not payable on most wages out there for the majority etc.

Shops, businesses and all sorts are collapsing as no one is spending (apart from me, but I am well off so I can afford to) - and by the way, I have no mortgage, I own my home so whatever the hell interest rates do do not bother me. But I feel keeping people away from repossession is a lot more important than savers who greedily care about no one but themselves. And yes, I AM A SAVER as well as a spender! so I'm not being selfish when I make these points.

Everyone out here (yes YOU!) wants what would benefit THEM, savers want rates up, mortgage holders want rates low - the BOE is doing what is best for the country, not YOU. That is their job!

All the comments about people should worry can they afford their mortgage when rates do eventually go up. Its like a narcissistic desire to enjoy watching people suffer, lose their homes and then you can gloat! Sick.

I'm sorry, but this is all nonsense.

The economy needs a balance of both spenders and savers, otherwise we end up in the situation where we did. Everyone spending, and in our case, spending debt, meant the economy could grow and grow.

But there comes a point where the economy cannot grow anymore, without inventing more money in order to allow people to spend.

We could hope that everyone spends again, but that wouldn't propell growth, not in any meaningful way year on year. So we have to naturally realign to economy with peoples abilities.

You can't just continually spend and grow. That's a pyramid. At some point the money is going to run out to provide growth, and that's where we are at.

A prime example of spending is Rangers FC. They were spending more than they bought in each month. They are now in administration. But by your theory, spending was correct and it provided growth. That's simply wrong.

I think you confuse spending and spending money we don't have on goods manufactured in a different country.

Generali

hallmark wrote: »

Yes and he hasn't done that job. Inflation has been way above target for a long while but King refuses to raise Interest rates & simply justifies it by saying it's because of where inflation "will be" in one year, two years, or however far away he has to say to justify his policy. Weasel words.

The job of the MPC is to look after monetary policy.

The primary aim in general is to keep inflation within limits but that is not the only job of the MPC. They are also meant to support Government economic policy.

What precisely would you do with monetary policy and what do you think the outcome would be?

I only ask because there seems to be an assumption that to grow the economy, all the Tories have to do is pull the lever marked 'growth' and they won't do it because of the bankers or their rich mates or because they get a sadistic pleasure in punishing the poor because of the kinky sexual practices they learnt in Public School. Similarly, I think many believe that all the MPC needs to do is raise interest rates by x% and inflation will fall by y%.

It simply isn't the case.

Don't get me wrong, low interest rates are part of financial repression and there is certainly a debate to be had about whether financial repression or another solution (such as that chosen by Iceland which I favour) is the right one.

If not financial repression then what in its place?

Graham_Devon

suburbanwifey wrote: »

Yes, that is true, but the savers on here who complain all the time, they want interest to spend, so they can leave their savings untouched.

You are kind of shooting your own foot now.

Sibley

At the end of the day it just confirms rates are going nowhere. Hooray!!!!

suburbanwifey

Graham_Devon wrote: »

You are kind of shooting your own foot now.

No I am not. I am not looking out for me in my comments (to benefit me rates would go up for savers as I have a lot in savings and no mortgage) but I am saying for the good of everyone! few on here think about all people, they think of just themselves. So no, I am not shooting myself in the foot. I'm thinking of the millions out there on low wages, without a buffer of any savings in the event of a job loss, those with high mortgages as it wasn't their fault house prices went ballistic was it, they just needed somewhere to live.

Savers spending interest barely helps anyone - the majority being able to spend does.

ILW

suburbanwifey wrote: »

If people are interested in the UK economy as a whole, they would agree with the BOE's decision to keep rates are virtually zero, as they should be. Thousands would be repossessed, homeless, claiming benefits to pay to live in landlords homes with high rents that are not payable on most wages out there for the majority etc.

.

Those that have put away some savings for lifes unforeseen circumstances, are much less likely to get repossed or end up relying on the state.

AndyGuil

Sibley wrote: »

At the end of the day it just confirms rates are going nowhere. Hooray!!!!

Today they're not.

ILW

suburbanwifey wrote: »

No I am not. I am not looking out for me in my comments (to benefit me rates would go up for savers as I have a lot in savings and no mortgage) but I am saying for the good of everyone! few on here think about all people, they think of just themselves. So no, I am not shooting myself in the foot. I'm thinking of the millions out there on low wages, without a buffer of any savings in the event of a job loss, those with high mortgages as it wasn't their fault house prices went ballistic was it, they just needed somewhere to live.

Savers spending interest barely helps anyone - the majority being able to spend does.

A primary cause for house prices "going ballistic" was that IRs were too low at the time.

suburbanwifey

ILW wrote: »

A primary cause for house prices "going ballistic" was that IRs were too low at the time.

So you wanted higher interest rates to buy a home so we could all line banks/building society's pockets? Don't the bankers of this world get enough?? Or did you want higher interest rates because you are a saver? I guess you are a saver huh? wanting people crippled by high mortgage costs due to high interest rates so you could line your pocket with interest yes?

High interest rates mean higher costs to borrow, on houses, on loans, to buy a car ... so interest rates should have been higher so we could all have been poorer to give the savers benefit huh