Inflation falls to 2.4%

ILW

grizzly1911 wrote: »

There is also a large proportion that have suffered on the other side of the equation.

Most seem better off where I am. Not me though.

Has rather rewarded the indebted and punished the prudent.

wotsthat

ILW wrote: »

Most seem better off where I am. Not me though.

Has rather rewarded the indebted and punished the prudent.

I take the point but 'high' inflation (of 2.4%) and low interest rates introduced to deal with a financial crash the like we've not seen for generations is hardly a reward to the indebted. They're probably still only treading water at best.

I'm better off and consider myself prudent. Currently getting 4.25% on cash ISA's (until September anyway), got an unexpected bonus in March, a 4% pay rise in April, paying 2.5% on a small mortgage, pension plans on track and inflation at 2.4% too.

If I was indebted I'd be sat in a bigger house and reliant on HPI to provide for retirement because I wouldn't be able to invest anywhere near the amount I currently do.

John_Pierpoint

On the 15th August 2004 Sainsburys in Eltham was selling diesel for £0.770 per litre.
On the 23rd August 2008 Morrisons at Erith...... "....... "....... ".... " £1.209 .." .. " .

Now what was that reduction in the petrol price, caused by the switch to diesel vehicles?

Can I recommend a title for this month's book club read?

http://www.independent.co.uk/arts-entertainment/books/reviews/paperback-review-the-physics-of-finance-by-james-owen-weatherall-8547041.html

Chapter 8 has a lovely description of an attempt to cut CPI by 1.1% in USA. in order to find a few billion to "painlessly" close the social security fund deficit caused by the arrival of the demographic time bomb.

The verdict is "inflation down by 1.1%", now go and find the evidence.

Of course that sort of thing would never happen over here, would it?

http://www.guardian.co.uk/tv-and-radio/2013/may/21/hillsborough-they-buried-truth-review

http://www.cityam.com/article/oil-probe-extended-trading-houses

http://www.huffingtonpost.com/2013/04/25/financial-stability-oversight-council-libor_n_3158369.html

Fortunately over in USA the wrinklies in the AARP were not fooled.

roddydogs

So inflation falls to 2.4%, big deal, so have all the I.A accounts best you can get now is 1.7%, so saver are still being shafted.

HAMISH_MCTAVISH

ILW wrote: »

Most seem better off where I am.

Has rather rewarded the indebted and punished the prudent.

wotsthat wrote: »

I take the point but 'high' inflation (of 2.4%) and low interest rates introduced to deal with a financial crash the like we've not seen for generations is hardly a reward to the indebted. .

Low interest rates do not punish the prudent.

Prudence, by definition, is showing the ability to govern and discipline oneself by the use of reason, displaying sagacity or shrewdness in the management of affairs, and exhibiting skill and good judgment in the use of resources.

Anyone that assumed interest rates wouldn't plummet when the country was faced with soaring unemployment, deflationary risks in the economy, global financial crisis, and the worst recession in living memory was clearly about as far from prudent as you can imagine.

This ongoing attempt to define those who got it wrong on interest rates, and lost out as a result, as 'prudent' is laughable..... By definition they can't be. They were wrong.

Furthermore having debt is not imprudent. Taking on a mortgage and buying a house is one of the best ways to lower lifetime housing costs, and so is by definition "prudent".

Lower rates have indeed rewarded those who took on a mortgage to buy housing, but as buying housing lowers lifetime housing costs, it is therefore prudent, so lower rates by definition have mainly rewarded the prudent.

andyroberts1967

I'd agree with Hamish, and also say that the imprudent people are more likely to have credit card debt, and as we all know, the APR rates haven't exactly crashed, so it's just a case of secured loans that have been more affordable.

Graham_Devon

HAMISH_MCTAVISH wrote: »

This ongoing attempt to define those who got it wrong on interest rates, and lost out as a result, as 'prudent' is laughable..... By definition they can't be. They were wrong.

So basically, you appear to be suggesting prudence doesn't even exist, as NO ONE back in 2006 or previously would have seen interest rates at 0.5%.

Codswallop Hamish.

Your definition of prudence is completely and utterly wrong. Prudence is not guessing interest rates. And it's certainly not gambling on them.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Your definition of prudence is completely and utterly wrong.

Definition of PRUDENCE:

1: the ability to govern and discipline oneself by the use of reason
2: sagacity or shrewdness in the management of affairs
3: skill and good judgment in the use of resources
4: caution or circumspection as to danger or risk

http://www.merriam-webster.com/dictionary/prudence

Prudence is not guessing interest rates. And it's certainly not gambling on them.

Prudence is using reason, shrewdness, skill and good judgement to manage your financial affairs and minimise risks, including the risk of interest rates falling in the event of a recession.

It really is that simple.

chucknorris

Graham_Devon wrote: »

So basically, you appear to be suggesting prudence doesn't even exist, as NO ONE back in 2006 or previously would have seen interest rates at 0.5%.

Codswallop Hamish.

Your definition of prudence is completely and utterly wrong. Prudence is not guessing interest rates. And it's certainly not gambling on them.

I thanked Hamish's post but I have thanked yours as well because I see it slightly differently and would have phrased it differently to Hamish. I would have said people who got themselves into a good position when buying/investing were rewarded by a surprisingly much larger fall in the base rate than could have been anticipated and also for a very long period too, which is still ongoing. But I certainly don't buy into the 'only gamblers were rewarded scenario' although it will of course apply to some, but not the majority.

System

HAMISH_MCTAVISH wrote: »

Definition of PRUDENCE:

1: the ability to govern and discipline oneself by the use of reason
2: sagacity or shrewdness in the management of affairs
3: skill and good judgment in the use of resources
4: caution or circumspection as to danger or risk

http://www.merriam-webster.com/dictionary/prudence




Prudence is using reason, shrewdness, skill and good judgement to manage your financial affairs and minimise risks, including the risk of interest rates falling in the event of a recession.

It really is that simple.

We're not in the real world here.

Here, prudence is waiting for a house price crash, getting one, and then being swallowed up in greed and wanting more of a crash while house prices rise back up.

During this time you should hoard cash in the face of high inflation and lose money on shiny metal.

THAT, is prudence.