UK interest rates held at 0.5% for years

Glen_Clark

grey_gym_sock wrote: »

if we'd been in the euro, of course it would have been worse than it has been.

when the Euro as introduced you got 1.4 Euros to the pound, so if we had been tied to the Euro the pound in our pocket would have been worth about 20% more

Glen_Clark

Thrugelmir wrote: »

The UK is not earning enough to match inflationary pay rises. Nor is productivity growing , over the credit boom years it actually fell. As many people preferred leveraging with debt to buy property rather than working hard and earning their money. Rather than investing the profits were frittered away on consumables, holidays and second homes. None of which was of benefit to the wider economy.

Thats about right, and Osborne's Help to Bubble has just moved it up a gear. Osborne has made it much easier for a Bank Manager to lend on property than try to evaluate a business loan, so thats where all the QE funny money is going - to increase housing costs (and housing benefit costs) wheras lending to productive industry is actually falling!!!

sabretoothtigger

talexuser wrote: »

and that was the missing link in the austerity plan... doh!

Austerity plan while increasing debt constantly is an insult to reasonable use of the english language.
Either its forced a withdrawal of government spending or it hasnt and in this case we choose to continue with spending excess. That is the policy failure, its not productive

Austerity is the uk budget after ww2, it was so restrictive we couldnt even import fruit. It favoured a stronger currency I think and slashed spending, we dont have any of that now

In 2012 the British population numbered around 64 million, and the debt therefore amounted to a little over £15,000 for each individual Briton, or around £33,000 per person in employment. Each household in Britain pays an average of around £2,000 per year in taxes to finance the interest

It would make sense to reduce debt so that we can then spend that now reduced cost, we havent and wont do that

bigadaj

Considering how self interested politicians are its interesting that raising rates hasn't been suggested. Obvious pain and adverse effects but if you look at the sheer numbers and predominance of voting by the retired and elderly, many of whom are suffering the cost of low savings rates Nd inflation, it sounds like a tactic. Definitely one for farage and co, they'd surely walk Eastbourne, Worthing etc?

I realise that boe are nominally independent but targets and rules can be changed.

grey_gym_sock

sabretoothtigger wrote: »

Austerity is the uk budget after ww2, it was so restrictive we couldnt even import fruit. It favoured a stronger currency I think and slashed spending, we dont have any of that now

no, public spending was not slashed after WWII. that's when the welfare state was really getting going - the foundation of the NHS, etc.

it took a few years before public debt actually started falling (relative to GDP). as i said, that was possible due to a combination of inflating it away and economic growth, and both of those take time.

we have the same low interest rate policy now, which should help to inflate away the debt. what we don't have is the economic growth.

austerity has done enough to scupper any decent economic recovery (and therefore has even been counterproductive at the government's alleged top priority, cutting the deficit).

buglawton

Low interest does not cause inflation at all.
Creating money out of nowhere does.

lvader

Too much cheap money no matter where it comes from causes inflation.

Glen_Clark

grey_gym_sock wrote: »

austerity has done enough to scupper any decent economic recovery

What is scuppering any decent economic recovery is Osborne making Buy to Let a better investment than productive industry.

Glen_Clark

buglawton wrote: »

Low interest does not cause inflation at all.
Creating money out of nowhere does.

Both cause inflation because there is more cash chasing the same goods.

buglawton

Assuming that people have loans and mortgages, low interest rates mean
More money chasing goods
Much less going on loans and mortgages
Zero sum game

Meanwhile printing GBP permanently reduces the value of all GBP.