UK interest rates held at 0.5% for years

sabretoothtigger

lvader wrote: »

So they are going to cheat the unemployment figues and increase rates sooner? How does that help with inflating away debt?

It does help. Lending to a government with improving employment is more attractive then otherwise.

If BOE sets rates to 0.5% but HMG is having to pay 5% on their 5yr debt it would create a problem I suppose, under (archaic) laws of arbitrage

If Greece has 1% unemployment, it looks a lot better. If we later realise all jobs are part time 1hr per week then its not quite so good, but face value counts for alot at the moment I think.

There is that whole paradoxical bank run effect where theres no problem till people start believing there is.
The Wile E Coyote masterplan for traversing a canyon is dont look down
So we do have low inflation and so on, stop trying to spoil it

http://www.businessinsider.com/video-george-soros-speech-italy-euro-crisis-2012-8

talexuser

lvader wrote: »

So they are going to cheat the unemployment figues and increase rates sooner? How does that help with inflating away debt?

No, they can cheat both the inflation and unemployment figures to have as much inflation as the country can stand. The ONS has already criticised ministers for selective data manipulation to create favourable headlines not presenting the true story.

Glen_Clark

I stopped taking the unemployment statistics seriously 30 years ago. Thatcher's election campaign was based on an advertising poster showing a staged queue of actors outside a jobcentre under the caption 'Labour Isn't Working' 'A million unemployed' So Thatcher got in, laid waste to mining and manufacturing industries, and yet the official unemployment figure actually came down!!! I thought there is something funny going on here. I have never trusted Government Unemployment Statistics since.

Minrich

Never trust any government , majority of what they say is fiddled to some degree

lvader

talexuser wrote: »

No, they can cheat both the inflation and unemployment figures to have as much inflation as the country can stand. The ONS has already criticised ministers for selective data manipulation to create favourable headlines not presenting the true story.

I get that but are you acusing them of massaging the unemplyment figues down so that they can increase rates sooner or up so that they can keep rates low? Neither seems a win win for the government. So why tie rates to unemployment figures?

Glen_Clark

lvader wrote: »

So why tie rates to unemployment figures?

Because they want to take the focus away from inflation - the thing that matters most when comparing interest rates. Thats what is so dangerous.

talexuser

Glen_Clark wrote: »

I thought there is something funny going on here.

The "something funny" was transferring a great number of middle aged and older unemployed to invalidity and then incapacity benefit to keep the unemployment figures down during those years.

And later having to rejig the criteria for disability benefits to try and get them off again (in the process making a lot of the genuinely disabled worse off).

talexuser

lvader wrote: »

I get that but are you acusing them of massaging the unemplyment figues down so that they can increase rates sooner or up so that they can keep rates low? Neither seems a win win for the government. So why tie rates to unemployment figures?

They could use eg low unemployment as an argument that the economy is growing and healthy again to get investors, when really it is based on zero contract or part time jobs with no little or no buying power, so useless in the long term?

I just think the whole policy is for as much inflation as the voters and debtors will stand without admitting it. It's the only way out of so much debt with no growth. The rest is all distraction headlines about planning permissions and immigration clampdowns we've seen a million times before.

badger09

vacheron wrote: »

Well I've admitted defeat ..................so I'm going to call an architect today and spend a big chunk of my savings on a kitchen extension I've been sitting on the fence about for some time now.

No point in sitting around watching inflation erode my best efforts at 1-2% per year when we could be enjoying something tangible.

A bit like you, vacheron, I've just ordered a new car. Bought my last one in January 2006, so I'm not exactly a spendthrift petrol head.

Also its on 0% finance with Santander apparently, so it feels quite MSE to borrow from them at 0% while getting 3% on a similar amount in their 123 account (Yes, I do know what a waste of money a new car is, but every 7 or 8 years, I just think, what the hell :rotfl:)

sabretoothtigger wrote: »

If you wont spend your money then someone else will spend it for you.

So true

Thrugelmir

Glen_Clark wrote: »

Because they want to take the focus away from inflation - the thing that matters most when comparing interest rates. Thats what is so dangerous.

There's no control over inflation. At least the type we are currently experiencing, i.e. imported.