UK "one of the wealthiest countries on the planet & getting wealthier by the day"

wotsthat

Loughton_Monkey wrote: »

If Wotsthat is not included in my definition of "most of us" then that puts me in the clear.

If he 'comes clean' and confirms to all of us something like "I swear by almighty God that I, Wotsthat, am indeed a single person with my own views and in no way am 'most of us'" then I shall breathe a huge sigh of relief.

I've lost track. Unless I send Graham a photo of the cashpoint fitted to my house he just won't accept that increased wealth, however liquid, leads to increased spending.

It's the usual debating style. 'You can't provide an itemised budget of how to spend an extra £50 per month if my house increases in value therefore HPI isn't real wealth and furthermore the UK isn't getting wealthier by the day'

Graham_Devon

wotsthat wrote: »

I've lost track. Unless I send Graham a photo of the cashpoint fitted to my house he just won't accept that increased wealth, however liquid, leads to increased spending.

It's the usual debating style. 'You can't provide an itemised budget of how to spend an extra £50 per month if my house increases in value therefore HPI isn't real wealth and furthermore the UK isn't getting wealthier by the day'

I accepted it ages ago.

I was asking you how much extra you think families should be spending of their income as their house has gone up in value. I was asking you if it's a good thing or a bad thing that people are spending more on goods just because their house value increased.

Never disagreed or even commented on the wealth effect. Please don't make up a scenario and tag it onto me. Just read what I actually state, I always give you the courtesy of reading what you state (and go on to disagree with it!)

smartn

For me the value of my house going up makes no difference to how wealthy I feel as it is a place to live in and required for that purpose for many years yet. It may have an impact if I eventually downsize but until that point it doesn't factor in to how wealthy I feel.

On the other hand growth in my ISA's and SIPPS have a direct relation to how wealthy I feel and hence how much income I would spend rather than save.

If I was a landlord then the value of a house rising would make me feel wealthier as it's an asset I could sell.

ILW

CLAPTON wrote: »

the paradox of thrift doesnt say that savings is a bad thing

rather it says that in an economy with highish unemployment then an increase in 'savings' will lead to further unemployment and actually a reduction is the total saved.

so we need to save in good times and spend in bad times

quite a revolutionary thought?

Never going to happen, goods times are for running up debts because we all feel better off.

the_flying_pig

ILW wrote: »

Never going to happen, goods times are for running up debts because we all feel better off.

another revolutionary concept though is that central banks traditionally increased interest rates when an economy was showing signs of overheating. high interest rates encourage sving & discourage borrowing.

obviously house prices tripling over the space of a decade with otherwise fairly low inflation didn't count as overheating, hence no checks were put on the rampant, ahem, growth, & debt had snowballed by the end of the mid noughties.

and that's the thing - we are in a recession but arguments about needing to borrow loads more are quite difficult to reconcile that household debt is already practically at an all-time high. we've only had a tiny bit of hosuehold deleveraging compared to the mountainous debt binge that preceded the 'crunch'.

antrobus

HAMISH_MCTAVISH wrote: »

....9% is terrible for the economy and society, 0% is equally bad.

Depends on how much a society wants to invest in acquiring capital assets.

Like houses, for example.

wotsthat

Graham_Devon wrote: »

I was asking you how much extra you think families should be spending of their income as their house has gone up in value.

...and I answered. Depends on age and attitude.

I've never spent any more as a result of increasing wealth (I think) as I'd prefer to bring forward my retirement date. Is that acceptable, storing up problems for the future or stifling growth? I don't care - it's my choice.

Do you think there's a right or wrong answer?

As I keep saying. 100% of all of our wealth will be spent; it's just a question of timing. Overspend today and there might be nothing left for tomorrow. Oversave today and there might be too much left to easily consume tomorrow. These are choices we make everyday in small increments.

Loughton_Monkey

wotsthat wrote: »

I've lost track.

So have I. I'm going downstairs for a large gin & tonic now.

wotsthat wrote: »

Unless I send Graham a photo of the cashpoint fitted to my house he just won't accept ......

Could you also send it to me, with your PIN number as well...

[Just for a laugh, I'd also like to see a photo of you banging your head on the brick wall of your house....]

As you say, your house value will be spent by somebody, sometime. Might as well be me, and might as well be now.

Thrugelmir

antrobus wrote: »

Not however much of a problem here in the UK. Quite the reverse if anything. The UK savings ratio managed to hit 0% in 2007.

Majority of commentators agree that although the fiscal situation is improving. The rebalancing of the economy hasn't. Balance of trade figures every month show how dire the situation is. Until the love of debt is broken the UK will continue to stand out alone singing its own song. That nobody else is listening too.

Thrugelmir

wotsthat wrote: »

If someone is already spending 100% of income then they can't (easily) spend more if their house goes up in value.

Spending 100% of income is, in most cases, a choice.

We can only make our own choices and be ready to pick up the pieces when others make theirs.

Correct. However to spend more now. Requires taking on yet more debt. That ultimately will reduce tomorrows spend. As the debt requires servicing, i.e. interest. Can't live on QE forever.......