Interest rates: What was it like back in the day?

Stubod

eskbanker wrote: »

I could be wrong but didn't read Stubod's comment as suggesting a direct correlation (which, as you say, doesn't exist), but meaning that interest rates shouldn't be considered in isolation from inflation rates....

..thanks for the clarification, I was not suggesting any link between the 2....just that you need to consider them both....

AnotherJoe

george4064 wrote: »

I thought it might be something to do with FX movements and inflation, however (easier said than done) couldn't someone just put a load of money into Dong and Vietnamese banks and hedge back the exposure?

This can all be summed up by the phrase "no such thing as a free lunch".

Or in other words, no baldrick your cunning plan has more holes in it than one of mrs midgleys pies after it's been left in the cellar with rats overnight

LHW99

Only thing I did used to do in the late 80's to 90's was to pay most of my wages directly into as high an interest rate savings account as I could find. Live off the credit card for a month, and pay the cc bill off in full just before the next pay cheque was due. In those days it added a reasonable amount of interest to what was earned on "real" savings.
Mortgage rates were horrible from the mid 70's really until the end of the nineties though and you relied on the inflation to eat away at the bill as said above.

Thrugelmir

spadoosh wrote: »

How do you explain increased inflation recently?

China (and the emerging markets) now consume commoditites.

Financial power base is moving West to East.

China can now pick and choose what it produces, and at what price.

grey_gym_sock

george4064 wrote: »

Also, another theoretical question which I've been wondering about: whats stopping me from putting my money into a Vietnamese savings account and taking advantage of their 6.25% official interest rate?

this has been answered well.

but think what lord flashheart might say: 6.25%, ding dong!!

Malthusian

george4064 wrote: »

I thought it might be something to do with FX movements and inflation, however (easier said than done) couldn't someone just put a load of money into Dong and Vietnamese banks and hedge back the exposure?

The cost of hedging would eliminate the interest rate differential. So you may as well just put your money in UK banks. Hedging is the financial equivalent of mindfulness - it is like doing nothing, only more expensive.

aj23_2

I'm a 90s kid too but I remember getting £150-£200 a year on a balance of £2000-3000 in a bog standard saving account with Abbey National aka Abbey aka Santander