Inflation rises to 4%

[rypt]

Healthy banks are very important for a healthy economy, don't get me wrong I'm not "attacking" them, just explaining what I think is the problem to furthering growth in the UK (which in my opinion is the largely exorbitant interest rates charged on finance other than mortgages at the moment for a lot of people and businesses).

But why must our economy be built on debt?

 

[Stretch]

Monetary policy is quickly becoming a farce. For all their faults the previous government made a good move by removing rate decisions from government control.

The MPC are now clearly being lent on to keep rates low to the point where there seems little point in having the MPC anymore. 4% is double the target rate.

If the committee is to retain any credibility they need to be free to act to reduce inflation i.e. raise rates. If that's not in the best interests of the country then the system is flawed. Especially since base rates seem to have little impact of the amount businesses/households are actually charged for borrowing money.

 

[[FnG]magnolia]

Welp, I almost wish I hadn't asked. Variable rate sits at 6.10% here, 6.60 - 6.80% if it is fixed.

 

[Jez]

Welp, I almost wish I hadn't asked. Variable rate sits at 6.10% here, 6.60 - 6.80% if it is fixed.

To be fair, your housing is about half the price to make up for it

 

[rypt]

And you have other benefits such as nicer weather, hotter women, etc!

 

[[FnG]magnolia]

To be fair, your housing is about half the price to make up for it

Not in Auckland it isn't. 4 bedroom house, 450k GBP. Comparable, if I remember correctly, to London/Surrey in 2005 when I last lived there. Still, might all be different now so maybe I'm moaning about nothing

 

[Participant]

New Zealand is quite simply an awesome country. 6% is nothing for the lifestyle available over there. *Looks out window at drizzle dripping from office window*

 

[[FnG]magnolia]

And you have other benefits such as nicer weather, hotter women, etc!

Ok, I'll definitely stop moaning now

 

[Jez]

Not in Auckland it isn't. 4 bedroom house, 450k GBP. Comparable, if I remember correctly, to London/Surrey in 2005 when I last lived there. Still, might all be different now so maybe I'm moaning about nothing

Yeah, that is comparible. I would hazard a guess that by 4 bed you dont mean the same footprint that a 4 bed/450k house would have here though.

I agree though, not cheap by any means at 6%

 

[anything I don't mind]

The central bank (boe) should not have the ability to set interest rates, interest rates should be set by the lender prior to signing the contract.

 

[Jez]

The central bank (boe) should not have the ability to set interest rates, interest rates should be set by the lender prior to signing the contract.

They are

 

[daz]

But why must our economy be built on debt?

Debt fuels capital investment.

 

[[FnG]magnolia]

We're on a fairly standard (for the area) 680 m2 section and the house is on two levels so yes, perhaps not your typical 4 bedroom London pad.

Anyway, enough of my derail. Enjoy the low rates, you lucky, lucky gits!

 

[Energize]

I said when they lowered the interest rates to punish the savers, that we would be New Zimbabwe, I won't say I told you so!

 

[rypt]

Debt fuels capital investment.

Except the economy and in fact national finances are build on a pyramid scheme system now

 

[Participant]

Regarding 'the BoE should be able to set interest rates entirely independently of the government or any political pressure', this is unrealistic.

Almost everything is subject to some kind of political pressure. Aside from locking them in a room and just giving them a spreadsheet full of numbers, there's very little that can be done to effect this.

 

[anything I don't mind]

If we had a free market in banking and currency, if the government allowed taxes to be paid with any currency (even ones that don't currently exist, non national currencies) or the government made taxes voluntary and in effect legalised competing currencies and removed regulation on banking industry. It would be a completely different market.

Banks would not be able to lend more money than they had in reserve. A bank would lend money out at an interest to finance the operation of banking service. They would offer interest on savings and potentially even current accounts, to entice customers in to their bank so that they would have more money to lend out. This is how banking is meant to be. You would get different variations, banks would exist that have a flat fee for the service and do not offer interest and do not offer loans etc. All different types of banking services would exist, currencies would in competition with one another and the most popular currencies would be the ones that are most commonly accepted and most stable.

 

[daz]

If we had a free market in banking and currency

...

Banks would not be able to lend more money than they had in reserve.

Erm... yes they would/could.

 

[Jez]

We're on a fairly standard (for the area) 680 m2 section and the house is on two levels so yes, perhaps not your typical 4 bedroom London pad.

Anyway, enough of my derail. Enjoy the low rates, you lucky, lucky gits!

Do you have any idea how much a 7300square foot house would cost in the home counties of england!? You are talking in millions, not hundreds of thousands

 

[anything I don't mind]

Banks can only practice fractional reserve banking because regulation allows them to. It is actually fraudulent to lend out money than you do not have and then charge interest on it. In a free market in banking a bank that is lending money that it does not actually have, would not be able to compete with a bank that only lends out its reserves. From a consumer perspective people want a bank that they know does not take risks or takes the least risk with their money, if a consumer had the choice of putting their money in to a bank that did not take risks with their money they would choose that bank. Eventually all banks would tow the line through competition.