Are we starting to see the wage increase vs inflation increase death spiral?

danlightbulb said:
That was kinda the original question really. Obviously for a customer of 1 and an intended transaction of 1 item, no employees or ongoing costs would technically be needed.

There's some information here: https://www.bankofengland.co.uk/prudential-regulation/new-bank-start-up-unit

But it talks about banks as 'deposit takers' and doesn't mention this ability to create money on balance sheets. I wonder if that requires a separate license? Can all banks create money out of nothing or do some 'lesser' entities have to have equivalent collatoral?
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A good number of challenger/start up banks start out as lenders before they are banks but source capital to fund those loans from alternative sources (e.g. their investors or wholesale funding). The main motivation for getting a banking licence is the fact that customer deposits are an incredibly cheap source of funding compared to wholesale borrowing, rather than anything to do with creating money. The vast majority of banks outside of the global banks are no more complicated than borrow at 1%, lend at 2%. The cheaper you can borrow (ie by taking customer deposits) the more money you make.

All banks will “create money“ through lending but they are also subject to regulatory requirements which limit the amount they can lend based on the amount of capital they hold - riskier assets mean you have to hold more capital and vice versa.
 
I think the issue comes about that at the very top there are people that profit directly off of a worsening economy and that invariably irritates everyone hurting from the addition strain that said parasites put on them.
 
One More Solo said:
A good number of challenger/start up banks start out as lenders before they are banks but source capital to fund those loans from alternative sources (e.g. their investors or wholesale funding). The main motivation for getting a banking licence is the fact that customer deposits are an incredibly cheap source of funding compared to wholesale borrowing, rather than anything to do with creating money. The vast majority of banks outside of the global banks are no more complicated than borrow at 1%, lend at 2%. The cheaper you can borrow (ie by taking customer deposits) the more money you make.

All banks will “create money“ through lending but they are also subject to regulatory requirements which limit the amount they can lend based on the amount of capital they hold - riskier assets mean you have to hold more capital and vice versa.
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Boo dont spoil it for us all, i was enjoying the crazy ranting :D

On fintechs for example, Revolut arent actually a bank. A good example of what is described above.
 
mid_gen said:
The grass is greener in many European countries. I would never have returned to the UK if I'd known what an absolute cluster fluff the next few years of Tory failure would be, I rather naively hoped that after the Brexit headbangers got their way, some sanity and competence would return to the party. More fool me I guess.

We've already talked about emigrating again if things don't improve in the next couple of years. It's really very easy to do if you have an in-demand skill. It'll bring into start relief what an absolute shambles the UK has become mind.
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The uk is a mess, most havent worked abroad and dont know what it is like, but I can say it is great to work abroad.
 
ultralaser said:
I think we need to differentiate between permanent and transitional changes in prices. We're in a situation where base costs are rocketing due to the effects of COVID and the situation in Ukraine. If we continue to increase salaries to address temporary changes in base costs then we'll enter that spiral which is why I think the government are giving 'one off' payments' and trying not to give into to enduring salary increases. If we take a real world example, there's been chaos with rail in the last week and I needed to spend more to get into work, we could answer that by [A] giving me a salary increase that would last indefinitely or giving me a one off payment to cover the increased cost for the time of the rail strikes. Its quite clear to me what's the best option to both help me afford the increase in commute costs whilst trying to keep inflation in check.
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Simple companies redeuce their products by reducing their profits. Companies share more or expecto to lose workers.
 
Zenduri said:
Just a rebump of this thread i started. Seems there is no stop now the ball is rolling

BT openreach and call centre staff offered £1500 pay increase but due to strike: https://www.bbc.co.uk/news/business-62184802
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What's the odds BT's Network has a hiccup during those two days?

LabR@t said:
Get ready for the collapse
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I keep hearing this. It never happens. Heard it after 2009. Heard it on 2011/12, then 2014, then 2016, 2018 then it stopped before Covid now I'm hearing it again. Keep hearing it cannot sustain itself and a decade passes again. It's still here, same problems.
 
V F said:
I keep hearing this. It never happens. Heard it after 2009. Heard it on 2011/12, then 2014, then 2016, 2018 then it stopped before Covid now I'm hearing it again. Keep hearing it cannot sustain itself and a decade passes again. It's still here, same problems.
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True, people expecting the world to burn when stuff like this happen and here we still are, same poop, different day. Nothing changes.
 
The interesting thing is that people still blame socialist thinking for the problems that greed and late stage capitalism is doing. It's almost as if they're doubling down to ensure the greed keeps on rolling.
 
V F said:
What's the odds BT's Network has a hiccup during those two days?



I keep hearing this. It never happens. Heard it after 2009. Heard it on 2011/12, then 2014, then 2016, 2018 then it stopped before Covid now I'm hearing it again. Keep hearing it cannot sustain itself and a decade passes again. It's still here, same problems.
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Yep, although high inflation is unusual these days.
Unemployment remains relatively low, for now, I suspect this may change.
The thing is these companies will do anything for their financials and tend to be ruthless.
 
Slam62 said:
Yep, although high inflation is unusual these days.
Unemployment remains relatively low, for now, I suspect this may change.
The thing is these companies will do anything for their financials and tend to be ruthless.
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Key thing, for the first time in years companies are crying out for workers and struggling. Things cant be THAT bad if people are willing not to take certain jobs despite high inflation.
 
malachi said:
Key thing, for the first time in years companies are crying out for workers and struggling. Things cant be THAT bad if people are willing not to take certain jobs despite high inflation.
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True, but I think the economy has become one of low wages, people won't move without an incentive.
The economy needs to adjust, but a lot of business cases don't stack up with higher wages.

The elephant in the room is productivity which no one is talking about at the moment. Without improved productivity you can't increase wages and inflation damages productivity.
Anyway, nothing will change.
 
malachi said:
True, people expecting the world to burn when stuff like this happen and here we still are, same poop, different day. Nothing changes.
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The Mayan thing was funny for 2012. People were blowing their credit cards thinking the world was going to end.
 
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