roots
Full Member
Posts: 116
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Post by roots on Jun 23, 2023 21:47:43 GMT
No. Worldwide inflation is a result of stifling the global economy for two years because a gain of function experiment leaked from a lab in China.
Money was then printed by the trillion to give reassurance to the masses.
They couldn't spend that money freely, but when they could the inevitable inflation occurred.
Hiking up interests is one way to mitigate the self inflicted damage.
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Post by andrewbrown on Jun 24, 2023 9:09:47 GMT
Agree that it is mostly as a result of Covid, plus some effect from Ukraine.
However this inflation is different from previous episodes where it has not been caused by people having too much money.
The BoE only has one tool in the armoury which is raising interest rates, but as the cause wasn't people having too much money it's not surprising that it isn't having the effect that they wanted.
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Post by Fairsociety on Jun 24, 2023 9:54:04 GMT
One big factor that has contributed to high inflation are energy hikes, the government should have got to grips with that long ago, propping up energy bills using tax payers money was always going to be a recipe for disaster.
It was never going to curve inflation, just stall it, this is where they missed the trick, and the BoE to be fair on their part can't control energy prices, that was up to the government, so with a combination of Covid, Ukraine war, food price hikes, energy price hikes, Cost of living crisis, there's the perfect storm.
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Post by bancroft on Jun 24, 2023 11:11:09 GMT
Agree that it is mostly as a result of Covid, plus some effect from Ukraine. However this inflation is different from previous episodes where it has not been caused by people having too much money. The BoE only has one tool in the armoury which is raising interest rates, but as the cause wasn't people having too much money it's not surprising that it isn't having the effect that they wanted. The govt though does have more tools though, through direct and indirect taxation instead of using interest rates. I'm not saying they should do this. It seems unfair that they are trying to reduce customer spending even though customer spending did not cause the debt it was buying COV-ID supplies and loss of tax revenues form lockdown. I read yesterday the UAE is buying tons of gold from Russia getting ready to de-peg from the USD. |
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Post by andrewbrown on Jun 24, 2023 11:11:29 GMT
Fairsociety, I believe you are mostly right.
I think that the attempt to help with energy costs actually came from a good place, that the rise in energy prices was temporary as a result of the Ukraine invasion, and would pass quickly. The Russian invasion is now 15 months on, and although energy prices appear to have peaked, they are extremely high and are a considerable barrier for both domestic and commercial sectors.
That does back up my point though that the rise in inflation isn't as a result of businesses or people having too much money, and therefore why the rise in interest rates is having very limited effect in controlling it.
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Post by andrewbrown on Jun 24, 2023 11:15:04 GMT
Agree that it is mostly as a result of Covid, plus some effect from Ukraine. However this inflation is different from previous episodes where it has not been caused by people having too much money. The BoE only has one tool in the armoury which is raising interest rates, but as the cause wasn't people having too much money it's not surprising that it isn't having the effect that they wanted. The govt though does have more tools though, through direct and indirect taxation instead of using interest rates. I'm not saying they should do this. It seems unfair that they are trying to reduce customer spending even though customer spending did not cause the debt it was buying COV-ID supplies and loss of tax revenues form lockdown. I read yesterday the UAE is buying tons of gold from Russia getting ready to de-peg from the USD. Not just unfair, but self defeating. Unless the aim of the game is a deliberate policy in order to reduce the value of this (and other) debt(s). |
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Post by bancroft on Jun 24, 2023 11:26:57 GMT
The govt though does have more tools though, through direct and indirect taxation instead of using interest rates. I'm not saying they should do this. It seems unfair that they are trying to reduce customer spending even though customer spending did not cause the debt it was buying COV-ID supplies and loss of tax revenues form lockdown. I read yesterday the UAE is buying tons of gold from Russia getting ready to de-peg from the USD. Not just unfair, but self defeating. Unless the aim of the game is a deliberate policy in order to reduce the value of this (and other) debt(s). What we don't know is whether these high rates are justified or whether it is a NATO decision to hurt non-NATO countries as it is not just us. |
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Post by andrewbrown on Jun 24, 2023 11:30:06 GMT
Historically speaking the interest rates are only at an average level. The issue is that we've gone from a decade of practically zero in a matter of 13 months.
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Post by bancroft on Jun 24, 2023 11:39:16 GMT
Historically speaking the interest rates are only at an average level. The issue is that we've gone from a decade of practically zero in a matter of 13 months. From 2009 to 2022 BOE rates were less that 1%, for me that was ridiculous and was more about pushing globalisation and to encourage investors to invest in shares. www.mortgagestrategy.co.uk/analysis/historical-interest-rates-uk/ |
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Post by borchester on Jun 24, 2023 12:31:06 GMT
In my experience, mortgages are about
(a) taking one out and thinking, oh Christ, what have I let myself in for ?
(b) sitting back for a few years and letting inflation take care of matters.
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Post by patman post on Jun 24, 2023 12:56:08 GMT
What happened to Repayment mortgages, you know the ones, you pay the same amount each month until the end of the mortgage and the property is yours. I only ask as BBC is full of people saying how their new mortgage rate is killing them and Tory millionaires don't care. You're remembering the days when people could usually only borrow three times their income and the term was 25 years, if that didn't extend beyond age 65... |
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Post by bancroft on Jun 24, 2023 13:01:18 GMT
What happened to Repayment mortgages, you know the ones, you pay the same amount each month until the end of the mortgage and the property is yours. I only ask as BBC is full of people saying how their new mortgage rate is killing them and Tory millionaires don't care. You're remembering the days when people could usually only borrow three times their income and the term was 25 years, if that didn't extend beyond age 65... Well said now you say that it does ring a bell so to speak. |
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Post by johnofgwent on Jun 24, 2023 21:19:35 GMT
What happened to Repayment mortgages, you know the ones, you pay the same amount each month until the end of the mortgage and the property is yours. I only ask as BBC is full of people saying how their new mortgage rate is killing them and Tory millionaires don't care. They're still there - i'm still paying one (i hit state retirement age in September) |
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Post by Pacifico on Jun 24, 2023 21:32:13 GMT
Didn't they go out of fashion when Endowment Mortgages were the latest thing?
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Post by johnofgwent on Jun 24, 2023 21:51:57 GMT
A number of people went into negative equity in the 90's, around the time of Britain following the ESM. Of course at that time we were still trading with Europe and we had the Multi-Nats in London too employing people so perhaps this is worise tohugh back then interest rates kept going up reaching 17% before we crashed out of following the ESM. The reason for negative equity was Nigel Bloody Lawson
In January 1983 I started looking for a house to get out of the bloody awful flat we were in. I had just secured a job paying £8,500 as a designer of better ways for the army to kill people and my wife was paid £3,250 as a civil servant at that time licensing nuclear biochemical manufacturing plants
We found a rand new 2 bed "link" house in Newport for £24850 the low cost endowment mortgage was £85 and the endowment policy £60.We were at that time paying I think £80 a month in rent. Then rates went from the 8(?) % that was to 17% and suddenly the only two people able to afford the houses at the new monthly repayment rates of £170 were me (the king's siege engineer was always well paid) and the copper in the end house who could afford the £29,950 to have the end terrace and the garage because Maggie paid him VERY well to kick the shit out of the miners
Sarah came along in 1986 and Emma threatened to squeeze us out of the house on her expected arrival in 1988 so we went looking. Lawson had just raised the stamp duty threshold from the £24,995 it had been in 1983 to £29,995 and that, more than any other reason, was how we secured a cash buyer for £29,990.
We moved to a traditional three bed semi built in the 50's now on the market for £39,995. My salary then was £15,950 and Moira had given up her job to look after Sarah full time. Within a month Moira's mum was dead of stomach cancer from the radioactive lamb ingested after the livestock that got the chernobyl fallout were allowed to stay in the food chain and Emma had been aborted at 24 weeks when we found she had no diaphragm
Stress was a real thing in the 80's
But then came the budget and the piece of shit decided to eradicate Dual Or Multiple Mortgage Interest Relief at Source for buyers living in sin. My wife and I were only allowed one MIRAS reduction, my pal and fellow designer of cool weapons of mass destruction had just, that january, moved into a house that cost half as much again as mine, because he was allowed to claim a MIRAS reduction in his name and the woman he lived with in sin also got a claim. And with Tax Rates at about 33% this was not a meagre amount.
The eradication of this reason for me and moira to divorce (i thought long and hard about it before we moved house) was applied not to my mate and hos common law wife but to applicants for NEW mortgages and the decision was made not to apply the change as soon as he sat down like they did for petrol fags and booze but in SIX MONTHS TIME
It was hectic beyond comparison
The house which I bought in one day from viewing to completion because gazumping was already rife rose in price exponentially. By the last weekend before the axe fell i was being besieged by estate agents and even a twonk in red braces who got out of an XR3 with a briefcase full of cash and the asking price of the house had gone from £39,995 to £89,995
And then the axe fell
Within a week the price of our house fell to £55,000 but NOT before the fucking inland revenue sent out their revaluers to set the rates / poll tax / whatever the hell it was on the prices at the end of the madness. A spot of organised crime there i always thought
I of course never noticed, having bought the house before the madness kicked in i had paid £39,995 on a salary of almost £16,000 but all those sinner s who bought to get in before the MIRAS axe fell spent the next 15 years waiting for the next political shittery to push prices up.
The house I bought for £39,995 had a £17,000 ground floor office extension put on it and that contributed a bit, but not that much, to the selling price of £68,500 when we moved out to our present Jog Towers bought for £94,500 with the company having made about £150k net each year for the past five
It would be half way through Brown's DTI and LTV fiasco before the house i sold for £68500 reached the dizzy heights it reached from Lawson's shittery
Half the country had to live with the consequence of his madness for a decade and a half
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