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Post by Deleted on Jul 16, 2023 12:27:40 GMT
It appears that inflation is being caused by profiteering by the multinationals so no amount of interest rises will stop it. This post ^^ proves you can talk sense when you put your mind to it. I think Orac's signature makes an interesting point. We're the third biggest importer of food in the world at a time when world crops are down and prices are very high. Sadly, farmland leads to climate change, so we have to pay farmers to sit around twiddling their thumbs whilst this continues. We're also relying on imported gas to generate power, which has obviously gone right up in price since Putin's tantrum. Again, we can't rely on our own means of fuel, because it leads to climate change, so we just have to sit around twiddling our thumbs. |
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Post by zanygame on Jul 16, 2023 12:34:10 GMT
There is a significant difference between the two for ME. In the case above all income tax would be raised sharing the pain equally among those earning income. You want to hold the current asset-holders in position and get the rest of the community to pay the shortfall in their bet. This is , more or less, what we did last time and the result is a baggy, stagnated economy. How would you argue against this accusation - that you are making tenants pay to hold in place their landlord's position over them - that the real-estate price you are protecting acts as an uneven cost-benefit (a cost to some and benefit to others)? Having held the real estate owners in place and real-estate prices high, are these owners then going to be forced to disperse the benefits of their state maintained position to others? This is purely a method of lowering demand and therefore inflation. Not a long term solution to our tax system. Real estate prices are a separate issue to controlling inflation. If you wish to raise interest rates to force house prices down then fair enough, but its a different conversation. I'm happy to discuss it when we finish this one. This inflation is caused by the price of gas=energy=everything costs more to make= everything goes up= pay rise demands. |
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Post by Orac on Jul 16, 2023 13:02:22 GMT
You want to hold the current asset-holders in position and get the rest of the community to pay the shortfall in their bet. This is , more or less, what we did last time and the result is a baggy, stagnated economy. How would you argue against this accusation - that you are making tenants pay to hold in place their landlord's position over them - that the real-estate price you are protecting acts as an uneven cost-benefit (a cost to some and benefit to others)? Having held the real estate owners in place and real-estate prices high, are these owners then going to be forced to disperse the benefits of their state maintained position to others? Real estate prices are a separate issue to controlling inflation. If you wish to raise interest rates to force house prices down then fair enough, but its a different conversation. It is a conversation you started by mentioning mortgage holders and how they lose, and suggesting your approach as a way to avoid this loss. I'm pointing out the corollary of this - that you are also holding real estate prices high and getting everyone to contribute towards the current owner's position |
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Post by Fairsociety on Jul 16, 2023 13:42:28 GMT
It seems unreasonable for someone who bought a house say 2 years ago, checked their mortgage affordability with a margin for a contingency plan, then the BoE put up interest rates 13 times in as many months, then try to say 'irresponsible' lending/borrowing. Never in the history of mortgages have they gone up 12 times in a row, and that is down to irresponsible BoE, and the big bloated fatcat who's in charge.
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Post by Orac on Jul 16, 2023 13:46:57 GMT
It seems unreasonable for someone who bought a house say 2 years ago, checked their mortgage affordability with a margin for a contingency plan, then the BoE put up interest rates 13 times in as many months, then try to say 'irresponsible' lending/borrowing. Never in the history of mortgages have they gone up 12 times in a row, and that is down to irresponsible BoE, and the big bloated fatcat who's in charge. Would it be similarly 'unreasonable' for someone who bought a house two years ago to then enjoy a massive leap in the house's value because of changing economic circumstances or government policy? I rarely hear any complaints. |
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Post by Fairsociety on Jul 16, 2023 13:58:36 GMT
It seems unreasonable for someone who bought a house say 2 years ago, checked their mortgage affordability with a margin for a contingency plan, then the BoE put up interest rates 13 times in as many months, then try to say 'irresponsible' lending/borrowing. Never in the history of mortgages have they gone up 12 times in a row, and that is down to irresponsible BoE, and the big bloated fatcat who's in charge. Would it be similarly 'unreasonable' for someone who bought a house two years ago to then enjoy a massive leap in the house's value because of changing economic circumstances or government policy? I rarely hear any complaints. Buying a property isn't a game of chance it's a long term investment, many hope their homes increase in value, but that's not always the case.
The job of the BoE is to make sure mortgage interest rates don't go up 13 times in succession, that is what they highly paid , the fact that they've gone up 13 times in succession is a huge indication they are 'failing' at their jobs, I mean who's fault is it, the butcher, baker or candle stick maker, no it's the BoE who have failed miserably, playing Russian roulette with mortgage payers, renters, landlords, and they will be rewarded with bonuses for the utter incompetence.
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Post by zanygame on Jul 16, 2023 14:45:03 GMT
Real estate prices are a separate issue to controlling inflation. If you wish to raise interest rates to force house prices down then fair enough, but its a different conversation. It is a conversation you started by mentioning mortgage holders and how they lose, and suggesting your approach as a way to avoid this loss. I'm pointing out the corollary of this - that you are also holding real estate prices high and getting everyone to contribute towards the current owner's position Only in the sense that interest rate hikes only effect mortgage holders. Why? Do you think its mortgage holders that are causing inflation? The idea behind raising interest rates is not to deflate the housing market, its supposed to discourage spending cool the economy and stop inflation. But the people fuelling the inflation rate by continuing to buy things even as the prices rise are the 50 to 80 year olds with loads of disposable income, they are unaffected by interest rate rises other than to give them even more money to spend. So either STOP trying to control inflation at all or try something that might work. |
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Post by zanygame on Jul 16, 2023 14:51:55 GMT
Would it be similarly 'unreasonable' for someone who bought a house two years ago to then enjoy a massive leap in the house's value because of changing economic circumstances or government policy? I rarely hear any complaints. Buying a property isn't a game of chance it's a long term investment, many hope their homes increase in value, but that's not always the case.
The job of the BoE is to make sure mortgage interest rates don't go up 13 times in succession, that is what they highly paid , the fact that they've gone up 13 times in succession is a huge indication they are 'failing' at their jobs, I mean who's fault is it, the butcher, baker or candle stick maker, no it's the BoE who have failed miserably, playing Russian roulette with mortgage payers, renters, landlords, and they will be rewarded with bonuses for the utter incompetence.
I would add that the huge majority of house buyers are not looking for investment but for a home. Most never realise their 'investment' as they stay in a house until they die. How many 80 yearolds living in a house they paid 70k for would really care if its value fell from 450k to 300k. So, want to stop house prices rocketing, then build enough homes. |
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Post by Orac on Jul 16, 2023 18:24:22 GMT
Would it be similarly 'unreasonable' for someone who bought a house two years ago to then enjoy a massive leap in the house's value because of changing economic circumstances or government policy? I rarely hear any complaints. Buying a property isn't a game of chance it's a long term investment, many hope their homes increase in value, but that's not always the case. I didn't suggest it is always the case. I asked if it is 'unreasonable' If people's house-prices prices start going up, should the government do something to stop the rise? |
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Post by Orac on Jul 16, 2023 18:52:12 GMT
It is a conversation you started by mentioning mortgage holders and how they lose, and suggesting your approach as a way to avoid this loss. I'm pointing out the corollary of this - that you are also holding real estate prices high and getting everyone to contribute towards the current owner's position Only in the sense that interest rate hikes only effect mortgage holders. Why? Do you think its mortgage holders that are causing inflation? The idea behind raising interest rates is not to deflate the housing market [..] Again, I didn't say that it was. You brought up mortgages and those with mortgages. I'm just telling you the other side of the story. You can see raising interest rates as hurting mortgage holders or you can see not raising rates when they need to rise as protecting mortgage holders at everybody else's expense. |
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Post by buccaneer on Jul 16, 2023 20:45:34 GMT
There is a strong correlation between the UK's productivity slowdown and ultra low interest rates that followed in 2008. It has led some economists to believe that interest rates need to go back to pre-banking crisis levels to support productivity growth. This is more concerned with the UK's stagnation rather than inflation and probably worthy of a thread of its own. www.briefingsforbritain.co.uk/the-great-stagnation-brexit-not-to-blame/Very interesting article. Two things caught my eye - The manufacturing productivity boost in 2020, as HR was furloughed - followed by productivity returning downwards, as HR returned to work. "With rock-bottom interest rates, economic theory would suggest that firms would invest more, leading to higher productivity, but the opposite has happened. Investment has been generally low. With less capital than might have been expected, firms needed more employees than would otherwise have been the case."An escape route partially facilitated by mass migration If correct, it claims employment expanded beyond output. The UK now has an extra 6 million bods thanks to the EU. And employment shot-up during those ultra-low interest rate years after 2008. |
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Post by zanygame on Jul 16, 2023 21:36:31 GMT
Only in the sense that interest rate hikes only effect mortgage holders. Why? Do you think its mortgage holders that are causing inflation? The idea behind raising interest rates is not to deflate the housing market [..] Again, I didn't say that it was. You brought up mortgages and those with mortgages. I'm just telling you the other side of the story. You can see raising interest rates as hurting mortgage holders or you can see not raising rates when they need to rise as protecting mortgage holders at everybody else's expense. Why would they need to rise? |
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Post by Baron von Lotsov on Jul 16, 2023 21:38:03 GMT
Very interesting article. Two things caught my eye - The manufacturing productivity boost in 2020, as HR was furloughed - followed by productivity returning downwards, as HR returned to work. "With rock-bottom interest rates, economic theory would suggest that firms would invest more, leading to higher productivity, but the opposite has happened. Investment has been generally low. With less capital than might have been expected, firms needed more employees than would otherwise have been the case."An escape route partially facilitated by mass migration If correct, it claims employment expanded beyond output. The UK now has an extra 6 million bods thanks to the EU. And employment shot-up during those ultra-low interest rate years after 2008. I've been saying what is claimed in the link on here for ages. |
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Post by sheepy on Jul 16, 2023 21:49:45 GMT
Inflation was caused by some terrible political decisions seized upon by pure greed as is the norm, interest rate rises as we have been saying are not a cure for any of it, they will only eventually fuel the fire even more. As is already the case.
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Post by Orac on Jul 17, 2023 7:06:45 GMT
Again, I didn't say that it was. You brought up mortgages and those with mortgages. I'm just telling you the other side of the story. You can see raising interest rates as hurting mortgage holders or you can see not raising rates when they need to rise as protecting mortgage holders at everybody else's expense. Why would they need to rise? There are different ways to explain it that all amount to the same statement - a bit like saying the sun is rising or the earth is spinning. Interest is a form of compensation for someone else holding your money (potential to purchase). As inflation rises, the gap between what the lender could purchase with the principle at the time he makes the loan and what he can purchase with the principle at the time of repayment gets larger - ie he loses more by deferring his purchases and making a loan. High interest rates also have the effect of making money more scarce and so changing the relationship between money and goods. I suspect real culprit is production. |
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