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Post by Fairsociety on Jul 17, 2023 9:14:56 GMT
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? Of course not, same way if your house loses value, the government shouldn't do nothing about it, you purchase a property on that basis 'investments can go up or down'.
If I had to hazard a guess, I'm thinking that the banks did exactly what the government did, dished out Covid loans like confetti, they've lent to all sorts of business that they've now found to be either bogus or gone bust, so far want of better words they are now crapping their pants, and need a 'quick' way to recuperate those losses, just like the government and its disastrous furlough fiasco.
I imagine the BoE think tank came up with the one and only quick fix, stinging the sitting ducks 'mortgage payers', hiking interest 13 times in succession would recuperate some of those losses, but my guess is they are still panicking balancing the books.
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Post by Baron von Lotsov on Jul 17, 2023 10:27:50 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. Read the article. It's from Cambridge.
Cambridge is one of the last remaining British institutions that is still doing serious thinking. Even Oxford is away with the fairies, but Cambridge is still holding out.
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Post by Baron von Lotsov on Jul 17, 2023 10:32:32 GMT
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. The medicine is working.
Zombie investments:
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Post by Fairsociety on Jul 17, 2023 10:36:43 GMT
Here's the difference between banks and the government, the banks are lending out investors money, and they have to be accountable, they've obviously lost big time with Covid loans, for the reasons already stated, the borrowers have either gone bust or were bogus, now the banks have to make good for their investors, hence 13 interest rates in a row, and they haven't stopped yet.
Now we get to the the government and it's incompetent furlough fiasco, they aren't accountable to the tax payers, they just spend our money like it was going out of fashion, once they've discovered they've been conned by the furlough fraudsters, there's not much they can do, or for that matter 'it's not our money, it's the tax payers'.
If the government looked after our tax payers money like the banks are looking after the interests of its investors and clawing the money back they have unwisely loaned out, you would see a real difference of accountability to the tax payers, and that's the difference between banks and the government.
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Post by Baron von Lotsov on Jul 17, 2023 10:42:26 GMT
Here's the difference between banks and the government, the banks are lending out investors money, and they have to be accountable, they've obviously lost big time with Covid loans, for the reasons already stated, the borrowers have either gone bust or were bogus, now the banks have to make good for their investors, hence 13 interest rates in a row, and they haven't stopped yet. Now we get to the the government and it's incompetent furlough fiasco, they aren't accountable to the tax payers, they just spend our money like it was going out of fashion, once they've discovered they've been conned by the furlough fraudsters, there's not much they can do, or for that matter 'it's not our money, it's the tax payers'. If the government looked after our tax payers money like the banks are looking after the interests of its investors and clawing the money back they have unwisely loaned out, you would see a real difference of accountability to the tax payers, and that's the difference between banks and the government. The link above proves the banks were investing in hype. |
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Post by zanygame on Jul 17, 2023 20:39:00 GMT
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. Slight problem here with your opening gambit Mags. 1, Most lending is not made by lending out the savings of other people and hasn't been for decades. 2, An average mortgage is spread over 30 years so the interest rate does not need to flex anywhere near as much as odd peaks in inflation. |
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Post by zanygame on Jul 17, 2023 20:49:50 GMT
Here's the difference between banks and the government, the banks are lending out investors money, and they have to be accountable, they've obviously lost big time with Covid loans, for the reasons already stated, the borrowers have either gone bust or were bogus, now the banks have to make good for their investors, hence 13 interest rates in a row, and they haven't stopped yet. Now we get to the the government and it's incompetent furlough fiasco, they aren't accountable to the tax payers, they just spend our money like it was going out of fashion, once they've discovered they've been conned by the furlough fraudsters, there's not much they can do, or for that matter 'it's not our money, it's the tax payers'. If the government looked after our tax payers money like the banks are looking after the interests of its investors and clawing the money back they have unwisely loaned out, you would see a real difference of accountability to the tax payers, and that's the difference between banks and the government. The banks do not lend investors money. “Where does money come from? In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood. The principal way in which they are created is through commercial banks making loans: whenever a bank makes a loan, it creates a deposit in the borrower’s bank account, thereby creating new money. This description of how money is created differs from the story found in some economics textbooks.” – Bank of England |
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Post by Orac on Jul 18, 2023 8:37:45 GMT
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. Slight problem here with your opening gambit Mags. 1, Most lending is not made by lending out the savings of other people and hasn't been for decades. 2, An average mortgage is spread over 30 years so the interest rate does not need to flex anywhere near as much as odd peaks in inflation. The exact mechanism doesn't matter. When banks make a loan, they create a risk for themselves which has the same nature as handing out bank notes from depositors. This is how banks end up in runs - ie they are unable to return the deposits they are liable for. Anyone seeking a loan from a bank is going to have to compete with the ability of a depositors to make a purchase now or simply not make a loan. I think we should leave it there. I sense you are drifting into magic money theory territory |
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Post by Baron von Lotsov on Jul 18, 2023 12:12:10 GMT
Here's the difference between banks and the government, the banks are lending out investors money, and they have to be accountable, they've obviously lost big time with Covid loans, for the reasons already stated, the borrowers have either gone bust or were bogus, now the banks have to make good for their investors, hence 13 interest rates in a row, and they haven't stopped yet. Now we get to the the government and it's incompetent furlough fiasco, they aren't accountable to the tax payers, they just spend our money like it was going out of fashion, once they've discovered they've been conned by the furlough fraudsters, there's not much they can do, or for that matter 'it's not our money, it's the tax payers'. If the government looked after our tax payers money like the banks are looking after the interests of its investors and clawing the money back they have unwisely loaned out, you would see a real difference of accountability to the tax payers, and that's the difference between banks and the government. The banks do not lend investors money. “Where does money come from? In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood. The principal way in which they are created is through commercial banks making loans: whenever a bank makes a loan, it creates a deposit in the borrower’s bank account, thereby creating new money. This description of how money is created differs from the story found in some economics textbooks.” – Bank of England BoE is a shit. What is the point in telling us what something is not. Anyone can do that. A bank is not a lemon. See, I'm 100% correct. |
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Post by Fairsociety on Jul 18, 2023 12:36:37 GMT
Here's the difference between banks and the government, the banks are lending out investors money, and they have to be accountable, they've obviously lost big time with Covid loans, for the reasons already stated, the borrowers have either gone bust or were bogus, now the banks have to make good for their investors, hence 13 interest rates in a row, and they haven't stopped yet. Now we get to the the government and it's incompetent furlough fiasco, they aren't accountable to the tax payers, they just spend our money like it was going out of fashion, once they've discovered they've been conned by the furlough fraudsters, there's not much they can do, or for that matter 'it's not our money, it's the tax payers'. If the government looked after our tax payers money like the banks are looking after the interests of its investors and clawing the money back they have unwisely loaned out, you would see a real difference of accountability to the tax payers, and that's the difference between banks and the government. The banks do not lend investors money. “Where does money come from? In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood. The principal way in which they are created is through commercial banks making loans: whenever a bank makes a loan, it creates a deposit in the borrower’s bank account, thereby creating new money. This description of how money is created differs from the story found in some economics textbooks.” – Bank of England Slight problem here with your opening gambit Mags. 1, Most lending is not made by lending out the savings of other people and hasn't been for decades. 2, An average mortgage is spread over 30 years so the interest rate does not need to flex anywhere near as much as odd peaks in inflation. The exact mechanism doesn't matter. When banks make a loan, they create a risk for themselves which has the same nature as handing out bank notes from depositors. This is how banks end up in runs - ie they are unable to return the deposits they are liable for. Anyone seeking a loan from a bank is going to have to compete with the ability of a depositors to make a purchase now or simply not make a loan.
I think we should leave it there. I sense you are drifting into magic money theory territoryAgree ^^ |
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