Monday, Sep 21, 2009
The paradox
The Telegraph: Bank of England warns of the consequences of thrift
It says in its latest Quarterly Bulletin that household decisions to spend or save will have major consequences for the economic outlook, because consumer spending accounts for two-thirds of total spending in the UK.
The Bank also reveals in the Bulletin that, from July 24 to August 4, the Bank did not buy any corporate bonds after receiving no offers in five consecutive auctions.
Posted by devo @ 07:12 AM (1096 views) Add Comment
13 Comments
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1. paul said...
The Bank of England only have themselves to blame. They created the boom and by consequence, the credit bust. Now they are shielding the feckless from the consequences of their decisions with ZIRP and QE, they have condemned us to a lost generation.
As I've always said, history will judge them harshly.
2. hpwatcher said...
history will judge them harshly.
I can see Gordon Brown going straight to national disgrace after the election - also Mervyn King. I think future generations will hold them in complete contempt for their wrecklessness, incompetence and ignorance........and arrogance.
3. stillthinking said...
Hmmm...
How many billions are waiting and will be waiting for some time for the trough in the housing market?
4. mr g said...
"Any attempt to reduce consumption is likely to push down on output"
Output of what? We don't make anything.
Or does it mean a reduction in the amount of bullsh*t we hear from VI's?
5. mountain goat said...
Maybe they could with-hold part of our salaries and make us accept consumer goods instead. Forced spending, thats what we need, negative return on savings clearly isn't enough to get people spending.
6. house said...
Just a thought, doesn't lower consumption means 'we' meaning the world has to produce less. That means lower green house emissions. The world then does not have to have an agreement as market forces will decide.
Any comments on this.
7. inbreda said...
"Any comments on this."
Yeah - leaving it to coincidence shouldn't really be an option.
8. easybetman said...
Yes - Mr King - you go first... (with his gold plated pension, he certainly can afford to)
9. timmy t said...
The consequences of thrift are that you buy less, pay off more debt, wipe your slate clean, then begin a new life where you live within your means. If we'd all done this all along then maybe boom & bust really would have been eradicated. If nobody tried drugs, nobody would become addicted and there wouldn't be a drug problem. We need to kick the habit, suffer the cold-turkey and move on. They can't put off the pain forever.
10. uncle tom said...
Shoot the organ grinder, not the monkey - Brown is the one to blame..
11. paul said...
Uncle Tom I disagree. The Bank of England systematically ignored house price inflation - they could have acted based on the RPI just as they are acting on negative RPI now.
But they didn't. No doubt about it - that was what created the boom and the consequent bust.
12. enuii said...
Paul, WHO switched from RPI to CPI, WHO was the chancellor at the time?
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