Friday, Jul 30, 2010
It's time we stopped bailing out overstretched borrowers.
Save our Savers: How to have your inflationary cake and eat it
Inflation is proving to be the Chancellor’s best friend. In it he has an ally that is systematically reducing the real value of the UK’s debt and, at the same time, by changing the measure of inflation used to index link certain expenditure he is able to reduce Government spending. The fact that it is also eroding the value of the Nation’s savings seems to be of no concern to him at all, though.
Posted by mr g @ 06:34 PM (1703 views) Add Comment
26 Comments
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1. Arthur Kinnell said...
The idea of putting your savings into for example Hungary (no offence) could be quite scary. But if all Britain's savers could get together to put their however many trillions into an overseas savings fund, that should get the attention of the banker-government axis. Need some sort of international financial wizard to set it up and run it, like George Soros for example. OK, I'm naive, but I'm trying.
2. Crunchy said...
Some jobsworth, mark my words.
3. miken said...
It's time for some sort of class action (or rally) against the BOE to force them to increase interest rates. We need a new Robin Hood!
4. easybetman said...
Actually, if you don't like GBP you can always sell it to the banks (and will end up in other central bank account at BoE) and hold something else such as the aussie etc or gold or packets of rice etc. If enough people sell the GBP, BoE will have to raise the rate to prevent to currency from thrashing.
5. miken said...
Link to related video mentioned on the website (Go to 11 minute and 30 seconds):
http://www.bbc.co.uk/iplayer/episode/b00t6cln/How_to_Beat_Tough_Times_Money_Watch_Growing_It/
6. mr g said...
@miken "It's time for some sort of class action (or rally) against the BOE to force them to increase interest rates."
Agreed, how do we organise it?
@easybetman "Actually, if you don't like GBP you can always sell it to the banks (and will end up in other central bank account at BoE) and hold something else such as the aussie etc or gold or packets of rice etc. If enough people sell the GBP, BoE will have to raise the rate to prevent to currency from thrashing."
That's OK if you know something about currency dealing or commodities but, I would imagine that the majority of people who are being robbed of their savings know next to nothing about either.
7. stillthinking said...
I thought it was interesting that the amount that UK savers have saved is the same amount that the UK government has borrowed...
8. estrader said...
Once again, Peter Schiff says it all
http://www.youtube.com/watch?v=y8kDVRwq-1Q
9. miken said...
Well Mr G, the first step is to petition the government. Reason being is the BOE have no right to keep interest rates at 0.5% since inflation is way over their 2% target. I feel the only reason to keep them at 0.5% is to prevent a housepricecrash at the expense of savers. Savers (old and young) must understand banks are in many cases earning in excess of 10% interest on the money savers have banked with them. So why should we put up with a paltry 0.5%? I am sure for every youngish person like myself who is upset with low interest rates that there will be 10 active pensioners willing to also be active petitioners (if not demonstrators).
I haven't previously been associated with the saversfightback.co.uk, but it seems their website is a good starting point for petitioning or demo'ing. For example see: http://www.saversfightback.co.uk . There you can subscribe to a mailing list and sign their petition.
Then keep an eye out for progress updates, demonstration dates, etc.
There is also the facebook page: http://www.facebook.com/SaveOurSavers
Simply click on 'like this' on the webpage and also 'subscribe to saveoursavers'. What's probably required is a co-ordinated approach between facebook groups and various other websites into organising a sizeable demo (e.g 10,000 or more to make it in the news) on Threadneedle Street in London. The government hopefully will take notice. I'm more than willing to participate in legal demonstrations.
I really hope hpc don't delete my comment here! I'm not entirely sure I have met their blog policies!
10. fallingbuzzard said...
Savers are few. Borrowers are more. Homeowners are many. Until the reverse is true Saveoursavers won't work because the many want high house prices, even if the real value is eroded by inflation. And the borrowers need the inflation. The savers are not needed because the BOE can create equivalent deposits at will.
11. miken said...
fallingbuzzard, that's exactly why we are in trouble. Many people don't realise money required to refinance money used for mortgages/loans simply wont be available in the near future and therefore must come from savers. It will also come from mortgagees via higher mortgage rates. Hence why I expect base rates to rise. There's not much choice for the government/BOE. Yes they might chose QE but that wont be socially acceptable in my opinion once more and more savers become aware their money is being devalued.
In any case I don't know what figures you are using/comparing when you state that savers are few.
12. fallingbuzzard said...
I've said it before but on the whole its far too comfortable in this country, so we'll protest heavily about a war in Iraq and poll tax, yet say nothing about the creation of £200 billion of new money and we'll say nothing about the next lump either.
13. tenyearstogetmymoneyback said...
A point I have made before which also came up on the "How to Beat Hard Times 3" program (miken has posted the link above)
is that savers have to manage their money i.e. check interest rates and move if you aren't happy.
Obviously do a bit of research before doing so regarding the £50K limit etc but certainly don't put up with less than 1%
on an ISA or anything silly.
As for stillthinkings point "I thought it was interesting that the amount that UK savers have saved is the same amount that the UK government has borrowed...", if we had a balanced economy then all the U.K.s mortgages shoulod have come out of that money
as well.
14. easybetman said...
@mr g,
Yes, this is a difficult one and under inflation rate of interest is certainly morally unfair. What is going on is like there is a giant farm (BoE) in an area which can supply unlimited amount of milk and hence can control the price of the milk.
However, under current regime, there is little one can do other than to abandon something that is not sound in search of something sounder. That is the only way to force change.... or we can have a referendum for an alternative currency in the UK (let's call it BoE II - the American did this during the civil war, a gold pegged dollar and the 'green back' where their exchange rate fluctuates according to market demand)
15. Sam said...
Petitioning the BOE to raise rates in entirely pointless. With the economy on the verge of dipping back into recession the BOE will not raise interest rates so that we get a bit more money from our savings, on the contrary it want to encourage you to spend!
If you are unhappy about the rates you are getting then you should invest your money elsewhere. Depending on the level of risk you wish to take it is quite easy to get a 5-7% yield in shares, corporate bonds, emerging market debt or even lending money yourself via social lending websites!!!
The biggest crime you can commit if to leave all your saving in a nice safe UK bank earning next to no interest. Why! Because you money provides the asset base with which other loans are made. We can increase the cost of borrowing by demanding a greater yield ourselves, otherwise we perpetuate the low interest/ easy money cycle.
There are 2600 readers of this website, say they all have 30k saved, the total is£91 million. Lets say banks leverage this money at a ratio 10 that totals £910 million in cheap rate mortgages. In short it is time for cash rich people like us to be the bankers and demand a better return, or walk and moving our money elsewhere.
We can push the rate higher by demanding more. It demand suppy.
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17. mystie010 said...
What we need is a peoples bank. A bank run by the people for the people. It would go something like this. Lend out money at 8% and offer 5% on savers deposits. Forget about all the rest of it like money markets, QE, Lobor rates etc. just keep it simple. Money in at 5% and money lent out at 8% for personal loans. Obviously there would have to be some kind of jigging about for mortgages as these are currently a much lower rate. But even if you offered savings at 3% and mortgages at 5 year fixes for 6% you theoretically would still be making a profit. I reckon people would flock to put their savings in.
Obviously as no-one has done this yet I guess that my business model is somewhat flawed but surely someone can turn this crazy situation into an advantage. Anyone up for it? The bankers need to be played at their own game!
18. smugdog said...
Do you honestly think that this little 'get-together' of odd balls is going make the slight bit of difference?
The plight of savers means nothing, in fact, they may well think 'what the hell' and spend spend spend.
The existence of happy home owners is so very important and props up the country.
It may well be a 'plate spinning' illusion, but hey, who's complaining! Me?, Smug!
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20. general congreve said...
This saver has saved himself. Keep the interest rates at 0.5%, no make them 0% and turn the QE back on, it'll do my new shiny yellow non-paper savings the world of good, just like the last lot of QE and low interest rates did :)
21. braindeed said...
Grumpy @4 said....
Agreed, how do we organise it?
1 Well first, get some Uzis, because 40% of the households with morgages will hate and resist you.
2 Blow up the TV transmitters or assasinate Ant & Dec
3 Go work for the Beano and try sneaking in some counter balanced economic philosophy - catch them young and wait for all the old 'wouln't pay' boomers to snuff it.
...or alternatively just stop moaning and get a life.
prior accrued
22. tenyearstogetmymoneyback said...
After reading all this I satrted wondering how they are getting on in Iceland ?
Does anyone have any news as to what is happening there. After all
(with the possible exception of Zimbabwe) they have the economy of the future.
23. Sam said...
Petitioning the BOE to raise rates in entirely pointless. With the economy on the verge of dipping back into recession the BOE will not raise interest rates so that we get a bit more money from our savings, on the contrary it want to encourage you to spend!
If you are unhappy about the rates you are getting then you should invest your money elsewhere. The biggest crime you can commit if to leave all your saving in a nice safe UK bank earning next to no interest. Why! Because you money provides the asset base with which other loans are made.
In short it is time for cash rich people like us to be the bankers and demand a better return, or walk and moving our money elsewhere.
Just stop this whinging and wishing thinking that house prices are going to collapse. With interest rates at the current level they will not. You might dream of hyper inflation but it's just not going to happen.
Do something about it...
24. greenmind said...
recaptcha: "hardliner needed"
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