the wizard

The government isn't failing to maintain a stable store of value. It is deliberately trashing the asset the society has decided will be the least risky store of value. This is no different to confiscating gold or foreign currency, which is what happens in more openly corrupt countries.

Landlords profit by stealing economic growth from the economically productive. If they steal too much, the economy collapses.

Thankyou.

Indeed, but for better or worse it is how the majority of people store their wealth in a 'risk-free' form. People who stored the wealth in this way made the right call - in the absence of government intervention. Pirate equity, landlords and oil traders made the wrong call and allocated capital where capital was not required. These failures are now being bailed out, so they can live to fail again and again and again. The entrepreneurs who would replace them have no niche to inhabit, and the real economy suffers. EDIT: Or to put it another way, the titanic has run aground, and everyone has abandoned ship. This is pretty bad for the ship owners, so the government has decided to set fire to the lifeboats. This has the miraculous effect of forcing everyone back aboard to hear the band play its last song, as the ship slowly disappears beneath the waves.

We have anarchy, in that people are free to do what they like, except that one group has grabbed power through a monopoly of violence. We have denial, because people think that 'states' are somehow natural historical structures, and not simply gangs with power. They tolerate the monopoly of violence. They will even encourage it, or join in. By pointing out that the government has grabbed all the power, you might convince people to grab power back. It is in their interests to do so, but they have been fooled into thinking otherwise. No violence is necessary. Anyway, the problem with inflation is that it steals from people who have cash and gives money to people who have assets. Those assets were bad investments and should be abandoned, but capitalists are the favoured group of the government and so they get a bail out. Not only does it not fix the productive economy, it actively encourages bad investments to continue and prevents the reallocation of capital to more productive areas. In that way it hurts the people who have neither cash nor assets. Banks should have failed. Bankers, landlords and the like should be looking to work in other, more productive areas which would grow the economy. They aren't, and that is the effect of QE.

The most efficient would be to power the heat pump using gas delivered to the house, in fact I sort of thought that was the whole point of a heat pump? Is such a thing available?

Exactly. Why do people keep parroting this 'free banking' nonsense? Do they think that banks are charities? Are they doing us a favour? I lend the bank money. I am the one providing the service to the bank, not the other way around.

My guess - and its only a guess - is that they will stop QE for a while, and then the apparently negative effects will force them to panic and restart it shortly afterwards. However, I think you will get a shock either way. I think that either stopping it now, or extending it for much longer, will cause a crunch point. The credibility of the BOE allows them to pretend that they will neither let the economy crash, nor let inflation get out of control. I don't think that is realistic. Left to itself we would have massive deflation (I don't think anyone disagrees about that, do they?). On the other hand, the central banks can produce as much inflation as they want. Since no one knows which of these two outcomes the bank will choose, the markets haven't moved as dramatically as they might otherwise. The number of people betting on inflation is similar to the number betting on deflation. As soon as their choice becomes indisputable, inflation or deflation expectations will really start to kick in and the movements could be dramatic.

There is a shock coming, although whether it is big enough is anybody's guess. Either QE ends - in which case deflation in all assets may resume. Or QE is extended - in which case inflation, and inflation expectations, could kill the pound. I don't like to predict the future, because I'm very bad at it, but I would say that when the bank of England is finally forced to decide one way or another, either choice will be a shock to the market.

I think you have underestimated the mortgage amount. I can only get this amount if I use a mortgage rate of 10%, which sounds quite high to me. I agree about the rate, but I think that your calculations are wrong. A guaranteed $1000 dollar monthly income, for $50,000, would be amazing. Profit after 5 years, unless inflation goes totally mental.

I agree, you need to speak to a lawyer.

Another possibility is to remortgage the house, and use his payments to you as your payments to the bank. You get a lump sum, and if he defaults the bank gets the house. That depends upon the exact legal situation though, and I'm assuming there's no existing mortgage. Basically you'd be his landlord.

No, sorry that isn't what I meant. The deal she has pays her $1000 a month for 20 years. Insurance companies sell exactly this product, its called an annuity. To work out roughly how much she can sell her contract for, she can look at how much they sell their contracts for. It is only a guide though. EDIT: Just to be clear, insurance companies are selling this product, and so are you. They might also buy this kind of thing, but I suspect not. I don't know how you would go about finding a buyer.

Some googling found this, which suggests $161,000 for a 20 year immediate annuity (scroll down the page, you want "Guaranteed Income for a 20-Year Period Certain Only ("20PC")" close to the bottom of the list. I think the number sounds about right, it suggests a rate of a bit over 4%/year. Again caveats: I don't know who runs that website, I'm not recommending it, I am recommending proper financial advice. They sell their annuities for $161,000 that doesn't mean you can.

There are many kinds of annuity, but the kind I'm talking about means you pay a lump sum now, in return for a fixed dollar amount each month over a period of time. This is pretty much what your wife got in return for the house, so you need to find out what insurance companies usually charge for that sort of thing. The trouble with trying to calculate it yourself, is that you don't know the correct interest rate to use. It isn't the inflation rate.

Inflation doesn't really come into the calculation, at least not directly. If I understand correctly, then what has happened (in financial terms, I don't know the legal details) is that your wife has given away her house in return for a fixed annuity, and now she wants to sell the annuity. It isn't really the house you are selling, its the $1000/month income I think. You should be able to find the cost of an immediate fixed annuity that pays $1000 per month for how ever many months is left on the contract, from various insurance companies or brokers. Normally, the value of her annuity would be much less than these quotes because the risk that your brother in law defaults is higher than the risk that an insurance company defaults. However if the deal is set up so that they get the house in the event of default, then there is less risk and so the quotes should be a pretty good estimate. Of course, it can only ever be an estimate, and the real price is set by your ability to find a willing buyer. Some other points: 1. Why would her brother-in-law default? Unless the value of the house is less than the cost of the annuity, he can sell the house, buy an annuity himself and pocket the difference. He then passes his payments on to you, and never has to default. 2. The formulas provided for calculating the value of the annuity are correct, if you know the interest rate. This will not be the rate of inflation. In fact the only real use for this kind of calculation is to be able to switch between a market price and a market interest rate, which are simply two different ways of talking about the cost of a financial product. 3. I have no idea about taxes, which may affect the price. 4. I am not a lawyer, financial advisor, or doctor. I am not regulated by the FSA. You should speak to someone who is, particularly a lawyer. 5. I may have misunderstood the arrangement, and I may be wrong. See point 4.

Nothing in the communist manifesto about gulags or slave labour either.

I'd quite like to modernise Peter Mandelson's face, with a shovel.

No I am English. I don't think I have an avatar, although who knows what with the new forum and everything.

Arguing that modern capitalist countries aren't really capitalist is as silly as arguing that the soviet union wasn't really communist. Capitalism includes landlords and bankers, corrupt politicians, externalising costs and limited liability companies. These are basic features of the system. Capitalism is not a form of anarchism.

No, I am English

According to my father, my grandparents did not use toilet paper in the 60s, using cut-up old newspapers instead. They had an outside toilet even in the 80s. I also remember metered electricity, where you had to put coins in every hour or so or the power went out. This really sucked on a Sunday when all the shops closed, so you had to keep lots of change.

This question is so good, I want to lick its face. Unfortunately, it isn't very timely, since house prices big news this week. So I suggest: If insecure rented accommodation is good enough for the priced-out generation, why isn't it good enough for MPs? Needs a good follow up that stresses the priced-out part, and links it directly to corrupt MPs.

Capitalism is an entirely unnatural state of affairs, and requires a strong government in order to be successfully implemented. Somone has to keep the losers in their place, someone has to enforce property laws even when those laws disadvantage the majority. People aren't naturally capitalists, their willingness to do all sorts of things in the name of religion, being the obvious counter example. In a truely free society, different power structures evolve, including free trade, but also charity, family, unions, and politics. Our ancestors were born into a free society - all laws are man made, and none have existed forever - and that free society evolved into what we have today - a mess of socialism, capitalism, science, religion and all sorts traditional institutions. The most important thing is to prevent any one of those gaining too much power. Your freedom is determined by the people who have power over you. The capitalists have and still are disassembling all other influences on society in order to maintain their power. They want us to trade everything, on their terms. Capitalists killed the unions and democracy. They are having a good go at academia, which is the subtext of much of the global warming debate. Families are broken in the name of the flexible labour market. Capitalism has even started to erode the influence of religion, which is why Al-Queda don't like us very much.

No. In my opinion the insane cost of housing is the single most important political issue in Britain at the moment. Why are we allowing a corrupt ruling class return us to a feudal society? Why is all economic growth given to landlords who produced none of it? Why is productive work so devalued relative to rent-seeking and speculation? I'm terrible at making predictions. I don't predict a house-price crash, I advocate it.