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About Biggus

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  1. It's an interesting argument. Do you think there's a danger people might save so much that consumption falls off a cliff?
  2. I don't see interest rates rising significantly until there's a complete and total collapse. In 2001 raising rates would have created a quick correction. By 2007 it would have been a huge downturn. But now? After twenty years of mismanagement the correction would be massive. It's not going to happen. Money will be printed. Interest rates will be held at zero percent or even be forced negative. This wont end until the system ends in catastrophic collapse.
  3. In neo-classical econ savings = investment. 'In neo-classical economics, it is assumed that the level of saving will equal the level of investment. This is because investment is determined by available savings in the economy.' https://www.economicshelp.org/blog/649/economics/difference-between-saving-and-investment/ There is no benefit to printing money. You should really think about resources, not money. At any time there is a certain amount of resources available. Printing money does not add anything to that stockpile. The resources that get consumed are used up and add nothing to growth. The proportion that gets invested creates growth. The economy grows more when investment is encourged and less when more resources are consumed. The low interest rate policies being enacted today create stagnation at best.
  4. If these things are needed on their own merits then there is no dispute. But creating them to support the economy is fallacy. In the same way, iIf four nuclear submarines are needed for defence then we must have four nuclear submarines. No argument. But if you tell me we should commission four nuclear submarines to suport the economy I'll say it's a garbage idea. Government does not support the economy,. The economy supports the government. Churchill put it this way. 'We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.' You should also remember that economics is not a rule book. It does not prescribe action. It exists simply to inform. There are many things I support that are economically inadvisable. However I justify them on their own merits.
  5. Where do they get the money? Does it arrive on a moonbeam?
  6. We already have roads, rail power and internet. If they needed upgrading it would already be being done. No need for an emergency budget. Any work done that is not needed is activity for the sake of activity. Sure, building unnecessary infrastructure is a popular way to waste money taken out of the productive economy.
  7. If the government had a huge pile of resources with which they could support the economy it would be great. But they don't. Any resources they use will come from the productive economy. They will put money into the economy by taking it out of the economy and putting it back in again. There are a great many schemes for this. Krugman suggested preparing for an alien invasion that will not come. Bastiat suggested breaking windows so that they can then be repaired. Building roads to nowhere hs always been a favorite. But really, if you are a follower of Keynes you should follow his advice: pay half the population to dig holes and the other half to fill them in again. Full employment! I don't think there will be much in the way of direct taxation. Taxes are too honest. They can been seen and felt directly. Printing money is much more likely.
  8. Nobody in politics is interested in ordinary people. One bunch is all about making the rich even more rich. The other lot wants to make the government bigger and have more control over everyone's life. There is no way to vote for the interests of ordinary people. Voting to leave the EU was a vote for change.
  9. Yes, there are winners an losers. Those are not my thoughts, by the way. I got the first paragraph from an online lecture on inflation - https://youtu.be/y_SL2tIF6i4?t=112 The second paragraph come from a passage in Adam Furgusson's book, which I can't be bothered looking up.
  10. There are no net benefits to society from printing money. Money does a certain amount of work by facilitating exchange, as a unit of acoount and store of value and so on. When there is enough to perform these functions adding more does not create a net benefit. It does have negative effects. It also enriches a few at the expense of the many. Also, when money is printed the value of currency in circulation falls more than you might expect. For example, if the amount of money is doubled you may think that the purchasing power of the currency would halve. It doesn't. It falls by more than half as people look for protection elswhere. A shortage of money is created. There are calls for more money printing to make up the lost value.
  11. The interest rate is set by the BOE paying more for government bonds than they are really worth. The market rate without the BOE printing money to buy bonds would be much higher. The money printing is not earned wealth. It is taken, without permission, from the rest of society. In other words theft. Last month the BOE printed 200 billion pounds to buy bonds. The manipulated interest rate forces up the price of bonds, stocks, houses and financial products and everything else. It's not possible to escape. There is nothing I can buy that has not had it's price affected by the money printing. But, yes, I'm going to protect myself as best I can.
  12. "The reality is the UK faces its greatest ever economic crisis. Q2 GDP is going to fall by 25% plus. There will be no V shape recovery. We are going to fail badly. The treasury is wrestling with the implications of Project Birch – the plans to bail-out the failing large UK companies critical to the economy. Company balance sheets across the country are being distorted by increasing debt – the only way to pay down will be to cut costs. Retail sales are collapsing. Gilts are at negative yields. Government borrowing in April exceeded £62 bln as expenditure rose 54% (compared to April 2019), while tax revenues tumbled 35%. Unemployment is going to explode. Companies across the nation are going bust at a record rate. Social deprivation is going to go through the roof. At the same time, we’re fighting to put together a new future for the UK outside the Eurozone, trying to agree the terms of trade deal with our former EU partners by the end of June, and struggling to avoid the breakup of the United Kingdom as nationalist pressures mount. Last week the UK was already a screaming sell, but you kind of believed there was hope, and on a relative basis to Europe, it wasn't so bad" https://www.zerohedge.com/markets/ship-sinking-economy-holed-below-waterline That about sums it up. And the answer, as always, will involve turning the crank on the printing press.
  13. Seems to me the state and central bank are determined to steal as much of my money as they can get away with. With negative interest rates this will be overt theft, on top of inflation and tax. It is my job to protect my wealth, that was earned by hard work, from these thieves. I have lost all faith in the pound as a store of value, thanks to this threat. The best I can come up with is to buy something that will retain its value. Doen't really matter what. I'd prefer a form of concentrated, liquid wealth. So, yeah, gold is the obvious choice. Other metals, such as silver, platumin or even copper work just as well but are perhaps not so liquid. If anyone has a better idea for wealth preservation speak up. Not looking to make money, just to not be robbed. Land is in a debt fueled bubble. Stocks look expensive and risky. The dollar looks as bad as the pound, though I could be wrong here. But why take the risk? So far as I can see an ounce of gold will still be an ounce of gold in five years time. There's always the risk that gold will be outlawed, though. So maybe silver? I've ordered a little gold and silver from ebay today. If nobody can come up with a better idea that's where I'm putting my savings. I was doing DD on high divi FTSE 250 stock in Jan, but now it all just looks like risk.
  14. I dont't think negative interest rates are just an abstract possibility. They look like a real possibility in the near future. So the real question is what does it mean for me? How I do to protect my savings? Also, do you think negative rates will be applied to mortgages?
  15. But would negative rates for retail banks might cause bank runs. When people start pulling their cash out of the bank to put cash under the matress the banks may not have enough reserves. Lack of reserves creates fear of losing savings in the bank leading to a bank run. How will such a thing be prevented?
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