huw Posted February 16, 2009 Share Posted February 16, 2009 Interest rates need to rise this will cut debt and consumption, it will be painful getting back to a sustainable position where people save for what they want but can afford what they need. How will the wealth be generated to pay the higher rates? To put it simply: - I put £100 in the bank - some time later I get £110 back - where is the extra £10 going to come from? Quote Link to comment Share on other sites More sharing options...
GregG Posted February 16, 2009 Share Posted February 16, 2009 We all know morons from school, this does not give us the ability to work out who they are from a couple of internet posts. I What's the point in engaging with this stupid OP's comments. We can all save money if we wish. None of us have to go into debt with the exception of buying a house (which we've become accustomed to believe is a prudent risk which pays off in the long run). Everything else can be bought for cash. There are savers in this forum from every spectrum of society. Some have £10k in savings some have £1m. The common factor they all share is that they spent less than they earned. That is always possible. I saved money when I was on a student grant in the 1980s because I didn't piss it away on beer and night-life. Anyone who hasn't saved for a rainy day has made that choice and now has to live with it. Quote Link to comment Share on other sites More sharing options...
huw Posted February 16, 2009 Share Posted February 16, 2009 Is the OP suggesting that we should all stop saving then? If the government keep handling this farce the way they are doing, then the whole concept of "saving for your retirement" will die a nasty death. I think we should all stop saving by giving our money (via intermediaries) to Ponzi schemes of one kind or another. That's not possible within our current debt-based monetary system, sadly, but there you go Quote Link to comment Share on other sites More sharing options...
GregG Posted February 16, 2009 Share Posted February 16, 2009 How will the wealth be generated to pay the higher rates?To put it simply: - I put £100 in the bank - some time later I get £110 back - where is the extra £10 going to come from? some time = 2 years. Prices have risen by at least that much. Interest is merely keeping pace with inflation most of the time and sometimes does not even do that. As someone pointed out above, the system did not crash because of too many savers. Quote Link to comment Share on other sites More sharing options...
huw Posted February 16, 2009 Share Posted February 16, 2009 The basic idea is cut base rates by n basis points and you hand back n basis point times outstanding mortgage pool into the pockets of hard working families so they can race down to the shops and save us all. I disagree, I think it's to reduce the amount of wealth that goes to servicing debt, in order (among other things) to reduce the default rate. If you put rates up, defaults will rise, companies will close, and the economy will shrink even faster than it is now. And the higher default rate will mean that much of the 'benefit' of higher rates will be lost in any case -- you don't collect interest off a loan that's defaulted. Quote Link to comment Share on other sites More sharing options...
catara Posted February 16, 2009 Share Posted February 16, 2009 How will the wealth be generated to pay the higher rates?To put it simply: - I put £100 in the bank - some time later I get £110 back - where is the extra £10 going to come from? This really is secondary school mathematics... Multiply 100 by 1+r where r is the interest rates connected to the inflation and you get 100 (1+r) after one year. After two years you get 100 (1+r) (1+r) If you want continously compounded interest, after two years you get 100 exp(2 r) Quote Link to comment Share on other sites More sharing options...
worzel Posted February 16, 2009 Share Posted February 16, 2009 What's the point in engaging with this stupid OP's comments. We can all save money if we wish. None of us have to go into debt with the exception of buying a house (which we've become accustomed to believe is a prudent risk which pays off in the long run). Everything else can be bought for cash.There are savers in this forum from every spectrum of society. Some have £10k in savings some have £1m. The common factor they all share is that they spent less than they earned. That is always possible. I saved money when I was on a student grant in the 1980s because I didn't piss it away on beer and night-life. Anyone who hasn't saved for a rainy day has made that choice and now has to live with it. There you go again calling him stupid. Whats the point in that? A lot of the people on this forum have large cash deposits resulting from house sales at vastly inflated prices due to excessive lending by the banks. Having had these un-earned windfalls, some now expect governemnt protection for their deposits, as they earn them interest, whats wrong with a taxpayer not wanting to pay for that and getting annoyed that the savers are then complaining about low rates - I dont see why its so hard for everyone to see where he is coming from. He could be aplant for all I know, but he makes a valid point. Quote Link to comment Share on other sites More sharing options...
huw Posted February 16, 2009 Share Posted February 16, 2009 The big difference is that the savers can take remedial action now and convert their savings into assets or diversify into different investments.The debtors cannot. Not all the savers can do that, only the ones who panic first Quote Link to comment Share on other sites More sharing options...
catara Posted February 16, 2009 Share Posted February 16, 2009 How can you possibly know what the OP was like at school?We all know morons from school, this does not give us the ability to work out who they are from a couple of internet posts. I Stupid (or ignorant) people usually turn out to be big losers in their lives, with low salaries. They also tend to blame everybody around them for their failures. OP looks very close to being one of them. Quote Link to comment Share on other sites More sharing options...
huw Posted February 16, 2009 Share Posted February 16, 2009 This really is secondary school mathematics...Multiply 100 by 1+r where r is the interest rates connected to the inflation and you get 100 (1+r) after one year. After two years you get 100 (1+r) (1+r) If you want continously compounded interest, after two years you get 100 exp(2 r) It may be secondary school mathematics, but unless you answer the question asked, you won't pass the exam. How will the wealth be generated to pay the higher rates? Quote Link to comment Share on other sites More sharing options...
catara Posted February 16, 2009 Share Posted February 16, 2009 There you go again calling him stupid. Whats the point in that?A lot of the people on this forum have large cash deposits resulting from house sales at vastly inflated prices due to excessive lending by the banks. Having had these un-earned windfalls, some now expect governemnt protection for their deposits, as they earn them interest, whats wrong with a taxpayer not wanting to pay for that and getting annoyed that the savers are then complaining about low rates - I dont see why its so hard for everyone to see where he is coming from. He could be aplant for all I know, but he makes a valid point. This is a very simplistic way to look at things. The easy and correct way: you put money in bank, banks makes profit and you get interest. Our of this interest , you pay 20% or 40% to the tax payer! So the taxpayer gets money, does not pay money. the OP is too full of envy and rage to understand this simple fact. Quote Link to comment Share on other sites More sharing options...
catara Posted February 16, 2009 Share Posted February 16, 2009 (edited) It may be secondary school mathematics, but unless you answer the question asked, you won't pass the exam.How will the wealth be generated to pay the higher rates? Banks get money from the savers and lend money to the borrowers. Savers get r% and borrowers pay q%. As r% is less than q%, the banks make money and can afford to pay savers their "wealth". I thought this was taught in secondary school... Edited February 16, 2009 by catara Quote Link to comment Share on other sites More sharing options...
huw Posted February 16, 2009 Share Posted February 16, 2009 some time = 2 years.Prices have risen by at least that much. Interest is merely keeping pace with inflation most of the time and sometimes does not even do that. As someone pointed out above, the system did not crash because of too many savers. I don't hear savers saying they merely want to keep up with inflation, I hear them calling for a return -- but I have yet to hear anyone suggesting how that return is to be generated. But as you say, interest doesn't always (almost never after tax, IMO) keep up with inflation, particularly as 'inflation' tends to be understated. So what's different now? Quote Link to comment Share on other sites More sharing options...
huw Posted February 16, 2009 Share Posted February 16, 2009 Banks get money from the savers and lend money to the borrowers. Savers get r% and borrowers pay q%.As r% is less than q%, the banks make money. I thought this was tought in secondary school... I say it again: How will the wealth be generated to pay the higher rates? Have the borrowers got a magic money mine? Do you know where our money comes from? Quote Link to comment Share on other sites More sharing options...
Tummybanana Posted February 16, 2009 Share Posted February 16, 2009 It may be secondary school mathematics, but unless you answer the question asked, you won't pass the exam.How will the wealth be generated to pay the higher rates? 1. Innovation which means that certain processes of production can be carried out faster, meaning that more can be produced at a lesser cost for production and purchase, freeing individuals' time for other activities which are also beneficial to the country's continual well-being. 2. By implementing procedures which mean that the state no longer has to bear the burden for the health and maintenance of individuals who can, instead, produce essential or desirable products for those who have benefitted by having their time freed up, and possible wage increase by 1. 2. Exploiting people in other countries. Quote Link to comment Share on other sites More sharing options...
worzel Posted February 16, 2009 Share Posted February 16, 2009 Banks get money from the savers and lend money to the borrowers. Savers get r% and borrowers pay q%.As r% is less than q%, the banks make money and can afford to pay savers their "wealth". I thought this was tought in secondary school... I thought they taught things in school joking aside, Bank lends money to many foolishy man who spends it all on strippers, and cant pay it back. Where does money come from to pay back depositor? Quote Link to comment Share on other sites More sharing options...
catara Posted February 16, 2009 Share Posted February 16, 2009 I don't hear savers saying they merely want to keep up with inflation, I hear them calling for a return -- but I have yet to hear anyone suggesting how that return is to be generated. Nobody says that. Returns can be obtained only from investments, where there is some risk involved. The reason why savers complain is because the real inflation (the one you see in supermarkets or when you pay your fuel bills) is hidden. There is a long way between some saver compalining and the stupid OP who says he hates savers... Quote Link to comment Share on other sites More sharing options...
hev Posted February 16, 2009 Share Posted February 16, 2009 I'm getting rather sick of savers bleating on about how the current low interest rates are ruining them financially and how it's not worth them saving their cash. How quickly they forget that if it wasn't for the taxpayer being forced to bail out the banking system these people wouldn't have any savings at all! You are with out doubt what epitomises the failures of this country, may I suggest you get your hair died bright orange apply a load of spray to make it stand up on end ( you can always apply for an extended mortgage to buy the products or put it on your credit card) and go and live on the troll's forum Quote Link to comment Share on other sites More sharing options...
catara Posted February 16, 2009 Share Posted February 16, 2009 I thought they taught things in school joking aside, Bank lends money to many foolishy man who spends it all on strippers, and cant pay it back. Where does money come from to pay back depositor? Sorry, I wrote a bit fast. OK, if we are putting prostitutes into discussion, then maybe we should open another topic. Quote Link to comment Share on other sites More sharing options...
Guest AuntJess Posted February 16, 2009 Share Posted February 16, 2009 (edited) This is a very simplistic way to look at things.The easy and correct way: you put money in bank, banks makes profit and you get interest. Our of this interest , you pay 20% or 40% to the tax payer! So the taxpayer gets money, does not pay money. the OP is too full of envy and rage to understand this simple fact. Ideally that is the way of it. The truth is it goes into the pot...y/know that pot that gordo uses to fund his crackpot schemes - (mistyped and wrote 'scams' there the first time) Scams, schemes, either way, he's throwing good money after bad, as he has about as much idea about sorting the country out, as does the seagull sitting on the end of my roof! ... and like the seagull, is quite capable of sh*tting on me when it feels like it. Edited February 16, 2009 by AuntJess Quote Link to comment Share on other sites More sharing options...
huw Posted February 16, 2009 Share Posted February 16, 2009 (edited) Er, no. The idea of letting people off the hook is an invention of the modern system.You can't pull away one pillar and expect the other to stand. Bonded labour and debtors prisons are distasteful. So is not being paid back what you are owed. Our entire system of wholesale indebtedness is a modern invention The reason I mentioned organ harvesting is that it's one of the few (only?) ways I can imagine for some of these debts to be paid off, since the debts were never predicated on the borrower's earning power, but on future HPI. In many cases, whatever earning power there was has evaporated along with the rest of the illusionary miracle economy. What do you reckon the going daily rate for someone in a labour camp or a chain gang would be? How much debt could they service and repay? And would you be prepared to deal with the social consequences? Edited February 16, 2009 by huw Quote Link to comment Share on other sites More sharing options...
worzel Posted February 16, 2009 Share Posted February 16, 2009 Sorry, I wrote a bit fast.OK, if we are putting prostitutes into discussion, then maybe we should open another topic. I know, cant stand spelling nazis so wanted to make sure you knew I was joking. But seriously, who pays up when the bank lent to a numpty who cant pay back. Does the depositor lose their money for lending to a numpty bank? Quote Link to comment Share on other sites More sharing options...
Stars Posted February 16, 2009 Share Posted February 16, 2009 If it wasn't for the educated financial racketeers trying to suck the uneducated into an exploitative system that milks them for all they're worth we wouldn't be in this mess. Of course you savers couldn't give a shit as long as you were getting your juicy interest payments. Your just like the bankers, fooking leeches on the back of the average working man. Additionaly - If working people hadn't been 'reckless' in trying to put a secure roof over their head and borrowed up to their eyebrows, many of the people, who erroneously count themselves as 'savers', wouldn't have made money out of their houses and wouldn't have deposits out of all proportion to their productive contribution. Quote Link to comment Share on other sites More sharing options...
huw Posted February 16, 2009 Share Posted February 16, 2009 1. Innovation which means that certain processes of production can be carried out faster, meaning that more can be produced at a lesser cost for production and purchase, freeing individuals' time for other activities which are also beneficial to the country's continual well-being.2. By implementing procedures which mean that the state no longer has to bear the burden for the health and maintenance of individuals who can, instead, produce essential or desirable products for those who have benefitted by having their time freed up, and possible wage increase by 1. 2. Exploiting people in other countries. Thanks for coming up with a valid reply to take the discussion on The problem is that we have lent our money not to people able to do the above, but to people buying houses likely (as it was thought by the people managing the process) to appreciate in value. The reason for this is that the (more or less genuine) investment opportunities you list above, are extremely limited, and too much money was looking for a home. So synthetic investment opportunities were created, and that's where your (and my) savings have ended up. Quote Link to comment Share on other sites More sharing options...
downsized Posted February 16, 2009 Share Posted February 16, 2009 Thanks to the OP for enlightening me on the error of my ways as a saver - I am going to spend all my savings since I am being irresponsible. In fact, I will go even further and give up my full time job and take a low paid part time job just so that I don't earn so much money that I will be tempted to save the extra in a savings account. Everyone should follow my lead and the country will soon be back on its feet again. Quote Link to comment Share on other sites More sharing options...
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