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andyrdj

Time To Wield Power As Savers?

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A lot of people slag off the idea of the buyer's strike, claiming that there's no unity among us, and that as soon as prices look like being the best that they'll be for a while, all the strikers will rush to buy.

Whether that's true or not, there might be another way - the saver's strike.

Right now, the return for saving money is ridiculously low, due to the 0.5% interest rate we're enduring. There's no real incentive for people to save, one reason that property seems like an attractive investment to many.

But here's the rub - the money that banks lend out to people comes from the money that savers deposit in the accounts, which is how we savers make interest. If nobody saves, then there just isn't the money to lend out. Gordon Brown's money printing can only really be a temporary exception to this.

For some interesting articles explaining this in depth, read http://gregpytel.blogspot.com/. One of his articles states that during the boom, despite the lack of savings being deposited banks lent money based on their optimistic projections of the values of their assets. You can see why that had to come tumbling down eventually.

Now here's the really interesting bit - in the post credit crunch world our banks are going to have to be a lot more cautious about their lending and speculating - which is to say, they need to have a lot more solid savings based wealth in their banks to back up their lending.

Savers have been a bit apathetic in many ways - we don't like the loss of interest, but we haven't really wielded any influence to lobby against it.

But if large numbers of us withdrew cash from our effectively dead savings accounts, there would be a huge drop in the amount available to be lent to house buyers, and prices would plummet as a result. This, in fact, is the very crash which Gordon Brown mortaged us up to the hilt to avoid.

So, with that in mind, let us imagine we get a large number of people to agree to the following ultimatum to present to government.

"Dear Mr Cameron and Mr Clegg

We as prudent savers wishing to buy a home are fed up with both the ridiculously high house prices and ridiculously low interest rates in this country.

We wish to see you put forward an exit strategy which will move us towards a country where:

1. House prices are a reasonable mutiple of average income - e.g. 3.5

2. Savings rates are reasonable, 6% or higher

3. Our economy is no longer dependant on high house prices for its wealth, with investment going into industry where it belongs so that true wealth can be generated

Unless our demands are met within 1 month, large numbers of us will withdraw our savings from British banks from that date."

The beauty of this is that we can win either way, namely

- either the government puts forward a public strategy to do this, in which case the housing market, massively dependant on optimism, will fall,

or

- We pull our money from the banks, and make it very public that this is what we're doing. It doesn't require a long drawn out strike to do it - the panic will set in very quickly.

Plus, what have you got to lose?

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Didn't some savers union get on tv and then do nowt?

It's hard work running a campaign and if you've got a job to keep you can't do it.

BUT I'm in!

:)

Edited by SarahBell

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I'm in ... IF ... I can find a bank that lets me have a safety deposit box. Then I could bring all my money in from all my accounts, into one ... then withdraw it over the counter and run it round the back to the box. There's no way I'd feel safe having that much sitting in my handbag.

So, questions:

- where does one find a safety deposit box not in a big city (prepared to travel up to 100 miles each way to do this, probably making 4-5 withdrawals as various pots hit that account)

- how much notice does one have to give a bank of wanting big piles of readies to be handed over?

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The banks only want savings for the image. They will borrow money from elsewhere and lend it out again 20 fold. The need only set up a subsidiary to lend themselves this money. If all else fails, the bank of England will provide them all the liquidity they need via the printing press.

In a credit crunch, savers should have been able to demand higher interest rates for their scarce savings. Instead interest rates fell to record lows. This is because interest rates are not determined by supply and demand for savings. The BoE has an infinite amount of money that it can make available to lower rates to whatever it wishes.

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One of two things:

a) Invest into new innovative businesses of the future.

B) Start a peoples bank that savers cash will only lend out to viable businesses with sound expertise behind them.

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Rather than withdraw the money and stick it under the bed, wouldn't it be just as effective to choose either a single mutual or building society where all the savers can pool their money. Preferably one which has been prudently run and did not need any government bailouts.

Edit to add "I'm in"

Edited by benzlife

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Guest happy?

I can't help thinking a single buyer and a single saver aren't gonna make that much difference.

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I'm in, but have already put my savings in premium bonds 'cos I don't want the bank lending them out on mortgages whilst giving me feck all.

The only way to truly take liquidity out of the system is to hold the actual cash. Buying gold or shares is no good 'cos the vendor will make a deposit.

Having said that, I would be fully prepared to take all my readies out on a specified day. Done right, and with the right publicity, it could cause a real stir.

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Why should they care about your savings when they've discovered the keys to the printing press? There's an infinite supply of pounds sterling, just takes a few taps on a keyboard.

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I didn't think that this was the case now days. Banks don't just lend out the money they get from savers, but raise most of it on the markets. I seem to remember from previous discussion when it was all going wrong in late 2007, that 20 years or so ago the lending to savings ratio for most banks was about 1 to 1, but now for some banks it is as bad as 10 to 1, ie they lend out 10 times more than they take from savers and that is why we savers have been so exposed. Withdrawing all savings may possibly mean they would just close down their unprofitable retail banking divisions.

(I'm no expert on this so I stand by to be corrected by the money gurus)

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A lot of people slag off the idea of the buyer's strike, claiming that there's no unity among us, and that as soon as prices look like being the best that they'll be for a while, all the strikers will rush to buy.

Whether that's true or not, there might be another way - the saver's strike.

Right now, the return for saving money is ridiculously low, due to the 0.5% interest rate we're enduring. There's no real incentive for people to save, one reason that property seems like an attractive investment to many.

But here's the rub - the money that banks lend out to people comes from the money that savers deposit in the accounts, which is how we savers make interest. If nobody saves, then there just isn't the money to lend out. Gordon Brown's money printing can only really be a temporary exception to this.

For some interting articles explaining this in depth, read http://gregpytel.blogspot.com/. One of his articles states that during the boom, despite the lack of savings being deposited banks lent money based on their optimistic projections of the values of their assets. You can see why that had to come tumbling down eventually.

Now here's the really interesting bit - in the post credit crunch world our banks are going to have to be a lot more cautious about their lending and speculating - which is to say, they need to have a lot more solid savings based wealth in their banks to back up their lending.

Savers have been a bit apathetic in many ways - we don't like the loss of interest, but we haven't really wielded any influence to lobby against it.

But if large numbers of us withdrew cash from our effectively dead savings accounts, there would be a huge drop in the amount available to be lent to house buyers, and prices would plummet as a result. This, in fact, is the very crash which Gordon Brown mortaged us up to the hilt to avoid.

So, with that in mind, let us imagine we get a large number of people to agree to the following ultimatum to present to government.

"Dear Mr Cameron and Mr Clegg

We as prudent savers wishing to buy a home are fed up with both the ridiculously high house prices and ridiculously low interest rates in this country.

We wish to see you put forward an exit strategy which will move us towards a country where:

1. House prices are a reasonable mutiple of average income - e.g. 3.5

2. Savings rates are reasonable, 6% or higher

3. Our economy is no longer dependant on high house prices for its wealth, with investment going into industry where it belongs so that true wealth can be generated

Unless our demands are met within 1 month, large numbers of us will withdraw our savings from British banks from that date."

The beauty of this is that we can win either way, namely

- either the government puts forward a public strategy to do this, in which case the housing market, massively dependant on optimism, will fall,

or

- We pull our money from the banks, and make it very public that this is what we're doing. It doesn't require a long drawn out strike to do it - the panic will set in very quickly.

Plus, what have you got to lose?

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A lot of people slag off the idea of the buyer's strike, claiming that there's no unity among us, and that as soon as prices look like being the best that they'll be for a while, all the strikers will rush to buy.

Whether that's true or not, there might be another way - the saver's strike.

Right now, the return for saving money is ridiculously low, due to the 0.5% interest rate we're enduring. There's no real incentive for people to save, one reason that property seems like an attractive investment to many.

But here's the rub - the money that banks lend out to people comes from the money that savers deposit in the accounts, which is how we savers make interest. If nobody saves, then there just isn't the money to lend out. Gordon Brown's money printing can only really be a temporary exception to this.

For some interting articles explaining this in depth, read http://gregpytel.blogspot.com/. One of his articles states that during the boom, despite the lack of savings being deposited banks lent money based on their optimistic projections of the values of their assets. You can see why that had to come tumbling down eventually.

Now here's the really interesting bit - in the post credit crunch world our banks are going to have to be a lot more cautious about their lending and speculating - which is to say, they need to have a lot more solid savings based wealth in their banks to back up their lending.

Savers have been a bit apathetic in many ways - we don't like the loss of interest, but we haven't really wielded any influence to lobby against it.

But if large numbers of us withdrew cash from our effectively dead savings accounts, there would be a huge drop in the amount available to be lent to house buyers, and prices would plummet as a result. This, in fact, is the very crash which Gordon Brown mortaged us up to the hilt to avoid.

So, with that in mind, let us imagine we get a large number of people to agree to the following ultimatum to present to government.

"Dear Mr Cameron and Mr Clegg

We as prudent savers wishing to buy a home are fed up with both the ridiculously high house prices and ridiculously low interest rates in this country.

We wish to see you put forward an exit strategy which will move us towards a country where:

1. House prices are a reasonable mutiple of average income - e.g. 3.5

2. Savings rates are reasonable, 6% or higher

3. Our economy is no longer dependant on high house prices for its wealth, with investment going into industry where it belongs so that true wealth can be generated

Unless our demands are met within 1 month, large numbers of us will withdraw our savings from British banks from that date."

The beauty of this is that we can win either way, namely

- either the government puts forward a public strategy to do this, in which case the housing market, massively dependant on optimism, will fall,

or

- We pull our money from the banks, and make it very public that this is what we're doing. It doesn't require a long drawn out strike to do it - the panic will set in very quickly.

Plus, what have you got to lose?

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Rather than withdraw the money and stick it under the bed, wouldn't it be just as effective to choose either a single mutual or building society where all the savers can pool their money. Preferably one which has been prudently run and did not need any government bailouts.

Edit to add "I'm in"

But how can you be sure that they wont take your money and run? If you want the money in a mutual, stick it in Nationwide, they're still a building society!

As for leaving it under the bed, bad idea, you get burgled or your house burns down and you're a bit stuffed.

Safety deposity box: what if that bank goes under or big crisis, who's to say they'll let you in to get your stuff out?

Best thing to do is to see what people with lots of cash do (ie criminals). So probably bury it in the garden in black plastic bags, hide it around in various places or swiss bank account. :lol:

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Why should they care about your savings when they've discovered the keys to the printing press? There's an infinite supply of pounds sterling, just takes a few taps on a keyboard.

I can see the logic...in that case what is stopping whoever is in debt defaulting on their loans...then borrowing it back again....Oh I forgot that is what is happening as we speak...add another zero. ;)

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I thought large numbers were withdrawing their money.

I got my cash ISA statement this year and the interest was laughable, about £60 on £11k IIRC, so I went down and closed it. Why wouldn't you?

Anybody who leaves it in there in a high-inflation environment is just burning money.

I have now got it invested in soemthing better. I'm not saying where as there are plenty of threads on that and I'm not trying to divert the thread.

Somebody at work was moaning about how little they had got on their cash ISA last year. I asked them why they didn't just close it and told them what the last 12 months' RPI had been and calculated how much money they had actually lost. Real loss not opportunity loss. They then asked me what else they could do with it and I was happy to run through some options.

So reverting to the OP:

  • Cash on deposit, whether ISA or whatever, is losing money hand over fist.
  • The longer you leave it the more you lose.
  • The government will not force banks to raise savings interest rates because there are no votes in it and it is cheap borrowing. Mainly for them!
  • The banks feel the same way, and as long as they can borrow cheap they will.

So take your money out yourself and forget the crusade. It won't make any difference and you will keep losing money. There will always be sufficient people that leave their cash in the building society as they have always done this. Leave them to it.

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I thought large numbers were withdrawing their money.

Only spoke to someone today...they said they had to jump through hoops to get their own cash out of the bank.

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Only spoke to someone today...they said they had to jump through hoops to get their own cash out of the bank.

I walked down with a passport and walked out with a cheque. I expect a basic level of security so I'm happy with some hoops or somebody else might be walking out with my cheque. Took less than ten minutes.

And if takes a bit of effort, well it's worth it.

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My parents withdrew £10,000 last week from an ISA they had for a year (interest gained £34.00!!) and as they were about the get given the cash the manager mysteriously appeared next to the cashier and enquired if they knew what they were doing as the building society/bank had a 'duty of care' towards them and were worried they were making a huge mistake!!

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My parents withdrew £10,000 last week from an ISA they had for a year (interest gained £34.00!!) and as they were about the get given the cash the manager mysteriously appeared next to the cashier and enquired if they knew what they were doing as the building society/bank had a 'duty of care' towards them and were worried they were making a huge mistake!!

I hope you'd briefed them Helen and the manager got ten minutes on credit bubbles, fiat currency and quantum easing.

I had all this prepared but the only concern of the BSoc was whether I wanted a form so I could transfer to another ISA elsewhere; I didn't. I was quite surprised as I know £11k is hardly big bucks but for a small local branch it would have been one of their larger accounts.

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Frank - he did give them an earful, especially when he heard the 'duty of care towards customers' line. Of course the 'manager' was aged about 25 so he probably thought my dad was an old nutter.

My dad is unfortunately too old and not computer literature but I don't have to brief him on any of the madness discussed by many on here. He has been briefing me for years and is as passionate as Eric P!

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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