Low Interest Rates May Lead To A Currency Dump

[crash2006]

fI was thinking about savers, if the climate does not change and rates ultra low how long do you think people will start to realise that they are losing their wealth? start to dump the paper money and head towards metals, keeping safe their savings from inflation?

I was thinking that he BOE may start a currency dump if this carries on, just thinking the system is broken they are unable to shift and hoping that it finds it way out naturally? However if it carries on then what alternative do people have but to save what they can, its very possible we are heading towards destruction of various currencies.

Edited May 5, 2011 by crash2006

[porca misèria]

fI was thinking about savers, if the climate does not change and rates ultra low how long do you think people will start to realise that they are losing their wealth? start to dump the paper money and head towards metals, keeping safe their savings from inflation?

I was thinking that he BOE may start a currency dump if this carries on, just thinking the system is broken they are unable to shift and hoping that it finds it way out naturally? However if it carries on then what alternative do people have but to save what they can, its very possible we are heading towards destruction of various currencies.

Er, what year did you post that? The pound has crashed against assets for upwards of a decade, starting with houses and moving on to gold, and now shares in the past two years.

Put it like that and it sounds optimistic: the productive economy finally making up lost ground on the speculators ...

[jonboy2010]

fI was thinking about savers, if the climate does not change and rates ultra low how long do you think people will start to realise that they are losing their wealth? start to dump the paper money and head towards metals, keeping safe their savings from inflation?

I was thinking that he BOE may start a currency dump if this carries on, just thinking the system is broken they are unable to shift and hoping that it finds it way out naturally? However if it carries on then what alternative do people have but to save what they can, its very possible we are heading towards destruction of various currencies.

i think if interest rates dont go up soon and europe keep raising theres we will see a lot of cash leaving the shores of britian for the more favored rates.

[Nationalist]

The key factor is not the absolute value of sterling but our interest rates compared to other countries' interest rates. If the EZ and the USA raise their rates and we don't then sterling will be sold off in favour of other currencies.

That said, the BoE Base Rate now seems to be irrelevant - you can't borrow for that amount, and you can lend for quite a bit more. I reckon the BR is now a broken lever. They could wiggle it backwards and forwards between 0.5% and say 2.0% with no effect at all.

[Realistbear]

Commodities/metals crash may be days/weeks away.

Bull run too long and the threat of recession looms ever larger.

Bonds seem to be picking up accross t' pond.

[zebbedee]

Commodities/metals crash may be days/weeks away.

Bull run too long and the threat of recession looms ever larger.

Bonds seem to be picking up accross t' pond.

$1374

Edit for bold

Edited May 5, 2011 by zebbedee

[koala_bear]

The key factor is not the absolute value of sterling but our interest rates compared to other countries' interest rates. If the EZ and the USA raise their rates and we don't then sterling will be sold off in favour of other currencies.

That said, the BoE Base Rate now seems to be irrelevant - you can't borrow for that amount, and you can lend for quite a bit more. I reckon the BR is now a broken lever. They could wiggle it backwards and forwards between 0.5% and say 2.0% with no effect at all.

General agreed but some business loans might be effected badly hence the MPC's fear of rate rises.

The banks would make a load of money

[MC Fur Q]

That said, the BoE Base Rate now seems to be irrelevant - you can't borrow for that amount, and you can lend for quite a bit more. I reckon the BR is now a broken lever. They could wiggle it backwards and forwards between 0.5% and say 2.0% with no effect at all.

Agree, until the BR gets anywhere near the rate of inflation it'll make jack all difference.

I can't see how any multi-national would want to invest in jobs in the UK. We'll inflate away the value of their investment and any profits while they avoid repatriating the profits for tax reasons. The EU is far more attractive now, maybe Ireland wil get some of their jobs back....