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The Masked Tulip

Low Interest Rates 'killing Savers' Who Then Spend Less: Analysts

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Is there any evidence that higher rates make savers spend more. They mIghf spend even less as they hoard more cash to take advantage. As a saver that's what I would do anyway.

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When savers get less in, they restrict spending to essentials and reduce or even stop their contribution to driving consumerism - something that is (sadly) the lifeblood of the UK. The government is hoping those who have lower mortgages and credit card habits would make up the shortfall. Looks like they miscalculated.

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I would have thought they are spending less because they a) want to. B) they are paying down debt. c) they are trying to save more because future stability is so uncertain, thus building up a rainy day fund. d) I don't blame them. ;)

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I'm a saver, and I can confirm that with pitifully low interest rates I am spending very little on anything but essentials.

I guess I'm getting not more than 2.5% on my money, and if this were a more realistic 6% I would most certainly have bought the following within the last 12 months:

iPad or similar - £400

New set of golf irons - £500

New computer base unit - £500

You can probably chuck at least another £1k in there for odd stuff like meals out and nicer brands at the supermarket.

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I think this article is aimed at politicians, most of them have no idea. As soon as they lowered the rates to ridiculous levels I started cutting back to try to restrict myself to the essentials to preserve my little savings. I'm sure that's what everyone did in this country and as a result low consumer demand, bankruptcies etc.

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I'm a saver, and I can confirm that with pitifully low interest rates I am spending very little on anything but essentials.

I guess I'm getting not more than 2.5% on my money, and if this were a more realistic 6% I would most certainly have bought the following within the last 12 months:

iPad or similar - £400

New set of golf irons - £500

New computer base unit - £500

You can probably chuck at least another £1k in there for odd stuff like meals out and nicer brands at the supermarket.

....I would have spent more on petrol going to places to spend money that I am now saving indirectly. ;)

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Low rates to discourage saving/hoarding, which counter intuitively leads to low discretionary spending in the economy.

Maybe they should have better impact analysts.

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Winkie @8.11

"I would have thought they are spending less because they a) want to. they are paying down debt. c) they are trying to save more because future stability is so uncertain, thus building up a rainy day fund. d) I don't blame them."

Agreed.

For all their statistical analysis, computer models, algorithms etc what the BoE are seemingly incapable of understanding is human nature.

Us 'human beings' don't respond like predictable lab rats to the BoE's policies. We are sentient. We change our behaviour paterns depending on circumstances.

If I am depending on savings income (at least for some discretionary spending) so what do I do when my savings rates drop? In the short term I stop spending

But of greater concern -to the existing debt based economic system- is that I change my spending paterns in the medium and long term.

A practical example.

When the financial crisis hit I started growing my own food (at least 1/2 my vegatables). Perhaps some short term spending at Wilkos (seeds etc plus spade, fork, wheelbarrow etc) but for the last three years my weekly food spend has more than halved. Indeed it can no longer be calculated as weekly food spend because I don't have to go shopping every week- and because I don't go shopping at least once every weekI have less opportunity/tempation to spend.

Despite price inflation of the last few years I would calculate that my personal spend has dropped, probably by a third - far more in fact than the loss of savings interest.

As Winkie implies when savers income drops they battern down the hatches.

All those numpties (at the BoE) and sundry VI's in the media are going to achieve with their artifical low interest rate policies is 20 years of Japanese type stagnation.

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Last year they were telling us all not to save and to spend spend spend

to boost the economy

I spent loads on **** and ******

jingle jingle

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Winkie @8.11

"I would have thought they are spending less because they a) want to. they are paying down debt. c) they are trying to save more because future stability is so uncertain, thus building up a rainy day fund. d) I don't blame them."

Agreed.

For all their statistical analysis, computer models, algorithms etc what the BoE are seemingly incapable of understanding is human nature.

Us 'human beings' don't respond like predictable lab rats to the BoE's policies. We are sentient. We change our behaviour paterns depending on circumstances.

If I am depending on savings income (at least for some discretionary spending) so what do I do when my savings rates drop? In the short term I stop spending

But of greater concern -to the existing debt based economic system- is that I change my spending paterns in the medium and long term.

A practical example.

When the financial crisis hit I started growing my own food (at least 1/2 my vegatables). Perhaps some short term spending at Wilkos (seeds etc plus spade, fork, wheelbarrow etc) but for the last three years my weekly food spend has more than halved. Indeed it can no longer be calculated as weekly food spend because I don't have to go shopping every week- and because I don't go shopping at least once every weekI have less opportunity/tempation to spend.

Despite price inflation of the last few years I would calculate that my personal spend has dropped, probably by a third - far more in fact than the loss of savings interest.

As Winkie implies when savers income drops they battern down the hatches.

All those numpties (at the BoE) and sundry VI's in the media are going to achieve with their artifical low interest rate policies is 20 years of Japanese type stagnation.

On a personal level I don't mind if we have Japanese-style low inflation for the best part of a decade. I visited Japan over a few years with work and it was nice to keep going back and prices in the shops were the same each time. That's not the case here at the moment obviously but if the BoE can resist devaluing the currency any more then the import prices might level out eventually.

The main thing it will do will focus people on how much things are really worth / will take to pay off, as opposed to riding a bubble and thinking you're the bees knees (see: many episodes of Property Ladder).

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Low interest rates are a sign of a weak economy.

People without savings want to start saving when they have worries about their jobs.

Savers know if they spend their capital they will never get as much income from it in the future even if rates go back up. So they are only prepared to spend the interest income, while that is so low they aren't spending.

The low rates are just so banks can have higher profit margins between savings compared to mortgages and business loans. To cover their casino losses and keep the bonuses rolling.

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I read another piece some time ago that MOST of the Uk citizens have little or no savings at all.

the hardest hit are people who live off their savings, their pensions if you will....they are cut off from both sides of the current banking system bailout, higher prices and lower incomes.

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Low interest rates are a sign of a weak economy.

People without savings want to start saving when they have worries about their jobs.

Savers know if they spend their capital they will never get as much income from it in the future even if rates go back up. So they are only prepared to spend the interest income, while that is so low they aren't spending.

The low rates are just so banks can have higher profit margins between savings compared to mortgages and business loans. To cover their casino losses and keep the bonuses rolling.

Not rocket science is it?

Can only imagine the effects of non-savers - those who regularly go near their account limits - gett zero or half a percent on positive balances and hit by near twenty percent overdraft charges or even more rip single/multiple charges - likely to drive a debt aversion stake into the heart of ths failed policy for backstopping the banks.

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From today's press:

"Reform is vital said Pensions Minister Steve Webb as Britons were urged to wake up to the fact their level of saving is dangerously low and they are spending too much. "

Joined up government at its finest.

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Whats keeping me saving and not spending is mostly stubborness.

I hate being treated like a rat in a maze, running around for someone's amusement. And when i hear about how cutting interest rates was 'encouraging' me to stop hoarding and start spending.. Guess what i do.

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From today's press:

"Reform is vital said Pensions Minister Steve Webb as Britons were urged to wake up to the fact their level of saving is dangerously low and they are spending too much. "

Joined up government at its finest.

Junk econonmists from the bankrupt of england are on message too this week - not enough savings.

Well can;t imageine why that would be with ZIRP and inflation in essentials multiple times wage increases. the bankrupt of england then go on to blame the vat rise for inflation - total douchebags the lot of them.

Edited by OnlyMe

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For all their statistical analysis, computer models, algorithms etc what the BoE are seemingly incapable of understanding is human nature.

Us 'human beings' don't respond like predictable lab rats to the BoE's policies. We are sentient. We change our behaviour patterns depending on circumstances.

//

All those numpties (at the BoE) and sundry VI's in the media are going to achieve with their artifical low interest rate policies is 20 years of Japanese type stagnation.

We have a clueless malevolent elite who exist in a rarefied, cosseted atmosphere, and are untouched by the hardship normal people have to endure and the uncertainties and vagaries of such an existence.

Let us not forget that whilst they were encouraging the excess, they never saw it coming. Those very people are still in charge, advising on policy, bending ears and influencing the out-of-touch politicians. Yet the dissonance between reality and their fantasy has never been greater.

Nothing will be different unless and until there is a changing of the guard.

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As a saver, the pitiful rates have caused me to cut back and reduce spending to the bare minimum in order to maintain the level saved each month. I also now am pretty sure that my job ends in march and so am all the keener to put money aside. Had the rates been higher and there was the possibility of continued employment, I'd have bought a new cpu/case/couple of hard disks and enjoyed a few nights out. People who save are saving for something be it specific or some as yet undefined event in the future (my case for a house at a reaonable price) and will tend to reduce outgoings when incomings reduce in order to maintain the increase in the pot. Bankers don't get this, they seem to be deluded into thinking they can force us to just set aside our aspiration which for some have been held for a long time,

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As a saver, the pitiful rates have caused me to cut back and reduce spending to the bare minimum in order to maintain the level saved each month. I also now am pretty sure that my job ends in march and so am all the keener to put money aside. Had the rates been higher and there was the possibility of continued employment, I'd have bought a new cpu/case/couple of hard disks and enjoyed a few nights out. People who save are saving for something be it specific or some as yet undefined event in the future (my case for a house at a reaonable price) and will tend to reduce outgoings when incomings reduce in order to maintain the increase in the pot. Bankers don't get this, they seem to be deluded into thinking they can force us to just set aside our aspiration which for some have been held for a long time,

Last point very valid - that is what the gun at the head interst rate driven buy or be priced out policy was all about post 2001 - a very disgusting policy - possibly the worst ever enacted by central abnks on their populations. That the same policy has also driven millions of (now too costly) jobs abord is the icing on the cake.

Yet they deny all responsibility for the resulting mess.

Edited by OnlyMe

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When savers get less in, they restrict spending to essentials and reduce or even stop their contribution to driving consumerism

Indeed. Many a HPC saver has declared this to be their mission. As interest rates were whittled away, so was their level of discretionary spending (deliberately).

B) they are paying down debt.

We savers scorn debt.

Whats keeping me saving and not spending is mostly stubborness.

Amen to that brother.

Although thousands of pounds has been exiting my bank account of late.

Am I spending or just switching from one currency to another?

Depends on your view of gold.

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  • 284 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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