Jump to content
House Price Crash Forum
The Masked Tulip

Beware! Ultra Low Interest Rates May Have To Go Up Far Sooner Than You Think

Recommended Posts

I guess if the Fed puts up interest rates we have no choice but to follow. Nobody would buy a guilt that yields 0.5 percent when they could get a Tbill that pays 3 percent. The market would force yields up. There has been some talk of the rates going up in USA, but nothing concrete. Can't see them holding down their own interest rates in the interests of British house prices.

Yeah, fingers crossed we get back a sane level of interest rates again soon.

Share this post


Link to post
Share on other sites

I don't believe it for a second but here is the article

Or maybe the twelfth of never?

http://www.dailymail...^editors_choice

"Prudent people, who use their own money, (always erroneously referred to as 'savers') outnumber borrowers six or seven to one. It is obvious that robbing a huge number of prudent people so that a small number of the less prudent can sit back and relax is the reason for lack of economic recovery. The BoE thought it could use Keynsian theory to frighten the prudent into frittering away their money by trying to stoke inflation. It didn't work because we live in a world of oversupply. What happens if you take all the prudent spenders out of the market place (by erroneously calling them 'savers')? Greater oversupply!"

I thought that comment was interesting. I agree especially with the bit in bold, hard to have inflation in a world where people put their lives at risk to make cheap clothes?

Edited by dances with sheeple

Share this post


Link to post
Share on other sites

I guess if the Fed puts up interest rates we have no choice but to follow. Nobody would buy a guilt that yields 0.5 percent when they could get a Tbill that pays 3 percent. The market would force yields up. There has been some talk of the rates going up in USA, but nothing concrete. Can't see them holding down their own interest rates in the interests of British house prices.

Yeah, fingers crossed we get back a sane level of interest rates again soon.

Not whilst Bernake is in power in the Fed - so not until the end of the year... and he is allegedly rooting for Yellen to take over.... and allegedly she likes ZIRP and QE more than him.

Share this post


Link to post
Share on other sites

I guess if the Fed puts up interest rates we have no choice but to follow. Nobody would buy a guilt that yields 0.5 percent when they could get a Tbill that pays 3 percent. The market would force yields up. There has been some talk of the rates going up in USA, but nothing concrete. Can't see them holding down their own interest rates in the interests of British house prices.

Yeah, fingers crossed we get back a sane level of interest rates again soon.

Neither can I.

Share this post


Link to post
Share on other sites

Not whilst Bernake is in power in the Fed - so not until the end of the year... and he is allegedly rooting for Yellen to take over.... and allegedly she likes ZIRP and QE more than him.

I think some US big-hitters are giving him the code to go for it, and are excited about the prospect.

We're only had forbearance, fake austerity, house price supports and now pushing Help-To-Buy, rather that taking any drastic restructuring steps. We couldn't easily handle higher rates, giving US commercial interests ability to mop up commercial opportunities here and elsewhere as we crash hard (perhaps), at value prices. Helping to change the nature of their own national debt by leveraging down on other countries assets at cheap prices.

Buffett: Bernanke Signal To Raise Rates Would Be A "shot" Heard Around The World

Heard from the bullet travelling through the hearts of UK and other high-cost countries in the EU Euro area, where they prefer to keep the zombies alive. UK would have less room to manoeuvre in raising rates, so maybe market money would gravitate back to the US.

Dollar strengthens and sterling falls, causing some panic and requiring BoE to act, beginning the act of purging the zombies, curtailing policies to special interest friends, like major builders, and allowing good money in.

Share this post


Link to post
Share on other sites

I think some US big-hitters are giving him the code to go for it, and are excited about the prospect.

We're only had forbearance, fake austerity, house price supports and now pushing Help-To-Buy, rather that taking any drastic restructuring steps. We couldn't easily handle higher rates, giving US commercial interests ability to mop up commercial opportunities here and elsewhere as we crash hard (perhaps), at value prices. Helping to change the nature of their own national debt by leveraging down on other countries assets at cheap prices.

Buffett: Bernanke Signal To Raise Rates Would Be A "shot" Heard Around The World

But Bernanke has bet his reputation on ZIRP and QE. He only has 6 months to go until retirement so IMPO he now has his eye on his legacy - going down as the many who drove stock-markets in the US to record highs.

Share this post


Link to post
Share on other sites

Not whilst Bernake is in power in the Fed - so not until the end of the year... and he is allegedly rooting for Yellen to take over.... and allegedly she likes ZIRP and QE more than him.

So what is inflation in the US?

You know, the hyperinflation that everyone on here has promised for the last 6 years 'cause Bernanke is a hyperinflationist nutjob. Everyone knows that as a fact innit.

Share this post


Link to post
Share on other sites

I don't think an interest rate change in the US will have any impact on the UK's rate. Any difference in returns will be reflected in a change of exchange rates over time.

Share this post


Link to post
Share on other sites

So if the Feb keeps ZIPR we will retain the 'New Economics' .... to help the 1% get richer and richer and why there is talk of negative saver rates.

Old economics; inflation = 3%, saver rate = 5%, mortgage rate = 6.5%, mortgage 3X salary, average house price 3X salary, the rich get richer by inflation plus 2%

Current economics; inflation = 3%, saver rate = 1%, mortgage rate = 2.5%, mortgage 5X salary, average house price 5X salary, the rich get richer by inflation plus 7%

New economics; inflation = 3%, saver rate = -1%, mortgage rate = 1.5%, mortgage 8X salary (inc government loan), average house price 8X salary, the rich get richer by inflation plus 10%

(read the principle rather than the actual numbers)

interesting - :huh:

Share this post


Link to post
Share on other sites

So if the Feb keeps ZIPR we will retain the 'New Economics' .... to help the 1% get richer and richer and why there is talk of negative saver rates.

Old economics; inflation = 3%, saver rate = 5%, mortgage rate = 6.5%, mortgage 3X salary, average house price 3X salary, the rich get richer by inflation plus 2%

Current economics; inflation = 3%, saver rate = 1%, mortgage rate = 2.5%, mortgage 5X salary, average house price 5X salary, the rich get richer by inflation plus 7%

New economics; inflation = 3%, saver rate = -1%, mortgage rate = 1.5%, mortgage 8X salary (inc government loan), average house price 8X salary, the rich get richer by inflation plus 10%

(read the principle rather than the actual numbers)

I think the US has an interesting factor that throttles back the 1%'s ability to steal off the other 99%, that factor being the general populous has the right to bear arms.

Massive wealth is counter productive when 99% of the nation have decided they want it more fairly divided.

Edited by TheCountOfNowhere

Share this post


Link to post
Share on other sites

So what is inflation in the US?

You know, the hyperinflation that everyone on here has promised for the last 6 years 'cause Bernanke is a hyperinflationist nutjob. Everyone knows that as a fact innit.

Consumer prices not so much because the economy is being forced to deleverage. Commodity prices abundantly because of ZIRP, QE and Bernanke's desperate efforts to reinflate the housing bubble.

For instance, there's been a significant increase in US domestic oil production in the last five years against a backdrop of declining demand but gasoline prices have still soared. The CPI adjusted rolling average of WTI crude is at an all-time high.

2012-03-10-oilprod2.jpg

us-crude-oil-prices-in-2012-dollars.jpg

Share this post


Link to post
Share on other sites

Massive wealth is counter productive when 99% of the nation have decided they want it more fairly divided.

Do they though? The Republicans rely on some of the country's poorest white communities to give them the votes to support the 1%'s wealth.

Share this post


Link to post
Share on other sites

Do they though? The Republicans rely on some of the country's poorest white communities to give them the votes to support the 1%'s wealth.

By poor...do you mean living on the streets, unable to afford to eat with 100's starving to death each month ?

Share this post


Link to post
Share on other sites

Do they though? The Republicans rely on some of the country's poorest white communities to give them the votes to support the 1%'s wealth.

I thought that people voted for those that feed them. :unsure:

Share this post


Link to post
Share on other sites

If interest rates externally went up then the UK would be forced to as well.

But then the government might just implement something called, I don't know, maybe Help to Live. Which would involve them paying 1% of your mortgage interest.

Or maybe it would just extend SMI.

The only way the government is going to cave in on this is if the external force cannot be handled by simple relatively low cost internal measures. It's not going to cave if it thinks it can burden taxpayers 10 years down the line with the bill instead of becoming unpopular.

Share this post


Link to post
Share on other sites

If interest rates externally went up then the UK would be forced to as well.

But then the government might just implement something called, I don't know, maybe Help to Live. Which would involve them paying 1% of your mortgage interest.

Or maybe it would just extend SMI.

The only way the government is going to cave in on this is if the external force cannot be handled by simple relatively low cost internal measures. It's not going to cave if it thinks it can burden taxpayers 10 years down the line with the bill instead of becoming unpopular.

Would America raising rates and the EZ breaking up do it?

Share this post


Link to post
Share on other sites

"Prudent people, who use their own money, (always erroneously referred to as 'savers') outnumber borrowers six or seven to one. It is obvious that robbing a huge number of prudent people so that a small number of the less prudent can sit back and relax is the reason for lack of economic recovery. The BoE thought it could use Keynsian theory to frighten the prudent into frittering away their money by trying to stoke inflation. It didn't work because we live in a world of oversupply. What happens if you take all the prudent spenders out of the market place (by erroneously calling them 'savers')? Greater oversupply!"

I thought that comment was interesting. I agree especially with the bit in bold, hard to have inflation in a world where people put their lives at risk to make cheap clothes?

I'm thinking inflation failed because for the first time in my life, wages did not follow. Presumably you can only have inflation if wages support it.

Share this post


Link to post
Share on other sites

Would America raising rates and the EZ breaking up do it?

I think it needs more than the US simply raising rates by 1/4 a percentage point or so, but who knows ? My guess is if the situation is manageable they will attempt to manage it not surprisingly.

An EU break up would cause tremendous issues worldwide. But as I have opined before the EU break up scenario/Japanese economic collapse is one of those things where you need to be careful what you wish for. My guess is that hardly anyone would profit from these sorts of scenarios and any one doing so will do so down to luck rather than amazing vision.

IMO in the same way the UK government sees quite keen on avoiding a HPC, so the majors CB's governments are (not surprisingly) keen on avoiding a worldwide economic collapse. So they're going to throw an awful lot of action at the problem before they let it happen.

Share this post


Link to post
Share on other sites

I'm thinking inflation failed because for the first time in my life, wages did not follow. Presumably you can only have inflation if wages support it.

Maybe this is obvious but if inflation goes up to me discretionary spend goes through the floor, so that leads to a general reduction in quality of life.

Although I am sure that manufacturers will attempt to cut their margins to get a pick up in business it seems to me that this can't continue indefintely. For example, is it really possible for people to make those 32" flat screen tellys much cheaper than they are at the moment ?

So if manufacturers are pressed to make things cheaper where do they get the margin, by beating up the workforce and getting lower wages, or by sourcing raw materials cheaper ?

To me it looks like a circle with the service based economies at the back end of it. Who will end up on top ? Seems to me like no one.

Share this post


Link to post
Share on other sites

I guess if the Fed puts up interest rates we have no choice but to follow. Nobody would buy a guilt that yields 0.5 percent when they could get a Tbill that pays 3 percent. The market would force yields up. There has been some talk of the rates going up in USA, but nothing concrete. Can't see them holding down their own interest rates in the interests of British house prices.

Yeah, fingers crossed we get back a sane level of interest rates again soon.

Highly unlikely, unfortunately. It will take some sort of major market 'event' to force them back up to a sensible level, way too many vested interests (on either side of the Atlantic) in keeping them low otherwise. Low interest rates/'free' central bank money is like crack cocaine for the financial world.

Of course, this policy of running too-low rates for too-long will just make the eventual system crash even bigger - so we're kind of screwed whichever way it goes.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 244 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.