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The Knimbies who say No

Bank Of England Twitter Q & A 11-12 Today

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Question: BoE policies are supporting high house prices. Why is expensive property a good thing?

Thank you for your question.

The main driving force behind the UK is residential housing equity withdrawal. Every £1 lost in equity through falling prices, means less money can be borrowed, at interest by the mortgage payer and ultimately spent back into the economy. It's a win-win-win. The mortgage payer can buy things far beyond his real income would allow (range rovers, horses etc) The shops sell stuff they otherwise wouldn't be able to and the Banking sector facilitate this by creating more money which they earn interest on. This, ultimately means more tax receipts for the government to spend on various essential services, such as war.

Have you considered Help to Buy?

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Thank you for your question.

The main driving force behind the UK is residential housing equity withdrawal. Every £1 lost in equity through falling prices, means less money can be borrowed, at interest by the mortgage payer and ultimately spent back into the economy. It's a win-win-win. The mortgage payer can buy things far beyond his real income would allow (range rovers, horses etc) The shops sell stuff they otherwise wouldn't be able to and the Banking sector facilitate this by creating more money which they earn interest on. This, ultimately means more tax receipts for the government to spend on various essential services, such as war.

Have you considered Help to Buy?

Is that the real response from the BoE?

Edited by Errol

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Being questioned like this is a politician's dream. There are far more questions than he can answer, so he can just pick the ones he wants to answer.

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@bankofengland Do you have any qualms about the BoE blowing up housing bubbles then ex-MPC members getting jobs at banks and house builders?

I'm still waiting for an answer....

You need to use the #AskBoE hashtag. Anyway, Spencer Dale already said he's not going to answer new questions.

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Missed this. I wanted to ask them why the 13 billion returned to customers from PPI boosted the economy to a far greater degree than the hundreds of billions given to banks in the form of QE.

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