Jump to content
House Price Crash Forum

The vicious cycle of too-low CB interest rates


Recommended Posts

Low growth leads to low interest rates

Low interest rates lead to high house prices

High house prices lead to limited labour mobility

Low labour mobility leads to low growth.

Repeat.

 

(I wouldn't say interest rates shouldn't be low currently, I just think they're too low, below the optimum rate for economic growth that's all, because the proper social costs of high house prices are not considered)

Link to post
Share on other sites
18 hours ago, Locke said:

That first government manipulation of interest rates is like the first little bump of heroin which dealers give out "for free".

haha I like that.

 

Interest rates cant go up, if they do BOOM in the financial word with assets pricing crashing.

Link to post
Share on other sites
19 hours ago, Si1 said:

Low growth leads to low interest rates

Low interest rates lead to high house prices

High house prices lead to limited labour mobility

Low labour mobility leads to low growth.

Repeat.

 

(I wouldn't say interest rates shouldn't be low currently, I just think they're too low, below the optimum rate for economic growth that's all, because the proper social costs of high house prices are not considered)

We could have low house prices and low interest rates, if there were strict loan to income ratios.

We could also reduce taxes on moving to have more labour mobility.

Sadly these should have been done about 22 years ago.

Link to post
Share on other sites
52 minutes ago, iamnumerate said:

We could have low house prices and low interest rates, if there were strict loan to income ratios.

We could also reduce taxes on moving to have more labour mobility.

Sadly these should have been done about 22 years ago.

Yes. Trying to engineer that is impossible with the sort of short term pain no politician, banker or central banker want linked with their name or party. Everything is short term. 

Link to post
Share on other sites
  • 2 weeks later...

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.

  • 417 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.