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BoE preparing for Negative Interest Rates


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As I predicted, they will not stop and are prepared to openly rob people to keep their scam going. It's all about the house prices and stock market, they couldn't give a **** is people starve.

https://news.sky.com/story/coronavirus-boe-warns-recent-case-increases-could-hold-back-economy-12074002

 

Bank of England: Subsequently, the MPC had been briefed on the Bank of England’s plans to explore how a negative Bank Rate could be implemented effectively, should the outlook for inflation and output warrant it at some point during this period of low equilibrium rates
 
I think anyone that thinks they will settle for anything other than massive inflation is going to be disappointed now
 
Pick which method you want to lose money on.
Edited by TheCountOfNowhere
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1 hour ago, TheCountOfNowhere said:

As I predicted, they will not stop and are prepared to openly rob people to keep their scam going. It's all about the house prices and stock market, they couldn't give a **** is people starve.

https://news.sky.com/story/coronavirus-boe-warns-recent-case-increases-could-hold-back-economy-12074002

 

Bank of England: Subsequently, the MPC had been briefed on the Bank of England’s plans to explore how a negative Bank Rate could be implemented effectively, should the outlook for inflation and output warrant it at some point during this period of low equilibrium rates
 
I think anyone that thinks they will settle for anything other than massive inflation is going to be disappointed now
 
Pick which method you want to lose money on.

How will negative interest rates cause people to starve in the absence of inflation? Why would rising them be beneficial to those peoples ability to buy bread in tesco?

 

I understand that if you want leveraged asset values to collapse you would like interest rates to shoot up but given the lack of inflation, the bank has no reason nor mandate to do that. 

 

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2 minutes ago, captainb said:

How will negative interest rates cause people to starve in the absence of inflation? Why would rising them be beneficial to those peoples ability to buy bread in tesco?

 

I understand that if you want leveraged asset values to collapse you would like interest rates to shoot up but given the lack of inflation, the bank has no reason nor mandate to do that. 

 

 

"given the lack of inflation"

Have you see house prices ? Cars ?  Holidays ?  Food ?

There is no lack of inflation.

"absence of inflation".

We will see a lot of inflation very soon.

"Why would rising them be beneficial to those peoples ability to buy bread in tesco?"

Interest on their savings ?  Higher wages ?  A real economy growing ?  Lower house prices ?

 

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1 minute ago, TheCountOfNowhere said:

All the westernized central bankers are gong down this root, as they did with low IRs.

Do you doubt that they are in cahoots ?

I expect the bankers just want people to spend and hand their money into the economy so it can trickle up.

Trouble with savers is, they'll take their money out and hide it under the bed.

These people know exactly what the are doing...devaluing the currency and increasing asset prices.

Dont expect cheap housing any time soon.  I sincerely doubt that'll happen now until prices collapse in real terms due to 20% inflation and/or collapse of the £. 

Those nominal falls we all hoped for just aint going to be allowed.  

if prices do collapse 15% over the coming months that might be the last chance for a while.

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1 minute ago, TheCountOfNowhere said:

 

"given the lack of inflation"

Have you see house prices ? Cars ?  Holidays ?  Food ?

There is no lack of inflation.

"absence of inflation".

We will see a lot of inflation very soon.

"Why would rising them be beneficial to those peoples ability to buy bread in tesco?"

Interest on their savings ?  Higher wages ?  A real economy growing ?  Lower house prices ?

 

I have seen prices for those things. Yes. Food is cheap, thanks Aldi, Holidays - Ryanair flights over being forced to fly BA who had to drop their prices, cars - not my thing but included in ye olde basket.

You can pretend that inflation is really high, and its all a conspiracy. But that is only conning yourself.

 

Assets that have a yield - which includes housing through lack of rent you need to take out. They wont be part of an inflation calculation and its outside their mandate. They do accept though that it is a negative that government policy should seek to adjust through tax changes (making BTL harder) and building more homes. Govnt has failed to get the balance right.

 

Explain how in a bordering on deflationary economy increasing interest rates would cause growth or increased wages?....

 

 

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10 minutes ago, TheCountOfNowhere said:

We will see a lot of inflation very soon.

Probably not. Our economies have become and are becoming ever better at production and distribution. Output is easily keeping up with demand. I don't see that changing, therefore demand driven inflation will remain low.

On the other hand, as you notice, cost of items priced by debt has risen (houses, cars, etc) but the way these are measured (imputed rents in houses at least), they don't reflect in the inflation stats.

So central banks don't have a lot of reason to raise rates and lots of reasons to keep them suppressed.

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5 minutes ago, captainb said:

I have seen prices for those things. Yes. Food is cheap, thanks Aldi, Holidays - Ryanair flights over being forced to fly BA who had to drop their prices, cars - not my thing but included in ye olde basket.

You can pretend that inflation is really high, and its all a conspiracy. But that is only conning yourself.

 

Assets that have a yield - which includes housing through lack of rent you need to take out. They wont be part of an inflation calculation and its outside their mandate. They do accept though that it is a negative that government policy should seek to adjust through tax changes (making BTL harder) and building more homes. Govnt has failed to get the balance right.

 

Explain how in a bordering on deflationary economy increasing interest rates would cause growth or increased wages?....

 

 

Why do we need continual growth ?

Who's that helping ?

You dont need increasing wages when prices are falling.

In deflation wages follow the deflation

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Just now, TheCountOfNowhere said:

Everyone expects it now.  

The central bankers will print and print big now and spend directly into the economy . This will have 1 effect

In which case, you can plan accordingly. I've done my plan according to how I see the situation (ongoing low rates, more QE).

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1 minute ago, TheCountOfNowhere said:

Why do we need continual growth ?

Who's that helping ?

You dont need increasing wages when prices are falling.

In deflation wages follow the deflation

Quite to avoid that situation they are trying to stimulate some inflation through the policy you are so against.

Its odd to lead with the demand to increase rates to increase wages and growth, then to say who needs growth.

 

I get it. You want rates to rise for asset prices to fall.

Thats fine. But house prices falling is not the BoE priority or even in its mandate. 

 

 

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By now it should be clear to everyone that the BOE is utterly incompetent. Can anyone make a serious argument for them making a success of the past two decades? All I see is bubbles and busts leading to this mess. Negative interest rates and more money printing is exactly what we should expect.

Instead of making the BOE indipendent the government of the day should simply have appointed a horse to do that job, like Caligula appointing Incitatus to the senate. Far less damage would have been done. There would have been no '90s stock bubble, no housing bubble, no 2008 crisis, no bailouts and interest rates would have remained steady at about 7%, encouraging investment and alloing people to save and have pensions. Oh and there would be no inflation, too.

In fact, the more I think about it the better the idea becomes. Having a horse make decisions, instead of the BOE, would be a massive impriovement.

 

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2 hours ago, TheCountOfNowhere said:

As I predicted, they will not stop and are prepared to openly rob people to keep their scam going. It's all about the house prices and stock market, they couldn't give a **** is people starve.

Let me ask @captainb's question another way....why are people more likely to starve with inflation at 1% and interest rates at -1% than they are with inflation at 2% and interest rates at 0%?

If you think people are going to starve due to INFLATION then OK - but that's not really impacted by whether interest rates are a fraction above zero or a fraction below, i.e. I'm still struggling as to why NEGATIVE interest rates are such a big deal?

 

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37 minutes ago, Unmoderated said:

Debt my dear boy, we need growth to reduce the debt. 

Growth doesn't reduce the debt, it makes it more serviceable. 

Using Debt to drive growth to service debt only leads to one outcome - it could be tomorrow or in 100 years time.

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1 minute ago, scottbeard said:

Let me ask @captainb's question another way....why are people more likely to starve with inflation at 1% and interest rates at -1% than they are with inflation at 2% and interest rates at 0%?

If you think people are going to starve due to INFLATION then OK - but that's not really impacted by whether interest rates are a fraction above zero or a fraction below, i.e. I'm still struggling as to why NEGATIVE interest rates are such a big deal?

 

Don't you work in pensions? How will a negative interest rate help my pension grow?

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Just now, Biggus said:

Don't you work in pensions? How will a negative interest rate help my pension grow?

What i'm saying is - it's the RELATIVITY between interest rates and inflation that matters.

I'd rather have -1% rates and 1% inflation than 10% rates and 15% inflation as per the 1970s!

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2 minutes ago, scottbeard said:

What i'm saying is - it's the RELATIVITY between interest rates and inflation that matters.

I'd rather have -1% rates and 1% inflation than 10% rates and 15% inflation as per the 1970s!

Genuine question, how will negative interest rates affect annuities? Will pensions shrink every year?

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7 minutes ago, Biggus said:

By now it should be clear to everyone that the BOE is utterly incompetent.

 

I dont think they are incompetent, I think they've done exactly what they've set out to do.

In-debt a nation, take all the assets, make themselves massively wealth, globalize and enslave.

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