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Realistbear

B O E In A Dilemma Over Ir

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http://today.reuters.co.uk/news/newsarticl...ITAIN-RATES.xml

LONDON (Reuters) - A resurgent property market underpinned by expectations interest rates may soon fall and an unexpected drop in inflation below target has landed the Bank of England in a serious dilemma.
Bank Governor Mervyn King, who was in a minority that voted against last August's rate cut and who is among the more hawkish on the nine-member committee, clearly does not want to risk another boom in the property market.
"House prices are broadly stable and that's a very satisfactory position," King told a local radio station last month. "Let's hope we can keep it roughly there."

Resurgent?

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http://today.reuters.co.uk/news/newsarticl...ITAIN-RATES.xml

LONDON (Reuters) - A resurgent property market underpinned by expectations interest rates may soon fall and an unexpected drop in inflation below target has landed the Bank of England in a serious dilemma.
Bank Governor Mervyn King, who was in a minority that voted against last August's rate cut and who is among the more hawkish on the nine-member committee, clearly does not want to risk another boom in the property market.
"House prices are broadly stable and that's a very satisfactory position," King told a local radio station last month. "Let's hope we can keep it roughly there."

Resurgent?

The BoE have had a serious dilemma for the last six months.

When are they going to wake up, make a decision and increase rates?

Their hands are tied.

Lowering rates would be insanity in the current climate.

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B O E quarterly report is out tomorrow and I think they'll get a clue which way the wind blows when Bernanke speaks tomorrow evening.

Edited by Sisyphus

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I remember when Brown got into power he made some speech about low IRs and wanting the UK to be like the US with everyone investing in shares, driving up the economy, etc, etc. It is now obvious that low IRs combined with the general British population only results in massive debt.

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I remember when Brown got into power he made some speech about low IRs and wanting the UK to be like the US with everyone investing in shares, driving up the economy, etc, etc. It is now obvious that low IRs combined with the general British population only results in massive debt.

Exactly. Looks what's happened. Both UK and US reduced interest rates to the point that it hurt savers. However, the US economy has rebounded with strength. The UK economy is going nowehere and personal debt has increased beyond annual GDP. We're certainly not two peas in a pod, are we?

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Guest Charlie The Tramp

Exactly. Looks what's happened. Both UK and US reduced interest rates to the point that it hurt savers. However, the US economy has rebounded with strength. The UK economy is going nowehere and personal debt has increased beyond annual GDP. We're certainly not two peas in a pod, are we?

Removed a very large sum out of the savings account today, the Bank appeared not to be very happy, why are they bothered? :unsure:

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Removed a very large sum out of the savings account today, the Bank appeared not to be very happy, why are they bothered? :unsure:

Going to be doing anything good with it ?

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Odd that. Banks love lending you money, but absolutely hate you taking savings out.

Well when you take your savings out it means they have less money to lend.

The banks are just middle men after all.

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every £100 grand you take out - means another £1mil they cant lend

You now we could be really cruel.

We all deposit our money in a bank - leave it there for a few months til they have lent it and all take it out on mass and stick it into another bank.

we can seriously mess them up....

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IMO this is the main point to the argument;

Bank Governor Mervyn King, who was in a minority that voted against last August's rate cut and who is among the more hawkish on the nine-member committee, clearly does not want to risk another boom in the property market.

Merv may be a hawk, but he may well be outnumbered by doves. I think rising energy costs are probably going to lead to consumers tightening their finances and probably depressing CPI a bit.

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Well when you take your savings out it means they have less money to lend.

The banks are just middle men after all.

There is actually no relationship between the deposits a bank has the amount of money they can lend. The banks aren't just middle men, the banks create money out of thin air ( something that if you or I did would be called counterfeiting and get you 20 years! )

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There is actually no relationship between the deposits a bank has the amount of money they can lend. The banks aren't just middle men, the banks create money out of thin air ( something that if you or I did would be called counterfeiting and get you 20 years! )

Its a win-win situation

I think there's four core banks in the UK?

Bank X 'creates' £150k

Paul borrows £150k to buy house from Peter

Peter deposits money back into Bank X

Paul is now paying intesest to Bank X

Look at what's happned to the money and who is suddenly richer ...

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Its a win-win situation

I think there's four core banks in the UK?

Bank X 'creates' £150k

Paul borrows £150k to buy house from Peter

Peter deposits money back into Bank X

Paul is now paying intesest to Bank X

Look at what's happned to the money and who is suddenly richer ...

My favorite bit about the whole sham is where the bank secures the money it made out of thin air against YOUR house! Genius!

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My favorite bit about the whole sham is where the bank secures the money it made out of thin air against YOUR house! Genius!

They cannot create money out of thin air they rely on a system called fractional reserve lending

Where they can lend 90% of any deposit.

You get the impression of them creating money out of thin air from the nature of how this system works.

I will try and dig out an old post to explain…

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  • 335 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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