Is This An Option For The Government

[Jonnybegood]

Could somebody on here answer this one for me, Through NR could the Government start to offer fixed rate long term mortgages for those coming off their fixed rate with the banks.

Say a fixed rate at the BOE base rate or just above, for 10 -15 maybe even 25 years, for those coming off their 2 year deals with rates going from 4 - 4.5% to 6% or more.

This would be means tested so that it is only for main residence (i.e no BTL or second holiday homes, proof needed council tax , Electoral register), a cap on the mortgage amount , only for existing borrowers (i.e Those coming out of their current deal only).

This would show the government is acting to save people which should get the vote, it helps lower repossession levels, the government are not faced with having to re home thousands of families, keeps property prices from falling by as much as they would if thousands of property goes to auction, banks do not have to write down the debt as its passed to the government.

They are doing this already to an extent, with all the money being ploughed into the markets to save the banks and keep the wheels turning it just seems unjust that those who simply cannot afford to pay the increase in their mortgages when their deals end should be ousted from their property when the banks are kept afloat.

Should encourage the banks to pass on the rate cuts to the public as they would be in competition with NR for certain customers

[babesagainstmachines]

Could somebody on here answer this one for me, Through NR could the Government start to offer fixed rate long term mortgages for those coming off their fixed rate with the banks.

No

[jac]

unfair competition

[Mr Nice]

basically you are talking about a mortgage subsidy.

the only problem with that is the the UK is already spending more than it has.

it's not healthy to keep rates lower than what they would naturally be which leads to a lot higher inflation. like we are seeing now, as the currency gets debased.

the end result of your subsidy would be higher inflation and higher taxes, two things Britain doesn't really need at this point.

especially for something voluntary like home ownership, just letting them rent for a while would be a lot more efficient all around.

[Jonnybegood]

I remember a year or so ago Mr Brown talking about the answer being long term fixed rate mortgages to move homeowners away from IR movements, so that the Government could play with IR as much as they like without hurting homeowners directly.

This to me would be the ideal way to do it, it removes the inflation worries by allowing the Government to raise IRs without hurting those most vulnerable, inflation at the moment is not due to consumer spending its down to increases in oil and energy prices which in turn as affected everything else, keeping homeowners on long term lowish rate mortgages would have little impact on inflation with the household incomes already squeezed by rising prices elsewhere.

Edited June 1, 2008 by Jonnybegood

[the end is a bit nigher]

unfair under european law, plus the other banks etc. would go ballistic - still, it's stupid enough for labour to have a go at

[lets get it right]

Illegal under EU law. Otherwise impractical. It would mean the effective nationalisation of banking.

[The Spaniard]

unfair competition

Is it actually illegal for our supposedly sovereign nation state to issue and lend money directly to its own people?

Is it only commercial banks that may borrow directly money issued by the BoE?

Here is one of my previous posts outlining a different, and to my mind more sensible arrangement:

Under our present monetary system HM Government must borrow money which itself was originally borrowed into existence through loans from commercial banks. It does this by issuing and auctioning IOUs (Gilts). Thus over time it accumulates and owes, on our behalf, the enormous and ever increasing National Debt, which places correspondingly massive and escalating debt servicing requirements upon present and future taxpayers.

Borrowing by the State of commercially issued money seems both logically and intuitively to be completely the wrong way around the tail wagging the dog. The State is reduced to being merely one among many non-issuing players (albeit one with special powers) in a money system structured and controlled by commercial vested interests. Because of this peculiar fact democracy is greatly weakened, and arguably it is reduced to a sham.

Assuming that we wish to retain a debt-based currency (a debate in itself), why does the State not turn the tables and itself issue the money, and then lend it at interest to the banks? This happens already with the issue of the relatively small amount of debt-free banknotes and coins in circulation (roughly M0), but why not extend the principle to the overwhelmingly dominant debt-based money supply (roughly M4)?

The State-issued money would be lent to the banks which would offer their IOUs in exchange. A suitable system of inter-bank competition together with the terms and conditions of the banks IOUs could be negotiated between the State and the participating banks. The State might also perhaps retain the ability to by-pass the banks and lend straight into the economy in certain circumstances, for example to government agencies.

The banks would compete with each other in their function as intermediaries between the money-issuing State and the money-using general economy, lending the money on into the economy for profit at whatever interest rate differentials could be achieved in a free market. They would have no power to expand or contract the money supply and would be a genuine money-handling service industry, just as many people think (erroneously) that they are now.

The precise control of exactly how much new money to issue and lend into the economy at any time would provide a direct mechanism to avoid both overall inflation and deflation in the general economy. It would be much more effective than the present remote control method of merely setting the base interest rate. Money supply growth could be harmonised with measured increases in real wealth (GDP) far more accurately.

The State would continue to raise taxes, though to a much lesser degree than it does now, and maybe dramatically so if it received enough money back from the economy (via the interest received from the banks) in return for its direct and exclusive provision of the debt-based money supply, our universal means of exchange. The tax system could be vastly curtailed and simplified and the State would cease its humiliating role as interest collector for the banking system.

The State could, in parallel, simply issue and spend new debt-free money into the economy, in appropriate circumstances and amounts. This would inflate the money supply, but if the new debt-free money was spent on wealth creating infrastructure projects for the common good, it would not necessarily be price inflationary. New money and new wealth would come into being in tandem. Such spending would also be an ideal way of re-cycling back into society the interest received by the State, thus avoiding the inexorable build-up of escalating debt which we see with the present commercially issued money supply.

The above is simply a bare bones sketch of such a system of State-issued debt-based money. The basic principle, the take-home message, is that the massive interest payments generated by a debt-based money supply, i.e. one that is borrowed into existence, should flow back to the State and be used for the common good, rather than, as they do at present, to an unproductive but extremely powerful section of society, namely the commercial money-issuing banks, for their private gain.

Why on earth have we allowed the almost complete privatisation of our money supply, our society's very means of exchange, with the consequent enormous transfer of power and control from our elected representatives to a cartel of profit motivated bankers? Why does the flow of interest which arises from the issue of our debt-based currency go from the people to the banks rather than vice versa? Are we uninformed or just plain stupid? The internet surely removes any excuse we might have for being the former.

The crucial question is who issues/originates/lends our debt-based money into existence and who thereby benefits from the enormous amount of interest which flows back to the issuer?

[Jonnybegood]

Illegal under EU law. Otherwise impractical. It would mean the effective nationalisation of banking.

Well after the balls up in the commercial banking sector maybe there is an argument that it should be nationalised

[the end is a bit nigher]

Well after the balls up in the commercial banking sector maybe there is an argument that it should be nationalised

there is an argument but not a good one - the only balls up has been by the government in bailing out NRK whih should have been allowed to go bust - however, we all know that was a political move to save jobs in a Labour heartland and is typical of a Labour government

[Radge]

All fiat money is loaned into existence by governments, therefore if the 'Government' i.e. taxpayer were to bale out homeowners with cheap loans they would be massively increasing the money supply, i.e. stoking inflation.

Commercial banks are, at least (supposed to be), lending money the fractional reserve of which already exists. A fairly good explanation of the process can be found here.

Apart from which, why should prudent 'me' as a taxpayer bale out silly people who bought in a bubble?

[right_freds_dead]

Could somebody on here answer this one for me, Through NR could the Government start to offer fixed rate long term mortgages for those coming off their fixed rate with the banks.

i suggested borrowing direct from the BOE in government backed schemes. it would be akin to buying your own social house at a guaranteed rate.

you could fund from national savings and investments, providing a pay check for savers.

it would only work on strict 3.5 salary rates. no joint income or 2nd home applicants. no tricks. no loopholes. no half buys.

government built. government sold. privately funded. this way, there is slack to spend in the wider economy or save.

and it keeps uk wages lower, so increasing competitiveness for real business. while protecting the pounds global value.

but they have to let this crash, and all the speculative parasites go under right now. including some banks.

this crash will not affect the jones', cos the jones' house goes down 40%, so does the one they want to move up to.

also, the government could combine the monthly payment with additional top up payments (optional} for an improved pension.

at the moment the bulk of the uk family income is going to a small clique of flippers, speculators and selfish buy to letters,

who have bubbled and ramped up one of the basic staples of citizenship and wellbeing.

and gordon is getting the blame for the benefits of others.

id hate to see him go, only to be replaced by another tory trickster.

he needs to make a stand.

and deliver some bad news good.

Edited June 1, 2008 by right_freds_dead

[The Spaniard]

Illegal under EU law. Otherwise impractical. It would mean the effective nationalisation of banking.

Does anyone else find it amazing that, as a sovereign nation, we have apparently signed away any legal right to issue our own money, our very means of exchange?

We are effectively allowed now to use only money that has been commercially issued and lent to us at interest by the banking system.

At least this makes clear the fact that it is the banking system that rules the world and that supposedly independent sovereign nations are under its control.

[renterbob]

Does anyone else find it amazing that, as a sovereign nation, we have apparently signed away any legal right to issue our own money, our very means of exchange?

We are effectively allowed now to use only money that has been commercially issued and lent to us at interest by the banking system.

At least this makes clear the fact that it is the banking system that rules the world and that supposedly independent sovereign nations are under its control.

Similar to the FED?

If you pay me 10%, I'll print you off some notes.

I agree the bansk rule.....and they are finally showing their real muscle....forget Pms/presidents...the banks rule. This won't change.

[Jonnybegood]

Similar to the FED?

If you pay me 10%, I'll print you off some notes.

I agree the bansk rule.....and they are finally showing their real muscle....forget Pms/presidents...the banks rule. This won't change.

Or people will suddenly wake up and realise the banks have become to powerful and set about changing it.

What we are seeing may be the start of it, a trigger.

The banks have been left in control and have f**ked up on a worldwide scale, maybe they did become to powerful for their own good.

[laurejon]

i suggested borrowing direct from the BOE in government backed schemes. it would be akin to buying your own social house at a guaranteed rate.

you could fund from national savings and investments, providing a pay check for savers.

it would only work on strict 3.5 salary rates. no joint income or 2nd home applicants. no tricks. no loopholes. no half buys.

government built. government sold. privately funded. this way, there is slack to spend in the wider economy or save.

and it keeps uk wages lower, so increasing competitiveness for real business. while protecting the pounds global value.

but they have to let this crash, and all the speculative parasites go under right now. including some banks.

this crash will not affect the jones', cos the jones' house goes down 40%, so does the one they want to move up to.

also, the government could combine the monthly payment with additional top up payments (optional} for an improved pension.

at the moment the bulk of the uk family income is going to a small clique of flippers, speculators and selfish buy to letters,

who have bubbled and ramped up one of the basic staples of citizenship and wellbeing.

and gordon is getting the blame for the benefits of others.

id hate to see him go, only to be replaced by another tory trickster.

he needs to make a stand.

and deliver some bad news good.

The Government has no business manipulating the free market, it is because the manipulated the free economy over the past decade that we find ourselves in this position.

The Bank of England should be privatised, and the lending of money by the Bank of England should go to the highest bidder. The problem with Labour over the past decade is that they have run a Big Government alongside a free market economy, the two are clearly at odds with one another.

House prices would have settled in 2001 had the Government not intervended and pushed interest rates down to a level whereby it was no longer worth saving, and it was beneficial to speculate in the highly inflationary property market.

Inflation is BAD, its the basics of economics, but of course New Labour would not know that, their background is cleaning toilets in council carparks.

[right_freds_dead]

House prices would have settled in 2001 had the Government not intervended and pushed interest rates down to a level whereby it was no longer worth saving, and it was beneficial to speculate in the highly inflationary property market.

funny enough, it was due to the 911 attacks which are entwined into the whole iraq saga.

lucky wtc 7 came down perfectly to help stiffen everyones resolve for conflict.

[Saberu]

Is it only commercial banks that may borrow directly money issued by the BoE?

Here is one of my previous posts outlining a different, and to my mind more sensible arrangement:

There is one fatal flaw in your system, the current party options for government are just as corrupt as the banks themselves. They may well run the country into the ground even quicker with more economic powers

[ingermany]

Or people will suddenly wake up and realise the banks have become to powerful and set about changing it.

What we are seeing may be the start of it, a trigger.

The banks have been left in control and have f**ked up on a worldwide scale, maybe they did become to powerful for their own good.

Yes, but that can all be changed without nationalisation. The job of the state is to pass and enforce legislation to regulate the activity of the banks (and other businesses). That is as far as state involvement should go. For example, the state passes legislation to govern how garages conduct MoT tests. It can do this without taking all private garages into public ownership. It is unnecessary and counterproductive to nationalise everything