Thursday, April 17, 2014

Time to short GBP/USD?

Interest rates are NOT rising!!!

Rates rose last year so, apparently, everyone jumped on the short term bandwagon and decided that the multi-decade trend had suddenly changed. Somewhat prematurely in our view. So the rate rose last year and the media and City pundits went wild announcing the death of the 40 year fall in rates and so, they said, we must expect higher and higher rates in the future. I have news for you: if rates rise then the Western economy is – to put it highly technically toast! So, if the rate at which the government borrows was to rise from, say, 3.5% to 4% – a mere 0.5% rise – this would increase the Government’s interest bill by £7 Billions pa. How would it pay for it? £7Bns of cuts? That would play well with the electorate just as we are entering the final year before the next Election.

Posted by khards @ 03:45 PM (6616 views)
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7 thoughts on “Time to short GBP/USD?

  • So, higher house prices as we slip into bubble-land! Carney will talk and talk and do nothing, IMHO.

    Keep buying, girls…

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  • Clearly alan hasn’t read the blog

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  • stillthinking says:

    I don’t think interest rates will rise either. The purpose of the ever imminent rise is to prevent the need for one.

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  • Japan did the same thing and had property and stock falls for 20 years….seems a bit
    Confusing

    Surely this economics has some nasty consequences…they would have you believe this
    is the new new

    BBC news talking about ftbs giving up homeownership dream…start of a new sentiment?

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  • As GC says, when interest rates go up, the economy goes down.

    Unless some extraordinary event happens, BOE will need to be dragged kicking and screaming to raise rates.

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  • Inflation is collapsing across the western world. But this is due to productivity from technology rather than a lack of money supply. They are releasing more and more cash to increase inflation, yet it keeps being invested in more technology, causing falling prices, and so central banksters have no idea what they are doing. Rather, they should let markets decide the rates. Central economic planning did the Soviet Union no good and will neither do us any good either.

    Thus, we may see negative rates before the market finally overwhelms the central planners to cause the higher interest rates that we need to properly reduce the cost of living for earners and savers. It is too long that government action has kept the cost of living artificially high.

    Part of the reason government likes inflation is that more and more people get trapped in higher tax brackets. That is why we have an inflation target. So, for those of you who do not like taxes, you should scream for deflation.

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  • Deflation it is then….unfortunately it doesn’t fit in to banks business models….but is great
    For savers and for.young would be homeowners

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