Tuesday, Dec 24, 2019

Misallocation of capital

Torygraph: Low interest rates can cause a baby boom, Bank of England suggests

BoE suggests that artificially low interest rates, typically associated with misallocations of capital culiminating in recessions as grand plans exceed real savings, points out that their artificially low interest rates -may- cause a baby boom in the UK!
As couples may misunderstand how much capital is available for their additional child presumably and then no .. sell that empty mall mum!
No mention sadly of couples forgoing additional children because they can't afford somewhere to live with them. Sensibly Torygraph kept the comments turned off.

Posted by stillthinking @ 08:32 AM (2610 views)
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1. jack c said...

Paragraph 3 and the final paragraph both read “Overall, our paper suggests monetary policy can have spillover effects on a host of economic and social outcomes,” researchers concluded

Strikes me that newspaper articles these days are largely cut and paste jobs designed to fill up column inches as quickly as they can.

On a similar theme Sweden ends negative rates regime over side-effects concern - see https://www.ft.com/content/0cb65c7a-223a-11ea-92da-f0c92e957a96

Tuesday, December 24, 2019 10:35AM Report Comment

2. mombers said...

Low interest rates stuffed renters. So we'll have more childless people living miserable old ages in private rented homes...

Tuesday, December 24, 2019 12:56PM Report Comment

3. deepak said...

They found that cutting interest rates appeared to stimulate more than just the economy, with an extra 14,500 babies born in 2009 after it slashed borrowing costs during the global financial crisis.

- Maybe it was due to they lost their jobs and both were sitting at home?
Causation is not correlation

Let me add the following (I've mentioned this before here and other blogs)

What about the kids that were never born due to high cost of housing and living caused low interest rates and bad monetary policy?
The families who did not have children because they could not afford their own living forget about bringing up a child?
The families who left it too late to have a child?
The families in distress due to failed IVY treatments, Oh! that would be counted as a positive as it adds to the GDP.

Not everything that is counted matters and not everything that matters can be counted. <- And you can quote me on this.

Tuesday, December 31, 2019 11:26AM Report Comment

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