Bank of England hold rates but now 6 to 3 not 7 to 2

[satch]

1 hour ago, NogintheNog said:

Sadly, I think they might well be right. We've had 10 years of 'emergency' rates at <0.5-0.25% and the economy has according to the government been strong and resilient!

If this is as good as it's ever going to be, then what position are they going to be in to raise them? Last chance August to maybe 0.75%, after that it's back down again to support the debt laden ponzi scheme. I remember the last housing crash of the late 80's when some of my friends posted the keys to their house back through the banks letter box and walked away. The banks at the time were well capitalized and had stricter lending criteria. Today that would be more like a Wile E. Coyote off the cliff moment, and the government aren't gonna subject their mates in the banks to that are they....

Inflation will be the result, inflating away the huge debts. It's gonna take some time....

Thinking back to the 70s interest rates were high albeit for a shortish time and the 'debt'in particluar mortgage debt inflated away, there were high interest rates but also high wage inflation, not sure of we would get high wage inflaiton today. Rates were around 12% (and 15% or 18% for a few days apparently) and people struggled to pay their mortgages based on 2 or 3 x the main salary. Today with people having mortgages of say 5x joint salaries and rates of 12 % could even for a short period not be serviced as many are struggling even with todays low mortgage rates. In the time taken for wages to catch up with the inflated mortgage payments people would not survive and would hand back the keys. The debt is IMHO just to big to inflate away unless you get high wage inflation with no interest rate rises, then it will work.

[TheCountOfNowhere]

7 hours ago, NogintheNog said:

https://www.economicshelp.org/blog/3015/economics/why-inflation-makes-it-easier-for-government-to-pay-debt/

I agree though Count that higher bond yields may be forced onto the UK at some point....

I've been clear in my mind for 10 years how this was all going to play out...now I am not sure anymore.

I fear now for the worst.

[Band]

8 hours ago, TheCountOfNowhere said:

I've been clear in my mind for 10 years how this was all going to play out...now I am not sure anymore.

I fear now for the worst.

Its going to play out with a Jeremy Steptoe led coalition, this Tory govt are just a bad bunch of Blairites ... at least with Blair/Brown they managed to get some money into the little peoples pockets whilst turning them into rent slaves, even if it was via tax credits and creating an economy based on a property bubble and fucked up banking system that created so much debt it could never be paid back.

Hammond and Carney aren't even offering crumbs off the table any longer.

[MrXxx]

17 hours ago, NogintheNog said:

https://www.economicshelp.org/blog/3015/economics/why-inflation-makes-it-easier-for-government-to-pay-debt/

I agree though Count that higher bond yields may be forced onto the UK at some point....

Thanks, great site that explains economics at a level even I can understand!

[Dave Bloke]

On 22/06/2018 at 15:43, NogintheNog said:

https://www.economicshelp.org/blog/3015/economics/why-inflation-makeTCOs-it-easier-for-government-to-pay-debt/

I agree though Count that higher bond yields may be forced onto the UK at some point....

TCON is correct and that website is wrong

> Because of inflation, the government would get more tax revenue as wages and prices increase

but wages won't increase, inflation (maybe due to the pound collapsing post Brexit) may make things more expensive, people will just have to buy less or change what they buy and the government tax take won't increase.

[twocents]

More theft by the BoE's cronies aided by the BoE.

According to 5Live radio news BoE admits some of its announcement gave "traders" advance notice in which to trade.

[sancho panza]

28 minutes ago, twocents said:

More theft by the BoE's cronies aided by the BoE.

According to 5Live radio news BoE admits some of its announcement gave "traders" advance notice in which to trade.

Shaun Richards on it

https://notayesmanseconomics.wordpress.com/2019/12/19/yet-another-scandal-unfolds-at-the-bank-of-england/#comment-49730

Yet another scandal unfolds at the Bank of England

Posted on December 19, 2019

Sometimes the news just leaps at you off the page and overnight this has happened concerning a warning I have made in the past about the Bank of England. So let us get straight to the Financial Times on the subject.

The Bank of England has referred to the UK’s financial watchdog the revelation that an audio feed of its market-sensitive press conferences was supplied to high-speed traders before the events were officially broadcast.

This is disgraceful on two counts. Firstly in an era of computer driven algorithm driven trading an edge like this is quite something for them as we mull exactly who was more equal than others? To coin a phrase. Next is the fact that this happened at the ECB several years ago and after such a warning someone should have been dispatched to make sure that it could not happen at the Old Lady. So we can add laziness to the incompetence.

Comment

As the term of Bank of England Governor Mark Carney comes to an end I am reminded of the Yes Prime Minister view that an intelligent and honest Governor would be an “innovation”. Added to that has been the accusations that he has played politics in the Brexit debate which was frankly hardly a surprise for a man accused of playing politics when he was Governor of the Bank of Canada. Sadly such issues got covered in a smokescreen provided by a fawning media who presumably are hoping today that people have short memories.

However there are 2 deeper issues which are as follows. The Bank of England has proved to be somewhat scandal ridden as we note the Li(e)bor and various other scandals. Next is the fact that this matters ever more because central bankers have intervened in so many new areas. Indeed that has been highlighted this morning by the Riksbank in Sweden which ran negative interest-rates in a boom and now responds to rising unemployment with this.

Therefore, in line with the assessment in October, the Executive Board has decided to raise the repo rate from –0.25 per cent to zero per cent. The forecast for the repo rate is unchanged, and the repo rate is expected to remain at zero per cent in the coming years.

Yet they mostly escape criticism for this shambles. Perhaps if Governor Carney could stick to the day job that might help.