Interest rates going up soon...
Discussion
Qwert1e said:
Personally I don't think it would make the blindest bit of difference.
If it doesn't make a 'bit of difference' they might as well put it up now and savers can get another risk-free 25bps risk??I view rates like brakes on the economy - step on it too much and the economy will grind to a halt. We are currently going uphill so need to be careful how we use the brakes. A slow steady increase is required.
I still say 0.25 would make no difference whatsoever. It just doesn't amount to enough hard cash to change anyone's behaviour.
Should it be done? Yes, and it should have been done a long time ago.
Will it be done? Well, for the same reason it wasn't done a long time ago - General Election in May 2015.
Should it be done? Yes, and it should have been done a long time ago.
Will it be done? Well, for the same reason it wasn't done a long time ago - General Election in May 2015.
Qwert1e said:
I still say 0.25 would make no difference whatsoever. It just doesn't amount to enough hard cash to change anyone's behaviour.
Should it be done? Yes, and it should have been done a long time ago.
Will it be done? Well, for the same reason it wasn't done a long time ago - General Election in May 2015.
A 0.25% rise would make a big difference - we haven't had an interest rate rise in over 5 years and rates are at an all time low.Should it be done? Yes, and it should have been done a long time ago.
Will it be done? Well, for the same reason it wasn't done a long time ago - General Election in May 2015.
Any rise would signify that the current 5 year "norm" is about to change, possibly drastically, and people/markets will react.
BlackLabel said:
They're all living on another planet.An interest rate driven economy needs to grow to work, and in a world running out of space and resources per head, and poorer countries to exploit, the system we use is buggered.
Why we continue under the idea that it'll all be back to normal in 5 years and on we go as we were from 1950-1990 is just bonkers.
Unless of course they're hoping for a huge war, some huge natural disaster that pushes the global population way down, or some fantastical technology advances that see us tinkering around in space a lot more...
Imo, it's the economic doldrums from now forwards, unless we come up with an economic system that doesn't depend on constant economic expansion to pay down the interest on our debts.
Dave
BlackLabel said:
Rates may not go up for years, perhaps they will even go negative. jonah35 said:
Rates may not go up for years, perhaps they will even go negative.
But medium + term that makes things worse as the incentive to put money aside for individuals future is less appealing so more reliance on state hence govt spending increasing. BOE could buy up all the debt from 3 rd parties so all UK govt debt is owned by BOE - then wrote it off ... What's the worst that will actually do? No one has been defaulted on except ourselves.
If inflation increases so will interest rates.People will demand higher pay rises if basic stuff like Gas and Electric plus food prices keep rising.Listening to wiser people than me the economic recovery will take about ten years.
Who has the answer what the future will bring.Pointless people saving if the value of your money decreases.You might as well spend it which will do the economy no harm.How much private money is in savings doing nothing?
Who has the answer what the future will bring.Pointless people saving if the value of your money decreases.You might as well spend it which will do the economy no harm.How much private money is in savings doing nothing?
Foppo said:
If inflation increases so will interest rates.People will demand higher pay rises if basic stuff like Gas and Electric plus food prices keep rising.Listening to wiser people than me the economic recovery will take about ten years.
Who has the answer what the future will bring.Pointless people saving if the value of your money decreases.You might as well spend it which will do the economy no harm.How much private money is in savings doing nothing?
And in the UK buy property in high density areas given low/irrelevant interest rates way way below min building houses to keep up with demand = sure thingWho has the answer what the future will bring.Pointless people saving if the value of your money decreases.You might as well spend it which will do the economy no harm.How much private money is in savings doing nothing?
Welshbeef said:
jonah35 said:
Rates may not go up for years, perhaps they will even go negative.
But medium + term that makes things worse as the incentive to put money aside for individuals future is less appealing so more reliance on state hence govt spending increasing. BOE could buy up all the debt from 3 rd parties so all UK govt debt is owned by BOE - then wrote it off ... What's the worst that will actually do? No one has been defaulted on except ourselves.
Foppo said:
If inflation increases so will interest rates.People will demand higher pay rises if basic stuff like Gas and Electric plus food prices keep rising.Listening to wiser people than me the economic recovery will take about ten years.
Who has the answer what the future will bring.Pointless people saving if the value of your money decreases.You might as well spend it which will do the economy no harm.How much private money is in savings doing nothing?
That's basic economics, it's not always true. But inflation is not increasing and in fact it may go negative.Who has the answer what the future will bring.Pointless people saving if the value of your money decreases.You might as well spend it which will do the economy no harm.How much private money is in savings doing nothing?
turbobloke said:
Foppo said:
How much private money is in savings doing nothing?
Do banks not use deposits to lend to people and businesses?(Based on the work of Robert-Arthur: Menard, Mary-Elizabeth: Croft and (to some extent Winston Shrout and Irene-Maus: Gravenhorst), and John R. Dempsey of Sovereign Trust. I've just tried to reduce it to absolute fundamentals)
1) Banks: They take deposits. These are held in trust for the depositor. They must, by law, always be prepared to return any and all deposits back to depositors on demand. That's the LAW. They would not be able to do that if they were ever to lend out any money on deposit to anyone requesting a loan. They cannot, therefore, lend or invest anything entrusted to them. So the question is: Where do they get the money from, in order to loan it to you?
2) Loan Companies, Credit Card Companies, Building Societies: They don't take deposit money anyway (I'm talking about the 'older version' of Building Societies before they became banks. I'm referring to the way they would just issue mortgages. Their 'banking' activities are controlled as in (1), above). So the question is: Where do they get the money from, in order to loan it to you as a mortgage?
Leave that question pending for a moment.
3) What is a cheque? Paper, printing ink, somewhere you can hand-write a Payee, and Amount (in numbers and words), a Date, and somewhere to write your signature.
4) What is a Loan Application/Agreement? Paper, printing ink, somewhere a Payee will be written (the name of the Loan Company), somewhere for an Amount (in numbers and words), a Date, and somewhere to write your signature.
Do you see any similarity between (3) & (4)?
A Loan Agreement is a cheque. (Cheques can be written on anything ... even toilet paper ... provided it contains the essential information so as to enable correct clearance processing)
You send off the Loan Agreement to the Loan Company ... and they CASH YOUR CHEQUE! They cash it with an organisation that has the power to issue 'money' for that purpose (for example the Treasury, or the Bank of England, etc)
NOW THEY HAVE THE MONEY, IN CASH, TO LEND TO YOU!
Simple. Wasn't it?
But wait! Sure, they provided the 'service' of converting your cheque into funds within an account you can drawn upon (write other cheques against, use a Credit Card against, etc). And they could do that because they knew how to do that. And yes, that was a service. And yes, they should be paid a fee for that service.
But wait again! What is their 'fee'? Their 'servicing fee'?
Oh ... only THE ENTIRE AMOUNT OF YOUR ORIGINAL CHEQUE, PLUS INTEREST!
That's all they ask for .. in order to provide the original service!
How to do they ensure they collect this 'service fee'. By giving you a Payment Book! And they make sure they cream off the INTEREST, before applying the remainder as PAYMENT. In fact they even cajole you into never-ending INTEREST by specifying a minimum payment equal to the INTEREST they want. (Knowing full well you'll often opt for that, thereby allowing them to roll the whole thing on endlessly)
Now let's view this another way.
If you write a cheque for £100, and send it to someone else (the Payee), and they cash it - DO YOU EXPECT THE BANK TO DEDUCT ANOTHER £100 PLUS INTEREST - FOR ITSELF - AS WELL?
No? You don't when you write a cheque you 'see' as a cheque do you?
Well, then, why should they do that just because you can't 'see' a Loan Agreement as the cheque it actually is?
MONEY IS CREATED WHEN YOU SIGN A PIECE OF PAPER AGREEING TO PAY.
AND THAT'S THE ONLY WAY MONEY IS -EVER- CREATED.
Your 'promise to pay' creates money. Yours, and everyone else's.
So what -should- happen, then?
What should happen is that you write out a cheque - promising to pay - and send it to the Treasury yourself. They would then 'cash' it (in the same way they do that for a Bank), by updating an account with the amount you specified, from which you can draw funds as you need them.
That's it. Your 'promise to pay' stands until the end of time. That's all money is. A 'promise to pay', which stands until the end of time.
All money. "All thee bits of it".
Check out a Banknote. What does it say? "I promise to pay the Bearer on demand the sum of so-many-pounds". And signed by the Governor of the Bank of England (in the UK). A banknote is a Promissory Note - just like a cheque or Loan Agreement or any other IOU. An IOU that stands until the end of time.
What should a Bank do? It should simply accept the 'cash' from the Treasury, and operate the account for you.
And claim a reasonable - SMALL - fee for providing you with this convenience.
If you agree to some of your funds being invested, the bank should deduct their fees as commission, and not bother you with any other 'charges' at all.
THIS IS WHERE WE NEED TO GET TO. To be able to convert your SIGNATURE directly, without any Bank or Loan Company intervening.
And now for something completely different
When you sent them your cheque (aka Loan Agreement) and they cashed it, they could have just walked away with your money. If they'd done that, you wouldn't have known any difference.
They could have just written to you and said "Sorry, we didn't approve this loan, after all"
You would have been miffed at not getting the loan but, on the other hand, slightly relieved you didn't have the payments hanging over you, believing that the whole thing was 'dead'.
Dead? They were 'up' by the amount of the loan! And you were empty-handed! And you had given them that amount!
Dead? I should cocoa!
No. They are greedy, greedy, greedy, greedy. They want INTEREST. Never-ending INTEREST. They POSITIVELY HATE IT when you pay off a loan. Have you noticed? Try getting a loan, and then paying it back immediately. TRY IT.
No. They can lend you your own money, and then claim it back PLUS INTEREST, if they don't just walk away.
That's why they don't just walk away.
Every loan taken out generates money for them. Generated by your payments back.
That's where banks (etc.) get their money from. All they need to do is to make as sure as possible you've fallen for this SCAM sufficient times in the past, so as to be pretty sure you'll fall for it again.
If you 'default' on payments, they had ALREADY BEEN PAID IN FULL RIGHT AT THE START. They took the risk with it. Exactly the same risk as when they invest anywhere. If prices go down, they simply lose, write off the experience, and try elsewhere. Do they send bailiffs if 'prices go down'? Err ... no.
They 'involve' themselves when (as explained above) they have no need to be. The risks of doing so are, therefore, entirely theirs, and consequently there is absolutely no need to feel sorry for them.
YOU, on the other hand, don't owe ANYTHING to ANYONE.
What YOU did was to 'make some money' - and then spend it the way you wanted to spend it.
And why not? 'Money was made' by you SIGNING a cheque and thereby 'promising to pay'. I repeat, that's the only way 'money is ever made'.
They were the ones who jammed their oar into that simple mechanism.
And now for something that gets really silly
Mortgages. The method for obtaining the cash amount is the same as described above. But there is more to mortgages that meet the eye. (More, over and above, straight loans).
Here a property, in the form of a dwelling, is being transferred from one owner to another (actually one keeper to another, not owner, but that's another subject).
Now, it is illegal to mortgage a property you don't own. The property is considered to be the security on the loan. How can you be providing 'security' when you don't - at that time - actually own the thing?
And, secondly, it is illegal to transfer a property/dwelling that has not yet been paid for.
So ... what does this mean? You can't establish a loan, because you don't have any security to offer. Therefore you can't pay for it, because you can't get the loan money. (Err ... no. You can't offer you current home as security, because you are probably in the process of selling it!) And, since you can't pay for it, the Seller can't transfer it into your name.
But ... on the other hand ... people can and do establish mortgages, do buy homes, and do move house.
How is this done?
Well ... it happens by 'magic'. The Bank/Building Society uses 'magic'.
Not really paranormal 'magic', of course ... more akin to fraud, in actual fact.
John Dempsey, of Sovereign Trust, explains in absolute detail how the Magic Bank operates.
(Sovereign Trust, btw, don't employ any form of magic/fraud. They do it honestly, openly, candidly, and all above board)
Veronica: of the Chapman family
(January, 2009)
Source http://www.fmotl.com/LoansScam.htm
Edited by retrorider on Sunday 19th October 11:08
retrorider said:
turbobloke said:
Foppo said:
How much private money is in savings doing nothing?
Do banks not use deposits to lend to people and businesses?(Based on the work of Robert-Arthur: Menard, Mary-Elizabeth: Croft and (to some extent Winston Shrout and Irene-Maus: Gravenhorst), and John R. Dempsey of Sovereign Trust. I've just tried to reduce it to absolute fundamentals)
Let's imagine a bank that is starting off from scratch and is able to function. Scratch Bank lends £100 to Mr. Parker. It does this by crediting Mr. Parker's deposit account at Scratch Bank with £100. The bank must now immediately figure out how to meet two new liabilities, its reserve requirement and its capital requirement.
To raise the £10 of required capital, Scratch Bank will have to sell shares, raise equity-like debt or retain earnings. Since Scratch Bank just got started, the only way to create immediate earnings would be to charge a ten percent origination fee to Mr. Parker. This option isn't really as outlandish as it sounds (although 10 percent is too high). Lots of loans come with versions of origination fees that can go to help banks settle their capital requirements. A £10 fee that is kept as retained earnings would completely satisfy the capital requirement.
This is actually quite extraordinary. The bank is meeting its capital requirement by discounting a deposit that it created out of its own loan. Which is to say, it is meeting the capital requirement with nothing other than its own money creation power. This makes sense because the effect of it is to reduce the liability of the bank without reducing its asset. What it really does is allow the bank to have an asset that is greater than the deposit liability it created.
Note that the way this would be done, in most circumstances, would be to net the £10 fee directly out of the £100. So the actual deposit would be just £90. The bank's reserve requirement would decrease by £1 because of this accounting. Which means that the £100 loan really creates £119 of liabilities for the bank: a £9 reserve requirement plus a £10 capital requirement.
How can the bank meet the requirement for £9 of reserves? It could attract a new customer, let's call him Mr. Christie, who would deposit at least £10. This would create a liability for the bank of £10 as well as a cash balance (an asset) of £10. The bank would need to use £1 of this as a reserve for Mr. Christie's account and could use the rest as the reserve for Mr. Parker's account. (There's no capital requirement for a cash asset, so the reserve requirement is the only one that applies.) The bank could also borrow the reserves from another bank...etc.
There are no labels in the moneymix from which funds are returned, and an account holder retains the right to have their money repaid on demand subject to restrictions imposed by the terms and conditions of the account. In the run on NR a local customer made headlines after demanding over £1m in cash on the spot, this was refused. They got the money but not immediately on demand.
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