Brexit and savers interest rates
Discussion
fblm said:
Why not? I'd suggest recession, unemployment and deflation are considerably worse than some very marginally negative real rates. The only losers in a world of marginally negative real rates are those with cash savings that significantly exceed the value of all their other assets. Most of those complaining usually forget their other assets.
For many low and middle income people cash savings are their only realisable asset. The value of their home may have been inflated by current policies but that is most likely to be of more interest to their descendants. Paper wealth is only real wealth if it can be realistically realised. Another example of negative social consequences is the effect on smaller charities who typically don't borrow but prudently hold significant cash reserves. Hence why I said it is not desirable socially to have negative real interest rates.In terms of the economical aspects can you seriously look around the world and say the west is recovering amazingly well thanks to the near zero interest rates?. I suspect you cannot, it was an emergency measure that now apparently needs to stay the new norm otherwise the economy will collapse.
It is not something one central bank can get out of in isolation either. I read an Economist article the other day that said the main reason the Fed had to stop its planned rise in interest rates was because, as the only central bank doing so, it would cause massive capital inflows and a rising dollar.
Deflation is also a spectre raised to scare us all (often by Economists with a vested interest in low interest rates). We haven't seen much deflation in actual fact since 2008 and most we have seen is of the more benign kind caused by falling commodity prices. It is also a strange deflationary world in which house prices rise by 10% per annum.
No I stand by my statement that the policy response we have seen may have suited banks but has exacerbated structural imbalances, has warped individual decision making, and will not create a lasting recovery.
To get out of this hole however will take coordinated action by the central banks.
Edited by JagLover on Monday 23 May 18:42
Murph7355 said:
crankedup said:
...
What happens o this situation post our exit of the EU
It gets better as it's a well known FACT that anyone over 60 will be euthanised immediately following a Brexit vote.What happens o this situation post our exit of the EU
Derek Smith said:
...
So the odds seem to be that there will be some fluctuation in the short term.
No sSo the odds seem to be that there will be some fluctuation in the short term.
t Derek. You should have been a trader 
It has always been thus, and will always be thus.
crankedup said:
Clapham responded to one of my previous innocent posts regarding small towns. He said that my home town is vile with vile people living in the town. He went on with various other insults, fair enough to have an opinion but when he couldn't respond to my pointing out several National ratings which were all highly positive to the town. Increasing numbers of International visitors, voted in the top twenty of best small towns, our beautiful Cathedral and Gardens, Medival Grid in the centre of town and theatres, restaurants, clubs it was obvious his post was no more than an unintelligent non researched off the cuff insult.
Personally I have a pride in where I live and do not take unfounded insult to it and its people, including me, lightly. Taking all this into consideration you may understand my short shift reply to yet another of his lightweight idiotic replies to my question.
I thought you were approaching your twilight years cranky...you should be above such things by now, surely? If you love the place you live in, who cares if someone else thinks it's a sPersonally I have a pride in where I live and do not take unfounded insult to it and its people, including me, lightly. Taking all this into consideration you may understand my short shift reply to yet another of his lightweight idiotic replies to my question.
t hole? The world's a large place. You can always find someone who thinks anywhere is a st hole.Your right though, somebody somewhere will always be ready to post adverse comment like claphams. I will resist posting my thoughts regarding Clapham !
JagLover said:
For many low and middle income people cash savings are their only realisable asset. The value of their home may have been inflated by current policies but that is most likely to be of more interest to their descendants. Paper wealth is only real wealth if it can be realistically realised. Another example of negative social consequences is the effect on smaller charities who typically don't borrow but prudently hold significant cash reserves. Hence why I said it is not desirable socially to have negative real interest rates.
In terms of the economical aspects can you seriously look around the world and say the west is recovering amazingly well thanks to the near zero interest rates?. I suspect you cannot, it was an emergency measure that now apparently needs to stay the new norm otherwise the economy will collapse.
It is not something one central bank can get out of in isolation either. I read an Economist article the other day that said the main reason the Fed had to stop its planned rise in interest rates was because, as the only central bank doing so, it would cause massive capital inflows and a rising dollar.
Deflation is also a spectre raised to scare us all (often by Economists with a vested interest in low interest rates). We haven't seen much deflation in actual fact since 2008 and most we have seen is of the more benign kind caused by falling commodity prices. It is also a strange deflationary world in which house prices rise by 10% per annum.
No I stand by my statement that the policy response we have seen may have suited banks but has exacerbated structural imbalances, has warped individual decision making, and will not create a lasting recovery.
To get out of this hole however will take coordinated action by the central banks.
I agree low to middle income people lose due to negative real rates. But let's be honest, it's tiny, far less than what they save on their mortgage. On the other hand those 'emergency measures' have most likely also kept a good number of them in jobs that other wise would have gone to the wall if equity markets and housing had been allowed to collapse. It's all very well pointing out the tepid global recovery compared to previous recessions but we piled into this one already borrowed up to the eyeballs, compared to other balancesheet recessions like the great depression or Japans ongoing mailaise we have actually recovered well. I can't count the number of times I have read that zirp/qe isn't working we need to hike rates etc it's arse about face logic... what you're not considering is how bad the recovery would have been without these measures. Personally I'd love higher rates, and a collapse in equity, house and classic car markets but I'll wager the vast majority wouldn't enjoy the fewer jobs and wage stagnation that inevitably comes with it...In terms of the economical aspects can you seriously look around the world and say the west is recovering amazingly well thanks to the near zero interest rates?. I suspect you cannot, it was an emergency measure that now apparently needs to stay the new norm otherwise the economy will collapse.
It is not something one central bank can get out of in isolation either. I read an Economist article the other day that said the main reason the Fed had to stop its planned rise in interest rates was because, as the only central bank doing so, it would cause massive capital inflows and a rising dollar.
Deflation is also a spectre raised to scare us all (often by Economists with a vested interest in low interest rates). We haven't seen much deflation in actual fact since 2008 and most we have seen is of the more benign kind caused by falling commodity prices. It is also a strange deflationary world in which house prices rise by 10% per annum.
No I stand by my statement that the policy response we have seen may have suited banks but has exacerbated structural imbalances, has warped individual decision making, and will not create a lasting recovery.
To get out of this hole however will take coordinated action by the central banks.
Edited by JagLover on Monday 23 May 18:42
ETA One other point - deflation of course we haven't had deflation. Since 2008 the US has printed what $2-3 trillion, the UK $500bn, ECB $1trillion, Japan go knows how many trillion and there's virtually no inflation anywhere. You scoff at the thought of deflation yet how can they get away with this if there wouldn't have otherwise been deflation?
QE and ZIRP is far from perfect. I agree it has caused imbalances that will likely correct at some point but frankly all other courses of action would have lead to considerably worse outcomes for most people. (ps why do you think banks like qe and zirp? qe kills their net interest margin (NIM))
Edited by anonymous-user on Monday 23 May 19:52
crankedup said:
Fair enough you did say you lived in the town or the neRby village of Culford. What you did not do was respond in any meaningful way to substantiate your comments which I found to be very derogatory and certainly not reflecting the common view of the town You simply said agree to disagree which is a cop out. I posted several comments as I have mentioned, denigrating towns might be OK but without substance it is simply bad form. Bury St Edmunds is certainly not a vile town nor or its folk vile.
I was with you right up to the point where you said "Bury St Edmunds"ATG said:
crankedup said:
Fair enough you did say you lived in the town or the neRby village of Culford. What you did not do was respond in any meaningful way to substantiate your comments which I found to be very derogatory and certainly not reflecting the common view of the town You simply said agree to disagree which is a cop out. I posted several comments as I have mentioned, denigrating towns might be OK but without substance it is simply bad form. Bury St Edmunds is certainly not a vile town nor or its folk vile.
I was with you right up to the point where you said "Bury St Edmunds"
fblm said:
And here's me thinking a post should make at least some sense without having to cross reference with a previous irrelevant digression! So you're talking about "base rates" right?
The thread title might have given you a clue.fblm said:
The base rate has not moved a single basis point since 2009. Why would the BoE hike base rates if you leave? Do you or the many experts you claim to be summarising predict higher employment, wages, stock market and housing if you vote to leave?
As I say, the OP's question was the one I was answering, and the point I put to the person on the information desk. I would suggest there are more reasons that those you quoted for a base rate hike. Indeed, there is some suggestion of pressures on the base rate and early 2017 has been mentioned for a modest rise. That's if things remain as they are. If we vote to leave then who knows what the fears it might generate?
Derek Smith said:
Whilst no one can say for sure, and informed opinion is not guesswork.
fblm said:
Er...
'Whilst no one can say for sure, informed opinion is not guesswork.' I am surprised you didn't guess that. * * *
It is not empty rhetoric to say that leaving is a leap into the dark. No one, not even you I'd suggest, can predict the full effects on me and mine. I was pleased to find someone who admitted this but was willing to express an informed opinion.
Derek Smith said:
No one, not even you I'd suggest, can predict the full effects on me and mine.
That's why it's called macro economics I guess. It's intriguing how much weight you place on the "expert", "informed" opinion of a random remain campaigner despite the fact he was unable to answer your question. He palmed you off with the spectacularly vapid 'no one knows but most experts agree a period of volatility followed by higher rates at some point in the future'! Wow. OK Ari said:
Oh goody! Perhaps you could point us to these 4% interest bearing bank and building society accounts? 
And me please, I would be very interested as I cannot find them anywhere. Best I can currently find is £20,000 in a Santander 123 account at 3.0% and the rest I have in a Virgin Money instant access Savings account at 1.31%. I could get 1.45% with the RFC bank but that is basically owned by Renault and if they go under is not covered by the UK governments £75,000 scheme. Would you rely on the French government to give you back your money if the bank went under?Nobody cares about savers, I am surprised the government haven't come up with an anti money hording law that makes it illegal to save more than £5000. House prices is all they care about, they want everyone to take on as much debt as is possible to keep house prices going up for ever and ever.
4%
BOE and their cheap money, banks don't need deposits, for now that is.
Credit crunch days I remember in 2007 sticking a wad in with the bank @ 7.25% fixed for 3 months.
Just didn't seem right (as it wasn't as we all know), just as it isn't right now that rates are so low. A Brexit will rise rates a lot faster that remaining.
BOE and their cheap money, banks don't need deposits, for now that is.Credit crunch days I remember in 2007 sticking a wad in with the bank @ 7.25% fixed for 3 months.
Just didn't seem right (as it wasn't as we all know), just as it isn't right now that rates are so low. A Brexit will rise rates a lot faster that remaining.
Edited by V8A*ndy on Tuesday 24th May 11:56
Derek Smith said:
...
It is not empty rhetoric to say that leaving is a leap into the dark. No one, not even you I'd suggest, can predict the full effects on me and mine. I was pleased to find someone who admitted this but was willing to express an informed opinion.
The thing is Derek, absolutely no one can predict the full effects on you and yours if you stay in either. No one. If you think you or anyone else can, you have been sold a dummy.It is not empty rhetoric to say that leaving is a leap into the dark. No one, not even you I'd suggest, can predict the full effects on me and mine. I was pleased to find someone who admitted this but was willing to express an informed opinion.
The thing for me on this vote is that I have a greater degree of control over those who can impact me and mine by not having an extra layer of faceless bureaucrats in the way. Who use undemocratic processes to change the rules that impact me and mine and who also are looking out for 27 other national interests. Or more accurately, not looking after any of them but themselves.
"Remain" is not "keep the status quo". It's as much leaping into the unknown as leaving.
Or is it...
One thing we have seen very, very clearly over the last 40yrs is that the EU elite are not above smoke and mirrors to get their own way, and they will do almost anything to avoid nations leaving for fear of the dominos coming crashing down ('75 referendum that many still think was only about a trading block; re-runs of votes that didn't go their way). They have eroded every member nation's sovereign powers, have allowed several nations to be brought to their knees economically...and they are intent on more of the same.
stongle said:
fblm said:
V8A*ndy said:
A Brexit will rise rates a lot faster that remaining.
Why?BTC has moved up and the things that made it do that, fear of devaluation of fiat currencies, will continue to drive that move.
Unless some economy has a currency that isn't being actively devalued where we can all run to for safety?
Dave
Am I the only one who thinks that actually expecting a significant return from no risk savings is a bit like wanting to have your cake and eat it?
Actually the situation we have now is how it should be, if you want capital growth then you need to put your money where you mouth is an take a risk.
Surely that is the natural order of things its wrong to expect to be able to put money into a bank and be given a great return, for no risk.
Your reward for putting money into a UK bank deposit account is security, not return.
Actually the situation we have now is how it should be, if you want capital growth then you need to put your money where you mouth is an take a risk.
Surely that is the natural order of things its wrong to expect to be able to put money into a bank and be given a great return, for no risk.
Your reward for putting money into a UK bank deposit account is security, not return.
nikaiyo2 said:
Am I the only one who thinks that actually expecting a significant return from no risk savings is a bit like wanting to have your cake and eat it?
Actually the situation we have now is how it should be, if you want capital growth then you need to put your money where you mouth is an take a risk.
Surely that is the natural order of things its wrong to expect to be able to put money into a bank and be given a great return, for no risk.
Your reward for putting money into a UK bank deposit account is security, not return.
Your sort of logic isn't welcome here...Actually the situation we have now is how it should be, if you want capital growth then you need to put your money where you mouth is an take a risk.
Surely that is the natural order of things its wrong to expect to be able to put money into a bank and be given a great return, for no risk.
Your reward for putting money into a UK bank deposit account is security, not return.
More seriously as you say, low returns are a result of nil inflation and nil risk.
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