What no one is talking about amongst all this inflation

35 comments

1. In fairness the base rate in 1980 was between 14-17%, it’s been <1% since 2009.

2. Nobody talks about Doctor David Kelly anymore either.

   That’s because the people controlling the media at the top are as crooked as they come. And yes, I’ve been asking myself the same question as yourself. I’ve barely ever heard it bought up.

   I’m sometimes torn over which is the worst out of our government and our mainstream media. Neither have the the countries best interest at heart (de dum)

   Bottom line is, we’ve all been taken for a ride.

3. Banks don’t value having your savings at 3-4% higher than the base rate now basically. It will filter though somewhat eventually, we are noticing them slowly creeping up, and you can find rates higher than the base interest rate but i don’t think we’ll see 5% anytime soon.

4. First direct are offering 3.5%

5. Almost as if banks don’t need your deposits in order to operate isn’t it.

6. I have zero interest in savings rates as I am not in a position to save.

7. That’s because banks have no need of real savings. Savings are a nuisance to banks and they’d rather not pay you anything.

   They will only start paying you if you have an alternative to go to that isn’t a bank or bank like operation.

   That alternative used to be “National Savings”. So much so that the banks used to complain how high National Savings interest rates were.

8. Banks don’t offer those rates anymore because they’re no longer allowed to lend out your deposits on dodgy mortgages. On the whole that’s a good thing, because it means you’re not implicitly taking on part of the risk in those investments, but it means savings accounts are now less profitable for the bank.

   If you want to pursue better returns you still can, and in fact doing so is much easier and more user-friendly than it was 15 years ago. The choice of whether to take on additional risk is now in your hands and you’re free to make an informed decision.

9. If people could actually afford to save money… there wouldn’t really be a problem. Thats just another scheme to feed money UP to the already wealthy elites and middle class twats that caused all the problems.

10. The reason is because markets are flooded with capital. There’s so much equity and debt available that it has inflated asset prices and kept yields low.

    Banks themselves don’t really lend money anymore. They are mostly servicing providers. These days money is coming from institutional investors who have lots of money to deploy but are struggling to make a return that can match their long term liabilities (mostly that’s paying out pension incomes).

11. Banks don’t need your money, they just print more.
    Reference: William Butcher you cnut

12. We also have an overinflated housing market and no public assets to sell off, apart from the NHS… So we’re fkd or really fkd

13. As a youngen somehow I never noticed this.

    It really is a shitshow isn’t it?

14. Normally high inflation is from an economy running hot with loads of demand and growth.

    This is the first time we’ve ever had supply side inflation and normal tools like interest rates may not work. Everyone is flying blind to be honest and the only real solution is realpolitik and investment to rapidly shift supply chains away from russia and china.

    I doubt we’ll get interest rates above inflation like pre 2008 times due to this.

15. All the quantitative easing now goes into Banks for them to invest. They hold such enormous cash reserves, given to them by government after 2008, that they have zero need of public money, we are largely irrelevant to the running of the banks now given the enormous reserves they have. Money isn’t worth anything to them anymore, they have it all.

16. It sucks but it’s by design I think.

    If you devalue the money in people’s savings, they need to work for longer. This keeps the fiat ponzi scheme going for longer.

    It also helps move money from the risk averse (typically less wealthy) to the wealthier, as the wealthier hold assets like stocks and real estate, that over a longer period of time will appreciate due to inflation (albeit with short term fluctuations).

    It also helps to devalue the govt debt which is a horrendously large amount. But this can only work in the short term or if you have globalisation & tech to help make things cheaper, but globalisation is now backfiring, whilst tech predominately just benefits the shareholders, and so we’re end up in the mess we are in.

    It’s a travesty that our mainstream media never covers topics like this, or how our system of govt hasn’t changed in 100+ years, despite every other successful product or technology being built on a fast, iterative, process. The fact we are sending 1 person from each region to a building to discuss topics, and 1 of those people then become a ministerial department head without knowing much about it, is just woeful. Rant over lol.

17. I’m not blaming you OP, but the general standard of economics education is terrible.

    The Bank of England interest rate is determined monthly by the Monetary Policy Committee, and it is this announcement that you often hear reported in the news.

    This rate is the cost to banks to borrow money from the Bank of England. The MPC is tasked with keeping inflation at or around the target rate of 2%, with the mechanism working: as interest rates go up, borrowing becomes more expensive, saving becomes more attractive, therefore reducing demand, surpressing prices and damping inflation. This only really works when the cause of inflation is demand side – what we’re seeing at the moment (outside of housing) is not an excess of demand in comparison to supply, but an increase in the fundamental costs of production for a wide range of products, and products that demand for won’t reduce as people’s incomes tighten.

    Using interest rates to control “inflation” (as what is described as inflation in the media isn’t really exactly what economist would consider inflation) doesn’t work when the reasons for the prices increases are that supplies are reducing (global factors), shipping has become incredibly expensive (global factors also), we’ve put huge barriers to trade with europe (local factor) and we have a sleep-walking zombie government (local factor).

    The global factors contribute to why prices are rising eveywhere currently, the local factors are why the effects are so severe in the UK currently.

18. [deleted]

19. The 2008 crash robbed us of many things which we used to take for granted. Like every supposed crisis the 2008 crash was used an excuse by the rich to consolidate their power and weaken the living standards of the working class.

20. It’s amazing to me that society once had the empowerment to come up with concepts like retirement and social welfare for its people.

    Now we have £10 fines for missing appointments as ‘agile social reform’

    Fuck this timeline. How do we get back to when people cared.

21. 1 in 10 people have no savings. A third have under £600 and 41% don’t have enough to see them through a month of no income. The average amount in saving is under £7k. Millennials, who can be over 40 now have about £4.5k on average.

    [Source for all of the above.](https://www.finder.com/uk/saving-statistics)

    Putting the interest rate to 20% isn’t going to make a difference to a person with £4.5k. It’s at best an extra £900 a year that will get taxed and won’t cover 3 months energy bills. Using interest rates to control inflation after a decade of stagnant wages when nobody has any savings is not going to work. Inflation now isn’t driven by consumer spending. People aren’t going to think something is too expensive so they’ll put the money in their savings account and get a good return because they don’t have enough money to pay their bills as they are.

    We need modern solutions for this current problem and relying on the old thinking of using interest rates to control inflation after a decade of austerity isn’t going to work.

    The scandal everyone should be talking about is how so many people haven’t had a real terms pay rise since 2008.

22. Am I right in saying if the interest rate on your savings account is lower than inflation. Then your money becomes even less valuable?

23. See you at the picket lines this Christmas.

24. The interesting thing is that the governor said he couldn’t do anything about inflation a month or so ago and now no one is questioning the cunt when he says he has to raise interest rates.

25. The trick is to not having any savings then your cash won’t devalue

26. This is the Conservative’s Summer of Discontent. Just as Conservatives used the “Winter of Discontent” to bash Labour for at least two years, Labour needs to pick this up.

27. I lost track of theestablishment paedo enquiry, maybe 5 years ago Butler Schloss was it head it, then resigned before it got started, before or after that a New Zealand judge was going to head it.
    Then it all seemed to go quiet.
    What happened?

28. In the mid-2000s the interest rate at the building society was over 10%; my husband figured that when he could get £40,000 he could live of the interest.

    Boy, is that dream dead.

29. I remember Irish Life at one time (’83/’84?) giving 17%, even the vanilla GPO Savings Account was in double digits.

    The the banks realised they could earn far more by selling credit, so out they trotted our new, “just sign here” flexible friends … and away we go ….

30. Even under Thatcher, if our current economy took affect overnight it would escalate to riots.

    Boil a frog. As long as it only gets gradually worse, it’ll sit there until it’s dead.

    I don’t think the general public will realise how bad things *really* are compared to Thatcher until it’s far too late and people are dying (quicker than they already are under austerity)

31. Just want to be able to afford a house, nothing fancy, just something so I can bring up a family, 42 now and it looks like it will never happen.

32. Warren Buffet said it well, something like the 99% are in a war with the 1% and the 99% don’t even realise they are in one. They are trying to turn the general public into serfs again so we have no power and they can do what they want. It is going to happen unless they are BIG changes but everyone so tired from being overworked it might not happen.

33. The inflation we are experiencing is the result of the massive loans taken out by the Conservative governments to pay cronies…I mean for emergency pandemic supplies.

34. The reason is quantitative easing (QE) – this is where central banks (such as the Bank of England in the UK and Federal Reserve in the US) “create” or “print” money out of thin air and give it to the banks to lend to us, thus boosting economic activity (for the economy to grow it needs people to keep transacting / spending money).

    The result of QE is that the supply of money has increased substantially, which means it is worth less (i.e. it has been substantially devalued because there is much more of it about – it’s the same reason mass-produced china will never be worth much in the antique world).

    In the good old days, money was backed by physical gold. The supply of gold is fixed (there is only so much of it in the world) which means the banks couldn’t just “print” more of it, so the value of money was retained (this is also why some people like Bitcoin because the number of Bitcoins is limited to 21 million or something, whereas other cryptos can keep mining more coins without any limit – but that’s a different story).

    QE is a huge ticking time bomb. The reason the banks do it is to stimulate economic activity and it effectively works in the same way as reducing base rate, so we effectively have negative interest rates at the moment and have done since 2008. Low or negative base interest rates are supposed to encourage people to spend, thus boosting the economy. But what actually happens is that most of this “printed” money filters into equities. So the stock market has been hugely inflated with all this “printed” money and as soon as the banks stop “printing” money (known as “quantitative tightening”), the stock market will probably crash and the side-effects of this will be catastrophic and much worse than 2008. So what can the central banks do? KEEP PRINTING MONEY, BOYS!

35. the banks won’t offer decent interest rates for savings until they’ve recouped all the losses from 2008.