Reminder - one of the quoted reasons for backstabbing Truss was that her slightly lower tax policies will lead to higher interest rates …
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Bank of England Base rate & other news
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Originally posted by Protagoras View Post
Reportedly, there's a greater use of fixed-term retail debt than was the case last time inflation was out of hand.
This should imply that interest rates as an inflation-reducing tool will be less effective, taking longer to impact demand. I wonder if this means that we'll see a period of prolonged higher rates than folks have been used to in the last 15 years.
There are also more homeowners with no mortgages than in the past, boomers retiring.
Interest rate harm is far more concentrated on fewer people than in the 80s which means its going to take far longer to have the desired impact.
Originally posted by Protagoras View PostIt's not just younger people with mortgages who are impacted negatively by rate rises, though. Older folks' pension funds are impacted as the asset bubbles deflate. This also works to reduce demand as folks save more / spend less to compensate. Even many with DB pension schemes have annual rises capped at 5% so won't keep up with inflation.
No idea about DB. If interest rates are going above 5% I can't see how capping at 5% will fly.
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Originally posted by JustKeepSwimming View Post
Rate rises are hurting the young disproportionately. A generation that has taken an unfair amount of tulip for the benefit of older generations. Delaying a career/house might not impact real time economic metrics, but it does impact the individual life.
VAT does not cause inflation, basically the increase is offset by reduced profit margins and/or increase economies of scale.Comment
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Originally posted by malvolio View Post
Nope, read that four times, it still makes no sense...Comment
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Originally posted by dsc View Post
Most / all VAT increase would just be pushed over to the consumer, you really think everyone would just gladly take it on the chin?
So company has a choice, cut their profit margins or lose market share. They don't get their cake and to eat it too.Comment
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Originally posted by jamesbrown View Post
Supply is not unimportant, but easy money is the elephant in the room (see worldwide prices) and UK gov't policies that ramp up demand have been at least as important in recent years. Anyway, massive crash incoming. Would've preferred a slow deflate, but a good old fashioned crash is probably in order and is already well underway elsewhere (e.g., NZ).
In 1990 average house price was 2.5x average wage (£50k house, £20k wage). Interest rates peaked at 15%, and that hurt. The usual interest of that period was not much more than it is now (today).
Today the average house costs 8x the average wage (£250k house £30k wage).
That difference is almost all down to lack of housing supply. Cheap money has been a thing since the banking crisis, house prices being daft predate that.
Build more houses....... I mean we should have built more houses for the past 30 years, but we can start now.
See You Next TuesdayComment
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So you say that av. wage in 1990 = £20K, 30 years later av. wage = £30K and that's why house prices are greater?
Wonder if people who have invested in property (their own and commercially)have been supplementing their income by pushing up house prices?
Or is the av. wage kept down by immigration but we better not mention that?
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Originally posted by Lance View Post
supply is absolutely important. House prices are too high.
In 1990 average house price was 2.5x average wage (£50k house, £20k wage). Interest rates peaked at 15%, and that hurt. The usual interest of that period was not much more than it is now (today).
Today the average house costs 8x the average wage (£250k house £30k wage).
That difference is almost all down to lack of housing supply. Cheap money has been a thing since the banking crisis, house prices being daft predate that.
Build more houses....... I mean we should have built more houses for the past 30 years, but we can start now.Comment
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Originally posted by NigelJK View PostSo you say that av. wage in 1990 = £20K, 30 years later av. wage = £30K and that's why house prices are greater?
Wonder if people who have invested in property (their own and commercially)have been supplementing their income by pushing up house prices?
Or is the av. wage kept down by immigration but we better not mention that?
I am saying lack of housing supply is why prices are so high.... DESPITE wages increasing only a small amount over the same period.See You Next TuesdayComment
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Originally posted by JustKeepSwimming View Post
So why don't Tesco just charge £2 a pint of milk? Because if they did Sainsburys would undercut them. Competition is what puts downward pressure on prices and profits.
So company has a choice, cut their profit margins or lose market share. They don't get their cake and to eat it too.Comment
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