Originally posted by AtW
View Post
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Reply to: Massive falls in inflation in June
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on "Massive falls in inflation in June"
Collapse
-
Originally posted by Doggy Styles View PostSo, you blaming the BoE for not taking unilateral action on base rates to cool house prices, when the government is telling it to do something else, is stupid.
Leave a comment:
-
Originally posted by AtW View PostPolicy is to have low inflation, it has not changed for a long time - interest rates are a macroeconomic tool designed to deal with this problem, since BoE is supposedly independent it is not the Govt that should be responsible in any way for setting rates.
The bank is supposedly independent.
BoE is responsible for interest rate policy decisions that should keep inflation low (under 2%).
The reality of course is that BoE's "independence" is a sham.
The BoE is not independent. It is not a sham, because it never has been and it doesn't pretend to be.
So, you blaming the BoE for not taking unilateral action on base rates to cool house prices, when the government is telling it to do something else, is stupid.
Leave a comment:
-
Originally posted by OwlHoot View PostHow do you know?
So for all we know the Government may be secretly quite comfortable with slightly higher inflation for now, while publicly saying they are striving to reduce it.
What's political is that raising rates would do to house bubble what should have happened long time ago - politically it is a very difficult thing to do, so BoE was forced to get rates to the ground, something that is a clear proof that they are NOT independent.
Leave a comment:
-
Originally posted by AtW View Post
Policy is to have low inflation
That may be the stated policy, and may have been true until recently, but the overriding priority must be to get on top of the deficit and debt.
So for all we know the Government may be secretly quite comfortable with slightly higher inflation for now, while publicly saying they are striving to reduce it.
Leave a comment:
-
1. We elect a government to decide fiscal policy.
2. The bank does what it is told according to that policy.
3. Ergo, any arguments you have about interest rates, take them to the government, not the BoE.
The reality of course is that BoE's "independence" is a sham.
Leave a comment:
-
Alexei, you still do not understand how things work in a democracy.
1. We elect a government to decide fiscal policy.
2. The bank does what it is told according to that policy.
3. Ergo, any arguments you have about interest rates, take them to the government, not the BoE.
I hope this helps.
Leave a comment:
-
Originally posted by AtW View PostIt's not BoEs job to do so - they effectively acted out of their own remit and should be all fired, possibly jailed for active disregard for their own mission - tackling inflation.
Frankly they should have been in jail long time ago for ignoring house pricing boom - excluding mortgages from inflation was totally wrong.
They were a danger to economy and rates set by BoE had direct effect on lending - they totally failed to control real inflation that should have included house prices into account.
It was obvious that allowing house prices to go so much up would create a bubble - it's not first time it happened ffs, many times already in the last 50 years alone.
If BoE was truly independent as Govt says then it would not have mattered - clearly they are not, I never "bought" this suggestion that they were but last few years clearly demonstrated they were not independent in any shape or form.
BoE is responsible by not increasing rates to deal with house pricing bubble - rates should have been jacked up as high as necessary to ensure house prices don't go far away from common sense, they failed to do that saying it's not their job, however they dropped rates to near zero in order to keep house pricing bubble high up ffs.
Leave a comment:
-
Originally posted by Doggy Styles View PostThey dropped them that low when the economy went pear-shaped, in a change of government policy, in order to encourage spending rather than risk the economic meltdown that was feared if rates went up.
Frankly they should have been in jail long time ago for ignoring house pricing boom - excluding mortgages from inflation was totally wrong.
House prices weren't part of their remit, so they couldn't jack them up.
Look, economics is not an exact science, except in hindsight, and nobody has all the answers so it is pointless talking about what the MPC should and should not have chosen to do at various times.
The MPC had their terms of reference and they stuck to them until the government said otherwise. For better or for worse, we elect a goverment to form policy on such things, we do not elect the BoE.
The only cast-iron given is that you should not spend more than you can afford to, and the last government cause most of our problems by doing that in spades. It doesn't need an economist to tell us that.
Leave a comment:
-
Originally posted by AtW View PostThey had no right to drop rates to nearly zero - effectively negative rates, inflation technically is around 3%, if anything they should have increased rates, but they dropped them because Govt wanted so - so much for independence.
Originally posted by AtW View PostIf they did jack up rates then house pricing bubble would have burst long time ago and recovery would have happened by now
Look, economics is not an exact science, except in hindsight, and nobody has all the answers so it is pointless talking about what the MPC should and should not have chosen to do at various times.
The MPC had their terms of reference and they stuck to them until the government said otherwise. For better or for worse, we elect a goverment to form policy on such things, we do not elect the BoE.
The only cast-iron given is that you should not spend more than you can afford to, and the last government cause most of our problems by doing that in spades. It doesn't need an economist to tell us that.
Leave a comment:
-
Originally posted by Doggy Styles View Post9 members, of which 4 are appointed, I make that 44% I calculate they only need to convince one.
The situation is even worse than I thought!
Now, from what you have said about government controlling the MPC, don't you agree that you blaming the BoE itself is harsh?
When the government set up the MPC, they gave it the remit to use the base rate to keep inflation within the window of 2% to 3%, which they did pretty well until Gordon's economic house of cards collapsed a couple of years ago.
If they did jack up rates then house pricing bubble would have burst long time ago and recovery would have happened by now, something that ain't going to happen because finally prices are going to start falling I and reckon we'll see double dip.
Naturally Labour will blame it on Cons...
Leave a comment:
-
Originally posted by AtW View PostSo much for independence when 30% of votes directly appointed by the Govt...
Originally posted by AtW View Post...they only need to convince 3 out of 9 to get Govts way.
Now, from what you have said about government controlling the MPC, don't you agree that you blaming the BoE itself is harsh?
When the government set up the MPC, they gave it the remit to use the base rate to keep inflation within the window of 2% to 3%, which they did pretty well until Gordon's economic house of cards collapsed a couple of years ago.
Whether their remit was right or not is another matter, but few moaned about it until they realised that house prices had got a bit high.
Leave a comment:
-
Originally posted by Doggy Styles View PostCan they? I thought that was the MPC's responsibility, which includes non-bank members.
"Interest rates are set by the Bank’s Monetary Policy Committee. The MPC sets an interest rate it judges will enable the inflation target to be met. The Bank's Monetary Policy Committee (MPC) is made up of nine members – the Governor, the two Deputy Governors, the Bank's Chief Economist, the Executive Director for Markets and four external members appointed directly by the Chancellor. The appointment of external members is designed to ensure that the MPC benefits from thinking and expertise in addition to that gained inside the Bank of England."
So much for independence when 30% of votes directly appointed by the Govt and they only need to convince 3 out of 9 to get Govts way.
Fighting inflation is primary job of BoE with primary tool being rates. They totally abused their position by dropping them to effective negative rates.
It was not independent from day 1 - this only became obvious though when they had to drop rates when Govt needed it.
Banks now pay 0.05% on savings accounts, yet they still lend at 5-7% (or more), there was never a time when they had such massive margins.
Leave a comment:
-
Originally posted by doodab View PostThey could raise interest rates.Last edited by Doggy Styles; 13 July 2010, 14:18.
Leave a comment:
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: