Reply to: The left-field threat to Europe ...

[BrilloPad]

Hungary faces ruin as EU loses patience - Telegraph

[TimberWolf]

Wow, I've just checked and he is not just KBE, but GBE - Knight Grand Cross - highest rank in the order!

Wow, a ranker of the highest order!

I guess that and five million quid in a pension pot would do the trick.

Bank of England, established 27 July 1694.

Current position according to Wikipedia:

Reserves

£7,334,000,000 (in gold)
£229,599,000,000 (total assets)

Source: Bank of England - Wikipedia, the free encyclopedia

So, the real deal (gold) is around 3% of "assets" - 230 bln of them, amazing growth from just 97 bln of "assets" in 2008 (PDF) and 77 bln in 2007 (PDF), trippling assets in just 4 years, what a good banker he is!

Quarter of a quintillion. Easily enough to buy a loaf of bread.

[AtW]

Merv gets showered with honours and money and perhaps they expect private sector wages to rise faster

Wow, I've just checked and he is not just KBE, but GBE - Knight Grand Cross - highest rank in the order!

I guess that and five million quid in a pension pot would do the trick.

Bank of England, established 27 July 1694.

Current position according to Wikipedia:

Reserves

£7,334,000,000 (in gold)
£229,599,000,000 (total assets)

Source: Bank of England - Wikipedia, the free encyclopedia

So, the real deal (gold) is around 3% of "assets" - 230 bln of them, amazing growth from just 97 bln of "assets" in 2008 (PDF) and 77 bln in 2007 (PDF), trippling assets in just 4 years, what a good banker he is!

[TimberWolf]

...and index linked pay raises for public sector will increase costs even further.

Unless they lie through their teeth about inflation, perish the thought. Maybe that's the reason Merv gets showered with honours and money and perhaps they expect private sector wages to rise faster than the public sector at some stage as otherwise they are screwed.

[BrilloPad]

FFS we're talking macro-economics and fiscal and monetary policy here, not how Mr. Bloggs is going to pay his mortgage.
Personally I think fook Mr. Bloggs for borrowing too much.

You idiots need to do some reading of economic history before exposing your ignorance on here.
Inflation is the UK's official government policy, behind the scenes,, as has happened before.

Go and do your own fooking research and education, I don't have time to drum it into your thick bonces.

So we should all go out and spend/spend/spend and borrow/borrow/borrow safe in the knowledge that the government will always come to our rescue?

[BlasterBates]

FFS we're talking macro-economics and fiscal and monetary policy here, not how Mr. Bloggs is going to pay his mortgage.
Personally I think fook Mr. Bloggs for borrowing too much.

You idiots need to do some reading of economic history before exposing your ignorance on here.
Inflation is the UK's official government policy, behind the scenes,, as has happened before.

Go and do your own fooking research and education, I don't have time to drum it into your thick bonces.

Yes I read up on Harold Wilson´s inflationary strategy. We definitely more of that, it was incredibly successful wasn´t it.

[doodab]

So if you have savings of £10k and debts of £10k, both at 4% fixed and everything goes up in price 10-fold but your wages remain the same, then ther value of the savings is decreased, and the value of debt remains the same, so you're worse off than if you had no debts and no savings?

The value of both sums of money is always equal as long as you measure them in the same way.

[doodab]

But it's value is it's purchasing power, not your ability to acquire it. Otherwise, if your salary doubles, the value of your savings halve.

Exactly. The value of money lies in what you can exchange it for. In most cases the thing you exchange an outstanding debt for is your income, hence it makes sense to measure the value of a debt one owes in terms of ones income.

Measured in that way the value of your savings do indeed halve. For example, someone who gives you £10,000 is only going to get half as much of your time as they would have before.

Like I said, it's relative. You seem to think "purchasing power" is the one true unit of value, I would contend that a unit of my time is an equally good measure.

[AtW]

So if you have savings of £10k and debts of £10k, both at 4% fixed and everything goes up in price 10-fold but your wages remain the same, then ther value of the savings is decreased, and the value of debt remains the same, so you're worse off than if you had no debts and no savings?

You are worse off because savings gone down in value, debt is still there to repay so net effect is worse than just having savings go down in value but no debts (my case).

[Old Greg]

Indeed.

But with the debt it's the other way around - unless your salary grows (inflates) your debt isn't getting any cheaper to pay off when other prices go up.

The big question is how long normal inflation can go up without wage inflation taking place - savings rates in this country weren't very high in the boom days.

OK - but we're talking about value, not ability to pay off.

So if you have savings of £10k and debts of £10k, both at 4% fixed and everything goes up in price 10-fold but your wages remain the same, then ther value of the savings is decreased, and the value of debt remains the same, so you're worse off than if you had no debts and no savings?

5 o'clock. It's been fun!

[AtW]

But it's value is it's purchasing power, not your ability to acquire it.

Indeed.

But with the debt it's the other way around - unless your salary grows (inflates) your debt isn't getting any cheaper to pay off when other prices go up.

The big question is how long normal inflation can go up without wage inflation taking place - savings rates in this country weren't very high in the boom days.

[Old Greg]

Relative to the value of your labour, no. You would have to do exactly the same amount of work to earn £10,000 as you would before.

But it's value is it's purchasing power, not your ability to acquire it. Otherwise, if your salary doubles, the value of your savings halve.

[doodab]

Excellent.

So, if everything gose up in price 10 fold, but my wages stay the same, and my savings of £10,000 stay the same at a fixed rate interest of 4% p.a., have my savings been eroded in value?

Relative to the value of your labour, no. You would have to do exactly the same amount of work to earn £10,000 as you would before.

[AtW]

You mean if you buy anything?

You have to buy something - council tax for example, living without electricity and food isn't easy either.

Would you care to lay out the circumstances in which your savings are not eroded in value as you've laid out the circumstances in which they are?

Savings are not eroded in value when inflation (increase in prices - saying this especially to Freamon) is less than net (after tax) interest rate paid on them. That was the case few years ago when inflation was 2% and interest rates were 5%.

Right now inflation is easy over 5% and interest on savings is near 0%.

Debt does not get cheaper however because it becomes harder to service it due to higher costs of essentials, so proportion of money going towards paying off existing debt is higher, painful cut backs just to afford mortgage have to happen - all that makes it feel that debt got more expensive even if in nominal terms it's the same amount.

The only debt that got cheaper to service are mortgages linked to BoE rate. It's false economy though because of much higher inflation that more than exceeds savings in rate paid.

[Old Greg]

Yes, if you buy those things that gone up in price.

You mean if you buy anything?

Would you care to lay out the circumstances in which your savings are not eroded in value as you've laid out the circumstances in which they are?