Bank of England raises rates to 2.25%, despite likely recession

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4 minutes ago, nigelforbes said:

It doesn't have to be gilts, why must it be so? Overseas investors are able to invest the same things that UK citizens are, hedge funds, property, markets, private sector business, venture capital etc etc. 

 

I'm an overseas investor who invests globally, including in the UK. I am invested in UK property, UK income and accumulation funds and also in a UK business, anyone practically can do exactly the same.

But you claimed that raising the interest rates would encourage investment. Why would that encourage investment? To invest in the UK would cost foreign investors more, not less, if the pound rises.

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2 minutes ago, nigelforbes said:

OK, if that's what you think. I disagree, I think trickle down economics works and that giving hand outs to the lowest income group is nothing more than financial aid and nothing to do with stimulating the economy. Trickle up economics, which is what that is, doesn't create jobs or stimulate new investment, ....I think.

Unfortunately, there's plenty of history that proves you wrong, and precious little that proves you right. One of the reasons interest rates got so low is that as the wealthy acquired an increasing large portion of the economy, they accumulated more cash than they could reasonably invest. That's why countries like Germany and the US were actually able to charge negative interest rates for their bonds. In effect, investors wound up with less money than they invested. That's also why assets like unique real estate and art and such shot up in value to such extraordinary lengths. The rich have more liquidity than they can sensibly invest.

[nigelforbes]

17 minutes ago, placeholder said:

But you claimed that raising the interest rates would encourage investment. Why would that encourage investment? To invest in the UK would cost foreign investors more, not less, if the pound rises.

The Pound would only rise if the economy was improving, buying in at the bottom is nothing new. 

 

There's a lot of people right now looking globally for somewhere to invest and markets are out for the time being. UK interest rates are forecast to reach 6%, that's a decent return when the average return from markets is only 7.5% per year.

[nigelforbes]

16 minutes ago, placeholder said:

Unfortunately, there's plenty of history that proves you wrong, and precious little that proves you right. One of the reasons interest rates got so low is that as the wealthy acquired an increasing large portion of the economy, they accumulated more cash than they could reasonably invest. That's why countries like Germany and the US were actually able to charge negative interest rates for their bonds. In effect, investors wound up with less money than they invested. That's also why assets like unique real estate and art and such shot up in value to such extraordinary lengths. The rich have more liquidity than they can sensibly invest.

We don't have to agree...and we don't. Not all wealth is merely accumulated and stored, much of it is invested in business, that why venture capital  and the like exist.

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1 minute ago, nigelforbes said:

The Pound would only rise if the economy was improving, buying in at the bottom is nothing new. 

 

There's a lot of people right now looking globally for somewhere to invest and markets are out for the time being. UK interest rates are forecast to reach 6%, that's a decent return when the average return from markets is only 7.5% per year.

Yes, there are investors looking for places to invest. Including investors in the UK. Why would they necessarily invest in the UK with the extra cash they've received due to tax cuts?

And as alway, the big issue re: buying at the bottom is how does one know when the bottom has been reached?

[Chomper Higgot]

39 minutes ago, nigelforbes said:

Large scale inflation during a recession is a serious problem, there is no single answer that suits both sides of the economic argument, at the same time. Lowering inflation has to be the priority hence that means increased interest rates, that's BOE's job. Stimulating growth is the governments job, hence the tax cuts, which in turn means increased government borrowings. Which of those two items would you suggest we forgo, quelling inflation or stimulating growth?

 

I think that trying to do both things at once is a bold move, I hope it doesn't backfire but as I said earlier, what is the alternative?

 

 

Dealing with inflation is obviously necessary, the BoE are on it.

 

Borrowing money to give tax cuts in a ‘growth gamble’ is lunacy.

 

1. It works directly against the BoE efforts to control inflation.

2. It burdens tax payers and the economy with debt.

3. It deflated the pound, thereby increasing inflation.

4. It goes nothing to address the cost of living crisis.

It does however hand tens of billions to people who are already wealthy. 
 

Meanwhile millions of people in the UK are unable to afford regularly meals.

 

 

 

 

 

[placeholder]

Just now, nigelforbes said:

We don't have to agree...and we don't. Not all wealth is merely accumulated and stored, much of it is invested in business, that why venture capital  and the like exist.

Nowhere have I written that all wealth is accumulated and stored. But in a situation where there is already so much liquidity, why is more necessary. If you want business to do better direct tax cuts to those who will spend.

And I fail to understand why, as you remarked in your earlier comments,  giving tax cuts to those who earn less is a bad thing because they don't deserve it whereas giving tax cuts to the wealthy is a good thing because they deserve it.

If the goal is to stimulate demand, then giving disproportionate tax cuts  to those who earn the least makes eminent sense.

[Chomper Higgot]

35 minutes ago, nigelforbes said:

OK, if that's what you think. I disagree, I think trickle down economics works and that giving hand outs to the lowest income group is nothing more than financial aid and nothing to do with stimulating the economy. Trickle up economics, which is what that is, doesn't create jobs or stimulate new investment, ....I think.

People on low incomes spend increases in money they receive in the local economy, that spending stimulates economic activity from the bottom up.

 

Local spending, local businesses, local communities.

 

 

[Chomper Higgot]

16 minutes ago, nigelforbes said:

The Pound would only rise if the economy was improving, buying in at the bottom is nothing new. 

 

There's a lot of people right now looking globally for somewhere to invest and markets are out for the time being. UK interest rates are forecast to reach 6%, that's a decent return when the average return from markets is only 7.5% per year.

Mortgage holders are going to be delighted.

[nigelforbes]

1 hour ago, placeholder said:

Yes, there are investors looking for places to invest. Including investors in the UK. Why would they necessarily invest in the UK with the extra cash they've received due to tax cuts?

And as alway, the big issue re: buying at the bottom is how does one know when the bottom has been reached?

One of the benefits of raising interest rates is that it attracts overseas investors, Foreign Direct Investors is the target.  I do not mean to imply that raising rates would attract UK investors to invest in UK business.

 

As for your question about bottom, I can't believe you're actually asking it, let alone expecting an answer!

[nigelforbes]

1 hour ago, placeholder said:

Nowhere have I written that all wealth is accumulated and stored. But in a situation where there is already so much liquidity, why is more necessary. If you want business to do better direct tax cuts to those who will spend.

And I fail to understand why, as you remarked in your earlier comments,  giving tax cuts to those who earn less is a bad thing because they don't deserve it whereas giving tax cuts to the wealthy is a good thing because they deserve it.

If the goal is to stimulate demand, then giving disproportionate tax cuts  to those who earn the least makes eminent sense.

You trolling me boy! I never said anything like that.

 

I think we're done.

[placeholder]

8 minutes ago, nigelforbes said:

One of the benefits of raising interest rates is that it attracts overseas investors, Foreign Direct Investors is the target.  I do not mean to imply that raising rates would attract UK investors to invest in UK business.

 

As for your question about bottom, I can't believe you're actually asking it, let alone expecting an answer!

Raising interest rates attracts overseas investors to invest in gilt (government bonds)s. If anything, it discourages other investments since the value of the pound would presumably rise rise in tandem with a rise in interest rates  making investments more expensive.

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11 minutes ago, nigelforbes said:

You trolling me boy! I never said anything like that.

 

Really?

You called giving tax cuts to people who earn less "hand outs".

[Mac Mickmanus]

1 minute ago, placeholder said:

Really?

You called giving tax cuts to people who earn less "hand outs".

Maybe its two different things ?

The U.K Gov has been handing out money to the poorest people and thats different to tax cuts 

[placeholder]

2 minutes ago, Mac Mickmanus said:

Maybe its two different things ?

The U.K Gov has been handing out money to the poorest people and thats different to tax cuts 

He was disagreeing with me. I mentioned only tax cuts. 

[Chomper Higgot]

23 minutes ago, nigelforbes said:

One of the benefits of raising interest rates is that it attracts overseas investors, Foreign Direct Investors is the target.  I do not mean to imply that raising rates would attract UK investors to invest in UK business.

 

As for your question about bottom, I can't believe you're actually asking it, let alone expecting an answer!

Why would anyone invest in a country that has deliberately  cut itself off from tarring free access to its single biggest market?

 

Perhaps it’s the abysmal productivity that’ll attract them.

Edited September 26, 2022 by Chomper Higgot

[nigelforbes]

6 minutes ago, placeholder said:

Really?

You called giving tax cuts to people who earn less "hand outs".

Yes really, read it again, slowly. I don't believe that giving money to the lowest income groups helps stimulate investment or the economy, sorry if you disagree but that's my view. Now we're done.

[placeholder]

Just now, nigelforbes said:

Yes really, read it again, slowly. I don't believe that giving money to the lowest income groups helps stimulate investment or the economy, sorry if you disagree but that's my view. Now we're done.

So that's what you were on about? Why did you introduce an irrelevant comment as a rebuttal? I never broached this issue. I only referred to cuts. You can't cut taxes from people who don't pay them.

[Chomper Higgot]

3 minutes ago, nigelforbes said:

Yes really, read it again, slowly. I don't believe that giving money to the lowest income groups helps stimulate investment or the economy, sorry if you disagree but that's my view. Now we're done.

People spending money at the bottom of the economy doesn’t stimulate growth?

 

There’s sure to be a Nobel Prize for that if you can prove it.

[Bluespunk]

2 hours ago, nigelforbes said:

I think trickle down economics works

It doesn't

 

https://www.washingtonpost.com/business/2020/12/23/tax-cuts-rich-trickle-down/

Edited September 26, 2022 by Bluespunk

[nigelforbes]

12 hours ago, Chomper Higgot said:

Dealing with inflation is obviously necessary, the BoE are on it.

 

Borrowing money to give tax cuts in a ‘growth gamble’ is lunacy.

 

1. It works directly against the BoE efforts to control inflation.

2. It burdens tax payers and the economy with debt.

3. It deflated the pound, thereby increasing inflation.

4. It goes nothing to address the cost of living crisis.

It does however hand tens of billions to people who are already wealthy. 
 

Meanwhile millions of people in the UK are unable to afford regularly meals.

 

 

 

 

 

So your short answer is that you'd raise interest rates and not do anything else, you wouldn't do anything to help people under strain from the interest rate increases.....really? 

 

If you give those people on the bottom end of the earnings ladder any form of support, it will come at a cost, somebody has to pay for it and that somebody is the tax payer. It's either paid for with cash handouts, which increase borrowings and taxes, or it's paid for by tax cuts and then paid for by tax increases. The current government has chosen a third option, cut taxes and pay for it by increased borrowings, like I said, a bold move.....I think.

 

The only issue in question seems to be, who should receive those tax cuts. Should it be the wealth and job creators, the people who create jobs and companies, or, the people on the bottom end who you say can't afford to eat because of inflation etc. Hmmm, tricky. From a humanitarian perspective you'd chose the latter, I certainly would. But from an economic recovery position of government I might chose the former, because I think that has a better chance of success and avoid me having to do exactly the same thing over again, in six months time. 

 

Of course there is yet another option, tax the bejesus out of the people and companies with money and give it to the poor, the Robin Hood solution. Unfortunately that has the effect of forcing the Dysons to Singapore, the Jim Radcliffe's to Monaco and the bankers to Europe and the US, a seriously unhelpful solution..

 

 

 

 

[Chomper Higgot]

1 hour ago, nigelforbes said:

So your short answer is that you'd raise interest rates and not do anything else, you wouldn't do anything to help people under strain from the interest rate increases.....really? 

 

If you give those people on the bottom end of the earnings ladder any form of support, it will come at a cost, somebody has to pay for it and that somebody is the tax payer. It's either paid for with cash handouts, which increase borrowings and taxes, or it's paid for by tax cuts and then paid for by tax increases. The current government has chosen a third option, cut taxes and pay for it by increased borrowings, like I said, a bold move.....I think.

 

The only issue in question seems to be, who should receive those tax cuts. Should it be the wealth and job creators, the people who create jobs and companies, or, the people on the bottom end who you say can't afford to eat because of inflation etc. Hmmm, tricky. From a humanitarian perspective you'd chose the latter, I certainly would. But from an economic recovery position of government I might chose the former, because I think that has a better chance of success and avoid me having to do exactly the same thing over again, in six months time. 

 

Of course there is yet another option, tax the bejesus out of the people and companies with money and give it to the poor, the Robin Hood solution. Unfortunately that has the effect of forcing the Dysons to Singapore, the Jim Radcliffe's to Monaco and the bankers to Europe and the US, a seriously unhelpful solution..

 

 

 

 

The third option is provide relief to the people who need (those suffering poverty) and not to the already wealthy.

 

Pay for that  with a windfall tax on Oil and Gas companies (who are not going to dig up their oil fields and move to Singapore).

 

Advantage, does not require injecting more money into the economy than is necessary, doesn’t involve massive public borrowing, generates growth from the bottom up, and it can even be justifiably claimed as ‘leveling up’. It’s even the right ‘humanitarian’ thing to do. (Or is that a disadvantage?).

 

Disadvantage, it doesn’t fit with already debunked rightwing dogma.

…..

 

As an aside.

 

Let’s deal with this particular piece of rightwing dogma ‘the people who create jobs’.

 

It’s the economy and society that creates jobs, not some individual or company.

 

If you start a company you won’t employ anyone unless you have customers, you don’t employ people and in doing so create customers.

 

If individuals or companies were job creators, the economic woes of sub Sahara Africa could be solved by opening branches of Starbucks, or Dyson outlets.

 

No, companies need an established level of economy, laws and regulations, transport and utility infrastructure, and educated/skilled employees. All provided by society and government.

 

Jobs and wealth are created by economies and societies. (Oh and market access, remember that?!)

 

Feel free to open up shop in Sub Sahara Africa to prove me wrong.

 

 

 

 

Edited September 27, 2022 by Chomper Higgot

[nigelforbes]

11 minutes ago, Chomper Higgot said:

The third option is provide relief to the people who need (those suffering poverty) and not to the already wealthy.

 

Pay for that  with a windfall tax on Oil and Gas companies (who are not going to dig up their oil fields and move to Singapore).

 

Advantage, does not require injecting more money into the economy than is necessary, doesn’t involve massive public borrowing, generates growth from the bottom up, and it can even be justifiably claimed as ‘leveling up’. It’s even the right ‘humanitarian’ thing to do. (Or is that a disadvantage?).

 

Disadvantage, it doesn’t fit with already debunked rightwing dogma.

…..

 

As an aside.

 

Let’s deal with this particular piece of rightwing dogma ‘the people who create jobs’.

 

It’s the economy and society that creates jobs, not some individual or company.

 

If you start a company you won’t employ anyone unless you have customers, you don’t employ people and in doing so create customers.

 

If individuals or companies were job creators, the economic woes of sub Sahara Africa could be solved by opening branches of Starbucks, or Dyson outlets.

 

No, companies need an established level of economy, laws and regulations, transport and utility infrastructure, and educated/skilled employees. All provided by society and government.

 

Jobs and wealth are created by economies and societies. (Oh and market access, remember that?!)

 

Feel free to open up shop in Sub Sahara Africa to prove me wrong.

 

 

 

 

Thanks for replying. I'm not sure I agree with everything you wrote but what sort of place would the world be if we all thought the same thing!

 

Just one comment before I disappear for the day - I started a business in the UK over 35 years ago, I did so not for any reason other than I had some spare cash and I desperately wanted to do so. I charged into the whole thing with nothing more than a really strong desire and some cash, no marketing, no sector surveys no economic evaluation and no business plan, I didn't even have any customers. Without the determination, drive and some cash it never would have taken off, luckily for me it did. I think that companies, jobs and wealth are created by people, opportunities are created by economies. Have a great day.

[thaibeachlovers]

On 9/24/2022 at 10:16 PM, Mavideol said:

come on, give it a shot, you may be surprised  555

Even a bad joke is something to laugh about in these fraught days.

[thaibeachlovers]

15 hours ago, placeholder said:

Nowhere have I written that all wealth is accumulated and stored. But in a situation where there is already so much liquidity, why is more necessary. If you want business to do better direct tax cuts to those who will spend.

And I fail to understand why, as you remarked in your earlier comments,  giving tax cuts to those who earn less is a bad thing because they don't deserve it whereas giving tax cuts to the wealthy is a good thing because they deserve it.

If the goal is to stimulate demand, then giving disproportionate tax cuts  to those who earn the least makes eminent sense.

Perhaps then, the goal is not to increase demand.

IMO the sooner AI takes over government, or at least financial affairs the better, given every government in my lifetime has resulted in things getting worse for average Joe, and wonderfully for the rich.

[thaibeachlovers]

14 hours ago, nigelforbes said:

One of the benefits of raising interest rates is that it attracts overseas investors, Foreign Direct Investors is the target.  I do not mean to imply that raising rates would attract UK investors to invest in UK business.

 

As for your question about bottom, I can't believe you're actually asking it, let alone expecting an answer!

If one wants to know about the "bottom", try and find someone that lived during the Great Depression of the '30s. I grant that finding such might be rather hard though.

[BritManToo]

1 hour ago, Chomper Higgot said:

It’s the economy and society that creates jobs, not some individual or company.

 

If you start a company you won’t employ anyone unless you have customers, you don’t employ people and in doing so create customers.

Answer,

Stop all imports and outsourcing workers.

Grow all food eaten in the UK be produced/grown in the UK.

Make everything used in the UK to be made in the UK.

Make all services used in the UK, be provided by UK citizens.

Don't give away money, make welfare recipients work for their food and housing. 

Stop all foreign aid, spend UK money on projects in the UK.

Make all companies operating in the UK pay tax in the UK.

Edited September 27, 2022 by BritManToo

[thaibeachlovers]

12 minutes ago, BritManToo said:

Answer,

Stop all imports and outsourcing workers.

Grow all food eaten in the UK be produced/grown in the UK.

Make everything used in the UK to be made in the UK.

Make all services used in the UK, be provided by UK citizens.

Don't give away money, make welfare recipients work for their food and housing. 

Stop all foreign aid, spend UK money on projects in the UK.

Make all companies operating in the UK pay tax in the UK.

I agree with a lot of that, but I believe that Britain has never grown enough food for a very long time. NZ and Australia made a good living shipping food and wool etc to Britain till Britain joined the Common Market.

Edited September 27, 2022 by thaibeachlovers

[Chomper Higgot]

1 hour ago, BritManToo said:

Answer,

Stop all imports and outsourcing workers.

Grow all food eaten in the UK be produced/grown in the UK.

Make everything used in the UK to be made in the UK.

Make all services used in the UK, be provided by UK citizens.

Don't give away money, make welfare recipients work for their food and housing. 

Stop all foreign aid, spend UK money on projects in the UK.

Make all companies operating in the UK pay tax in the UK.

Your last suggestion alone would provide the funding fix many of the UK’s problems.

 

It was the basis behind the CCCTB being introduced by the EU (including UK), and was the reason why billionaires and hedgefund managers backed Brexit.

 

 

 

 

[BritManToo]

1 hour ago, thaibeachlovers said:

I agree with a lot of that, but I believe that Britain has never grown enough food for a very long time. 

The UK doesn't grow all it's own food due to the greed of the corporations.

Everything could be home grown, but you can make bigger profits from importing from cheaper countries.

 

Same as corporate outsourcing to 3rd world call centres.

If the service is provided in the UK, it should be provided by UK citizens.

 

Same as industry,

Why manufacture in the UK, when it's cheaper to manufacture in the 3rd world.

 

The answer is always corporate greed.

And allowing corporate greed will destroy the world.