Genie Posted August 28, 2022 Share Posted August 28, 2022 Just now, sidcow said: But the price of everything has gone up because of energy. There is widespread price inflation though for whatever reason. If there’s no willingness to reduce the price of energy then this is the next lever to pull. Link to comment Share on other sites More sharing options...
sidcow Posted August 28, 2022 VT Supporter Share Posted August 28, 2022 On 04/08/2022 at 22:16, sidcow said: BBC news interviewer has just voiced what I've been thinking/saying. Interviewing a small businesses owner due to be hit by interest rate rises he said they usually use interest rates to reign in spending in a booming period of economic activity. He and the interviewee both agreed this didn't feel like that. Then they interviewed several people in the street who all said they were reigning in spending because of increasing prices and fuel costs. Then the Governor of the BOE who admitted the price rises were mainly due to increased energy costs. I just don't see what raising the interest rate is going to do to cut inflation. People are already cost cutting all over the place. It won't suddenly make gas or petrol cheaper. It's just going to make people poorer, increase the depth of the coming recession and not make a blind bit of difference to increasing prices. It's the wrong solution for this current situation. And I didn't even go to Oxford. Link to comment Share on other sites More sharing options...
Genie Posted August 28, 2022 Share Posted August 28, 2022 The system is broken because of the lack of action on energy costs. The BoE need to do something as it’s their job to. All major economies are doing the same thing. Link to comment Share on other sites More sharing options...
Genie Posted August 28, 2022 Share Posted August 28, 2022 2 minutes ago, sidcow said: And I didn't even go to Oxford. You said it yourself, “usually”. Interest rate rises are to curb inflation, “usually” that is down to a hot economy but not always. If the economy was hot but inflation low/2% ish then they wouldn’t act (like last year). Link to comment Share on other sites More sharing options...
sidcow Posted August 28, 2022 VT Supporter Share Posted August 28, 2022 (edited) 5 minutes ago, Genie said: You said it yourself, “usually”. Interest rate rises are to curb inflation, “usually” that is down to a hot economy but not always. If the economy was hot but inflation low/2% ish then they wouldn’t act (like last year). Well as the Oxford educated specialist in this area is also asking the question I think it's justified to be confused about how this is going to help. Edited August 28, 2022 by sidcow Link to comment Share on other sites More sharing options...
Genie Posted August 28, 2022 Share Posted August 28, 2022 3 minutes ago, sidcow said: Well as the Oxford educated specialist in this area is also asking the question I think it's justified to be confused about how this is going to help. Link to comment Share on other sites More sharing options...
sidcow Posted August 28, 2022 VT Supporter Share Posted August 28, 2022 1 minute ago, Genie said: Yes, well she's a very special kind of idiot isn't she. 1 Link to comment Share on other sites More sharing options...
Genie Posted August 28, 2022 Share Posted August 28, 2022 1 minute ago, sidcow said: Yes, well she's a very special kind of idiot isn't she. Oxford educated not always a badge of intelligence. Link to comment Share on other sites More sharing options...
CVByrne Posted August 28, 2022 Share Posted August 28, 2022 Might be a bit technical but this is a good video on how we stop inflation Link to comment Share on other sites More sharing options...
MakemineVanilla Posted August 28, 2022 Share Posted August 28, 2022 2 hours ago, bickster said: Interesting question posed by the cleverest kid in my year at schoool (and former LIbDem Pensions Minister) It could be that, with so much credit being available, that the driver of inflation is not demand but lack of supply. Link to comment Share on other sites More sharing options...
Genie Posted August 28, 2022 Share Posted August 28, 2022 Russia must be making more money, and supplying less gas, than ever before. Link to comment Share on other sites More sharing options...
OutByEaster? Posted August 28, 2022 Moderator Share Posted August 28, 2022 We should switch off the lampposts, it'll make it harder for people to find the right ones for Kwasi Kwaterng and Jonathon Brearley. Link to comment Share on other sites More sharing options...
blandy Posted August 28, 2022 Moderator Share Posted August 28, 2022 3 hours ago, Genie said: I’m sorry but I don’t follow. If inflation was being driven by just energy costs then i’d agree that increasing interest rates isn’t the way to go. However, the price of absolutely everything is going up so increasing interest rates if the usual way to slow it down. It’s like this. Raising interest rates when there is normal inflation in the economy has the effect of encouraging people to save (better interest rates) and discouraging borrowing ( more expensive). Both of which reduce demand for goods and services and this reduced demand leads to lower prices and hence inflation is reigned in. In this current situation inflation is massively driven by unique circumstances- energy prices due to Ukraine and the end of pandemic restrictions. These massive cost hikes for energy have the exact same impact as raising interest rates - people will spend less on goods and services, because of their energy bills. Thus the conventional action of raising interest rates to suppress demand is inappropriate and counter productive. 1 2 Link to comment Share on other sites More sharing options...
Mandy Lifeboats Posted August 28, 2022 Share Posted August 28, 2022 2 hours ago, Genie said: Russia must be making more money, and supplying less gas, than ever before. Definitely. But that’s far from the full picture. Despite massive increases in gas and oil revenues the Russian economy is back to 2018 levels. Take away the EU payments and their economy is desperate. Putting it in simple terms, they are losing their richest, most reliable customers who already have the infrastructure to receive their products. They now need to generate the same income from poorer, less reliable customers and fund all that new infrastructure without Western investment. Link to comment Share on other sites More sharing options...
bickster Posted August 28, 2022 Moderator Share Posted August 28, 2022 3 hours ago, Genie said: Russia must be making more money, and supplying less gas, than ever before. Well no, not really at all. Firstly they are selling a lot at discount prices to India / Turkey etc. secondly because they turned off the pipelines to certain EU countries they are literally burning billions of dollars of gas a day. Burning it off into the atmosphere, that’s all they can do with it. Giant plumes of gas flames burning away across the country Link to comment Share on other sites More sharing options...
Genie Posted September 22, 2022 Share Posted September 22, 2022 The BoE have raised interest rates another 0.5% to 2.25% today. That’ll take a bit more money out of peoples pockets going into the winter. Link to comment Share on other sites More sharing options...
tonyh29 Posted September 22, 2022 Share Posted September 22, 2022 On 28/08/2022 at 09:40, sidcow said: And I didn't even go to Oxford. did you go to one of the other two great universities , Cambridge or Hull ? Link to comment Share on other sites More sharing options...
Wainy316 Posted September 22, 2022 Share Posted September 22, 2022 22 minutes ago, Genie said: The BoE have raised interest rates another 0.5% to 2.25% today. That’ll take a bit more money out of peoples pockets going into the winter. Punish the average joe and reward the money hoarders, yay. Link to comment Share on other sites More sharing options...
foreveryoung Posted September 22, 2022 Share Posted September 22, 2022 31 minutes ago, Genie said: The BoE have raised interest rates another 0.5% to 2.25% today. That’ll take a bit more money out of peoples pockets going into the winter. Not sure how this helps. People will just reduce spending even more now surely. Link to comment Share on other sites More sharing options...
Genie Posted September 22, 2022 Share Posted September 22, 2022 1 minute ago, foreveryoung said: Not sure how this helps. People will just reduce spending even more now surely. Yep. The government and BoE are not working in unison. BoE recognises the danger of runaway inflation and has an obligation to try and control it. The inflation will come down due to less disposable income, but it will probably push the UK into a recession. The Government seem to not give a shit about inflation and are prioritising keeping the economy out of recession. They’re cutting personal and corporation tax to encourage spending by increasing disposable income. You couldn’t make it up. 1 Link to comment Share on other sites More sharing options...
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