Economics for idiots

[Duff Man]

On 24/06/2019 at 03:36, TheBitch said:

Be sound if Jeff Bezos actually paid the tax he was supposed to. 

He really, really wants to, but unfortunately his business doesn't, and there's absolutely nothing he can do about that. He's actually a victim, imo.

 

#prayforjeff

[VladimirIlyich]

20 hours ago, viRdjil said:

 

I have said for a long while that Labour has to include small and medium sized businesses in it's ideas if it wants to alter the current corporate cultural set up and it seems this is happening. I loved the part where it mentioned somebody more or less saying 'If you don't like it,fuck off to Singapore' or some such paraphrase.

[Kepler-186]

Read this excellent thread on post war economics, Japan, and the parallels with China now. 
 

You can read it from the Unroll link, too. 
 

 

[Captain Willard]

This is a very good explanation of most economical theories. It’s what happens if you can’t find a page on the FT website. 

[Evelyn Tentions]

I'm no economist, as a quick glance at my banking history would prove, but I can't understand how raising the bank rate is supposed to rein in inflation. A rate rise causes an increase in mortgage payments affecting just about everyone, either paying for their house or paying rent. Given that wages aren't increasing at anywhere near the rate of inflation this leaves even less disposable income, less spending and so a downturn in demand for products. Household spending is not the current driver of inflation, profits are.

Perhaps one of our resident Tories could explain it to me

 

[Moctezuma]

14 minutes ago, Evelyn Tentions said:

I'm no economist, as a quick glance at my banking history would prove, but I can't understand how raising the bank rate is supposed to rein in inflation. A rate rise causes an increase in mortgage payments affecting just about everyone, either paying for their house or paying rent. Given that wages aren't increasing at anywhere near the rate of inflation this leaves even less disposable income, less spending and so a downturn in demand for products. Household spending is not the current driver of inflation, profits are.

Perhaps one of our resident Tories could explain it to me

 

In the aggregate yes, but in terms of outright mortgage holding it is 28% of house holds in England and Wales, approx. 6.8m

 

There is now a large chunk of the country who own their homes outright and are unaffected directly by this unless they have buy to let mortgages themselves,

 

https://www.ons.gov.uk/peoplepopulationandcommunity/housing/articles/researchoutputssubnationaldwellingstockbytenureestimatesengland2012to2015/2020#:~:text=8.8 million (36%) were,19%) were privately rented

 

This model estimates that in 2020, across all local authorities in England, there were 23.2 million households living in 24.7 million dwellings.

Of those 24.7 million dwellings, just under two-thirds (64%) were estimated to be owner-occupied in 2020. For most of this analysis, this is broken down further, giving the following four tenures:

8.8 million (36%) were owned outright

6.8 million (28%) were owned with a mortgage or a loan

4.8 million (19%) were privately rented

4.2 million (17%) were in social rent, mainly rented from housing associations and local authorities

[Captain Willard]

5 minutes ago, Evelyn Tentions said:

I'm no economist, as a quick glance at my banking history would prove, but I can't understand how raising the bank rate is supposed to rein in inflation. A rate rise causes an increase in mortgage payments affecting just about everyone, either paying for their house or paying rent. Given that wages aren't increasing at anywhere near the rate of inflation this leaves even less disposable income, less spending and so a downturn in demand for products. Household spending is not the current driver of inflation, profits are.

Perhaps one of our resident Tories could explain it to me

 

A couple of points : 

 

Most mortgages are fixed (74%) and only the minority of the population live in houses with a mortgage (28%) so the number of people whose monthly mortgage is impacted by an interest rate rise is quite small in the short term. Obviously it goes up as people come off fixed rate deals but 96% of all new mortgages since 2019 were fixed so this shit doesnt hit the fan until the next 2 - 3 years when about 2 million people come out of fixed rate deals. That’s when the real impact will be felt. 
 

A big % of inflation is imported through fuel and food and a strong dollar. Average European inflation is 10% but as high as 17% in Holland and 20% in Eastern Europe. Moving up interest rates to strengthens the currency and reduces the impact of imported inflation. If they don’t raise rates and let the £ sink then inflation will go through the roof. 

[VladimirIlyich]

1 hour ago, Captain Willard said:

A couple of points : 

 

Most mortgages are fixed (74%) and only the minority of the population live in houses with a mortgage (28%) so the number of people whose monthly mortgage is impacted by an interest rate rise is quite small in the short term. Obviously it goes up as people come off fixed rate deals but 96% of all new mortgages since 2019 were fixed so this shit doesnt hit the fan until the next 2 - 3 years when about 2 million people come out of fixed rate deals. That’s when the real impact will be felt. 
 

A big % of inflation is imported through fuel and food and a strong dollar. Average European inflation is 10% but as high as 17% in Holland and 20% in Eastern Europe. Moving up interest rates to strengthens the currency and reduces the impact of imported inflation. If they don’t raise rates and let the £ sink then inflation will go through the roof. 

So if a large % of inflation is imported(I assume with buying foreign goods or energy?) couldnt or shouldnt we be creating or providing our own? We owned North Sea Oil and Gas.

[Captain Willard]

14 minutes ago, VladimirIlyich said:

So if a large % of inflation is imported(I assume with buying foreign goods or energy?) couldnt or shouldnt we be creating or providing our own? We owned North Sea Oil and Gas.

The Norwegians owned more. The uk is an arts/service/finance/tourism based economy so it’s very vulnerable to currency movements and the impact on inflation. 

[Elite]

Interest rates on the increase for savings accounts. Every cloud and that...

[Mudface]

1 hour ago, Elite said:

Interest rates on the increase for savings accounts. Every cloud and that...

Yeah, getting 1.5% on my current account... With inflation at well over 10%, I'd be better off spending all my money straight away.

[PestiRed]

4 hours ago, Evelyn Tentions said:

I'm no economist, as a quick glance at my banking history would prove, but I can't understand how raising the bank rate is supposed to rein in inflation. A rate rise causes an increase in mortgage payments affecting just about everyone, either paying for their house or paying rent. Given that wages aren't increasing at anywhere near the rate of inflation this leaves even less disposable income, less spending and so a downturn in demand for products. Household spending is not the current driver of inflation, profits are.

Perhaps one of our resident Tories could explain it to me

 

Theoretically it kills demand as more people either can’t afford to borrow or choose to save. As demand drops then so do prices

 

Problem is that the Bank of England is pursuing this policy whilst at the same time the government’s idea is cutting taxes to put more money in people’s pockets and therefore stimulate growth through more spending. Essentially you’ve got the Bank and the government using opposing strategies to fix the economy