In Whose Interest

Central banks seem to have closed their eyes to any other policy except cheap money for those who already have large amounts of available funds, ie. large multinational corporations who can go around the World buying up assets, Tony Hayward the ex CEO of BP can go into the markets with a shell company, no pun intended, and raise a billion pounds for purchasing commodity producing companies.

No Central Bank is interested in making life easier for those at the bottom of an economic pyramid, inflation out of control, jobs harder to find, this leads to a feeling of insecurity, no one wishes to spend their savings because they are not receiving any interest to maintain what savings they have, which means saving even more money. Look at Japan they have had a zero interest rate for decades and the Japanese people are saving more and spending less.

Economists have failed to recognise the psychology of ordinary consumers saving and spending habits, with inflation in the UK at 4% there should be a real return of 3% making a Bank rate of 7%, banks would be paying out interest to savers and they would feel confident about their returns and consequently spend more, this would be much more of a bottom up recovery rather than a top down one.

Looking at economies that have very low rates of return these are the ones heading back into recession, countries with high interest rates are still growing strongly. It is time to give savers, people with money confidence to go out and spend in the knowledge that they will receive a reasonable return from the banks, if not a long period of stagnation will follow.

Low interest rates are the ultimate insider trading, if you are a small business and wish to borrow a rate of approximately 7-9% would be charged, if you went to the Bank Of England and asked for a loan @ 0.5% they would laugh you out of the building but this is what low rates are intended for, business to expand with cheap money but this only applies to  those inside the financial institutions who were bailed out by the Government in the first instance, causing all the debt to be repaid by the tax payer. People with personal debt are in  an even worse situation with credit cards @ 17% and personal loans @ 10% all the pain is being carried by those at the bottom of the pile, and with inflation not improving that pain will only continue.

About michaeldouglasbosc

I am retired and live with my wife on a small olive finca in the middle of a forest in the mountains of Spain in Catalonya. I served 9years in the armed services, am an engineer and because of my love of navy sailing ships a naval historian of the 1700-1800's, plus the author of 10 books. When I retired I started writing adult books my first being A Soldiers Wind. Then came Stanley's story again adult books such was his life. Another book on life in the 1950's this very much an adult book. I have now returned to my love of the sea and my latest navy book 'A Plymouth Story' follows the life of Dr James Blackstock. But Clearing In The Forest is an historical fantasy set in the middle ages at the end of King Johns reign. All the books are published on Kindle and Create a Space in paperback. I have worked all my life and for relaxation I sailed a coastal yacht for many years, but deep inside me was a writer waiting to get out. So when I retired I started writing I find story telling both relaxing and - for me - a pleasure.
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