Bank of England Madness

[mossdog]

What will happen to the economy if people are encouraged to save instead?

..........China and Germany will get a haircut for one thing!

[Cyclone]

And the effect on our economy?

[mossdog]

And the effect on our economy?

.......it all depends on what level you mean by save as to the effect it might have on our economy,prudence is always wise.I guess you have savings as I do and many others.I spend quite a lot possibly at the side of some but I watch for the rain clouds on the horizon.So I think your question a bit too wide open to conclude a black or white answer!

[tzijlstra]

.......it all depends on what level you mean by save as to the effect it might have on our economy,prudence is always wise.I guess you have savings as I do and many others.I spend quite a lot possibly at the side of some but I watch for the rain clouds on the horizon.So I think your question a bit too wide open to conclude a black or white answer!

 

Talk about evasion.

[Cyclone]

.......it all depends on what level you mean by save as to the effect it might have on our economy,prudence is always wise.I guess you have savings as I do and many others.I spend quite a lot possibly at the side of some but I watch for the rain clouds on the horizon.So I think your question a bit too wide open to conclude a black or white answer!

 

We know exactly the context in which the question is asked though.

 

There is little to no incentive to hold large savings at the moment because interest rates are derisory.

The rate has just fallen further, with the intention of discouraging the hording of cash, and instead encouraging it to be either invested in a more active way and/or spent.

 

If the central bank did the opposite, and raised the rate (for example to 5%) this would encourage saving in cash.

And what effect would the subsequent drop in spending have on our economy?

 

---------- Post added 08-08-2016 at 13:47 ----------

 

I would say they are spending enough now, the amount of debt people are in. To encourage people into even more debt really does cause you to scratch your head to make sense of it.

 

Spilldig thinks that people should stop spending.

 

Mossdog has avoided answering the obvious question of what would happen to the economy at that point... Can you answer it Spilldig?

 

---------- Post added 08-08-2016 at 13:49 ----------

 

Because if everyone stopped spending that would definitely boost the economy... [

 

The evasion from mossdog actually doesn't make sense.

 

I didn't mention saving here, I mentioned stopping spending.

 

it all depends on what level you mean by save

I didn't mean any level, I meant what I said in the quote above, if spending was reduced (which is what Spilldig thinks is a sensible outcome to pursue) then what effect would it have on our economy?

[spilldig]

We know exactly the context in which the question is asked though.

 

There is little to no incentive to hold large savings at the moment because interest rates are derisory.

The rate has just fallen further, with the intention of discouraging the hording of cash, and instead encouraging it to be either invested in a more active way and/or spent.

 

If the central bank did the opposite, and raised the rate (for example to 5%) this would encourage saving in cash.

And what effect would the subsequent drop in spending have on our economy?

 

---------- Post added 08-08-2016 at 13:47 ----------

 

 

Spilldig thinks that people should stop spending.

 

Mossdog has avoided answering the obvious question of what would happen to the economy at that point... Can you answer it Spilldig?

 

---------- Post added 08-08-2016 at 13:49 ----------

 

 

The evasion from mossdog actually doesn't make sense.

 

I didn't mention saving here, I mentioned stopping spending.

 

 

I didn't mean any level, I meant what I said in the quote above, if spending was reduced (which is what Spilldig thinks is a sensible outcome to pursue) then what effect would it have on our economy?

 

It wouldn't matter in the short term because as people got out of debt the economy would get better. What's happening now might get things going, but as in prewar Germany, with a situation something along the lines of, you join the queue for a loaf of bread which costs say one million pounds, which you have managed to scrape together but by the time you get to the front of the queue its gone up to two million pounds.

[truman]

It wouldn't matter in the short term because as people got out of debt the economy would get better. .

 

Genuine question.how would it improve the economy if people are paying their debts down instead of buying stuff ?

[Cyclone]

It wouldn't matter in the short term because as people got out of debt the economy would get better. What's happening now might get things going, but as in prewar Germany, with a situation something along the lines of, you join the queue for a loaf of bread which costs say one million pounds, which you have managed to scrape together but by the time you get to the front of the queue its gone up to two million pounds.

 

Really. You think that reduced spending wouldn't matter in the short term.

 

I think that it would trigger a recession, almost immediately, as retailers and businesses very quickly saw a fall in sales and income, they would react and start cutting down stream orders and laying of staff.

As people became unemployed and fear took hold spending would drop even more sharply, and boom, we have a recession.

 

Some people might reduce debt, but those most in debt are those most at risk if the economy faltered. And a reduction in debt doesn't somehow stimulate the economy, so overall we'd all lose.

 

I've no idea how you think we are suffering from hyperinflation, which is the phenomena you just described (Zimbabwe would be a more contemporary example). If we were suffering from any real inflation then saving would be utterly pointless of course because the money would be losing so much value as the currency deflated.

Edited August 8, 2016 by Cyclone

[mossdog]

We know exactly the context in which the question is asked though.

 

There is little to no incentive to hold large savings at the moment because interest rates are derisory.

The rate has just fallen further, with the intention of discouraging the hording of cash, and instead encouraging it to be either invested in a more active way and/or spent.

 

If the central bank did the opposite, and raised the rate (for example to 5%) this would encourage saving in cash.

And what effect would the subsequent drop in spending have on our economy?

 

---------- Post added 08-08-2016 at 13:47 ----------

 

 

Spilldig thinks that people should stop spending.

 

Mossdog has avoided answering the obvious question of what would happen to the economy at that point... Can you answer it Spilldig?

 

---------- Post added 08-08-2016 at 13:49 ----------

 

 

The evasion from mossdog actually doesn't make sense.

 

I didn't mention saving here, I mentioned stopping spending.

 

 

I didn't mean any level, I meant what I said in the quote above, if spending was reduced (which is what Spilldig thinks is a sensible outcome to pursue) then what effect would it have on our economy?

.......you did not say "spending reduced" in your previous quotes".......and there lies the question, what level of "reduction" are you now talking about so we could have an idea of what you are blathering on about.

By the way,for all you handwringing sneering remainers,I am not evading anything!

[Cyclone]

post #112, which was in reply to Spilldig specifically says "spending reduced" and leads to the question (post #121, which is itself in reply to #120 that quotes #112) that you then avoid answering whilst referring to increased saving.

 

Why do you imagine that I must specify exactly how much spending will be reduced? If I could somehow do that then I'd be working at or maybe running the BoE. It's not even me that WANTS to reduce spending, that's Spilldig, so why don't you demand he explain exactly how much he wants to reduce it by, so that you can then claim that reduced spending by that specific amount won't harm the economy...

 

---------- Post added 08-08-2016 at 15:24 ----------

 

And how can you claim that you didn't avoid it.

 

What will happen to the economy if people are encouraged to save instead?

 

..........China and Germany will get a haircut for one thing!

 

Specifically not answering the question.

 

---------- Post added 08-08-2016 at 15:25 ----------

 

.......it all depends on what level you mean by save as to the effect it might have on our economy,prudence is always wise.I guess you have savings as I do and many others.I spend quite a lot possibly at the side of some but I watch for the rain clouds on the horizon.So I think your question a bit too wide open to conclude a black or white answer!

 

And then some more not answering the question.

Edited August 8, 2016 by Cyclone