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"The economy is fine… I feel for those struggling because of the interest rates as I have paid off my house At some point I want to get a new car.. well… 2nd hand new… holding off wait on interest rates to come down a little before getting the ev bad boy! "I thought you had ordered a Tesla years ago? Not being funny... I just remembered you were excited about getting a model 3 or something. | |||
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"There really does seem to be a massive divide in the country " Yes and it's been deliberately created in my opinion. | |||
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"The economy is fine… I feel for those struggling because of the interest rates as I have paid off my house At some point I want to get a new car.. well… 2nd hand new… holding off wait on interest rates to come down a little before getting the ev bad boy!
I thought you had ordered a Tesla years ago?
Not being funny... I just remembered you were excited about getting a model 3 or something."I was on the original model 3 waiting list.. they said it was going to be around 35k… then the eu vote devalued the pound, and 35k became nearer 50k and couldn’t justify that Anyway new version of model 3 is coming soon… apparently cheaper to build so may be a lot cheaper by the knees are going old so may look at getting a model y… but there are other EVs I am interested in so I’ll hang on and wait till the interest rate comes down before revisiting | |||
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"There really does seem to be a massive divide in the country Yes and it's been deliberately created in my opinion." | |||
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"The economy is fine… I feel for those struggling because of the interest rates as I have paid off my house At some point I want to get a new car.. well… 2nd hand new… holding off wait on interest rates to come down a little before getting the ev bad boy!
I thought you had ordered a Tesla years ago?
Not being funny... I just remembered you were excited about getting a model 3 or something.
I was on the original model 3 waiting list.. they said it was going to be around 35k… then the eu vote devalued the pound, and 35k became nearer 50k and couldn’t justify that
Anyway new version of model 3 is coming soon… apparently cheaper to build so may be a lot cheaper by the knees are going old so may look at getting a model y… but there are other EVs I am interested in so I’ll hang on and wait till the interest rate comes down before revisiting "Fair! It's silly money. I saw a Polestar and would definitely go for one of those if I had the coin/infrastructure. | |||
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"There really does seem to be a massive divide in the country Yes and it's been deliberately created in my opinion." | |||
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"There really does seem to be a massive divide in the country Yes and it's been deliberately created in my opinion." I think it’s just incompetence of running the economy. Triple effect of Brexit, covid and Ukraine needed very smart hardworking ministers when we had the stupidest and most careless batch for decades. I don’t they they purposely tried to hurt the poor but they certainly were not focussed when they were partying, shagging around , lying & preoccupied about Brexit (both sides) and doing deals for mates through the pandemic. UK is in a very bad place right now because of all this/ them. Longest stretch of lost growth since pre covid, 0.3 % growth prediction with 60% risk of recession, 6-7% inflation until at least 2025, unemployment rising to 5-% , real wages below pre covid levels, especially east England and west mids, 17% disposable income shortfall in bottom half of earners. | |||
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"Nope I've not been affected except everything and i mean everything has gone up significantly "Breathing air remains free at the moment  | |||
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"The economy is fine… I feel for those struggling because of the interest rates as I have paid off my house At some point I want to get a new car.. well… 2nd hand new… holding off wait on interest rates to come down a little before getting the ev bad boy!
I thought you had ordered a Tesla years ago?
Not being funny... I just remembered you were excited about getting a model 3 or something.
I was on the original model 3 waiting list.. they said it was going to be around 35k… then the eu vote devalued the pound, and 35k became nearer 50k and couldn’t justify that
Anyway new version of model 3 is coming soon… apparently cheaper to build so may be a lot cheaper by the knees are going old so may look at getting a model y… but there are other EVs I am interested in so I’ll hang on and wait till the interest rate comes down before revisiting "Take a look at the e niro if you haven't already...awesome car. | |||
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"^^ I find it very hard to find evidence that the current govt cares about poor people or in fact anybody other than themselves and anyone who might hold shares in anything. They're divisive liars almost to a man or woman only one or two possess any integrity and their voices are drowned out. " Just look at EONs profits and that should tell you all you need to know about what this government think about the poor. | |||
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"Dont have a mortgage credit card debt or loans so same ol same old for me" Food and fuel inflation not impacting on you at all? | |||
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"There really does seem to be a massive divide in the country " The UK in my opinion is made up of 3 main groups The rich, no Morgage and now getting more on investments. HAPPY The poor on benefits and from what I see just getting by not so Happy The working family not getting any support feeling it hard the cost of living and interest rates is going to hurt the middle the most. Me I'm OK as Morgage paid off this year so now working to invest and cash in while it lasts. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues?" Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using?" Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues?" No idea why they use in this method under these circumstances. Even the USA has come around, realising this approach doesn’t work, you can’t make a change to interest rates, don’t expect to see some data shortly after that shows it’s working and by how much, simply won’t work. The way UK government tries to control energy prices, also very badly, would be a much better strategy to tackle information | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using?" Clearly, not in the UK. All their predictions have been wrong to date. The only way to tackle spending, is to increase tax on the areas were spending is out of control, luxury items, highest earners, but they are too scared to. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Clearly, not in the UK. All their predictions have been wrong to date. The only way to tackle spending, is to increase tax on the areas were spending is out of control, luxury items, highest earners, but they are too scared to. " Interesting thoughts thanks. So the Govt could tackle supply side inflation by taxing the companies who are increasing prices? Something I read/heard the other day that was thought provoking was that all the pain is being passed to mortgage holders and renters (who rent from mortgage holders). Those who are mortgage free, most often retirees, are still spending. Indeed, if savings rates ever get properly increased in line with base rare rises, these people are laughing! | |||
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"Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues?" "Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using?" "Don’t know I am not an economist. But as a layperson it seems counter-intuitive." How so? An increase in the base rate makes obtaining credit more expensive, meaning that companies have less funds available, so they spend less. It also increases the rewards for saving, so more is saved, meaning that less is spent. What's counter-intuitive there? | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Clearly, not in the UK. All their predictions have been wrong to date. The only way to tackle spending, is to increase tax on the areas were spending is out of control, luxury items, highest earners, but they are too scared to. " Yes totally agree a progressive vat system so why not have 40% vay on a shirt over £100 for example or 40% on a hand bag costing more then £400 easy way to tax the rich more the only problem is more will shop abroad. | |||
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"Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. How so? An increase in the base rate makes obtaining credit more expensive, meaning that companies have less funds available, so they spend less. It also increases the rewards for saving, so more is saved, meaning that less is spent. What's counter-intuitive there?" Why extract a part of my post when you quote, ie the part where I said it seemed counter-intuitive? "Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has?" You point on rewards saving is not really coming through yet though is it? Compare base rate rises with mortgage rates and savings rates. The delta is expanding due to banks being slow to pass on to savers. How does companies having more expensive credit address supply side costs? Surely it would increase supply side costs if a company needs to absorb more expensive credit? | |||
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"Dont have a mortgage credit card debt or loans so same ol same old for me Food and fuel inflation not impacting on you at all?" shopping a little bit more and i have a zippy electric bike to get about on | |||
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"You point on rewards saving is not really coming through yet though is it?" No, the banks aren't helping. But the savings aspect is only secondary, the prime mover is the squeeze on credit. "How does companies having more expensive credit address supply side costs? Surely it would increase supply side costs if a company needs to absorb more expensive credit?" The idea is that it puts companies off investment, because the cost of credit is too high. A reduction in the availability of credit lessens the velocity of money. MV=PQ, so if V reduces, PQ has to reduce as well. | |||
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"Interest rates aren't affecting us. Inflation is. " Ditto | |||
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"Nope I've not been affected except everything and i mean everything has gone up significantly
Breathing air remains free at the moment "Isn't that included in your council tax ? | |||
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"You point on rewards saving is not really coming through yet though is it? No, the banks aren't helping. But the savings aspect is only secondary, the prime mover is the squeeze on credit. How does companies having more expensive credit address supply side costs? Surely it would increase supply side costs if a company needs to absorb more expensive credit? The idea is that it puts companies off investment, because the cost of credit is too high. A reduction in the availability of credit lessens the velocity of money. MV=PQ, so if V reduces, PQ has to reduce as well." Ok so companies scale back plans/new projects. So potentially less jobs. How does that impact on supply side inflation? ie cost and transportation of raw materials. Increases energy costs for production. Increased distribution costs. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues?" Supply and demand, the demand is still high. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Supply and demand, the demand is still high. " Is it though? See my other post discussing with MrDiscretion. Isn’t much of the inflation being driven by supply side costs? | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Supply and demand, the demand is still high. Is it though? See my other post discussing with MrDiscretion. Isn’t much of the inflation being driven by supply side costs?" High demand pushes up Supply costs causing higher inflation as prices rise for goods, basically there is more demand than product. The levers as you mentioned are to cause pain in the pocket, that reduces demand due to more product than demand which in turn brings down supply costs due to the to lack of demand. The 2 things go hand in hand. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has?" Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Supply and demand, the demand is still high. Is it though? See my other post discussing with MrDiscretion. Isn’t much of the inflation being driven by supply side costs? High demand pushes up Supply costs causing higher inflation as prices rise for goods, basically there is more demand than product. The levers as you mentioned are to cause pain in the pocket, that reduces demand due to more product than demand which in turn brings down supply costs due to the to lack of demand. The 2 things go hand in hand. " I totally get that and see how that applies almost all of the time but isn’t much (not all) of the supply side cost increases as a result of hugely increased energy prices rather than increased demand? | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient." As I said, I am no economist, so I know increased base rates only affect those on tracker and variable rate mortgages. In the UK there is a huge preference for fixed rates. So some people are being impacted right now. Others are sitting on a potential time bomb as their fix rate deal ends. Apparently as you say that is 1.3m this year. Wouldn’t call that insignificant? A jump from c.2% to c.6% is going to hurt right? | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient. As I said, I am no economist, so I know increased base rates only affect those on tracker and variable rate mortgages. In the UK there is a huge preference for fixed rates. So some people are being impacted right now. Others are sitting on a potential time bomb as their fix rate deal ends. Apparently as you say that is 1.3m this year. Wouldn’t call that insignificant? A jump from c.2% to c.6% is going to hurt right?" Mortgage rates are already dropping. Fixed rates now available circa 5%. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient. As I said, I am no economist, so I know increased base rates only affect those on tracker and variable rate mortgages. In the UK there is a huge preference for fixed rates. So some people are being impacted right now. Others are sitting on a potential time bomb as their fix rate deal ends. Apparently as you say that is 1.3m this year. Wouldn’t call that insignificant? A jump from c.2% to c.6% is going to hurt right? Mortgage rates are already dropping. Fixed rates now available circa 5%." Yep which is great news. They rose then dropped last winter too (fixes dropping to c.4%). Let’s hope the market price in a reduction longer term for their swap rates and it triggers a mortgage price war (got a few years left on my fixed). | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Supply and demand, the demand is still high. Is it though? See my other post discussing with MrDiscretion. Isn’t much of the inflation being driven by supply side costs? High demand pushes up Supply costs causing higher inflation as prices rise for goods, basically there is more demand than product. The levers as you mentioned are to cause pain in the pocket, that reduces demand due to more product than demand which in turn brings down supply costs due to the to lack of demand. The 2 things go hand in hand. I totally get that and see how that applies almost all of the time but isn’t much (not all) of the supply side cost increases as a result of hugely increased energy prices rather than increased demand?" You want to purchase a washing machine and the cost of that washing machine has risen by 35%, due to energy costs, wage increases, parts increases, and logistic increases. All of those things are linked to the increase in price, but people are still buying. If they didn’t buy the usage in energy would fall, the logistics would not be moving, parts would not be ordered and washing machines would not be built. Eventually, energy prices would come down as the demand for supply has dropped, along with logistical costs as nothing is moving, parts would now become less costly as those factors reduce the overall cost. The washing machine at this point would now become less costly to make, bringing down the price to encourage demand again. The lever to stop us buying the washing machine and all other goods is interest rates that drive higher inflation, that in turn begins to make products to expensive to purchase. The BoE is baby stepping. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient. As I said, I am no economist, so I know increased base rates only affect those on tracker and variable rate mortgages. In the UK there is a huge preference for fixed rates. So some people are being impacted right now. Others are sitting on a potential time bomb as their fix rate deal ends. Apparently as you say that is 1.3m this year. Wouldn’t call that insignificant? A jump from c.2% to c.6% is going to hurt right? Mortgage rates are already dropping. Fixed rates now available circa 5%. Yep which is great news. They rose then dropped last winter too (fixes dropping to c.4%). Let’s hope the market price in a reduction longer term for their swap rates and it triggers a mortgage price war (got a few years left on my fixed)." *Meant to say they rose them dropped last winter AND then rose again and are now dropping again. Feels a bit like gambling right now. Anyone who bagged the Lloyds 10yr fix at 2.75% (ish can’t remember but it was 2.something) available in spring 22 looks like they played a blinder! | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Supply and demand, the demand is still high. Is it though? See my other post discussing with MrDiscretion. Isn’t much of the inflation being driven by supply side costs? High demand pushes up Supply costs causing higher inflation as prices rise for goods, basically there is more demand than product. The levers as you mentioned are to cause pain in the pocket, that reduces demand due to more product than demand which in turn brings down supply costs due to the to lack of demand. The 2 things go hand in hand. I totally get that and see how that applies almost all of the time but isn’t much (not all) of the supply side cost increases as a result of hugely increased energy prices rather than increased demand? You want to purchase a washing machine and the cost of that washing machine has risen by 35%, due to energy costs, wage increases, parts increases, and logistic increases. All of those things are linked to the increase in price, but people are still buying. If they didn’t buy the usage in energy would fall, the logistics would not be moving, parts would not be ordered and washing machines would not be built. Eventually, energy prices would come down as the demand for supply has dropped, along with logistical costs as nothing is moving, parts would now become less costly as those factors reduce the overall cost. The washing machine at this point would now become less costly to make, bringing down the price to encourage demand again. The lever to stop us buying the washing machine and all other goods is interest rates that drive higher inflation, that in turn begins to make products to expensive to purchase. The BoE is baby stepping." Thanks. Makes sense but another question. Isn’t inflation a continuum? What I mean is, if something has gone up by 10% then next year goes up by just 2% it has still gone up. For the price to fall do you not need deflation? | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Supply and demand, the demand is still high. Is it though? See my other post discussing with MrDiscretion. Isn’t much of the inflation being driven by supply side costs? High demand pushes up Supply costs causing higher inflation as prices rise for goods, basically there is more demand than product. The levers as you mentioned are to cause pain in the pocket, that reduces demand due to more product than demand which in turn brings down supply costs due to the to lack of demand. The 2 things go hand in hand. I totally get that and see how that applies almost all of the time but isn’t much (not all) of the supply side cost increases as a result of hugely increased energy prices rather than increased demand? You want to purchase a washing machine and the cost of that washing machine has risen by 35%, due to energy costs, wage increases, parts increases, and logistic increases. All of those things are linked to the increase in price, but people are still buying. If they didn’t buy the usage in energy would fall, the logistics would not be moving, parts would not be ordered and washing machines would not be built. Eventually, energy prices would come down as the demand for supply has dropped, along with logistical costs as nothing is moving, parts would now become less costly as those factors reduce the overall cost. The washing machine at this point would now become less costly to make, bringing down the price to encourage demand again. The lever to stop us buying the washing machine and all other goods is interest rates that drive higher inflation, that in turn begins to make products to expensive to purchase. The BoE is baby stepping. Thanks. Makes sense but another question. Isn’t inflation a continuum? What I mean is, if something has gone up by 10% then next year goes up by just 2% it has still gone up. For the price to fall do you not need deflation?" Everything you purchase is costed on supply and demand so individual items can rise x% due to popularity or necessity but they have a natural supply and demand point price point. Example would be a Ferrari or a Ford, both cars, different costs mainly driven by supply and demand. In this case Ferrari will supply less cars than they have demand for, keeping the price high. Ford will make enough cars for all the demand, making them less costly to produce and less costly at the price point. Inflationary figures are linked to many products to give an overall view in terms of the cost of living, this has remained relatively stable over the last x years, however a shit storm of events as created instability. Items will settle again once demand drops and a few uncertainties are ironed out in Eastern Europe… | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Supply and demand, the demand is still high. Is it though? See my other post discussing with MrDiscretion. Isn’t much of the inflation being driven by supply side costs? High demand pushes up Supply costs causing higher inflation as prices rise for goods, basically there is more demand than product. The levers as you mentioned are to cause pain in the pocket, that reduces demand due to more product than demand which in turn brings down supply costs due to the to lack of demand. The 2 things go hand in hand. I totally get that and see how that applies almost all of the time but isn’t much (not all) of the supply side cost increases as a result of hugely increased energy prices rather than increased demand? You want to purchase a washing machine and the cost of that washing machine has risen by 35%, due to energy costs, wage increases, parts increases, and logistic increases. All of those things are linked to the increase in price, but people are still buying. If they didn’t buy the usage in energy would fall, the logistics would not be moving, parts would not be ordered and washing machines would not be built. Eventually, energy prices would come down as the demand for supply has dropped, along with logistical costs as nothing is moving, parts would now become less costly as those factors reduce the overall cost. The washing machine at this point would now become less costly to make, bringing down the price to encourage demand again. The lever to stop us buying the washing machine and all other goods is interest rates that drive higher inflation, that in turn begins to make products to expensive to purchase. The BoE is baby stepping. Thanks. Makes sense but another question. Isn’t inflation a continuum? What I mean is, if something has gone up by 10% then next year goes up by just 2% it has still gone up. For the price to fall do you not need deflation? Everything you purchase is costed on supply and demand so individual items can rise x% due to popularity or necessity but they have a natural supply and demand point price point. Example would be a Ferrari or a Ford, both cars, different costs mainly driven by supply and demand. In this case Ferrari will supply less cars than they have demand for, keeping the price high. Ford will make enough cars for all the demand, making them less costly to produce and less costly at the price point. Inflationary figures are linked to many products to give an overall view in terms of the cost of living, this has remained relatively stable over the last x years, however a shit storm of events as created instability. Items will settle again once demand drops and a few uncertainties are ironed out in Eastern Europe… " I think I missed a part out that you asked. Inflation is an indicator to the cost of living, is it increasing or decreasing. Resources and demand for those resources increases, pushing up the cost of living. The population rising pushes up demand on resources, everything is linked. Products and services can go down, technology advances as an example can make production less costly enabling a greater supply, which manages the demand. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient. As I said, I am no economist, so I know increased base rates only affect those on tracker and variable rate mortgages. In the UK there is a huge preference for fixed rates. So some people are being impacted right now. Others are sitting on a potential time bomb as their fix rate deal ends. Apparently as you say that is 1.3m this year. Wouldn’t call that insignificant? A jump from c.2% to c.6% is going to hurt right?" 1.3m in the next 18 months Given the total mortgages its insignificant.. and given that I'd expect mortgage rates to lower in the intervening time we will be OK. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient. As I said, I am no economist, so I know increased base rates only affect those on tracker and variable rate mortgages. In the UK there is a huge preference for fixed rates. So some people are being impacted right now. Others are sitting on a potential time bomb as their fix rate deal ends. Apparently as you say that is 1.3m this year. Wouldn’t call that insignificant? A jump from c.2% to c.6% is going to hurt right? Mortgage rates are already dropping. Fixed rates now available circa 5%. Yep which is great news. They rose then dropped last winter too (fixes dropping to c.4%). Let’s hope the market price in a reduction longer term for their swap rates and it triggers a mortgage price war (got a few years left on my fixed). *Meant to say they rose them dropped last winter AND then rose again and are now dropping again. Feels a bit like gambling right now. Anyone who bagged the Lloyds 10yr fix at 2.75% (ish can’t remember but it was 2.something) available in spring 22 looks like they played a blinder!" Possibly. There are kick out rates. E.g if the rates went to 6% the mortgage would be deemed. Void. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient. As I said, I am no economist, so I know increased base rates only affect those on tracker and variable rate mortgages. In the UK there is a huge preference for fixed rates. So some people are being impacted right now. Others are sitting on a potential time bomb as their fix rate deal ends. Apparently as you say that is 1.3m this year. Wouldn’t call that insignificant? A jump from c.2% to c.6% is going to hurt right? Mortgage rates are already dropping. Fixed rates now available circa 5%. Yep which is great news. They rose then dropped last winter too (fixes dropping to c.4%). Let’s hope the market price in a reduction longer term for their swap rates and it triggers a mortgage price war (got a few years left on my fixed). *Meant to say they rose them dropped last winter AND then rose again and are now dropping again. Feels a bit like gambling right now. Anyone who bagged the Lloyds 10yr fix at 2.75% (ish can’t remember but it was 2.something) available in spring 22 looks like they played a blinder! Possibly. There are kick out rates. E.g if the rates went to 6% the mortgage would be deemed. Void. " Sorry am I reading that right? If somebody took out a 10yr fix at 2.75% but during that 10yr period if base rates went above a threshold (you say 6%) it would void that mortgage agreement? Read the small print huh  | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Supply and demand, the demand is still high. Is it though? See my other post discussing with MrDiscretion. Isn’t much of the inflation being driven by supply side costs? High demand pushes up Supply costs causing higher inflation as prices rise for goods, basically there is more demand than product. The levers as you mentioned are to cause pain in the pocket, that reduces demand due to more product than demand which in turn brings down supply costs due to the to lack of demand. The 2 things go hand in hand. I totally get that and see how that applies almost all of the time but isn’t much (not all) of the supply side cost increases as a result of hugely increased energy prices rather than increased demand? You want to purchase a washing machine and the cost of that washing machine has risen by 35%, due to energy costs, wage increases, parts increases, and logistic increases. All of those things are linked to the increase in price, but people are still buying. If they didn’t buy the usage in energy would fall, the logistics would not be moving, parts would not be ordered and washing machines would not be built. Eventually, energy prices would come down as the demand for supply has dropped, along with logistical costs as nothing is moving, parts would now become less costly as those factors reduce the overall cost. The washing machine at this point would now become less costly to make, bringing down the price to encourage demand again. The lever to stop us buying the washing machine and all other goods is interest rates that drive higher inflation, that in turn begins to make products to expensive to purchase. The BoE is baby stepping. Thanks. Makes sense but another question. Isn’t inflation a continuum? What I mean is, if something has gone up by 10% then next year goes up by just 2% it has still gone up. For the price to fall do you not need deflation? Everything you purchase is costed on supply and demand so individual items can rise x% due to popularity or necessity but they have a natural supply and demand point price point. Example would be a Ferrari or a Ford, both cars, different costs mainly driven by supply and demand. In this case Ferrari will supply less cars than they have demand for, keeping the price high. Ford will make enough cars for all the demand, making them less costly to produce and less costly at the price point. Inflationary figures are linked to many products to give an overall view in terms of the cost of living, this has remained relatively stable over the last x years, however a shit storm of events as created instability. Items will settle again once demand drops and a few uncertainties are ironed out in Eastern Europe… I think I missed a part out that you asked. Inflation is an indicator to the cost of living, is it increasing or decreasing. Resources and demand for those resources increases, pushing up the cost of living. The population rising pushes up demand on resources, everything is linked. Products and services can go down, technology advances as an example can make production less costly enabling a greater supply, which manages the demand. " | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient. As I said, I am no economist, so I know increased base rates only affect those on tracker and variable rate mortgages. In the UK there is a huge preference for fixed rates. So some people are being impacted right now. Others are sitting on a potential time bomb as their fix rate deal ends. Apparently as you say that is 1.3m this year. Wouldn’t call that insignificant? A jump from c.2% to c.6% is going to hurt right? Mortgage rates are already dropping. Fixed rates now available circa 5%. Yep which is great news. They rose then dropped last winter too (fixes dropping to c.4%). Let’s hope the market price in a reduction longer term for their swap rates and it triggers a mortgage price war (got a few years left on my fixed). *Meant to say they rose them dropped last winter AND then rose again and are now dropping again. Feels a bit like gambling right now. Anyone who bagged the Lloyds 10yr fix at 2.75% (ish can’t remember but it was 2.something) available in spring 22 looks like they played a blinder! Possibly. There are kick out rates. E.g if the rates went to 6% the mortgage would be deemed. Void. Sorry am I reading that right? If somebody took out a 10yr fix at 2.75% but during that 10yr period if base rates went above a threshold (you say 6%) it would void that mortgage agreement? Read the small print huh "I'm not sure of the exact percentages but yes. That's how these agreements have worked for about 300 years in trading. And it's how they always worked in mortgages. If a bank gave every 1 a base rate of 2% and then interest rates and gilt rates rose to 10% for a prolonged period e.g 2/3 years. You'd have no banks left. | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient. As I said, I am no economist, so I know increased base rates only affect those on tracker and variable rate mortgages. In the UK there is a huge preference for fixed rates. So some people are being impacted right now. Others are sitting on a potential time bomb as their fix rate deal ends. Apparently as you say that is 1.3m this year. Wouldn’t call that insignificant? A jump from c.2% to c.6% is going to hurt right? Mortgage rates are already dropping. Fixed rates now available circa 5%. Yep which is great news. They rose then dropped last winter too (fixes dropping to c.4%). Let’s hope the market price in a reduction longer term for their swap rates and it triggers a mortgage price war (got a few years left on my fixed). *Meant to say they rose them dropped last winter AND then rose again and are now dropping again. Feels a bit like gambling right now. Anyone who bagged the Lloyds 10yr fix at 2.75% (ish can’t remember but it was 2.something) available in spring 22 looks like they played a blinder! Possibly. There are kick out rates. E.g if the rates went to 6% the mortgage would be deemed. Void. Sorry am I reading that right? If somebody took out a 10yr fix at 2.75% but during that 10yr period if base rates went above a threshold (you say 6%) it would void that mortgage agreement? Read the small print huh
I'm not sure of the exact percentages but yes. That's how these agreements have worked for about 300 years in trading. And it's how they always worked in mortgages.
If a bank gave every 1 a base rate of 2% and then interest rates and gilt rates rose to 10% for a prolonged period e.g 2/3 years.
You'd have no banks left."In a broken financial system that would never happen. Plus banks are to big to fail and will get bailed out.  | |||
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"Hopefully our resident economists can explain this or correct assumptions... Why are the BoE using levers to control inflation which are normally linked to an over heating economy driven by excessive consumer spending, when all indicators appear to be that inflation now is being driven by supply side issues? Because those levers still work to dampen the economy, even if the cause is supply-side issues. Which levers would you prefer to see them using? Don’t know I am not an economist. But as a layperson it seems counter-intuitive. Price of everything goes up (inflation) so people have less money to spend. BoE put up interest rates and people have even less money to spend. In the meantime the supply issues causing the price inflation to rise continues. Are you saying rising/reducing base rate is the ONLY tool the BoE has? Why does the bofe putting up interest rates leave people with less money to spend? Interest rates immediately affect savers. They have a delayed response on borrowers on thing such as mortgages. I have a 5 year mortgage from 2020 most mortgages tend to be 5 year atm I think with 45% being that as of 2021 I think there are 1.3m people due for renewal in this year and next year? This isn't significant. It would also be worth getting the adviser to discuss, because id fully expect rates to go down in the next year so maybe a variable mortgage is better. I'm not really sure how interest rates affect much else. Maybe company borrowing costs and they push those onto the Consumer, but tbh that's minimal. My former employers cost of borrowing went up 50m a year. But per product and treatment sold. That's maybe 10p per item/patient. As I said, I am no economist, so I know increased base rates only affect those on tracker and variable rate mortgages. In the UK there is a huge preference for fixed rates. So some people are being impacted right now. Others are sitting on a potential time bomb as their fix rate deal ends. Apparently as you say that is 1.3m this year. Wouldn’t call that insignificant? A jump from c.2% to c.6% is going to hurt right? Mortgage rates are already dropping. Fixed rates now available circa 5%. Yep which is great news. They rose then dropped last winter too (fixes dropping to c.4%). Let’s hope the market price in a reduction longer term for their swap rates and it triggers a mortgage price war (got a few years left on my fixed). *Meant to say they rose them dropped last winter AND then rose again and are now dropping again. Feels a bit like gambling right now. Anyone who bagged the Lloyds 10yr fix at 2.75% (ish can’t remember but it was 2.something) available in spring 22 looks like they played a blinder! Possibly. There are kick out rates. E.g if the rates went to 6% the mortgage would be deemed. Void. Sorry am I reading that right? If somebody took out a 10yr fix at 2.75% but during that 10yr period if base rates went above a threshold (you say 6%) it would void that mortgage agreement? Read the small print huh
I'm not sure of the exact percentages but yes. That's how these agreements have worked for about 300 years in trading. And it's how they always worked in mortgages.
If a bank gave every 1 a base rate of 2% and then interest rates and gilt rates rose to 10% for a prolonged period e.g 2/3 years.
You'd have no banks left."West Brom BS tried this a few years back with their buy to let portfolio. They argued that as the base rate was so low, they were losing money. They lost part of the case as many BTL customers are consumers, rather than companies. | |||
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