71 2 mins 9 yrs

The last thing we need is to punish savers EVEN further and encourage reckless bank lending and yet, unbelievably, that is exactly what the financial “experts” at the Bank of England seem to be contemplating.

Negative interest rates should be considered as an option to encourage banks to lend to small and medium-sized firms, the Bank of England’s deputy governor for financial stability said today.

Paul Tucker said the dramatic move had been discussed at this month’s rate-setting meeting as an option to help fuel economic growth.  Such a move would spell catastrophe for cash-strapped savers, who have already been crippled by rock bottom rates since the Bank of England dramatically cut the base rate to its record low of 0.5 per cent in March 2009.

Lending is based on calculated risk, not largesse. I would encourage banks to be careful to whom they lend. Saving is predicated long term investment and denying oneself short term benefit. At a stroke, Tucker seeks to increase risk taking and punish prudence. Remarkable stupidity, even by Bank of England standards.

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71 thoughts on “PUNISH THE PRUDENT…

  1. Risk and reward are linked. If you want a higher return on your money you need to take more risk.

  2. Negative interest rates aren’t an entirely new thing. Japan has had them for a time I think. It hasn’t helped them.

    The regulators are asking the banks to do contradictory things – lend more, and yet protect the balance sheet.

    After the near death experience that they had five years ago, they tilt to caution.

  3. Paul Tucker said the dramatic move had been discussed at this month’s rate-setting meeting as an option to help fuel economic growth because they’ve flogged their one idea to death, they’ve been printing like mad, they’ve stolen our wealth by massive inflation, still the economy’s a disaster, and they’ve got no idea what else they can do.

    Here’s what they should do – resign, lock the doors and let market forces decide interest rates.

  4. Things are rough for savers but still good for those of us with mortgages. In fact I tend to forget the late 80s when I was paying through the nose.

    I have my mortgage down to a manageable ammount even if the interest rates doubled but I think that there would be many who would struggle. I think that there is a bucketful of misery waiting for a lot of people as I don’t see mortgage rates staying low for ever.

  5. ‘Not in price inflation, the only inflation that real people care about. ‘

    What nonsense! – groceries up 4.7% this month. gas prices up 6p a litre, some 3.5% – and you think folk dont care about that? and those are but two examples of very inflationary price increases.

    Worse is promised as the pound falls due to QE, and the debt just keeps growing.

    That link you posted is utter nonsense based on governmental imagination rather than honest facts.

  6. It appears that few here grasp the notion of money as debt i.e. as money is introduced into the economy through lending, debt is created because it is money loaned. And the killer is that in order to pay off the new debt, more money has to be taken out of the economy because the debt is usury-based. So, if the banks lend more money into the economy as mortgages and business loans, a greater amount of money has to come OUT of the economy to pay off the debt, hence Ernest’s comment at 9.21pm. The only way round this inevitable removal of money from the real economy is to create more debt, and more debt, and more debt….

    Those who control the issuance of money are the puppet-masters, and the politicians are their puppets. Occasionally, the ‘mainstream’ media which the puppet-masters own or control let slip some information as to how the system works. It happens only rarely but here was one instance:

    http://www.independent.co.uk/news/uk/home-news/rothschild-loses-libel-case-and-reveals-secret-world-of-money-and-politics-6720015.html

    It began on Mr Rothschild’s private jet from the World Economic Forum in Davos to Moscow, where they met Mr Deripaska, the aluminium plant manager who became the richest oligarch of them all, and continued on Mr Deripaska’s private jet to his chalet in Siberia, where “to beat jet lag” they were whipped with birch leaves before plunging themselves into icy water – a traditional Siberian banya.

    Less salacious, but seemingly more sordid, was an earlier dinner at Cantinetta Antinori, a fashionable Tuscan restaurant in Moscow. Mr Deripaska, the Mail had claimed, was dining with executives from the US aluminium giant Alcoa, negotiating a £250m deal to buy two of Mr Deripaska’s aluminium plants, at which a stumbling block was an EU import tariff on Russian aluminium. Enter Lord Mandelson, then a lowly Mister, but at the time the EU Trade Commissioner. The deal is done, costing several hundred British jobs, and the tariffs come down.

    Puppet masters, of course, do not like the limelight, but when one pulls quite as many strings as Mr Rothschild would appear to, things will inevitably go wrong. Indeed, it is not the first time this seemingly unlikely trio has conspired to make the headlines. When Mr Deripaska moored his yacht next to the Rothschild family villa in the summer of 2008, they, along with George Osborne, managed to tie themselves up in an even more spectacular imbroglio.

    These people do not go through airport security although they will fool the weak-minded into believing that they do – the recent Henry Kissinger lark as an example. These are the people mentioned in the report which revealed the $32trillion of offshore, untaxed cash, and it belongs to the trillionaires, of which one notable family is mentioned above.

  7. Money supply is esoterica. We’re not in Economics class, we are in the world, People care about the price of horsemeat in Tesco’s, not money supply.

    Ernest

    I agreed with you!

  8. No Phantom – people over here care about tonight’s football results. But I care about money supply because it has determined the world in which these football fans live. Just because they can’t understand the reality of money doesn’t mean that they deserve to lose everything to the clique which owns their banks, their homes and even the football clubs about which they care more than anything.

    Goerge Osborne is a puppet, like Cameron. Rothschild is the puppet-master. This is the contrast of government and shadow-government made clear for a fleeting moment.

  9. Well thats a good discussion to have but call it ” money supply inflation ” or whatever if you wish to be understood or to persuade.

    Calling it ” inflation ” in a non macroeconomics discussion is pedantic and useless.

    Use the language that that the general public uses.

  10. Allan — You’re in no way superior to people who like to watch football. I bet you spend far more time on your hobby (laughably implausible conspiracy theories) than those you look down on do watching the football.

  11. Petr – I’m superior to you and that’s all tha matters on this thread. Do you have anything to say on my post of 11.34pm? Btw I really am superior to you – I wasn’t kidding.

  12. Phantom –

    On the contrary, for the greater part of economic history inflation has been widely understood to mean an increase in the supply of money and credit. That is what it always was, that is what it remains.

    Rising prices are merely an effect of inflation.

    The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.

    – von Mises.

  13. Use the language that that the general public uses

    We’re not the general public. When we discuss a matter of economics, there is no reason why it should be dumbed-down in order that Petr may understand it. When we on this site discuss money, I consider it important that the fact of ‘money as debt’ be made clear to those of us who are nit yet aware of it. This is not taught in economics classes at University because the curricula of certain subjects (history and economics) are tighly controlled by the people mentioned in my post of 11.34pm.

  14. Oh they are. Krugman is a product of a university education, and as Allan has shown beyond any doubt, the universities aren’t telling us what’s really going on.

  15. Phantom – do you understand the concept of money as usurious debt, and do you then see the reality of it and how it creates more debt at the same time as taking more money out of the economy to pay off the debt created?

  16. We, and perhaps the West in general, is so deep in debt that there is little chance of it being repaid in the conventional sense, i.e. by repaying debt on a ‘pound for pound’ basis. The only way is to devalue todays pound by printing more paper, in effect reducing the value of each pound and thereby giving the appearance of ‘paying the debt’ – effectually cheating the lender with dud money no better than forgeries when compared with the pounds of the original debt.

    The debt is so large that even in a thriving economy it would take decades to repay, – but we do not have a thriving economy, nor even the likelyhood or prospect of having one for many decades. The rest of the world are no longer our customers for our exports, – we are now their customers, and our purchases from them are increasing our national debt on a daily basis.

    But you all know this anyway, just perhaps afraid to admit it.

    Just how many beds can a rich man sleep in on any one night? – and how long before the reality becomes common knowledge that greed is the ultimate sin?

  17. Ernest Young –

    There is no chance of paying back the debts, but I suspect that was a feature of mortgaging the labour of future generations. The question is, should the debts be repaid? The answer is: no way. Neither you nor your grandchildren signed debt instruments. Politicians did that. Well let politicians pay back the debts in that case.

    In a profound sense, the debtor who fails to repay the $1,100 owed to the creditor has stolen property that belongs to the creditor; we have here not simply a civil debt, but a tort, an aggression against another’s property.

    If sanctity of contracts should rule in the world of private debt, shouldn’t they be equally as sacrosanct in public debt? Shouldn’t public debt be governed by the same principles as private? The answer is no, even though such an answer may shock the sensibilities of most people. The reason is that the two forms of debt-transaction are totally different.

    [W]hen government borrows money, it does not pledge its own money; its own resources are not liable. Government commits not its own life, fortune, and sacred honor to repay the debt, but ours. This is a horse, and a transaction, of a very different color.

    Murray Rothbard

    The moral, legal and economic case for repudiating the debts is unimpeachable.

  18. These ‘national debts’ are odious debts.

    http://globaljustice.stanford.edu/publications/21472

    Odious debts are debts incurred by the government of a nation without either popular consent or a legitimate public purpose.

    The creation of money as debt and the inflationary consequences of it are known to those who have the intelligence to understand it. Money is debased and the assets of the nation are transferred to the corporations which are owned by those banks which loaned the money into the economy as usurious debt.

    I had a discussion with one of my colleagues today who is taking a part-time MBA at Aberdeen University. I asked him a few questions about the curriculum, and he mentioned QE then his astonishment at “how banks can have £1 but lend out £10”. Amazing, said I, that’s fractional reserve banking (not taught on the syllabus). How about ‘money as debt’ – “no, we’re not told about that. What is it?” So I explained.

    The entire syllabus is false and these ‘mainstream’ economists base their failed economics on the ‘money as debt’ paradigm. Yeah, Krugman et al – shills for the usurers.

  19. Well let politicians pay back the debts in that case.

    They are going to.

    With money raised by taxation.

  20. FO –

    I see.

    So when it comes to paying for the NHS, “the money comes from government”. When it comes to paying off state debts, “the money comes from the taxpayer”.

    Try not to speak out of both sides of your arse.

  21. Phantom –

    Absolutely.

    War is the health of the state, as a wise man observed. Nothing erodes liberty, advances the state and benefits power elites like war.

  22. Phantom – for certain. First of all because the Money Power created the conditions for WW 1 and 2, and secondly because there was no need to borrow a nation can create its own money. From whom did the US borrow to fund the war, and who gained from the expenditure?

    http://www.warisaracket.com/

    Major General Smedley Darlington Butler, USMC

    1881 – 1940

    double recipient of the Congressional Medal of Honor

    “I spent 33 years and 4 months in active service as a member of our country’s most agile military force–the Marine Corps. I served in all commissioned ranks from second lieutenant to Major General. And during that period I spent most of my time being a high-class muscle man for Big Business, for Wall Street and for the bankers. In short, I was a racketeer for capitalism. I suspected I was part of a racket all the time. Now I am sure of it. Like all members of the military profession I never had an original thought until I left the service.”

    Smedley D. Butler (1881-1940)

  23. “It is no coincidence that the century of total war coincided with the century of central banking.”

    ― Ron Paul, End the Fed

  24. We had comparatively less periods of war and conflict in the 20th century than any other previous century in known history.

  25. There have been many examples of total war in history.

    The Mongols were fine at it.

    The only thing that really changed is the technology

  26. I see.
    So when it comes to paying for the NHS, “the money comes from government”. When it comes to paying off state debts, “the money comes from the taxpayer”.
    Try not to speak out of both sides of your arse.

    Pete, try reading

    on the NHS “So that would be yes, the money that Circle receives comes via government taxation.

    on state debts “With money raised by taxation.”

  27. FO –

    You’re still wrong. Nothing “comes via government taxation”. That merely describes a process. Whatever government does with any money, that money is looted from the productive class. There is no other possible way for an honest person to describe it.

    Do try to not become as dull as Tarasov.

  28. Surely government by and large is just the moral confiscator and beneficient sensible distributor of monies that would otherwise be squandered on booze fags and fancy fripperies by the irresposible masses 🙂

  29. We had comparatively less(sic) periods of war and conflict in the 20th century

    Really? Is that merely your opinion, Colm, or can you back it with supporting evidence. But as the Cold War showed, non-war can be as profitable as war if stage-managed correctly. It is very fortunate for the military-industrial complex that the Soviets were given the A-bomb by the US authorities:

    http://www.jrbooksonline.com/PDF_Books/From_Russia_With_Love-Col_Jordan-1952-28pg-POL.pdf

  30. No Allan it is a fact. Societies were a lot more violent in previous centuries and much greater proportions of young men died in military conflict or other violent incidents than in the 20th century. Yes WW1 and WW2 were massive in scale, but in pre 19th century Europe at least, war between states was the default position not the exception which thankfully it is now.

  31. Allan

    I don’t post links. You can choose to agree with my views or not. Posting links taken from the internet is like taking grains of sand from the Sahara. There are trillions to choose from.

  32. Allan,

    Colm has a very vivid imagination regarding previous eras, that the twentieth century had major wars going on for some seventy years of the century, and particularly in the latter part, seems to have passed his notice. Also missed was that more people died in the tewentieth century than died in the total of previous centuries.

    Of course it could all be due to those new fangled weapons of mass destruction, and the invention and devlopement of gunpowder and other explosives, – but hey! if Colm sya it is so, it must be fantasy so…

  33. ‘There are trillions to choose from.’

    — and you just cannot be bothered! – in case you might find something that may induce you to change your mind.

  34. Ernest

    Nothing to do with that. I choose to treat the comments threads following the posts as a forum for expressing opinions not a scientific analysis board. Whateevr you may think of me I don’t feel the need to fix myself to a Right or Left position, i just have my views and they may or may not be accurate but I post my opinions and feel no need to buttress them with links from other websites, they are just my views take them or leave them. Others can research the web for ‘proof’ as they see fit.

  35. Ernest – you are correct. Colm fails to notice that the internet allows the more intelligent to bypass the gatekeepers who falsify history and go straight to the source material. For example, Colm did not know that the US gave the Soviet Union the means to construct the A-bomb. Until recently, neither did I but it did not surprise me. Even with the factual evidence of the link which I posted, Colm will refuse to believe that the US gave the Soviet Union the means to construct the A-bomb because if he did believe it, then the entire edifice in which his mind is imprisoned would begin to collapse around him. You see, some people are very comfortable in prison.

  36. Colm – I have my views and I make sure that they are accurate. If they are shown to be inaccurate (go on – show me where and when), then I change my mind and then my views are once again accurate. Why one earth would you wish to have views and opinions which are wrong? Why?

    To paraphrase you – “I have my views and I don’t see why they should be accurate”. If I held to that, I’d be thrown out of my job.

  37. Colm –

    Free yourself, open up, accept new information.

    You’ll feel better for discarding the suffocating propaganda which has imprisoned your mind since school.

  38. Colm

    Why don’t you just set up web pages up expressing your opinions on a host of stuff. Indeed not just opinions. State stuff. It dorsn’t matter if it is true or not. Just linking to it will apparently lend weight to your opinion.

  39. Aileen – in 1949, the Soviet Union succeeded in exploding an A-Bomb. What is your opinion on how this was achieved so soon after the US developed its A-bomb?

  40. Aileen

    I will leave such shoulder padding to Allan and Pete. They obviously don’t trust the strength of their own arguments without scouring the net to ‘prove’ their views.

    If I wanted to, I could post a hundred links to websites that ‘prove’ Elvis is alive and working in a fish shop in Grimsby – does it make that supposition any truer ?

  41. No Colm – I express my opinion then I link to information or reports which support that view. I put to you the question which I put to Aileen at 10.11pm: would you give it a considered response?

  42. Allan

    No I won’t give it a considered response because I don’t have the slightest clue as to how the Russians got the bomb. I wasn’t in the corridors of power in Moscow in the late 1940s. Maybe if I was I might have been able to answer.

  43. Colm – you weren’t and neither was I. On that basis, no documentary evidence can ever persuade you of anything. Ignorance isn’t bliss: it’s just ignorance.

  44. Phantom – the Rosenbergs handed over material on radra and jet engines. Anything else was trivial. I know why you have to put foprward diversions, but the A-bomb had no espionage aspects to it at all. The tehnology was handed over at the behest of the Administration, though probably not of either President, both of whom were unaware of the Manhattan Project. Come to think of it, the entire world was unaware of the Manhattan Project – 100,000 people working on it? That’s a pretty big conspiracy, is it not?

  45. Phantom –

    Given inflation in Zimbabwe, a million Zim bucks isn’t worth much.

    Do you have an actual answer to Allan’s 10.54pm?

  46. Colm wasn’t in the corridors of power in Moscow in the late 1940s, but he was an eye witness to pre-20th Century warfare.

  47. Pete

    That’s right I was. It’s another way of saying, I decide my own views on things whether I was there or not. And here’s a little secret for you. We ALL do it !

  48. For Phantom’s education:

    https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol49no3/html_files/Rosenberg_2.htm

    In addition to data on radars, analog computers, and the proximity fuse, the Rosenberg group turned over a treasure trove of secret information about jet engine design and radio and computing technologies. The group’s total contribution amounted to over 20,000 pages of technical documents, plus the entire 12,000-page design manual for the first US jet fighter, the P-80 “Shooting Star.”[6] In addition to designs for specific weapons systems, the data gave Soviet scientists and planners invaluable insights into America’s development strategies. In technology development, information about a rival’s mistakes and dead ends is almost as valuable as details of its accomplishments.

    Oh – they were all jews, except one.

  49. The SU’s A-bomb project was driven primarily by Russian expertise, and Stalin fortunately recognised the military potential of nuclear fission earlier than Hitler did. They were certainly helped by information from Germany and from spies in the UK and, most of all, the US. Jewish and all as these spies were, however, their help probably only shortened the time the Russians needed to develop a bomb by a few years.

  50. Noel – the Soviet Union had no expertise in anything except that which it got from Wall Street’s corporations. This is the mind-prison inside which Colm seems rather pleased and even proud to be for a life-sentence and it is why I posted the document at 8.39pm. What I suggest that you do is read that and then reply in the light of new evidence which runs contrary to what you have been told.

  51. Daphne – the Soviet Union was given the technology of the A-bomb in order to create a plausible threat against which huge amounts of money would be spent in the US military. These would be enormous contracts to the corporate sector paid for by the money of its workforce and the blood of its young men (Korea, Vietnam). Not only did the SU get the A-bomb, but it got everything else by one way or another as the linked documnet describes in detail. Do you consider that the history which you’ve been taught being shown as false is merely trivial?

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