Comments | lordrosemount: Interest rate cut a disaster

lordrosemount

Interest rate cut a disaster

Nov 06, 2008 22:12

This afternoon, in a quick news check, I was horrified to learn that the Bank of England - under pressure from the Brown government to abandon its long-held commitment to keeping inflation low, in favour of the politically expedient but wholly short-term objective of trying to re-inflate the credit bubble to try to have Britons borrow our way ( Read more... )

Comments 4

soviet_phantom November 6 2008, 23:10:17 UTC

I think that's unfair, without the interest cut the small businesses and companies of this country would go down the pan regardless. The economy simply doesn't have a choice. I agree, it's risky and it could go dangerously wrong given the economic climate but I'm fully supporting the 1.5% cut because it will actually get the country's capital moving again as opposed to stagnating.

By the bye, I thoroughly recommend "After Blair: David Cameron and the Conservative Tradition" by Kieron O'Hara. I think you'd enjoy it. ;)

lordrosemount November 9 2008, 20:18:39 UTC

But that's exactly the problem: it isn't that the banks have money that they won't lend until prodded appropriately, it's that they simply don't have the money in the first place, and their priority is rebuilding their capital base (in large part through the use of taxpayers' money). In order for capital to move, it first has to exist. Meanwhile, if the answer to Britain's ailing business is ramping up the inflation rate to try and offset their pre-existing loans, that's not monetary policy, that's slash-and-burn economics.

toodeep2 November 9 2008, 15:25:20 UTC

Nice post. I have to (rather sheepishly...?) admit that the political content of your posts prevents me reading them fully, but when it comes to the economy, or put more bluntly - MONEY, then my political apathy is washed away.
Although how you think the Tories would have done better had they been in power, I'll never know...
The credit crunch was bound to happen no matter who was in power, and we can say that perhaps the Tories would have handled it better, but we will never know.
I was a bit shocked when they announced such a big cut, but for the moment I am not going to declare it a bad move. We'll have to wait and see!

lordrosemount November 9 2008, 20:31:45 UTC

Thanks. I think there are plenty of issues that are as important to people's livelihoods as the economy, but they just take a little more time for their effects to hurt people ( ... )