Interest Rates Predicted To Rise Very Soon

steveR

Member
Mixed Farmer
Having money in a bank just now is just a total joke. Probably losing 10%+ on it every year. Imagine there's a lot of older people with a bit of money in the bank considering buying a house to let just to have something other than a few worthless numbers on a screen, that's what I would do. I think it's going to get a lot worse

All suggestions still welcomed for investment opportunities.... ;)
 
Value of homes have increased by more than covid debt.

There are two routes to raise revenue. One is treat houses like normal asset and get some cgt out of them. Second is destroy the overseas tax havens and bring the dosh back or tax it as it it were still here.


The western world has printed trillions of $ collectively called Quantitative Easing. Of course those who are more money savvy will invest their share in property. Hence house prices are going up everywhere where their gov'ts have been running their printing presses hot.
Central banks (those controlling interest rates for each nation) require higher rates now as all this money that has sloshed around to cushion the effects of Covid will have to be bought back, some how, some day. They have few other tools to control inflation.
 

cows sh#t me to tears

Member
Livestock Farmer
The western world has printed trillions of $ collectively called Quantitative Easing. Of course those who are more money savvy will invest their share in property. Hence house prices are going up everywhere where their gov'ts have been running their printing presses hot.
Central banks (those controlling interest rates for each nation) require higher rates now as all this money that has sloshed around to cushion the effects of Covid will have to be bought back, some how, some day. They have few other tools to control inflation.
Except that plenty of people lost their jobs or were stood down during lockdowns (still happening here) and defaults on mortgages en mass is unpalatable to both banks and government. The banks dont want to be stuck with books full of property worth less than the debt owed on them. The RBA has stated that rates will remain the same here for at least the next 3 years.
 

Grass And Grain

Member
Mixed Farmer
Location
Yorks
I'm guessing (yes, guessing, I'm a farmer not an economist) commodities like gas will fall as quickly as they rose, which will reduce headline inflation. That said, knock on effect on fert, and hence maybe reduced food supply next year - but remembering many low yielding spring cropping areas of the world don't pile on the N like we do with Autumn cropped cereals in GB. Might be a good idea to keep N rates up!

Energy price will have knock on effect for many things in short term, but settle down. Many will simply jump on the bandwagon by raising prices, using inflation as an excuse.

Gov don't seem to like high interest rates, businesses and home owners are too reliant on low interest rates. Rates should go up to 5+% , but I guess they won't.

I wrote that, but tbh I've not got a clue.
 

DaveGrohl

Member
Mixed Farmer
Location
Cumbria
I'm guessing (yes, guessing, I'm a farmer not an economist) commodities like gas will fall as quickly as they rose, which will reduce headline inflation. That said, knock on effect on fert, and hence maybe reduced food supply next year - but remembering many low yielding spring cropping areas of the world don't pile on the N like we do with Autumn cropped cereals in GB. Might be a good idea to keep N rates up!

Energy price will have knock on effect for many things in short term, but settle down. Many will simply jump on the bandwagon by raising prices, using inflation as an excuse.

Gov don't seem to like high interest rates, businesses and home owners are too reliant on low interest rates. Rates should go up to 5+% , but I guess they won't.

I wrote that, but tbh I've not got a clue.
When it comes to individual things, the cure for high prices is high prices. So yes with gas, supply will increase and prices will subside. Don't know where, don't know when....... Wheat at £1000/? I'm ploughing my PP up, my garden and my lonning.
 
Where does the US go to when they want to borrow 39 trillion dollars?

And who is daft enough to lend it when they have 657 trillion outstanding?

And who has it to lend when the world seems in a mess?

We have talked about this before.

The USA owes money to investors. A lot of these will be American people or companies who have bought government bonds as they see them as safe and a worthwhile investment. I can't say I blame them- the USA is a pretty strong economy and it seems to have been on the boil more often than not in the last 10 years.


Look at it like this:

I'm the Ollie9899898 government and I write an IOU to an investor and borrow £1000.

I then spend that £1000 and buy something the Ollie989898 country needs. (Transaction number 1).

The person who just took the £1000 off me needs his car repaired. He spends £1000 doing it and just so happens to have recently been paid £1000 (by me). (Transaction number 2).

The garage take the £1000 in payment for fixing the earlier guy's car. It pays the £1000 as wages to some of it's workforce this week. (Transaction number 3).

The workers, each pocketing £250 (for example) all go out and spend it on their shopping, a bit of diesel and a good knees up and Saturday night. (Transaction number 4).


Now, the government originally borrowed £1000 but since then, a total of £4000 of business has occurred using that same money.

And guess what? The government is levying a little bit of tax on every single pound of that £4000 and all the Ollie989898 government needs to do is earn enough tax back on that £4000 to repay the interest on the original £1000.


Now ask yourself- which is higher today? The value of the taxation that will be attached to £4000 of varied business or the interest payments on £1000?
 
I'm guessing (yes, guessing, I'm a farmer not an economist) commodities like gas will fall as quickly as they rose, which will reduce headline inflation. That said, knock on effect on fert, and hence maybe reduced food supply next year - but remembering many low yielding spring cropping areas of the world don't pile on the N like we do with Autumn cropped cereals in GB. Might be a good idea to keep N rates up!

Energy price will have knock on effect for many things in short term, but settle down. Many will simply jump on the bandwagon by raising prices, using inflation as an excuse.

Gov don't seem to like high interest rates, businesses and home owners are too reliant on low interest rates. Rates should go up to 5+% , but I guess they won't.

I wrote that, but tbh I've not got a clue.

The thing with commodities is that, the higher the market price, the more economic transport and production becomes so more players enter the game who would otherwise have been excluded.

You can bet your bottom dollar that middle eastern pipeline to Europe is being talked about again. It was extremely foolhardy for Europe to be relying on imported gas from Russia to generate electricity. It is utterly mental.
 

Jonp

Member
Livestock Farmer
Location
Gwent
My brain is hurting reading this thread as I'm a bit thick but understood your explanation. How do you pay the original £1000 back though?
 

DaveGrohl

Member
Mixed Farmer
Location
Cumbria
We have talked about this before.

The USA owes money to investors. A lot of these will be American people or companies who have bought government bonds as they see them as safe and a worthwhile investment. I can't say I blame them- the USA is a pretty strong economy and it seems to have been on the boil more often than not in the last 10 years.


Look at it like this:

I'm the Ollie9899898 government and I write an IOU to an investor and borrow £1000.

I then spend that £1000 and buy something the Ollie989898 country needs. (Transaction number 1).

The person who just took the £1000 off me needs his car repaired. He spends £1000 doing it and just so happens to have recently been paid £1000 (by me). (Transaction number 2).

The garage take the £1000 in payment for fixing the earlier guy's car. It pays the £1000 as wages to some of it's workforce this week. (Transaction number 3).

The workers, each pocketing £250 (for example) all go out and spend it on their shopping, a bit of diesel and a good knees up and Saturday night. (Transaction number 4).


Now, the government originally borrowed £1000 but since then, a total of £4000 of business has occurred using that same money.

And guess what? The government is levying a little bit of tax on every single pound of that £4000 and all the Ollie989898 government needs to do is earn enough tax back on that £4000 to repay the interest on the original £1000.


Now ask yourself- which is higher today? The value of the taxation that will be attached to £4000 of varied business or the interest payments on £1000?
And everyone else has lost a bit of money through taxation in the process. Like shooting fish in a barrel.
 
My brain is hurting reading this thread as I'm a bit thick but understood your explanation. How do you pay the original £1000 back though?

The government is borrowing money over long timeframes. Their aim is to grow the economy (which is nothing but a huge business in effect) just tiny fractions of a percentage within that timeframe and by consequence their tax 'take' will increase enough to pay back the £1000- if they so choose to do so.

Significant inroads have been made into government debt repayments before, it was done in a big way under the Clinton administration. I think he managed to repay over 500 billion give or take.
 

steveR

Member
Mixed Farmer
I'm guessing (yes, guessing, I'm a farmer not an economist) commodities like gas will fall as quickly as they rose, which will reduce headline inflation. That said, knock on effect on fert, and hence maybe reduced food supply next year - but remembering many low yielding spring cropping areas of the world don't pile on the N like we do with Autumn cropped cereals in GB. Might be a good idea to keep N rates up!

Energy price will have knock on effect for many things in short term, but settle down. Many will simply jump on the bandwagon by raising prices, using inflation as an excuse.

Gov don't seem to like high interest rates, businesses and home owners are too reliant on low interest rates. Rates should go up to 5+% , but I guess they won't.

I wrote that, but tbh I've not got a clue.
Well, you are not alone in that, there are many, many well paid advisers and economists who don't know either...
 
Last edited:

DaveGrohl

Member
Mixed Farmer
Location
Cumbria
As far as I can see governments have now got into the habit of simply paying it back with new fresh borrowed money so the national debt simply goes higher & higher!
See, it's not anything like as complicated as it first appears is it? The more you borrow from the future the lower the value of that money when you finally get there.
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
The inflation rates we are seeing should be relative short term, they are based on a global lag in production caused by covid, things should catch back up eventually……… assuming we didn’t get another significant covid variant or wave now

everyone is in the same boat globally, nothing has REALLY changed other than the numbers

maybe some short term interest rate rises to try cool things and stop inflation getting out of control but they can not rise much without bankrupting most of the word and individuals as economies are based on debt now

in the meantime borrowing cheap money to buy appreciatIng assets pays handsomely, landowner farmers and those sitting on piles of wheat literally get richer daily right now

question is if it’s time to fixed any variable rate borrowing you may have or not ?
 
Last edited:

cows sh#t me to tears

Member
Livestock Farmer
The inflation rates we are seeing should be relative short term, they are based on a global lag in production used by covid, things should catch back up eventually……… assuming we didn’t get another significant covid variant or wave now

everyone is in the same boat globally, nothing has REALLY changed other than the numbers

maybe some short term interest rate rises to try cool things and stop inflation getting out of control but they can not rise much without bankrupting most of the word and individuals as economies are based on debt now

in the meantime borrowing cheap money to buy appreciatIng assets pays handsomely

question is if it’s time to fixed any variable rate borrowing you may have or not ?
Ummmm Evergrande and the complete crash of the property and steel market in China may have a much greater effect than their biological weapon they unleashed.
 

SFI - What % were you taking out of production?

  • 0 %

    Votes: 80 42.3%
  • Up to 25%

    Votes: 66 34.9%
  • 25-50%

    Votes: 30 15.9%
  • 50-75%

    Votes: 3 1.6%
  • 75-100%

    Votes: 3 1.6%
  • 100% I’ve had enough of farming!

    Votes: 7 3.7%

Red Tractor drops launch of green farming scheme amid anger from farmers

  • 1,293
  • 1
As reported in Independent


quote: “Red Tractor has confirmed it is dropping plans to launch its green farming assurance standard in April“

read the TFF thread here: https://thefarmingforum.co.uk/index.php?threads/gfc-was-to-go-ahead-now-not-going-ahead.405234/
Top