Interest Rates Predicted To Rise Very Soon

[HatsOff]

How much does the U.K. “earn” in a day? The country “earns” from taxes, so how much is collected each day?

Then, for instance, when we get daft figures like the cost of HS2 thrown at us we can put that figure into context.

ie, would it take 5 days of tax collection to pay for it or 500 days?

Government (national and local) spends approx £1065B a month year. Currently borrowing £65B a quarter so that suggests tax income is approx £805B. So HS2 is about an eighth of a year, or 6 weeks of taxes in one year.

Of course the mistake a lot of people make is comparing a national expenditure to a household/personal finances. It's not the same because a country never dies, generally gets bigger (or can increase value) and is in a population of other never-dying countries.

 

[tje]

Government (national and local) spends approx £1065B a month year. Currently borrowing £65B a quarter so that suggests tax income is approx £805B. So HS2 is about an eighth of a year, or 6 weeks of taxes in one year.

Of course the mistake a lot of people make is comparing a national expenditure to a household/personal finances. It's not the same because a country never dies, generally gets bigger (or can increase value) and is in a population of other never-dying countries.

But when the population of a country( like most of Europe ) starts to shrink that's when debt begins to become unmanageable

 

[Still Farming]

Lots can't afford their mortgages now at all time record low rates or goodness knows if only go up a couple of points?
The cheapest Mortgages in the nineties were around 14% and we managed???

 

[Drillman]

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?

I was wondering the exact same thing!

 

[Cab-over Pete]

Just printing a bit more sounds ideal in my world, but that’s why I’m not the chancellor.

In my world, I would need a really, really, really good quality set of coloured pens and some good paper.

 

[Drillman]

So at this point what would be the best way to cream off some of this money that’s floating about?

someone has to have some somewhere or there wouldn’t be such a national debt!

I thought about setting up a farm assurance scheme as a get rich quick venture but see it’s already been done

 

[DaveGrohl]

Lots can't afford their mortgages now at all time record low rates or goodness knows is only go up a couple of points?
The cheapest Mortgages in the nineties were around 14% and we managed???

Indeed, the main achievement of years of low interest rates has been massively inflated house prices. No one has money to spend on anything other than servicing their mortgage any more. Most people believe they are "better off" because their house has gone up. It's an illusion.

 

[DaveGrohl]

I was wondering the exact same thing!

They don't get it from China, they get it from the future. Where does China get its debt from? Same place.

 

[Roger Perry]

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?

I think there are too many zero's in that post, I was under the impression that we have $28 trillion on tick right now, this in a $20 trillion year economy.........scary eh.?

 

[oil barron]

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?

Give it take a few hundred million, the US tax revenue is around $3.5 Trillion and the spend is around $7Trillion.
The difference is made up by selling government bonds. These are auctioned off each month for various time frames from 2 - 30 years. The rate payable is dependent on the number being sold and the number of buyers. The government does not want to pay a big coupon on them, but if they flood the market with bonds that is the result.

That is where the fed comes in and buys bonds. This is how money printing happens. This is reflected on the “Federal balance sheet”. Ideally the fed would then sell these bonds second hand on the market as the economy improves. This happened from 2016-2019. However the level of federal buying of bonds has gone into overdrive since then. The outcome of having a large federal balance sheet is confidence in the currency.

in answer to where does the money go? Well when the fed buys bonds, investors are not so they buy securities and commodities instead which drives up the prices of those. People pay lower interest rates on their mortgages so buy bigger houses which drives the prices up of those. So the end result is inflation in securities, commodities and houses.

 

[Still Farming]

Indeed, the main achievement of years of low interest rates has been massively inflated house prices. No one has money to spend on anything other than servicing their mortgage any more. Most people believe they are "better off" because their house has gone up. It's an illusion.

Wait untill negative equity and bank sell offs again is it?

 

[Hilly]

Rates can go up and create bankruptcy’s like no tomorrow , it’s happend before be stupid to think it won’t happen again, the economy will need cooled down soon …….

 

[oil barron]

Rates can go up and create bankruptcy’s like no tomorrow , it’s happend before be stupid to think it won’t happen again, the economy will need cooled down soon …….

A lot of inflation just now is being driven by lack of productivity in the real economy. If interest rates go up business will not be able to invest to improve productivity so it will make things worse.

it was sneaked in on the BBC news this morning that people employed by the government is now higher than the Blair years and overall tax take on the economy is at 36% ( highest it has been since the 1950s).

Things are not going to improve with those sort of policies. Rishi Sunak is a communist in a Spivs suit and is getting an absolute free ride from the press and the opposition.
Nigel farage needs to up his game and start highlighting these issues to the man on the street.

 

[Hilly]

A lot of inflation just now is being driven by lack of productivity in the real economy. If interest rates go up business will not be able to invest to improve productivity so it will make things worse.

it was sneaked in on the BBC news this morning that people employed by the government is now higher than the Blair years and overall tax take on the economy is at 36% ( highest it has been since the 1950s).

Things are not going to improve with those sort of policies. Rishi Sunak is a communist in a Spivs suit and is getting an absolute free ride from the press and the opposition.
Nigel farage needs to up his game and start highlighting these issues to the man on the street.

Farage is great imo , but most don’t like him , he’s of made a great pm but never happen .

 

[Bald Rick]

Was talking to the bank yesterday and they are scratching their heads a bit as this is a bit of a new one on them.

Generally inflation is demand led but here & now it is supply led inflation which the BoE expect to flatten the inflationary pressures when the supply chain problems are ironed out.
Unfortunately, they cannot accurately predict when that will be so the best guestimates are that interest rates will remain low or not move at all in the near future

 

[Hilly]

Some predictions of recession in new year ?

 

[Bald Rick]

Some predictions of recession in new year ?

Country is very febrile at the moment.

IF food prices rise significantly (as suggested in today's Times), I can see rioting in the winter months

 

[Hilly]

Country is very febrile at the moment.

IF food prices rise significantly (as suggested in today's Times), I can see rioting in the winter months

With fert at the predicted £1000 ton next winter will be the big riot .

 

[Bald Rick]

With fert at the predicted £1000 ton next winter will be the big riot .

If you think about it, any pressure on domestic budgets will cause a kick back (a la poll tax riots)

Fuel - both for vehicles & houses (cooking / heating)
Food
Christmas toys

there's 3 for a start.

 

[teslacoils]

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.