PJ87
Journeyman Pro
The BOE played the inflation play book but failed to understand that if inflation is based on core needs like energy and food then inflation rises do nothing but make it tougher
Retirement
- Thread starter Crazyface
- Start date
The BOE played the inflation play book but failed to understand that if inflation is based on core needs like energy and food then inflation rises do nothing but make it tougher
harpo_72
Journeyman Pro
On that basis one could say that the Bank of England are not very well qualified and they have an inherent problem within .. if the lot at the top are thick then those at the bottom will either reach that level through degradation or poor training
Life expectancy has dropped in recent years but there’s still talk of upping the retirement age. As for what medical science can achieve, it’s a juggling act. Refining established medical procedures can extend and improve quality of life but I’ll paraphrase what a doc once said to me. We’re getting good at prolonging death. Unfortunately, it’s a process medical science has to go through, i.e. try something and if it works, look to refine it.
Sorry to bash the ego but I don’t think earning £80k (or whatever) in your mid 30s in London, with limited upside on earnings, living in a semi detached driving a Kia makes you an exception!
I manage a 26 year old on the same salary.
PJ87
Journeyman Pro
Considering the average wage of those in london is 42k and those around me are on lower I consider it an exception to the rule.
I'm not saying I'm well off I'm saying there are more people on less that have to have two incomes than not
Age has nothing to do with it, my colleague is 26 and on the same
Voyager EMH
Slipper Wearing Plucker of Pheasants
Its all about controlling the money supply to control inflation.This bit I have never understood and would love it explaining by someone. To control inflation we put up interest rates, that is paid for by mortgage owners and it is painful. But that money, the raising of rates goes to the banks. Why not raise tax by 0.25% and everyone pays, shares the burden. That way the money goes to the government. How does giving money to the banks help inflation
Money Supply = Deposits + Debts (loans, mortgages etc) + cash in circulation.
Deposits are potential spending. Loans are spending money of the recipient. Adding together deposits and loans might seem odd, but it is a simplistic view of money supply.
Raising interests rates makes deposits (savings) more attractive and loans less attractive thus reducing the amount of money being spent on stuff.
Larger demand (money supply) would push up prices as sellers of stuff look to maximise profits and there is enough money for them to sell at higher prices.
There is much more to it than this, but I have tried to give a simplistic description.
Raising tax as an alternative to raising interest rates is an interesting one. Tax revenue is merely giving the government spending money rather than leaving it in the hands of individuals and businesses. Does not get to any underlying cause and effect of inflation.
But very wealthy people benefitting from high interest rates while people much lower down the wealth scale struggle is perhaps one of the biggest issues of the day.
Redistribution of the wealth of the nation through effective tax and spending to benefit the nation as a whole is what might be needed. This is an unpopular strategy, it seems to me.
But views change over time.
Mmm, good post. A question; you say that raising the tax rates “does not get to any underlying cause and effect of inflation.“ If the tax take goes up disposable income goes down, inc. the headroom for an individual to borrow? Maybe I’m missing something but won’t raising the tax rates have a similar, not the same, effect as raising interest rates with respect to individual spending but give headroom for increased govt spending.
PJ87
Journeyman Pro
Raising taxes without rates must mean it's still cheap to borrow to meet your spending needs
Have a reread of my post. If you raise income tax, disposable income drops meaning it’s harder to borrow. But this also means interest rates for businesses, who invariably borrow, remain low. It protects businesses whereas interest rate rises doesn’t.
PJ87
Journeyman Pro
Whilst disposable drops borrowing can still increase
I mean I only looked at buying a car outright because interest rates went up, if they had stayed down a loan would have been first choice
If you don’t have the disposable income to pay the loan repayments, you don’t borrow. And you’re focusing on only one aspect of it, you’ve ignored the benefit to businesses.
Your own personal, anecdotal evidence has little relevance.
PJ87
Journeyman Pro
But it's a reflection of how it can still happen?
Yes I accept that less disposable income means less borrowing however you will have some that still borrow so doesn't hold the whole story
Maybe a hybrid method is needed
Tax rises and interest rates
But rather than to 4% rise to 2% and raise taxes
PNWokingham
Journeyman Pro
a few points to add on this subject. 1. Bussiness spending is also inflationary, not just consumer; 2.You cannot adjust taxes monthly like you can with interest rates so this strategy could never be flexible as interest rates are; 3. Central bank is independant and thus not politicised (supposedly); 4. Central banks have made the biggets mistake in their history and have caused (largely) the whole inflation bubble by not raising rates (and stopping QE) years aggo when the afteraffects of the financial crises in 2008/9 had calmed and growth was back on. A decade of zero rates and printing money was enetering the twilight zone and we will reap the affects for years to come
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pendodave
Tour Rookie
hmmm.
I would say that the very low interest rates which have been in place since 2008 have contributed a great deal to the rich (particularly the asset rich) getting much, much richer at the expense of the poor.
They don't have money in a savings account getting interest on the whole.
D
Deleted member 15344
Guest
Well
When it comes to retirement I’m hoping it will be at 55
I have a final salary pension from the military which I deferred to 55 which will allow to at least maybe go to part time
Then my own private pension plus my work pension
But unless things change I will be ok to work until 60
When it comes to retirement I’m hoping it will be at 55
I have a final salary pension from the military which I deferred to 55 which will allow to at least maybe go to part time
Then my own private pension plus my work pension
But unless things change I will be ok to work until 60
I was going at 52.5, and then the financial crash kicked in. Went at 59.
PJ87
Journeyman Pro
Being ex military would you rather busy yourself working until 60 rather than going at 55?
I can go at 55 but I'd be so bored. 60 seems a good age
Why would you be bored at 60? What your age is and what you do not to be bored aren’t linked. If you have a number of things you enjoy now, work gets in the way. I loved my job and was fully committed to it but I had a bucket list of things that work stopped me doing. Transitioned into retirement without much of a problem at all. My boss expected me back within 3 months… he got that well wrong.
PJ87
Journeyman Pro
There is more factors to age ofc
At 55 my kids would be 25 , 22 and 22 but add 5 more years they are more settled in their life's in theory. Maybe needing a grandad for childcare
Then my wifes pension is terrible compared to mine, she won't be able to go much earlier than 65 so 5 years without her would be less boring than 10
However if I stay longer my pension is higher and we could both go at 60 and I support her
PNWokingham
Journeyman Pro
you may have to ask Sir Kier for one of those "consultant opts outs" on the pension!
