MPC holds base rate at 0.5% for 35th month in a row

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Another month, another MPC decision to keep base rate at 0.5% as it has been since they first brought the rate to that level in March 2009.

This week’s political buzzword that is being bandied about is “fairness”. Yet not a word has any politician from any of the parties spouted about the huge injustice of the Bank of England’s policies.

How can it be fair to confiscate £44 billion annually from savers and pensioners and transfer it to those in debt, to penalise those who have struggled to put something by in order to support those who ran up debts and caused this financial crisis, to reward debt and penalise savings? Of course it is not fair. But it is politically convenient to inflate away debt and so they stay shamefully quiet.

Low interest rates are hurting the economy

The most annoying thing is that the policy is now doing the opposite of what is intended. Negligible base rates have not produced growth as was hoped. What was an emergency measure has been extended to last almost three years and is now actually harming the economy as commentators such as Anthony Hilton and Andrew Lilico have recently recognised.

Economic growth requires investment. But real investment requires savings. Without them, there can be no sustainable growth.

Yet instead of encouraging saver, the group that could provide the investment to help get us out of this mess, the Bank of England is hammering them instead. It doesn’t seem able to recognise that its actions are hurting the economy, crippling pension funds, savaging annuity rates and scaring people into curbing consumer spending.

The mad topsy-turvy world of Alice in Wonderland

The economy is now so distorted by artificially low interest rates that investors in index-linked government bonds this week had to pay for the privilege of lending the government money. We have moved into the mad, topsy-turvy world of Alice in Wonderland.

The Bank of England must admit that it has got it wrong and give a firm indication soon that interest rates will begin to be normalised. This would encourage businesses to invest, restore profitability to financial institutions, relieve the pressure on pension funds and persuade savers that they are free to spend again.

It is no use the Governor and Deputy Governor of the Bank of England expressing sympathy for the plight of savers. Savers don’t want sympathy. They want action. Action to stop this massive transfer of wealth. Action to stop the long-term devaluation of the pound.

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7 Comments

1. Lee

   January 12, 2012 at 3:45 pm

   “It is unfair: to confiscate £44.5 billion annually from savers and pensioners and transfer it to those in debt; to penalise those who have struggled to put something by in order to support those who ran up debts and caused this financial crisis; to reward debt and penalise savings.”
   What an idiot campaign site, i have savings which this hits me but i also have a mortgage, which keeping the rates at 0.5% saves me over £150 per month, to which i can spend on the high-street or pay my mortgage off earlier.
   A mortgage is not a debt, it is a long term investment, with hopefully a profit at the end, a debt is something you buy with no return.
   Most people wish to buy there homes but not many people have £100,00+ in there pockets to buy a house up front so that is why they take out mortgages.
   People need to be savvy and shop round for good savings rates. What a lot of people want is the easy life and not have to do a bit of shopping around for deals.
   It also helps smaller businesses stay a float with lower payments on there mortgages, thus hopefully keeping people in work, who can save….the country would be in a worse state if they had not kept the rates at this level, and i would say they will be at least this level to mid 2013 or even later.

   Recommend (1)
2. Brian

   January 12, 2012 at 7:17 pm

   “A mortgage is not a debt”

   You may think a little differently if the bond market decides that the UK is no longer a safe haven. (Providing the B of E is not allowed to turn us into a British version of the Weimar Republic)

   Recommend (6)
3. frances

   January 12, 2012 at 7:26 pm

   Lee

   Your the one who is talking C***
   The vast majority of Pensioners are the savers and they do not have mortgages..they saved for their old age
   Almost my entire income is interest from savings ..my pension was totally stolen by G Brown
   Company pensions simply do not exist for many pensioners they have to live off savings income
   My income has nose dived by 1/3rd despite being very very careful to ensure i get the best rate going
   The sheer cost of food and bare essentials has long since outstripped any RPI /CPI rise in my half state pension .

   The MPC and the Treasury are as guilty as hell and in cahoots stripping savers in order to benefit those who took out debts they could not afford
   As for buying a house G Brown was the idiot who seemed to think you could take a brick out of your house and spend it …another load of c***

   I worked hard all my life from age of 13 and stayed home to properly care for children, a sick husband , grandchildren and elderly parents and this is the way this and previous lousy Government treat us .

   Just wait till you find yourself in our shoes

   Recommend (11)
4. DK

   January 12, 2012 at 8:44 pm

   Lee, what a pile of BS\****..

   Whoever bought house with 90-95% mortgage at very high prices has made a mistake and we cannot support them through their debt. The whole story that house is an investment is wrong and we savers should not pay for your mistakes.

   The low IR policy has not delivered growth since the market has not corrected itself. The policy has failed and it is about time that BoE raised the rate.

   If they will not , do worry because the market will do it .. Check the LIBOR rate and see what I mean.

   Come on guys&girls, it is time to contact our MPs and ask the Osborne why he is letting MKing go by with murder of savers/pensioners/future FTB.

   Recommend (9)
5. John

   January 13, 2012 at 3:00 pm

   Lee,

   at the risk of parroting others… a mortgage is a debt, to say anything otherwise is quite honestly, idiotic.

   Now, you say it’s an investment and not a debt? Ever heard this phrase or words similar?

   The value of investments fluctuates: you may get back less than the amount you invested.
   Past performance is no guarantee of future performance. If you are in any doubt you should consult a professional.

   Here’s the truth Lee, you’re the problem. Your attitude is in large part what has caused the financial meltdown. People buying houses they can barely afford for a guaranteed profit. The banks lapping it up, peddling the line that houses are investments and happy to lend stupid amounts to people who can barely afford to service their “investment” in order to coin huge usury profits for themselves. The banks then massively compounding and complicating that by selling on and trading back and forth those “investments” as further investment opportunities for further profits.

   And on and on it goes, a perfect storm of naivety, usury and greed inflating a huge bubble until eventually someone decided to look at what was underpinning it all and asked “what are these houses actually worth?”

   Then the proverbial hits the fan, banks are left holding huge inflated and convoluted “investments” that eventually trace back to people who can barely afford to service them, underpinned by physical real estate worth fractions of what has been speculated.

   The bottom line is that the banking “industry” is being bailed out by savers and tax payers, they are effectively thieving the interest to offset their (and your) excesses. To protect wealthy elite privileges and shield reckless speculative lenders and borrowers from their own greed and/or stupidity, whatever happened to houses just being homes.

   Recommend (11)
6. John H

   January 20, 2012 at 11:21 pm

   Lee puts it in a nutshell.

   “A mortgage is not a debt, it is a long term investment, with hopefully a profit at the end, a debt is something you buy with no return.”

   Therefore, nothing whatever to do with having somewhere to live – a house is just an investment, something to turn into a profit.

   It’s precisely this greedy attitude that’s helped to produce the mess we find ourselves in.

   However, following Lee’s argument that a mortgage is an investment. As we all know, investments can go down as well as up. So why should this section of the population be so protected?

   Recommend (1)
7. frances

   January 21, 2012 at 12:40 am

   Unfortunately it was the previous administration who nurtured the stupidity of telling everyone they could spend spend spend , just stick it on a credit card or borrow more and more using their houses as collaterol that got us into the financial mess
   Too many people took out self certified loans …125% mortgages,,,re mortgages which they could not afford to service
   And now its the prudent people who saved or paid into a pension and mostly are retired who are being fleeced left right and centre in order to prop up those who took on such loans.

   Currently mortgage holders have it on a plate with loans at cheaper rates than the savers get because the whole basis of savings being needed to fund mortgages has gone out the window

   MPs and Governments NEVER learn from history .
   Well i am old enough to remember when interest rates roared up to 12% and it cant come soon enough again to teach an awful lot of people with huge debts and loans a big lesson they wont forget in a hurry .
   Sadly though it wont last long enough to make up for all that us savers have lost over the last 3 years

   Until MK is stripped of his knighthood , the MPC thrown out along with a lot of other greedy Bank Bosses and CEOs there will be no justice at all

   Recommend (2)