Interest rates can’t rise because nobody has enough money to keep the economy going

Mark Carney, Governor of the Bank of England [Image: Reuters].

With respect to all the bigwigs like Mark Carney, they’re talking a load of guff.

The reason interest rates in the UK can’t rise isn’t because of global issues or low oil prices (although they certainly play a part) – it’s because most people in the country don’t have the disposable income necessary to make the purchases that would push money through the system.

Here in Mid Wales, as This Writer reported a short while ago, wages have risen by around 10 per cent since 2008 – while inflation increased by twice as much. Therefore there has been a real-terms wage fall of around 10 per cent, in an area where average income was already only around 76 per cent of the national average.

This is a direct result of Conservative Government policy (and that of the Coalition before it – both headed by David Cameron and George Osborne).

There will be no substantial economic improvement while the Conservatives are in charge. They don’t want it.

If matters continue as they are, the Tories will be able to use the continued economic sluggishness as a reason to cut more public services.

The added bonus is that low interest rates also hit savers, meaning even people who have had a nest egg in the bank will end up having to dip into it to stay alive, while their capital will not be replenished by interest payments.

The Tory plan to impoverish the UK (apart from their friends) is right on course.

The Governor of the Bank of England has ruled out an immediate rise in interest rates because of the turmoil in the global economy and weaker UK growth.

In a gloomy assessment of the state of the world, Mark Carney said that collapsing oil prices and an “unforgiving” global environment meant that tighter monetary policy was not yet necessary”.

Mr Carney’s assessment comes six months after he suggested that a rise in interest rates would come into “sharper relief” at the beginning of 2016.

Many assessed that as a signal that rates would start rising early this year – a relief for savers who have struggled with historically low interest rates since the financial crisis.

Source: Carney: No need for interest rate rises now – BBC News

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17 thoughts on “Interest rates can’t rise because nobody has enough money to keep the economy going

  1. David Woods

    Strange that the American who was caught destabilizing the Caymen island banks (where the rich keep their money) was given 150 years (without parole); while the bankers who caused world wide devastation to the global economy got nothing but their million pound bonuses for a job well done!

  2. Jeffery Davies

    Another failed banksters from canada hmm but the peasants hadnt lost monies but the rich did through the fraudulent trading by these banksters yet the peasants monies went to prop up those fraudulent banksters isnt it time the peasants woke up to this fact while the cons will screw us more so that their wallets will get fatter jeff3

  3. Phil Lee

    Iceland dealt with their banking crisis fairly and reasonably – it’s all gone now, and those that caused it unable to repeat their behaviour from inside prison cells. The debts are all paid off and investors reimbursed.
    Of course, this example of complete economic recovery from a banking crisis get very little press coverage, when it should be used as a global example of what to do with any wunch of bankers who behave as they did.

  4. Dez

    Not sure what Carney is contributing to anything apart from his own wallet. He was bought in as a new white knight to replace sleepy eyed joe who fell asleep on the job but to date I struggle to see what difference he and his team have made to anything. Appreciate the climate and economy etc but if you have bought in a mover ‘n shaker top man you expect something for your investment. Interest rate increase at the moment, with the amount of debt this Country has, would really screw the Cons….let the peasants keep subsidising the banks until the bankers are ready to get back in “control” and pay themselves huge backdated bonus and salary increases…which of course they deserve.

  5. Bookworm

    Also though of us relying on card tarting our credit cards to keep afloat would have go bankrupt if interest rates rise which would be catastropic if there’s as many of us as I suspect.

  6. mohandeer

    Like Mikes interpretation of economic situation and Phil Lee’s interpretation of those who caused the crisis. Wunch of bankers? Excellent.
    It isn’t as if the OFS and IMF haven’t stated how low the NNDI has fallen so why is Mark Carney talking out of his …hat?

  7. perry525

    In the not so distant past, we had mortgage interest rates of 15%, we paid and lived through it. Now we have unnaturally low mortage interest rates and the government is allegedly worried that many will loose their homes if rates increase. No mention of the fact that at the moment our government can borrow at these very low rates.

    1. Mike Sivier Post author

      I seem to recall that it might help the government if interest rates increase. It has to do with the value of government bonds and the speed at which debt can be paid off.
      However, the Tories seem to be stymied for the moment.

  8. Stephen Mellor


    * Get more productive
    * Make it pay to work
    * Stop subsidising unproductive activities
    * Reduce regulatory costs
    * Cut taxes
    * Reduce the size of the state

    Then you’d have money to spend.

    1. Mike Sivier Post author

      What a lot of nonsense. It’s not the responsibility of employees to do these things.
      If employERS want to get more productive, they need to pay people more, give them job security and job satisfaction. That will improve production and profitability – as has been proved.
      Part of that involves employERS making it pay to work, by actually paying the Living Wage, so their workforce doesn’t have to claim any state benefit.
      This will inevitably lead to a reduction in the size of the state, as in-work benefits cease to be necessary.
      It may even lead to a tax cut, although that depends on the greed of politicians. Tories like to funnel public money into private enterprises, who then pay donations to the Conservative Party, so that money may be diverted. I call that corruption, but others will tell you it’s perfectly legal (as if the two are mutually exclusive – they’re not).
      Regulation is necessary to prevent corruption. We see the evidence in pretty much all the deregulation that the Tories have carried out.
      As for subsidising unproductive activities – they’re only unproductive because they haven’t had the right investment at the right time (mostly due to Tory short-termism). Those same activities may be productive elsewhere, so why not here? When they’re gone, they’re gone – and that could be far more harmful than spending a little money to develop them.

      1. Stephen Mellor

        I repeat: It is not the responsibility of employers to pay any more than they need to get the dedication and quality they want.

        But you are correct that it is “corrupt” for the government to give *any* entity that didn’t earn it.

        Reduce the role of government to a mere cipher and the “corruption” will go away.

      2. Mike Sivier Post author

        You do not understand how business works.
        Employers who pay less than a Living Wage would be out of business if they were not helped out by in-work benefits such as tax credits – which you oppose.
        Prospective employees simply would not be able to afford to work for them.
        No, corruption will not go away if government is reduced. It will increase. We have seen that with every deregulation that has happened – most particularly the deregulation of the banks.

      3. Terry Davies

        I call it corruption too.
        the enterprise zones were set up to encourage investment by employers and create work.
        They are subsidised by taxpayers. However nowadays employers retain the money and direct it into tory funding or lobbying.
        if that is not misappropriation of public funds what is!!!!

  9. amnesiaclinic

    Very good analysis, Mike. Ordinary people spend money while the bloated stack it in the offshore havens. That is why the economy would pick up if people were paid a proper living wage and also given a fair basic income. Guess what, not only does the economy pick up but health increases because anxiety is reduced dramatically. Finland is introducing a scheme this year. It could be financed with the savings on the benefits system, health costs, and taxes. Lovely win-win situation for everyone.

  10. Terry Davies

    Carney’s brother is linked to the USA economy?????
    They are Canadian so why dont they stick to the Canadian economy?

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