The interest rate cuts are supposed to mean that people with mortgages now have more money in their pockets (and , yes, I do), so they'll run out and spend it (Er... no. I'm using the difference to pay more mortgage off).
However, the banks - in fact all businesses - want liquid assets (cash) at the moment, and do not want to lock their cash down for a few years. So they're not lending it. A clever government would have looked into a loan gurantee scheme, but we have a credit card government...
My company has traditionally used a high interest bank account for our reserves, but the rate of return, which used to be enough to pay a months rent on the office, now covers about a box of tea bags a month.
It feels to me like they sre tyring to nudge us into deflation.
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timeasmymeasure
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Date: 2009-01-10 08:59 am (UTC)However, the banks - in fact all businesses - want liquid assets (cash) at the moment, and do not want to lock their cash down for a few years. So they're not lending it. A clever government would have looked into a loan gurantee scheme, but we have a credit card government...
My company has traditionally used a high interest bank account for our reserves, but the rate of return, which used to be enough to pay a months rent on the office, now covers about a box of tea bags a month.
It feels to me like they sre tyring to nudge us into deflation.