UK Downgraded from LOL to LMAO

[Luno]

What happens to gold price if interest goes up, does it drop?

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[Puppet]

Yes, and PC word processors would never replace typewriters, and email would never replace letters, digital cameras would never make film obsolete, online video would never kill off high-street video rental. Yes, very good that we have all those long-standing things still with us...

Problem is you are expecting a clever electronic etch a sketch to replace word processors. That just isnt going to happen either. Bitcoin is a lot of things, but an viable general alternative to fiat currency, it aint. Ripple otoh, way too early to say, but at least its not unthinkable.

[Lethn]

What happens to gold price if interest goes up, does it drop?

I doubt the interest rates will effect very much what we need to keep an eye on is the borrowing and the printing because that is what causes inflation in the long run, this bit of news with the UK being downgraded and so on may explain the rise the BTC/GPB had recently

[molecular]

Yes, and PC word processors would never replace typewriters, and email would never replace letters, digital cameras would never make film obsolete, online video would never kill off high-street video rental. Yes, very good that we have all those long-standing things still with us...

Problem is you are expecting a clever electronic etch a sketch to replace word processors. That just isnt going to happen either. Bitcoin is a lot of things, but an viable general alternative to fiat currency, it aint. Ripple otoh, way too early to say, but at least its not unthinkable.

thanks god bitcoin is not an alternative to fiat currencies. I wouldn't have bought into it.

[Rygon]

Bitcoin has flaws... in your world the price of Bitcoin would keep inflating until only one currency remained (BTC), nobody would spend any money for fear of its value growing the following week! Why buy a car this week if its cheaper next week?

Arguably superior alternates for things are invented all the time... doesn't mean they gain mass adoption, so your list is meaningless.
Bitcoin has a big future, its just not what some dreamers let themselves believe. (In my opinion)

Because you need a car this week to go to your job and make more money. Although there are good arguments against deflation in the price of goods (mostly linked to how fiat currencies work), this isn't one of them. Computers have been getting cheaper and better for decades and yet there is still a thriving market. If anything, price deflation encourages efficiency in the market because people are more discerning when buyings goods and capital. In an inflationary economy, there is an incentive to make purchases you wouldn't otherwise make if the price was stable, because of the fear that if you do need it tomorrow, it'll cost more. Additionally, the transition from an inflationary environment to a deflationary one becomes rougher the worse the inflation is.

[johnyj]

"George Osborne has warned there will be no let up in his plans to reduce the deficit"
Well that's a good thing isn't it? We are high in debt, at least they are sticking to plans to get us out of it.
Our credit rating has been reduced a little? Not massive news, we are among many other large countries in the same boat.

Most of people (even some of the high officer) believe that they should work hard to payback the loan, and this created all the problems today, since saving in Pound's form is bank's debt, if you pay back the loan, there will be less money in circulation, means even heavier recession and bank failure 

A much better alternative is to save in non-Pound form, like house/gold/bitcoin, as long as money get spent quickly, the situation is under control

[matthewh3]

There is a train of thought that the Bank of England is quietly fostering inflation.  If it can successfully keep interest rates low it can inflate away the countries debt. 

Much as I like the idea of a federal Europe this is a good (or the main) reason that the UK never joined the single currency.

[meanig]

There is a train of thought that the Bank of England is quietly fostering inflation.  If it can successfully keep interest rates low it can inflate away the countries debt. 

Much as I like the idea of a federal Europe this is a good (or the main) reason that the UK never joined the single currency.

The flaw in this cunning plan will be downward pressure on average wages. With millions unemployed and underemployed workers have very little bargaining power to raise wages in line with inflation.

Debts might look less significant as essentials soar in price due to inflation but if wages don't keep up things will only get worse.

[matthewh3]

There is a train of thought that the Bank of England is quietly fostering inflation.  If it can successfully keep interest rates low it can inflate away the countries debt. 

Much as I like the idea of a federal Europe this is a good (or the main) reason that the UK never joined the single currency.

The flaw in this cunning plan will be downward pressure on average wages. With millions unemployed and underemployed workers have very little bargaining power to raise wages in line with inflation.

Debts might look less significant as essentials soar in price due to inflation but if wages don't keep up things will only get worse.

I can only see fat-cat salaries rising with or above inflation as its those who decide salaries to be paid.  The Con-Dem's will promise the middle-class (voting class) a massive tax cut to win the next election.  Just like the Tories promised to punish the scroungers (unemployed [non-voting class] for the banks casino losses before the last election.

[zkay]

There is a train of thought that the Bank of England is quietly fostering inflation.  If it can successfully keep interest rates low it can inflate away the countries debt.  

Much as I like the idea of a federal Europe this is a good (or the main) reason that the UK never joined the single currency.

The flaw in this cunning plan will be downward pressure on average wages. With millions unemployed and underemployed workers have very little bargaining power to raise wages in line with inflation.

Debts might look less significant as essentials soar in price due to inflation but if wages don't keep up things will only get worse.

I can only see fat-cat salaries rising with or above inflation as its those who decide salaries to be paid.  The Con-Dem's will promise the middle-class (voting class) a massive tax cut to win the next election.  Just like the Tories promised to punish the scroungers (unemployed [non-voting class] for the banks casino losses before the last election.

Am I alone in hoping that either this does happen or they flat out send rebate checks in the mail like Bush's $600 back in 2006 or 2007? If only to enable me to buy more bitcoins? Not that I'd vote to get it.

[Lethn]

Don't worry, the 'Conservatives' are as useless at money management as Labour are in this country so they'll find a way to completely fuck everything up.

[Richy_T]

The pound is down nearly 10c against the dollar in the last couple of weeks and nearly 50c since 2001. This is with all the inflation the dollar has been experiencing itself.

[meanig]

Government borrowing costs are up 25% since the start of this thread. It's the wrong kind of UP,UP,UP

[meanig]

May I present to you Lord Professor Sir Mervyn King, soon to be ex Governor of the Bank of England.

A true asset to the nation. His gold plated inflation linked multi million pound pension pot isn't enough reward for his tireless service to the people. I shall be contacting my local MP to insist on his face being on the next £10,000 note






Pressure pushing down on me
Pressing down on you, no man ask for
Under pressure that burns a building down
Splits a family in two
Puts people on streets

[meanig]

The first act of the new fall guy (foreigners are always best for taking abuse in the press) is postponed for another month

Bank of England maintains Bank Rate at 0.5% and the size of the Asset Purchase Programme at £375 billion

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.  The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £375 billion.

Since the May Inflation Report, market interest rates have risen sharply internationally and asset prices have been volatile.  In the United Kingdom, there have been further signs that a recovery is in train, although it remains weak by historical standards and a degree of slack is expected to persist for some time.  Twelve-month CPI inflation rose to 2.7% in May and is set to rise further in the near term.  Further out, inflation should fall back towards the 2% target as external price pressures fade and a revival in productivity growth curbs domestic cost pressures.

With the cost of government borrowing increasing there will soon be a time when £375 billion of QE will seem like small change. Make it happen Mark 

[meanig]

Rejoice Rejoice Rejoice!! Food Prices Up 14%

http://www.mindfulmoney.co.uk/wp/shaun-richards/inflation-presents-a-contractionary-danger-for-the-uk-economy-yet-again/

The Consumer Prices Index (CPI) grew by 2.9% in the year to June 2013, up from 2.7% in May.

In the year to June the overall price of materials and fuels bought by UK manufacturers for processing, known as total input prices, rose 4.2%, compared with a rise of 1.8% in the year to May.

The rise in June in input prices was driven by Home Food Materials (who makes these categories up?) which soared by 7.2%. As we had not had the recent hot weather by then that leaves the wet weather of 2012 and early in 2013 to take the blame.

But on a more fundamental point if you feel that food purchases have become noticeably more expensive then at least one component of the UK inflation measuring system is agreeing with you as Home Food Materials annual inflation is now running at 14.3%.

So the headline inflation which is the only thing quoted by the press is 2.9% but food inflation is 14.3% 

But don't worry fellow serfs. The glorious hero of the north Andy Murray is standing adonis-like atop a giant BBC sponsored housing pyramid ejaculating feel good serum on our faces to make us forget how shit life is getting.

I just got some in my eye. I feel better already.

[molecular]

May I present to you Lord Professor Sir Mervyn King, soon to be ex Governor of the Bank of England.

A true asset to the nation. His gold plated inflation linked multi million pound pension pot isn't enough reward for his tireless service to the people. I shall be contacting my local MP to insist on his face being on the next £10,000 note

lol!! Awesome idea.

[notme]

What happens to gold price if interest goes up, does it drop?

The best answer is maybe.

Rising rates are deflationary for the money supply.  Historically, with gold backed money, this meant gold price would rise as people needed gold to pay the higher interest.  In modern times, however there is no such link.  One might argue gold could drop due to people needing to raise liquid capital.  But then again, one could argue that gold could rise because the large institutions shorting it would need to close out their positions to recover their collateral.

[meanig]

What happens to gold price if interest goes up, does it drop?

The best answer is maybe.

Rising rates are deflationary for the money supply.  Historically, with gold backed money, this meant gold price would rise as people needed gold to pay the higher interest.  In modern times, however there is no such link.  One might argue gold could drop due to people needing to raise liquid capital.  But then again, one could argue that gold could rise because the large institutions shorting it would need to close out their positions to recover their collateral.

If interest rates go up every mortgage taken out in London and the South East of England since 2005 is going to go into default. It's not possible for mortgage holders to absorb exponential increases in the cost of lending when wages are at best stagnant and food prices are going up 14.3%.

Many of those mortgages are interest only with no repayment vehicle. The banks will be fucked.

[notme]

What happens to gold price if interest goes up, does it drop?

The best answer is maybe.

Rising rates are deflationary for the money supply.  Historically, with gold backed money, this meant gold price would rise as people needed gold to pay the higher interest.  In modern times, however there is no such link.  One might argue gold could drop due to people needing to raise liquid capital.  But then again, one could argue that gold could rise because the large institutions shorting it would need to close out their positions to recover their collateral.

If interest rates go up every mortgage taken out in London and the South East of England since 2005 is going to go into default. It's not possible for mortgage holders to absorb exponential increases in the cost of lending when wages are at best stagnant and food prices are going up 14.3%.

Many of those mortgages are interest only with no repayment vehicle. The banks will be fucked.

There have to be some fixed rate mortgages out there, but I agree there will be trouble.  Again, history says gold will tend to be a fall back and will recover first.  But there are new forces at play this time, so I say maybe.