The interest rate went up from 0.1 per cent to 5. 25 per cent. It’s unusual for anybody to have earned 5.25 per cent on their deposits, of course, over that period. But real interest rates have risen from well under 1 percent in 2021 to over 4 percent still if you search around.
How’s he getting to 4% real rates?
CPIH is 4.7%, Base rate is 5.25%. It would be rare for a retail depositor to get more than base rate and if so not by much. So I’ve got real interest rates running at 0.55%. How’s he getting to a 4% real rate?
What a great surprise. And what a news story that is. A news story that’s not being said on any of the mass media, which is why I thought I’d mention it here.
Could be that even journalists know what a real interest rate is. As Spud clearly doesn’t.
Why CPIH, Tim? Has someone or other in authority said it’s the best approximation to my personal inflation rate? It’s not the rate that THEY use for my pensions.
Anyway I’ve looked it up and it’s 3.8% as of 17/04/2024 which doesn’t change your conclusions an iota. Man’s a tit.
One assumes what he means is market rates, ie what people actually get on the their savings accounts, in the ‘the real world’, not the headline BoE rate.
But you’d have to a be a special type of moron to write that in the context of economics when everyone knows ‘real interest rates’ means the rate margin over inflation.
It’s because he doesn’t understand the term “real interest rates”
He’s talking about the interest rates that are currently available ie x bank will pay you 4% on your savings. For a so called economics professor he doesnt know the most basic terms. If he did he’d have talked about available interest rates or at a pinch actual interest rates. The fact that he’s got a teaching job is most depressing.
Infamy, infamy, they’ve all got it in for me!
Richard Murphy says:
April 20 2024 at 4:49 pm
By real I mean those paid in the real world as opposed to the rates set by the BoE, as the context made abundantly clear, unless of course you are an acolyte of Tim Worstall, which ho doubt you are. I know you guys (you do all seem to be guys) live in some fantasy economic universe. I write about the real one.
The joy is that that doesn’t even address the point being made.
Sigh.
‘Erica makes a reasonable point but Spud just responds with abuse.
He just can’t help himself – abuse anyone that doesn’t agree with you even if you’re demonstrably wrong!
Talking about inflation I thought this interesting. The paper being discussed includes Larry Summers as an author but one mustn’t leap to conclusions and reject it for that reason. Or must one?
https://quoththeraven.substack.com/p/inflation-we-can-feel-but-dont-measure
I read the article linked to above and what they are proposing is a price index that includes the anti-inflation measures i.e. interest rate rises. By combining illness and cure in the same number it makes the index useless for the purposes of measuring inflationary pressures in the economy.
However it is true that a rate calculated this way is a more representative of the effects of inflation plus anti inflation measures (interest rate rises) on the average consumer during an inflationary period. But over the longer term these interest rates will drop – potentially leading to a negative inflation rate.
It may be an interesting stat to compile, maybe as an indicator of consumer wellbeing or something.
i read the article and was struck by this ” More recently, inflation rates have been trending lower. Nonetheless, a number of economists have been surprised to observe that consumers aren’t very happy despite signs that the inflation rate is on a trajectory towards the Federal Reserve’s target of two percent”
Just because the rate has slowed down people arent happy that after a huge jump in prices has occurred and prices are rising. Personally I’m not happy that the milk i purchase from tesco seems to have leapt up in price from £1/1.20 a couple of years ago to £1.55 now. Telling me that it won’t increase by 55p in the next couple of years but only 10p doesn’t fill me with joy. it’s still costing me more now.
“unless of course you are an acolyte of Tim Worstall,” – he can’t even get that right. I doubt any one here thinks of Tim as some sort of leader. I like reading Tims stuff because he s got a good grasp of classical economics and reminds me that many years ago i did a degree in it, but seem to have forgotten the basics. Also Tim dissects the pompous and ill informed. It’s not Tim’s fault that the potato is one of the most egregious example of this. I knowe that when people disagree with Tim he doesn’t resort with abuse. As for acolytes anyone whose read the comments on spud central must recognise the assorted arse lickers that keep on telling spud he’s the messiah or it’s equivalent – looking at you pilgrim slightretard.
you do all seem to be guys
That’s simply untrue as we do have Julia around here to keep us all in check. Also whilst not a contributor, my better half does indeed agree with most of the sentiments espoused here.
That’s why I posted as Erica – seems to be more likely to get published. Unless of course you tell him how great he is, then anyone can get a comment published…
“Just because the rate has slowed down people arent happy that after a huge jump in prices has occurred and prices are rising. ”
I was astounded the other day when the news reader on the radio said that inflation had dropped from 3.8 to 3.5% (or whatever it was), but then added that this did not mean prices were falling, but were still rising, just not as fast as before.
Given the state of education in the UK I’m convinced that if you asked 100 people what the statement ‘The inflation rate fell last month’ meant, at least 50 of them would say it meant prices dropped.
So, something akin to CPIH then – that’s the end conclusion. Probably very wise.
Jim @ 10.54, George Carlin: “Think of how stupid the average person is, and realize half of them are stupider than that.”
Depends which measure of ‘average’ you are using – certainly not the most commonly used one 🙂
we do have Julia around here to keep us all in check
… and the lovely Ms Klapp 🙂
And a couple of lady doctors, if memory serves.
It’s great, still managing to wind up Richard about his error in referring to real rates when he meant nothing of the sort.
Of course, he’s doubling down that never made a mistake and that he always admits in when he does. If enough of us can keep him involved in this nonsense, it stops him making further stupid/lying/nonsensical posts.
😉