Madness of interest rates

On BBC Breakfast this morning they announced that the incredibly low interest rates after the credit crunch have cost savers around £45 billion over those two years. Of course, borrowers have gained, to the tune of around £52 billion.

This it should be remembered comes in the wake of a financial disaster caused by people borrowing more money than they could afford to pay back, and generally not having enough money tucked away for a rainy day.

So you would think encouraging growth by encouraging people to borrow more and save less would be folly enough. To add insult to injury however, as growth is slack the government look likely to print more money. More money = higher inflation = even less value for those poor, prudent souls that are bothering to save money.

It really does beggar belief.

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4 thoughts on “Madness of interest rates

  1. It does seem crazy if they want to encourage a change in behaviour, but I honestly don't think they know of any other way to generate growth in the economy.

  2. Seems Alan Sugar agrees with you
    http://www.bbc.co.uk/news/business-17346701

    He told the Radio Times: "The banks were villains by acting irresponsibly, but now they're trying to act responsibly, they're getting chastised for not lending irresponsibly again…

    "It is a total joke, a complete and utter political joke. Why should a bank give you some money?"

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