What's the point in saving anymore?

maninasia

KyussBishop wrote: »

^^ We don't want to close the deficit, because that (in our current economic environment, no matter what you do) leads to more economic destruction; we need changes at an EU level, such as centralizing EU members debt within the EU (to get better interest rates), relaxing the fiscal pact restrictions which are choking economies, and using monetary policy to provide funding (while keeping inflation in check).

If you don't have control of your own currency you have to get the deficit under control before it controls you. It's called debt 101.

Even IF you have control of your own currency, that still does not give you a license to run massive deficits forever, hence the fiscal cliff discussions in the US.

Even if you had gold back currencies, you can still run deficits and end up in default , as has happened many times over the centuries.

maninasia

Farmer Pudsey wrote: »

What is the point in saving anymore

This is the OP orginal point. In reality the government wants savers to start spending to boost the economy. They want people to either invest or to spend in services. At present they have a problem the banks need deposits and are paying more than the ECB rate and inflation for 2-3 year money. To counter this and to raise tax they have increased Dirt and will add PRSI to it so that 38% of intrest will be taken in tax.

Also I think they are looking at the personnel Insolvency/bank repossions that will happen over the next two years. Is this why there is a rumour that the banks intent to increase lending 3-5 fold next year. As the reposses they will need buyers either cash buyers or low leveraged purchassers that can put up 20-30++ equity. The last thing they want is buyers that they are lending 90-100% value of an investment

They should be careful with taxing savings too highly, as people can move the money off-shore. That reduces the deposit:loan ratio in the banks and is the major reason that banks need recapitalisation at the moment!

KyussBishop

maninasia wrote: »

If you don't have control of your own currency you have to get the deficit under control before it controls you. It's called debt 101.

Even IF you have control of your own currency, that still does not give you a license to run massive deficits forever, hence the fiscal cliff discussions in the US.

Even if you had gold back currencies, you can still run deficits and end up in default , as has happened many times over the centuries.

The first point is exactly the problem, and which makes the EU the problem, not our budget; the EU's undemocratic control over our national politics due to budget control (getting to demand cuts) is also a massive problem, especially considering how it does not look to get resolved, and is leading to the destruction of our economy.

Anyone who accepts the EU restrictions, is inherently accepting the destruction of our economy, and limiting debate to that, means only discussing what exact ways the economy should be destroyed (rather than discussing any recovery), and what exact cuts you want to use to spin people out into poverty and some to death.

It's like people are willingly blind to the massive undemocratic problem that is the EU (and the fact that the only way to recovery is there), and instead of pressuring governments for action there, are happy to just accept it as it is and try to put it out of bounds of discourse.


On the second point: Where did I ever say we should run a massive deficit forever? Sounds like the usual straw-man tactics used against my argument, of making up completely fictional exaggerated scenarios and saying I support them, which again, is dishonest at best. How about dealing with my actual arguments?

Additionally, the fiscal cliff in the US is a political, not economic problem; it is a totally manufactured issue, easily solved by repealing the bill congress passed in August 2011.


On the third point: Where did I support gold-backed currencies? They are a horrendously bad idea.
It is exactly that we are not in a gold backed currency, but a fiat currency, which means the only economic limit to spending is inflation control.

yesman2000

maninasia wrote: »

They should be careful with taxing savings too highly, as people can move the money off-shore. That reduces the deposit:loan ratio in the banks and is the major reason that banks need recapitalisation at the moment!

That would be true if there was an incentive to change deposit location. Interest rates are minimal almost everywhere, negative in some cases. You may get a better yield somewhere you've to change currency but this carries too much risk and transaction costs. The gov. knows this too hence they can get away with DIRT increase and PRSI charge on interest. You're right about DL Ratio though, it needs to be corrected.

Bullseye1

If government was interested in getting people to spend more they wouldn't have raised VAT.

gurramok

Don't see it mentioned that Rabobank are reducing their interest rates further in January 2013, this(assuming other banks reduce their rates) together with the higher DIRT rate is not helping anyone. Long term, when the Euro exits from their crisis, the interest rates will go back up. What will Enda do then?