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If UK interest rates were at their non political, independant level (~ double their current level) - the survival of the UK as a going concern would be in jeopa
by blitzar 4y ago
If UK interest rates were at their non political, independant level (~ double their current level) - the survival of the UK as a going concern would be in jeopardy and the government would step in and make the rate setters a political no longer independent body.
The governement already spends 80bn on the interest bill each year (against a budget of ~1,000bn); despite 20 years of being able to issue debt at effectively 0%.
- darkerside 4y agoIs there such a natural level for interest rates?
- blitzar 4y agoYes, but its economic theory ... so no. https://en.wikipedia.org/wiki/Neutral_rate_of_interest https://en.wikipedia.org/wiki/Neutral_rate_of_interest (also known as r*) Naturally I have taken a few liberties with the theory - inflation +/- r* would be the correct rate for the economy. As a quick calculation, it wouldnt be unfair to say interest rate == inflation is a balanced monetary policy.