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UK CPIH index value (includes cost of housing) Nov 2021 - 114.1 Nov 2023 (latest value) - 130.0 So, 14%. 18% slightly out of date figure. Cash in the bank,

by nly 3y ago

UK CPIH index value (includes cost of housing) Nov 2021 - 114.1 Nov 2023 (latest value) - 130.0 So, 14%. 18% slightly out of date figure. Cash in the bank, even at 5% rates, hasn't kept up.

md_ 3y ago
Cash in the bank normally doesn't keep up. If it does, the orthodox view is that you risk a deflationary spiral. Central banks want to incentivize investments.
- nly 3y ago
  It's not what they want. It's the mechanics of their business. They borrow short at base rates and lend long at a margin
- lotsofpulp 3y ago
  Owning shares in the entities for which money for goods and services pass through is the way to keep up with inflation. If I buy things from Costco/Apple/Toyota/Novartis/etc, then they increase prices, then their share prices go up accordingly. Anything else will fall short.
- ptero 3y ago
  This is a phenomenon of the last two decades. Before the fed started cutting rates after 9/11 (to support the country, the financial markets, the housing markets, etc.) both money market and savings accounts (you had to choose a good bank) usually gave positive inflation adjusted return.
  - nly 3y ago
    Barely. In real terms US bills have returned 0.4%/yr over the last 120+ years
    - md_ 3y ago
      Seems to me Treasury bills meaningfully outpace inflation, on average: https://www.bauer.uh.edu/rsusmel/other/lrret1.htm https://www.bauer.uh.edu/rsusmel/other/lrret1.htm. But I was talking about cash accounts, which typically pay lower interest rates than T-bills or CDs (as noted on the above link).
      - ptero 3y ago
        In the late 1990s my savings account at the EmigrantDirect was paying about 7% with inflation around 3%. This was not a term deposit, but a regular account, either itself with check-writing privileges or linked to a checking account with 1-3 day transfers. I think MMFs with check-writing paid similar interest, although not 100% sure as I never put my money there. Those were cash accounts as I could withdraw any amount, up to 100% of the account any time without any penalties.

by nly 3y ago

UK CPIH index value (includes cost of housing) Nov 2021 - 114.1 Nov 2023 (latest value) - 130.0 So, 14%. 18% slightly out of date figure. Cash in the bank, even at 5% rates, hasn't kept up.

md_ 3y ago

Cash in the bank normally doesn't keep up. If it does, the orthodox view is that you risk a deflationary spiral. Central banks want to incentivize investments.

nly 3y ago
It's not what they want. It's the mechanics of their business. They borrow short at base rates and lend long at a margin
lotsofpulp 3y ago
Owning shares in the entities for which money for goods and services pass through is the way to keep up with inflation. If I buy things from Costco/Apple/Toyota/Novartis/etc, then they increase prices, then their share prices go up accordingly. Anything else will fall short.
ptero 3y ago
This is a phenomenon of the last two decades. Before the fed started cutting rates after 9/11 (to support the country, the financial markets, the housing markets, etc.) both money market and savings accounts (you had to choose a good bank) usually gave positive inflation adjusted return.
- nly 3y ago
  Barely. In real terms US bills have returned 0.4%/yr over the last 120+ years
  - md_ 3y ago
    Seems to me Treasury bills meaningfully outpace inflation, on average: https://www.bauer.uh.edu/rsusmel/other/lrret1.htm https://www.bauer.uh.edu/rsusmel/other/lrret1.htm. But I was talking about cash accounts, which typically pay lower interest rates than T-bills or CDs (as noted on the above link).
    - ptero 3y ago
      In the late 1990s my savings account at the EmigrantDirect was paying about 7% with inflation around 3%. This was not a term deposit, but a regular account, either itself with check-writing privileges or linked to a checking account with 1-3 day transfers. I think MMFs with check-writing paid similar interest, although not 100% sure as I never put my money there. Those were cash accounts as I could withdraw any amount, up to 100% of the account any time without any penalties.