- November 21, 2012 at 9:42 am #57147
Most people are unaware that the British government has the power to pull the plug on the economy and bring the entire economy down whenever it feels like it, causing all the cummulative gains that occurred in house prices during the boom to disappear overnight.
The Bank of England and the government are encouraging people and businesses to borrow and expand but there is a nasty surprise waiting for these people in that what they don’t realise is that when the economy starts to overheat and inflation begins to rise the Government will be forced to pull the plug on the economy and bring down the economy leaving those people who borrowed high and dry and in the lurch having to face servicing their debts in an economy that is in a state of collapse.
In keeping interest rates at a historical low and by encouraging people and businesses to borrow and expand the government and the Bank of England are giving people enough rope to hang themselves with and are lulling people into a false sense of security only to then be betrayed when the Bank of England is forced to raise interest rates sharply and curtail lending by the banks and bring down the economy in a desperate attempt to control rising inflation.
The British economy is a gigantic bubble that is waiting to burst with devastating consequencies. Bubbles need to be fed to survive otherwise they burst. When the economic bubble bursts all the inflationary excesses of the boom will appear and rising inflation will put in jeopardy the entire economic and financial basis of the country. Rising inflation will force the government and the Bank of England to resort to desperate measures, no matter how draconian or painful, to control the rising inflation by initially raising interest rates sharply but this simply won’t be enough because there is too much money in circulation in the economy as a result of the boom and the government will be forced to contract the money supply, making money scarce, in order to restore the purchasing power of money which means taking money out of the economy, causing a recession and a collapse in demand.
An economic boom is where the money supply is expanding and a recession is where the money supply is contracting. The Bank of England can create a boom by increasing the money supply and the Bank of England can create a recession by decreasing the money supply. The Bank of England can increase and decrease the money supply by buying and selling bonds in what is known as open market operations. The Bank of England can increase the money supply by buying bonds, which are just IOUs, from companies. A bond is a bit of paper that states the amount being borrowed, the interest rate to be paid on the amount borrowed and the maturity date which is the date when the bond matures and the borrowed money is returned by the company to the Bank of England. When the Bank of England buys a bond from a company the company receives money from the Bank of England in exchange for the bond and this money is deposited in the company’s bank account. Adding money to a company’s bank account will effectively add money to the economy and increase the money supply. The Bank of England can decrease the money supply and create a recession by doing the reverse of what it does when increasing the money supply and that is to sell bonds to companies rather than buy bonds from companies. When the Bank of England sells a bond to a company the company hands over the money for the bond by deducting the money from its bank account and transferring it to a bank account with the Bank of England. Taking money out of the company’s bank account effectively has the effect of reducing the amount of money in the economy which reduces the money supply.
What the British government is not prepared to tell you, and I have it on good word from my secret sources that this is true, is that in the year 2015 the British economy will experience a catastrophic collapse resulting in a twenty year long depression. There are powerful people behind the scenes who are pulling the strings and know when the economic collapse will begin. When these rich city slickers can no longer make money from the current economic boom and can no longer get their free lolly from the Bank of England in the form of Quantitative Easing and the funding for lending scheme then they will pull the plug on the economy causing the entire ponzi scheme economic boom that began in 1997 to collapse with devastating consequences for you, your family, your home and your business.
- November 21, 2012 at 11:58 am #113481
What has this got to do with living in spain or spanish property?
- November 21, 2012 at 12:50 pm #113484
Those are some of the roles government plays through their economic vechiles.
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