Mortgage annoyance!

[PeterB]

...encourage people to save and pay off bad debts.

Okay, I'm not an economist, but I thought that increasing interest rates might achieve those aims.

I have no debts, but reducing interest rates certainly isn't encouraging me to save!

[benb]

Okay, I'm not an economist, but I thought that increasing interest rates might achieve those aims.

I have no debts, but reducing interest rates certainly isn't encouraging me to save!

Increasing interests rates too much too fast will damage the economy as there is too much debt. You increase interests rate to curb inflation. Now that people have reduced spending far too much and house prices crashing fast, interests rates need to be reduced to ensure that we do not go into deflation (which can lead to millions of job losses, depression, declining GDP etc).

There needs to be more savers like you and that cannot happen overnight - need to pay off debts first!. Lowering interests rate does not benefit the savers, but you have already gained when you sold off your properties at peak prices, high interests returns etc. There are always winners and losers in any market. Those who gambled on Gold are celebrating now. Those who gambled on real estate are probably suffering from depression.

The government needs to do more to create a balance. More programmes are required to encourage saving in the long run, prevent crazy lending, tight control on bank securities etc.

Cheers