Inflation

[Dodgy69]

Plenty of strike action coming maybe, if wage rises don't keep up.

[Mussels]

Time to spend those savings as they're dropping in real value - what bike am I going to buy next, or is it new car time, what mental, impractical car shall I buy for £30K (and can I get a deal for cash)

Sounds like sir wants to go low budget electric.

[Count Steer]

That depends on who the above we is.

Most people unless they're hedged against inflation or who are in debt but are going to be getting inflation beating wage rises.

I think I'm going to dump some money in properties with part of it in mortgages, then let it inflate itself away.

Tempting to wait and see if house prices go south when mortgage interest rises before diving in though. Given the increased borrowing based on projections that rates would stay low there could be a bit of a bloodbath and bargains to be had, particularly from the amateur buy-to-letters that borrowed for the next property on the asset value of the previous one(s). There's a limit to how fast and far they can push rents to cover increases and the assets aren't very liquid.

Interesting times.

[Le_Fromage_Grande]

Time to spend those savings as they're dropping in real value - what bike am I going to buy next, or is it new car time, what mental, impractical car shall I buy for £30K (and can I get a deal for cash)

Sounds like sir wants to go low budget electric.

I'm fifty fucking five this year, if I buy a car it's going to be something stupid and petrol.

[Pirahna]

I'm fifty fucking five this year, if I buy a car it's going to be something stupid and petrol.

I used to daily driver my Elise.

[KungFooBob]

£30k might just get you into an SL500, I paid a coupe of grand less for my 350.

I still have that little niggle that I should have pushed for the 500, I've never owned a V8.

[Skub]

My first mortgage was 15% in 1989.

The shysters we were with put the rate up to 17%. Lots of folk had their lights put out around that time.

[Le_Fromage_Grande]

£30k might just get you into an SL500, I paid a coupe of grand less for my 350.

I still have that little niggle that I should have pushed for the 500, I've never owned a V8.

My sister had one, it's more of a fast luxury touring car than a fun car, it's highly unlikely I'll buy a fancy car, but if I did I think it would either be an Evo or a Mustang, though modern Dodge Challengers are pretty.

And yes, I did grow up in a council house.

[KungFooBob]

Yeah it's not a drivers car as such, but it's fast and a jolly nice place to be... especially in the sunshine with the roof down.

IIRC you've had various septic V8's. A decent V8 is deffo on my bucket list before petrol becomes a thing of the past.

[Le_Fromage_Grande]

Yeah it's not a drivers car as such, but it's fast and a jolly nice place to be... especially in the sunshine with the roof down.

IIRC you've had various septic V8's. A decent V8 is deffo on my bucket list before petrol becomes a thing of the past.

Only one V8, a 67 Pontiac GTO, a long time ago, and it was a bit of a death trap, drum brakes aren't great on a car that heavy.I

Hired a Dodge Durango in California in 2000, I think it had a 6 litre V8, it's the only fun SUV I've driven, all the others felt a bit under powered after that, I think it did about 15mpg, if you drove it gently.

[irie]

With the huge QE to keep economies afloat during the Covid pandemic of course inflation was bound to follow as economies opened up.

Money supply theory is these days unfashionable among central banks, but they're re-learning the relationship between scarce assets, money supply, and the velocity of money.

As for those proposing that house (a scarce asset) prices will crash, exactly where do they think all the QE money pumped into the global economy will go? Everywhere except houses?

[weeksy]

what's a QE ?

[irie]

what's a QE ?

Quantitative Easing.

https://en.m.wikipedia.org/wiki/Quantitative_easing

Quantitative easing (QE) is a monetary policy whereby a central bank purchases predetermined amounts of government bonds or other financial assets (e.g., municipal bonds, corporate bonds, stocks, etc.) in order to inject money into the economy to expand economic activity.[1] Quantitative easing is considered to be an unconventional form of monetary policy,[2][3] which is usually used when inflation is very low or negative, and when standard monetary policy instruments have become ineffective.

[JamJar]

Yeah it's not a drivers car as such, but it's fast and a jolly nice place to be... especially in the sunshine with the roof down.

IIRC you've had various septic V8's. A decent V8 is deffo on my bucket list before petrol becomes a thing of the past.

That was exactly why I bought my C63, I really wanted a V8 and a high HP car before making the jump to EV.

[Pirahna]

However, I don't think houses will fall because of people scrambling to sell them, the people that bought this time mostly haven't overextended themselves and can afford to sit on them - I think the reverse will happen, it will hurt the market because debt will be expensive, the economy is going to be bad and who will risk (or can afford) debt in that type of environment.
I think you'll struggle to sell houses @10% interest rates and that will drive the price down.

I sold my house last year and moved out in July, the people who bought paid top dollar. The people who bought their house for told by their mortgage lender that they'd agreed a price over the value of the house and to renegotiate.

We thought we might buy do went to look at a house. We liked it and put in an offer. Ten days later the estate agent came back and said it was "best and final offers". No idea what it went for as we didn't want to get involved. Every house was the same, if you didn't view within a couple of days it was sold. The market was a fucking frenzy.

I've got a feeling there's plenty of people that are mortgaged to the hilt and will struggle.

[irie]

With the huge QE to keep economies afloat during the Covid pandemic of course inflation was bound to follow as economies opened up.

Money supply theory is these days unfashionable among central banks, but they're re-learning the relationship between scarce assets, money supply, and the velocity of money.

As for those proposing that house (a scarce asset) prices will crash, exactly where do they think all the QE money pumped into the global economy will go? Everywhere except houses?

I think the point is that when money is cheap and there is lots of it floating around, then people overextend themselves, this was the basis of the sub-prime crash. I'm not predicting exactly the same (see below), but when interest rates shoot up and people find that money isn't so cheap anymore, they will need a bit more of it to be liquid - that's when you might get assets selling off in the hunt for liquidity - and at that point cash is king and assets are cheap.

QE in this case was robbing Peter to pay Paul, and IMHO a way to inflate some debt away before dragging it back down to earth, but this time it's compounded by a dodgy UK balance sheet because of 2019 economics and Brexit.

However, I don't think houses will fall because of people scrambling to sell them, the people that bought this time mostly haven't overextended themselves and can afford to sit on them - I think the reverse will happen, it will hurt the market because debt will be expensive, the economy is going to be bad and who will risk (or can afford) debt in that type of environment.
I think you'll struggle to sell houses @10% interest rates and that will drive the price down.

In the long run what matters is how the UK economy performs in relation to other western economies, especially continental European. Service and digital economies such as the UK's are inherently more flexible and faster to adapt to change than manufacturing economies.

Thus to the contrary I do not share your pessimism about the future performance of the UK economy.

[irie]

In the long run what matters is how the UK economy performs in relation to other western economies, especially continental European. Service and digital economies such as the UK's are inherently more flexible and faster to adapt to change than manufacturing economies.

Thus to the contrary I do not share your pessimism about the future performance of the UK economy.

It depends on how long is your run?

Budget deficit of c11%, inflation at 6% and climbing way quicker than forecast, interest rates 0.5%, average company losses of >20%, whole industries crippled, big consumer spending changes, rising global commodity prices, QE and furlough.

You can't correct that by pretending it isn't there, I think it unlikely that the UK will simply drift out of it.

You have either missed the point or conveniently ignored it, well done.

[wheelnut]

I think the point is that when money is cheap and there is lots of it floating around, then people overextend themselves, this was the basis of the sub-prime crash. I'm not predicting exactly the same (see below), but when interest rates shoot up and people find that money isn't so cheap anymore, they will need a bit more of it to be liquid - that's when you might get assets selling off in the hunt for liquidity - and at that point cash is king and assets are cheap.

QE in this case was robbing Peter to pay Paul, and IMHO a way to inflate some debt away before dragging it back down to earth, but this time it's compounded by a dodgy UK balance sheet because of 2019 economics and Brexit.

However, I don't think houses will fall because of people scrambling to sell them, the people that bought this time mostly haven't overextended themselves and can afford to sit on them - I think the reverse will happen, it will hurt the market because debt will be expensive, the economy is going to be bad and who will risk (or can afford) debt in that type of environment.
I think you'll struggle to sell houses @10% interest rates and that will drive the price down.

Perhaps you may have a point, but bear in mind that the mad house price boom in the late 80s happened against a backdrop of very high interest rates.

[Count Steer]

Gypsy Rose Steers predictions.

1. In 25 years time when looked at overall, average house prices will be seen to have risen steadily, keeping ahead of average general inflation. On closer examination there will have been dips and recoveries throughout the post war years. It's likely there will be one 'soon' - the supposed 18 year cycle suggests 2026 - but the last 2 years have been a bit unusual. If you can ride out the dips it won't matter much, if you can sell before the dip and buy in it then for you.

2. Whatever happens there will be some people saying 'this time it's different' based on what they hope is going to happen.

3. When the stock markets bomb people will keep calling the bottom of the market - all the way down - and calling 'dead cat bounces' the start of the recovery.

4. One person will say 'it doesn't matter how bad things get as long as europe is doing worse'.

Of course, Russia may invade Ukraine and we have another european war, we'll all die or turn into zombies due to unseen vaccine side effects or the heat death of the universe decides it can reschedule for an early slot. Predictions are usually bollocks, just plan according to what is most likely.

[Mr. Dazzle]

It's all gonna be moot when the self driving cars commanded by Amazon Alexas which have gained sentience take over.