When I PURCHASED My First House

UK second quarter GDP increased 0.3%, on the first reading. That comes after a 0 just.2% rise in the first quarter. I expect that the second quarter reading will be modified down, and that in the next half of the year, growth will slow further, or come to a standstill. Day revised down its development forecast for the united kingdom to at least one 1 The IMF the other.7% for 2017. I think that is positive highly.

The simple truth is that the united kingdom economy has been living on lent time for several years. The development has been built on froth, as an huge degree of private debt already, has been expanded even further recklessly, only to keep asset prices inflated, and consumer spending heading. The use of credit has acted like elastic to stretch the power of consumers to keep spending beyond their limits, the flexible is approximately to snap now. In the mid 2000’s, as the united kingdom economy, along with the global economy grew rapidly, as the new long wave boom got underway, wages sharply began to rise, in ways they had not done for more than twenty years.

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For the previous twenty years, the stagnation stage of the global economy had designed that labour-power was excessively supply. In the early 2000’s, the onset of the new boom meant that period of falling wages, and rising private debt could be taken to a halt. But, the degree of the debt, and moreover, the level to which asset price bubbles had been frequently inflated – The Greenspan Put – posed a problem for central banking institutions and other policy makers.

Monetarist orthodoxy was that to be able to stimulate economic activity additional liquidity needed to be placed into the economy, that would reduce rates of interest then, and encourage additional borrowing, spending and investment. The nagging problem is that this theoretical standpoint is bogus, for several reasons. Firstly, placing additional liquidity in to the system, will not reduce interest rates, unless there is a issue of inadequate liquidity already, i.e. a market meltdown. Everything that additional liquidity will is to devalue the currency, and create inflation thereby. What capitalists are interested in is making additional profits, not theoretical profits simply, but actually realised money profits, as their commodities can be purchased.

The third problem with the Monetarist solution was that having put additional liquidity in to the system, the authorities got no control over where it went then. So, it is often said that the vast upsurge in liquidity have not resulted in a growth in inflation. But, they have. The inflation has been around asset prices. The Dow Jones Index rose by 1300% between 1980 and 2000. Similar goes up is seen in other stock marketplaces.

In 2008, the Dow Jones and also other stock marketplaces crashed, dropping to around 7500, but as yet more liquidity was pumped in to the system, it rose from the ashes again. That huge inflation of asset prices meant that in the 1990’s, the paper value of pension money massively increased.

Central banks and states succeeded in bailing out the banking institutions, and reflating asset prices, only at the expense of depressing real financial activity over the last 8 years. They have distorted the current long wave cycle, which is now likely to be extended as a result. But, now, again, the true economy is asserting itself.