I believe we should have supported them, because this is a mistake by the central bank managers. Because of a regime of low interest rates, then that means the portfolio of bonds you have on the overall financial system over time will have a lower and lower coupon rate. And that therefore means it's quite easy to double interest rates,. If you're down to a level where rates are 2%, getting to 4% isn't all that much of a change. But if you had rates back in which we could- Is the mix of bonds, yeah. Well, you go back to the 70s and 80s when interest rates were as high as close to 20%. You weren't going to go
We last had a financial crisis in 2008 (ignoring the pandemic years), and if we’re not in another crisis now, we’re well on the way to it, with mortgages rising, taxes increasing and the price of everything continuing to rise. Your spending power is being hit in three directions. But, isn’t that what central banks want? So we spend less and inflation comes down, theoretically. Yet the banks, who might not be to blame this time, are now feeling the hurt. In fact, they stand to gain from rising interest rates because they can raise their borrowing costs. This week Phil asks Steve, will the banks always win, come what may?
Hosted on Acast. See acast.com/privacy for more information.