Monetary Policy

Flush Those Quid Down the Loo, For England

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Better not have any money hidden in those skivvies.

In the U.K., the unit of currency actually says in its name that it used to be worth a pound of a precious metal. But our former (and future?) colonial masters were experts in the destruction of money long before we got into the game. According to one central bank apparatchik, the biggest threat to the Sceptre'd Isle's financial health is not the government's unspportable spending. It's the damn savers.

From the Daily Telegraph:

[Bank of England deputy governor Charles Bean said] "Savers shouldn't necessarily expect to be able to live just off their income in times when interest rates are low. It may make sense for them to eat into their capital a bit." […]

Mr Bean said that encouraging Britons to spend was one reason why the Bank had cut interest rates.

Live off your savings, not your income. Think about where that personal finance plan will end up.

Courtesy of Calculated Risk, which notes that U.K. subjects are earning £18 billion a year less in interest. In the United States, savers are earning $143 billion less on interest than they were during the peak.