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Shut up and take your medicine! It’ll do us good!
From The Telegraph:
The Bank [of England] has been under attack for months from pensioner groups(1) who have claimed the Bank’s £375bn of money printing has triggered a “death spiral” in pensions, by slashing income from annuity rates.
However, the Bank fought back on Thursday by claiming pensioners have gained from QE and that the effect on those preparing to retire has been “broadly neutral”. Those to have suffered from the Bank’s response to the financial crisis and recession have been the young and the poor,(2) the study found, while the richest 10pc the population are estimated to have seen their wealth rise by more than £120,000 per household.(3)
Pensioner groups have argued that QE has forced down gilt yields and, consequently, reduced the value of annuities bought on retirement. However, the Bank claimed that the lower interest payments had been offset by an increase in the size of the pension pot used to buy the annuity.(4)
In addition, the Bank said that QE had helped “boosted the value of households’ financial wealth held outside pension funds” by about £600bn. More than half of those holdings are held by people aged 55 and over, and roughly 40pc by the richest 5pc of households, the study said.
1) Yes, that means you, Save Our Savers. So what if those pensioners who actually squirrelled away some cash for a rainy day are losing money – house prices are being kept higher than otherwise which makes you richer!
2) Yes, that means you, Priced Out. Paying rent and trying to build up a deposit? Ain’t gonna happen, because low interest rates insulate BTL landlords against their bad decisions and the value of your pathetic ‘savings’ is being eroded. It’s your own fault that you weren’t born a decade or two earlier,
3) This is the whole foundation and basis of UK government’s Home-Owner-ist policies. Rig things to benefit the One Percent but ensure that enough illusory wealth trickles down to enough people to trick them into voting for you again at the next election, it’s worked perfectly for decades.
4) That’s sort-of true, actually, if you are on the verge of retirement and your tax-favoured pension fund is largely invested in gilts, which is what you are traditionally supposed to do, then the two effects more or less cancel out in the short term.
Spotted by Stillthinking at HPC.
2012-08-23 13:27:40
Source: http://markwadsworth.blogspot.com/2012/08/shut-up-and-take-your-medicine-itll-do.html
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