SKETCH: The Oldies will have their revenge upon these ageist economics.

For the umpteenth time, the Bank of England’s monetary group held interest rates at 0.5% yesterday.

I wonder if, as they sit round their mahogany table in Threadneedle Street, that discreet group – the Monetary Policy Committee (MPC) – ever wonder about whether more than eighteen months of near-zero interest rates have actually achieved anything. I wonder if – not every day, but now and again – they have a few moments’ doubt about the correctness of their strategy.

My guess is that they must do. Speaking as one over sixty, where it’s got me is borassic lint, and having to rent our Devon home out for the summer in order to make ends meet. If that sounds a bit me-me-me, and likely to evoke the ‘lucky you having two homes’, I’d probably have two responses: luck had nothing to do with it; and think a bit harder about the contribution my age demographic makes to the UK economy.

I was born slap bang in the middle of the late 1940s baby boom, and thanks to randy returning soldiers and the NHS, there are more of us than any other comparable group. Baby Boomers control over 80% of personal financial assets and more than 50% of discretionary spending power. We are responsible for more than half of all consumer spending, and buy 77% of all prescription drugs… well as 61% of all OTC medicines.

I raise with you now two what-ifs: supposing a year ago, better-off Silvers like me had been told that from now on our prescriptions would be means tested; and suppose that – instead of dropping interest rates – we’d raised them?

My contention is that had these two things been done, the NHS would be in slightly better shape (prescriptions are 14% of all NHS costs)…..and the economy would be in far better shape. (If the previous lot had given my generation an incentive to buy British, it’d be in infinitely better shape).

As it is, yesterday’s news was not great on any front. UK Consumer spending was said to be on wane, and UK car sales slumped. Were we French, all would be well – because the financial seerette that is Christine Lagarde has asserted that bad news must always be followed by good.

But sadly, we have no such Gallic advantage: all we have is more fluffy stupidity, which reared it’s head yesterday in the shape of West Midlands Council, who insisted on protesting that – asteroid heading straight for Solihull or not – they want to build all their new schools. Indeed, they have vowed that Gove shall not have them. All I can do in the face of this is recount what Noel Coward said, viz, “I don’t see why not darling – everyone else has”.

The reality is that Brown Labour chose to save the banks rather than the economy. There really is no other explanation for slashing interest rates, which lost them the one chance they had of the banks attracting family-forming depositors while the likes of me and Mrs W went splurging on solid-gold olive-stoners, forty-foot wide American fridges and the like.

As it is, the country is knackered – but we wrinklies will have our day. For I have no doubt that what awaits us now is inevitably rising interest rates and massive deflation. Thus will people like me become carpetbaggers, tearing around the land in our Aston Martin sports coupes and buying up stately homes for what used to be the price of a decent lunch at The Ivy.

Our pensions and houses will be worthless, but our investment incomes will make us Headmasters of the Universe. We shall cane all those silly young bankers, tell them it hurts us more than it hurts them, and charge extortionate amounts of money to teach them the basics of civics (‘it’s not just about you’), physics (‘what goes up will probably also come down’) and mathematics (‘100 x 0 = 0’).

10 thoughts on “SKETCH: The Oldies will have their revenge upon these ageist economics.

  1. 'We shall cane all those silly young bankers'I would leave out this part. Too many might see this as an incentive bonus.Like their investment decisions, their personal tastes might prove to be a little wierd.


  2. How does the Bank of England MPC know best what rate to set? Have they a one way line to God? Surely the market should set rates – like it does for most everything else – that way we can get the rate that suits most people rather than the rate that smartie pants in Threadneedle Street set.


  3. This whole 0.5% rate is nothing more than an illusion. The only thing it has done is to make Government borrowing unsustainably cheap and prop up a housing bubble. At the moment the only people with anything like disposable incomes are the ones who overstretched themselves in the financial market while leaving the people who have acted with some degree of financial acumen and caution wondering why the hell they didn’t live the high life on the proceeds of multiple re-mortgages! Once again it seems the rewards go in the wrong direction and another erroneous example is set. It would seem it is our generation (baby boomers) who have sown the seeds of this as we have had the reins for a while now, and in our youth known real hardships, only to accept a laissez faire and amoral society which drifts along according to minority lobbying, just as long as we could kid ourselves we were ahead of the game. Maybe if we hadn’t inhaled we might of thought more about the stuff we used to demonstrate, and felt strongly, about in our youth! At the end of the day we are accomplices in this whole sorry mess!


  4. MacSadly, you are 100% correct. The 1960s were, without doubt, the daftest, most shallow and drug-addled years in the history of mankind.But what fun we had….


  5. Interesting article and comments.ISTM the major benefit of ultra-low interest rates is to reduce the number of home repossessions for people who over-borrowed during Brown's credit boom. Of course it's the savers who are paying the price.As JW alludes to, low rates are having little effect on economic activity…people are loathe to borrow and big companies are stashing their cash and won't invest it for fear of what may be around the corner. We should not ignore that many private/corporate borrowers are paying down their debts too.There are some other pros/cons of low rates but whether these help to explain Govt/BoE rate decisions is unknown to me.Several mentioned before by JW and others:- it's encouraged the banks to buy Govt Gilts instead of lending, thereby getting ~3% for doing nothing and avoiding lending risks.- it's made a ready source of funds available to Govt to cover its huge borrowings.- it's allowed banks to rebuild their balance sheetswhich AFAIK is now a requirement for them.The one thing that's fairly certain: we are being seriously deceived by the Govt and BoE.


  6. Enjoy your stuff John, and at the risk of sounding pedantic, it was Sandwell Council who went to Westminster to campaign for new schools. 16 miles as the crow flies from Solihull, and another planet…


  7. Another view on Baby-Boomers is that some of us left school at 15 after a crap education, so we went to night school to get something like an education paid for by us, no thanks to Harold Macmillan – worked our socks of for 45 years – never taking drugs or pandering to softies – never taking employment benefit but taking any job on offer – refurbishing homes on large mortgages just to get on the home ladder since the Labour council in East London would only house you if you either bribed the chair of the housing committee or had several kids – neither of which appealed to us. Now we are enjoying a well earned retirement based on our own savings – which no one else has paid for.Thus I say to the drug addled baby boomers who had a guilded youth and contributed sod all – it's pay back time and don't ask me to contribute.


  8. If you're worried about ageist economics then consider that the two main areas of spending supposedly ringfenced in the face of budget cuts (a policy of all 3 main parties) was NHS spending (more than half of which goes on over 65s who make up just 17% of the population) and pensions. Meanwhile youth unemployment is soaring, childcare services are being slahsed and university spending is being cut by 20%. By the way, if you think interest rates are going up just look at what happened in Japan after their debt bubble blew up in 1990. 20 years later, IRs still near to zero.


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