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AIBU?

To ask someone to explain the economy

3 replies

Pampapuddlepoose · 26/09/2022 08:32

I have looked online but am getting myself confused. I admit I'm not that clever with stuff like this and end up muddled.

If anyone could either take the time to explain or link me to a plain English for dummies explanation I would be very grateful. I feel like I really need to understand this. 💗

Why does increasing/decreasing the interest rate mean anything? I know it's how much you pay back when borrowing but why does that matter on a day to day basis?

When the BOE put up the base rate, it increases interest rates but why does that increase the price of food?

Do they change it to increase borrowing? If they ask people to pay more for their loans where does the money come from?

Where does the money go?

How does interest rate make value of £ drop? I know that then means it costs more to import but why is $ increasing in value when £ is dropping?

What does it mean to grow the economy or slow the economy? Why does BOE do it? Is borrowing (within your means) good for the economy?

Why are house prices so important?

Why was yesterday's budget such bad news for most people?

What is a bear market? Is it the same as a recession?

Thank you so much!

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TightDiamondShoes · 26/09/2022 08:36

Basically “they” (all flavours) will twist anything to make it sound positive and us at the bottom will have to suck it up because we have no say, no choice and no hope of meaningful impact.

thus it ever was.

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Pampapuddlepoose · 26/09/2022 08:49

@TightDiamondShoes That is the ONE thing I do understand! 🤣

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Princessglittery · 26/09/2022 09:57

When the BOE put up the base rate, it increases interest rates but why does that increase the price of food?

This is about understanding the supply chain. I apologise if this is too simplistic - Take milk as an example you start with the farmer who has to buy the farm, they may have a mortgage on the farm so the interest rate may impact their expenditure. They may have to take out loans to buy the cows, milking equipment and other capital expenditure so the interest rate rise may increase those expenses. The farmer employees farm workers whose mortgages have gone up and so may increase their wages. The farmer therefore has to increase the cost of milk to cover these increased expenses. The milk then has to be transported to the Dairy for processing. The tanker driver may be self employed, his mortgage has gone up and also the interest rate on the loan for his tanker has gone up so he charges more. Etc. All the way up the supply chain. If you then add on the increases in fuel costs, gas, electric, food for the cows etc. then this is why food prices are going up.

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