lil_kimmy

Ok I am not the most clever person on the planet and would like to know how basic economics works.

I know I could look on the net but I think that all you lovely clever SN people can tell me all the important bits.

The main bits I would like to know is from what I can gather the interest rates were put up to slow lending and spending etc but now people have actually slowed the spending it is another crisis?! I am sure it is a balance which is almost impossible.

I am in hospital bored and high on pain killers so thought I would ask!!

Kim.

PeteBrant

Others will able to do a far better job than I but...

Economics at it most basic level is based on the Supply and demand curve.


What this basically say si that when:

Demand is low and supply is low then the price is low
Demand is low and supply is high then the price is low
Demand is high and Supply is low then the price is high
Demand is high and supply is high then the price is high.


When people spend lots of money, then inflaton starts to rise. When people dont spend lots of money, then the economy slows down and might even start to go into recession.

You are quite right, it is a balancing act. We have seen recently an unprecedented period of economic stability. Whether this is due to Mr Brown, or due to world economics is a matter of personal opinion.

Snazy

Kim, you hunna hunny, is that the best you could come up with. Your getting old luv

Get well soon sweetie. Might have to come as see you as im off lol

lil_kimmy

I have literally just remember I posted this last night. I was hoping to god I didn't sound too much of an idiot.

Snaz I know but I am interested and want to understand as when I am watching the news I get annoyed hehe.

Yes you should indeed come and see me. Still in hospital but hope to be out in a few days. You know your always welcome and it has been far too long.

Oh and thanks for that Pete

Kim.

Snazy

You not able to get MSN there?
I might just do that hun, I have been known to do dafter things, so this might be just what I need. Only if the air is fresh though, im posh dont you know.

lil_kimmy

I can get on msn thought Ilovemsn.com but just waiting for physio to come see me but should be on later.

I have been off work for a while and probably won't be able to go back yet so maybe after xmas you can come see us? Or before of course. I don't mind

alcazar

iTrader: (2)

The bit that gets me is this:

The £ rises=bad for Britain
the £ falls =bad for Britain
US interest rates fall=bad for Britain
US interest rates rise=bad for Britain
The $ falls=bad for Britain
The $ rises =bad for Britain
Oil prices rise=bad for Britain
Oil prices fall=bad for Britain
The € falls=bad for Britain
The € falls=bad for Britain
European economies inflating=bad for Britain
European economies in recession=bad for Britain


Get the idea?

What EXACTLY would be GOOD for Britain???

Alcazar

lil_kimmy

That is exactly what I was thinking but I thought I couldn't possibly be right when we pay people to sit there and work this stuff out!

Snazy

Whats good for Britain is we all bail out. Still planning on leaving in a few years time lol

Brendan Hughes

Not reading the newspapers?

alcazar

iTrader: (2)

Nope. I get my info on this sort of thing from that fat Irish bloke on Good Morning. Nowt seems to make HIM happy.

What do the papers say, then?

Alcazar

Brendan Hughes

Much the same, but you can't see the lips move.

PeteBrant

It all depends on your business. If you are a net importer, then a strong pound is a beauty.

If you are a net exporter then a strong pound is a nightmare.

Wurzel

iTrader: (1)

It is inflation I don't understand, why does inflation go up when people spend money ???? and why does changing the interest rate help inflation??

WTF is inflation anyway????

from what I understand people spending money is bad for the economy and people not spending money is bad for the economy so what exactly is good for the economy???

lil_kimmy

Exactly what I want to know Wurzel....

Snazy

I have always thought of inflation as the basis of financial growth as a whole in the UK. The rate prices rise by, and wages rise to match the growth of the spending market...............so to speak lol

Technically spending IS good for the economy, just not spending on credit.
More and more people are borrowing above their means, and more lenders are relaxing their qualification for borrowing. Good for the shop keepers, bad for the borrowers, as they get out of the depth.
They then cant pay the loans back, the banks write off huge amounts of projected profit, and the circle starts again.

wrightylee

Have a watch of this video and it should go some way to answering your questions
Google Video - Money As Debt

lil_kimmy

Will look at vid in a sec.

Surely if the gorvernment but some restrictions on lending and who they can lend to it would reduce the problem slightly? I know the FSA are in place for secured lending and there is the banking code which is voluntary but it sems companies continue to lend to people who cannot afford the repayments and that is not including the people who maybe get made redundant etc...