A Picture is worth a Thousand Words

All the helicopter money dropped on the nation has quickly disappeared. Personal saving rates (in red) are quickly falling back to recession levels.

At the same time, consumer credit (in blue) is spiking upwards, already well past previous recession levels.

On Thursday, the Bank of England (BoE) raised the base interest rate up to 1%, the highest it has been in 13 years. UK inflation hit 7% in March and the BoE forecasted that it will raise to 10% by the end of the year. We all know how accurate their forecasts are, along with most forecasting using models.

Energy price caps were raised in April (planned long before the Ukrainian invasion) increasing prices for consumers by 40-50%. Another price cap rise is happening in October.

The Federal Reserve raised interest rates by 0.5% last week, the highest since 2000. More raises are expected to follow, with forecasts of 2.9% by early 2023. Again, more forecasts which have continuously been proven wrong.

If you haven’t had a pay rise of at least 8% this year, you’ve had a pay cut. If you have money in the bank, it is being stolen through inflation.

If the forecasts are accurate, it will be a terrible few years. However, we can all see where things are really heading.



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