Comments on: Freedom Today http://johnredwoodsdiary.com/2008/04/21/freedom-today-4/ Incisive and topical campaigns and commentary on today's issues and tomorrow's problems Wed, 23 May 2012 13:35:04 +0000 hourly 1 By: Tim Skinner http://johnredwoodsdiary.com/2008/04/21/freedom-today-4/#comment-2710 Tim Skinner Mon, 21 Apr 2008 15:38:27 +0000 http://www.johnredwoodsdiary.com/2008/04/21/freedom-today-4/#comment-2710 Who are you to say interest rates are too high (or low)? Are interest rates a matter of whim? Do they not reflect market realities in the same way as does (say) the price of bread? If interest rates reflect market realities, what do you suppose they are? Determining the balance between present and future consumption, perhaps? You want to make home ownership available to all, including the poor. Fine, but is that feasible without seeing house prices fall substantially in real terms? Where I live, a modest three bedroom semi-detached house costs ten times average annual earnings: what an incredible burden to have to take on. You don't want too rapid a deflation. Perhaps you prefer to drag the agony out over ten or twenty years? Really? Reply: Yes, I want a slow adjustment of house prices to earnings, not a massive collapse of prices which could undermine people's financial position. We judge whether interest rates are too high or low by the impact they have on jobs, prices and activity. Who are you to say interest rates are too high (or low)? Are interest rates a matter of whim? Do they not reflect market realities in the same way as does (say) the price of bread? If interest rates reflect market realities, what do you suppose they are? Determining the balance between present and future consumption, perhaps?

You want to make home ownership available to all, including the poor. Fine, but is that feasible without seeing house prices fall substantially in real terms? Where I live, a modest three bedroom semi-detached house costs ten times average annual earnings: what an incredible burden to have to take on.

You don’t want too rapid a deflation. Perhaps you prefer to drag the agony out over ten or twenty years? Really?

Reply: Yes, I want a slow adjustment of house prices to earnings, not a massive collapse of prices which could undermine people’s financial position. We judge whether interest rates are too high or low by the impact they have on jobs, prices and activity.

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