Age discrimination in UK mortgage market due to prospect of rising inflation and housing bubble bursting

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[EDIT 11/11/13: As pointed out on the Money Saving Expert forum which I provided a link to at the end of this post, I got it wrong about interest rates offered by banks/building societies being based on inflation – there are a number of factors including the base rate set by the Bank of England (although this is partly based on government targets on inflation). The title wasn’t particularly good either in talking about “age discrimination” because it is only rational for lenders to discriminate against older people on the basis that they may die before they have repaid their mortgages. However, Watchdog reported that maximum age limits for mortgages to be repaid had been reduced by 10 years by many lenders after the credit crunch, irrespective of ability to pay back, but failed to explain why (which is what I gave an explanation of in this post). I have had very few views of this post in five days according to the blog statistics facility, despite it being the top item on the blog, possibly due to the bad headline. Laura Kuenssberg on ITV News at lunchtime today reported that 2,384 mortgages have been applied for using Help to Buy (there is a separate one for new build properties – search online if you want details) out of 60,000 in total – a drop in the ocean and certainly not worth risking the housing bubble which there is already evidence of.]

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It will never be necessary to reduce the level of the national debt!

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The above graph shows the UK national debt is now much lower than it has been in the 1940s relative to GDP, but the analysis of an “unorthodox post-Keynesian” economist, Warren Mosler in his book “Seven Deadly Innocent Frauds of Economic Policy”, who once stood to be US President shows that a central bank (such as the Bank of England or US Federal Reserve) doesn’t need to pay back the national debt to anybody who has lent money to it even when gilts/bonds mature, because the money remains at the bank in a different account!

I first publish an article by Martin Odoni (hstorm) that I largely agreed with, after having big disagreements in comments of my post on MoneyWeek’s “The End of Britain” video/letter, and then added my own analysis, correcting the odd mistake…

UPDATE (31/10/13): This article is misleading, mainly because Warren Mosler’s analysis does not take inflation seriously (see these 1-star reviews at Amazon). I have now written a review of that book and published it on this blog at https://thatcheroftheleft.wordpress.com/2013/10/31/review-of-warren-moslers-the-7-deadly-innocent-frauds-of-economic-policy-and-prospects-for-socialist-revolution/.

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Is MoneyWeek’s “End of Britain” just fearmongering? What about US debt default? Is socialist revolution on the cards?

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[EDIT 24/3/14: This blog entry’s comments now include a short debate with financial expert and ex-banker Frances Coppola and myself, and information about a new blog entry of mine containing my critique of a new, much more serious, argument by MoneyWeek entitled “What Osborne didn’t tell Parliament“, which was actually written by financial experts and aimed at serious investors. In contrast, “The End of Britain” was  written by MoneyWeek’s advertising department, leading to it being widely criticised by economists and others who have not been fooled by biased graphs and a huge dose of propaganda. I strongly recommend reading #Budget2014 What Osborne didn’t tell Parliament: critique of new MoneyWeek End of Britain argument – need revolution! which is currently being censored by Google due to the importance of the arguments.]

The financial magazine MoneyWeek is continuing its slick advertising campaign, with its prediction of “The End Of Britain” (inevitable social and economic chaos in the UK), with a video (viewed preferably on YouTube since the video on their website doesn’t allow rewinding or fast-forwarding, a sign of untrustworthiness) or in text form (with graphs) as a “letter” at http://moneyweek.com/endofbritain/. I argue below that, while some of their arguments are false or biased, socialists should recognise the validity of some of their other arguments and be prepared for the opportunities that will open up.

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