Bank Of England Cuts Interest Rates, Lowest Since 1694
Remember 1694? No? Well, the Bank of England has cut the benchmark interest rate "to the lowest since the central bank was founded in 1694 as policy makers tried to prevent the credit squeeze from deepening Britain’s recession," says Bloomberg.
The bank rate was reduced a half-point to 1.5 percent, bringing policy makers closer to the point at which they will run out of options to fight the financial crisis with conventional tools. The pound rose against the euro and the dollar because some investors had bet on a larger reduction.
Just for a little perspective, let's look at some events that happened in the good old 1690s.
In 1694, the French philosopher Voltaire was born. You may know him as the fellow who pointed out that "If God did not exist, it would be necessary to invent him." Speaking of God, the Roman Inquisition was going strong during the 1690s, a decade that also saw the extinction of the Dodo, the establishment of the College of William and Mary in Williamsburg, Virginia and the Salem Witch Trials.
BOE Cuts Rate to Lowest Since Bank’s Creation in 1694 [Bloomberg]
(Photo: Ballista )
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Comments:
I wouldn't trust data from this obvious fly-by-night company. :)
I'm still waiting for my tulip futures to pay off.
You better start looking for facts that happened prior to 1694, because they're going to have to go lower than that.
Good. I can finally get that sugar plantation in Jamaica going.
Isn't it great to have an "old" country with a long history like that? The US has to go check some Native American records to find lower interest rates....
@ojzitro: you go back much further, you won't have any capitalism to compare to. I think we're setting new records here!
@CES.GitEmSteveDave: Let's at least hope their online presence has improved since they were founded.
@nataku83: If I remember my history correctly, banking as we know it started in the 1300's with the Italian banking families, but there were lenders before that. I don't know what kind of interest the Medici were charging, but those outside the banking system charged really high rates. So if we go back much further than 1694 the pendulum will start to swing in the other, higher direction!
@DrGirlfriend: It almost feels like that's where it should be, I know that means a collapse, but will people learn if there risk is rewarded?
Banks, people, CEO's, businesses all took on way too much risk, and are being relived of their responsibilities by a printing press and artificial interest rates.
YES! My mortgage rate just dropped again.. to 2%! I love tracking mortgages, wish they had a similar thing here in the US. @ColoradoShark:
@DrGirlfriend: I think this information is quite informative...Charging Interest
Apparently interest used to send you on your way to hell.
Next step - bring back debtor's prisons.
@Oranges w/ Cheese: Interest rates have not been this low since Chief-Vomiting-Wolf offered wampum loans at 1%, back in the moon of the ascending hawk!
hmm...this could actually be a good thing for people still stuck in ARMs (which are most commonly connected to LIBOR). perhaps this could provide a little relief to our dwindling housing market.
@Ingram81: Good link! Indeed, usuary was considered a sin. The history of moneylending and charging interest is really, um, interesting. It's closely tied to early anti-Semitism in Europe, too, as the most prominent moneylenders at the time were in the Jewish community. At first all interest = usuary, and then when wealthy European families started up banks, it was just "excessive interest". And of course, the Jewish moneylenders charged "excessive interest". Granted, the rates truly were high, but like I said, I'm not sure what kind of interest the banks were charging at the time.
@ojzitro: The thing is, though, that huge interest rates caused a lot of problems too. When you absolutely need money and can borrow it, but have no hope of becoming free of that debt because the interest rate is prohibitive, people can get pretty desperate. We might be talking about centuries past, but I think human nature doesn't change much over even long time spans. There should be a balance, I think, between too low and too high. Although as someone who is in the market for my first house and a responsible bill-payer, I can only be happy when interest rates drop!
Bring back the 1690's (or even the 1680's). I love a good stoning!
@oilburner: We already have debtor's prisons.
People are getting arrestly solely for owing debt today (without other crimes that could possibly conflict for the reason of the arrest, for that matter!)
@DrGirlfriend: Understood.....it's a necessary evil in this instance.
That leads us to a weird conundrum though; we're essentially fixing the hole in the boat with a pickax.
The very thing prescribed to correct this problem is what got us there to begin with, and that is where I have a hang up. When the housing inventories remain heavy throughout 2009, if I hear one senator call for a easing of lending requirements for individuals, I'll drive into oncoming traffic. There are people like you and I, with stellar credit and money saved, but we're not the answer. The answer is to give subprime loans with prime rates attached. That's why the FED is suppressing rates, and it can not do it for too long with out major consequences. It needs people who still can not really afford a home to buy them, and that's bad for all of us. Essentially wash, rinse, and repeat.
Credit cards are their own beast, but the national rates set by the FED can not live at 0-.25% without major headaches coming from it. There is a reason it is a record low. The usury link you're referring me to is applicable most to credit cards, and those are a whole 'nother bag of beans.
Going to read the usury link now...thanks.
W&M's big date is 1693, not 1694.
@RodolfoRabulous: Well sure, they were IMPREGNATED in '93 but didn't deliver until nine months later.
This isn't actually helping. The banks still aren't lending much money - and they haven't cut their lending rates much, either.
Why would they want to lend money? The rate cut makes it less attractive for them to do so, and they don't see many customers as safe enough to lend to in the current climate.
Meanwhile it screws those of us who have savings and no debt. My wife's just lost her job and we were hoping to have some income from our savings, but it's dwindled away. At this rate I'm going to have to get off my arse and find a job.
Interesting that the credit crisis might bring back both low interest rates AND witch trials from the 17th Century.
Eh, Madoff? I know you've got nothing better to do than cruise blogs right now. I'm looking at you!