Results are out! Find what you Get quick advice or join the chat
Hey there! Sign in to join this conversationNew here? Join for free to post

Why we wont get out of this recession for a while!

Announcements Posted on
  1. Offline

    The cause of the recession was a default on debt. However the BOE has tried to counter this by lowering interest rates and then pumping money in so people can obtain more debt. But the people dont want more debt and cant afford it. Hence a large bubble in housing still remains. I see a steady decline in GDP/Assets over the coming years with increased inflation due to QE. Not a pretty picture for anyone.
  2. Offline

    Your post does not make sense. You say people don't want more debt and can't afford it, hence a large bubble in housing still remains? Surely if people aren't borrowing then that deflates the housing market and brings it back in line with trend growth.

    In any case the BofE lowering interest rates has not really made much difference to first time buyers or people wanting to increase their mortgages to move up the housing ladder because the lenders are refusing to lend to most people so effectively the lenders have tightened monetary policy in the housing market regardless of the BofE's actions. The main effect of the BofE actions is it has kept mortgage repayments for those already on the housing ladder down, so that it allows people more disposable income otherwise the consumption part of aggregate demand would have collapsed.

    Like you say people don't want more debt and most people are trying to pay down debt and save instead of spending so the issue is one of a saving glut and people not spending, so it is the correct monetary policy to keep interest rates low to try and get people to spend more and discourage saving.

    The real reason we won't get out of this recession for a while is because we are relying on monetary policy for stimulus and monetary policy has pretty much reached the limits of its effectiveness as we are in a liquidity trap. We need to be combining this monetary policy with a fiscal stimulus in order to get out of the recession.


Submit reply


Thanks for posting! You just need to create an account in order to submit the post
  1. this can't be left blank
    that username has been taken, please choose another Forgotten your password?
  2. this can't be left blank
    this email is already registered. Forgotten your password?
  3. this can't be left blank

    6 characters or longer with both numbers and letters is safer

  4. this can't be left empty
    your full birthday is required
  1. By joining you agree to our Ts and Cs, privacy policy and site rules

  2. Slide to join now Processing…

Updated: July 25, 2012
TSR Support Team

We have a brilliant team of more than 60 Support Team members looking after discussions on The Student Room, helping to make it a fun, safe and useful place to hang out.

Today on TSR

Personal statement secrets

Universities reveal all....

Would you cheat in an exam if you knew you wouldn't get caught?
Quick reply
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.