A few interesting economic facts

It's Friday after all...

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UK Government debt now GBP£2trn (>100% GDP) https://www.bbc.co.uk/news/business-53859299

Apple now worth USD$2tn https://www.dailymail.co.uk/news/article-8643751/Apple-company-worth-2-t...

UK house prices at record highs https://moneyweek.com/investments/property/house-prices/601803/uk-house-...

Unemployment soaring at record rates (or will do when Government support ceases in October) https://www.bbc.co.uk/news/uk-england-53819623

Gold and Nasdaq also at record highs recently.

Low interest rates and money printing are of course the main reasons for most these facts, but I cannot believe there won't be a big property market crash within the next 2-3 years (which itself would lead to a recession if big enough). Something has to end the asset bubble party sooner or later (possibly the mother of all crashes if the bubble continues to inflate at its current rate).

Replies (53)

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Replying to Justin Bryant:
RLI
By lionofludesch
26th Aug 2020 12:34

Ach - it'll be grand.

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Replying to lionofludesch:
avatar
By Justin Bryant
26th Aug 2020 12:45

Also, to the extent the UK debt is owed to the Bank of England (I would guess around 1/3 or more), it could be instantly eliminated with the press of a computer key if the government so wanted, but that would be inflationary and would cause the £ to plummeted on the f/x markets.

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Replying to Justin Bryant:
paddle steamer
By DJKL
26th Aug 2020 13:19

Whilst one cannot run out of money (providing one can create it) one can run out of money for imports when others refuse to accept one's currency, or demand a rate of exchange that makes said imports far more expensive.Whilst economic theory argues for equilibrium with demand decreasing to reach same and supply increasing at the higher pricing, essentials like food, power and medicine tend to be in demand irrespective of price.

I am far more sanguine about Covid as we are in this with most other countries, we are all creating money.

I am less sanguine about our transition end with the EU and what that will do in the short term for sterling vis a vis other currencies- if we keep requiring to buy from abroad, as we certainly do re essentials like food, power and medicines ,but we then initially struggle to export due to compliance issues/transport issues/tariffs, then sterling may well,for a period, struggle, that struggle could require interest rates to rise and is one of the reasons I still own our house abroad as a hedge against sterling devaluation and why I currently favour equities which earn in currencies other than sterling.

Whilst the article you posted the link to is fine insofar as it goes it does not consider in any way potential trade issues that may soon arise, there could be quite a bumpy period whilst the new normal for trade becomes established.

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