Whatever we are being told, I would argue that according to one test, the economy is far, far from being in balance.
Why? We still have a deep ‘borrower bias’.
Despite the fact that we are in a ‘credit crunch’, borrowers (the people who want scarce credit) are getting a far better deal than the savers (who have the credit). It is the exact opposite of what should be the case, and reflects the fact that we have a long way to go before we are free.
2009 has been, in the words of Peter Warburton, a bonanza year for borrowers. The base rate on loans has fallen fast, from 7% a year ago to 3.9% in August. But for savers, the very people with the money that the banking system ought to be fighting for, have had a torrid time. Cash ISA rates are down from 4.4% to 0.4%, instant saver accounts from 2.4% to 0.2%.
Don’t hold your breath for normality. We are in an upside down economy.