Anyone who’s been reading the more hysterical parts of the press this past year or two will have seen those shrieks that the banks aren’t raising deposit rates as fast as they are loan rates. At which point there’s the screaming that government must do something and even some bureaucrats stepping into that breach to something do.
This is, of course, the wrong way to go about things in a market economy. For the very feature, point even, of a market economy is that we adults not only have agency we also have the freedom and liberty to pick and choose. It is that very deployment of our agency in our picking and choosing - those things we can do as a result of the freedom and liberty that multiple suppliers offers us - which then keeps the capitalists in line. They can’t rip us off too badly because we’ll go elsewhere.
This does rather mean that we do have to be adult and deploy our agency. But then we are and we do, right?
From NatWest’s latest results announcement:
Bank net interest margin (NIM) of 2.94% was 19 basis points lower than Q2 2023 with the reduction largely due to changes in deposit mix as customers shifted balances from non-interest bearing current accounts to interest bearing savings accounts, particularly term, as well as the continued impact on mortgage margins as the higher margin Covid-era book rolls off and is replaced at lower margins. Bank NIM was 3.11% for the year to date.
We are - or enough of us are - moving our money from low interest accounts to higher. Which is eating into the margins, profits, being made by the bank. Good, this is as it should be.
Now, it is possible for us to insist that actually, government should be doing all of this for us. Several of us here have lived in a variety of countries where that is the deal. Believe us, those places are worse.
That very liberty of choice is what constrains the capitalists. If we’re too lazy to exercise our adult agency then we’ll not constrain them, will we - and if we do then they will be so constrained.
We even have the joy of not having to exercise said choices and those that do will do better than those that don’t. Great system, isn’t it? All under our, not their, control.