11 thoughts on “Another way to think about government debt

  1. jed goodright

    just caught a few moments of Miliband’s speeck to Conference – content value is nil and he sounds remarkably like Bliar – the labour Party in the UK is officcially pronounced DEAD

      1. jed goodright

        Am I some people?
        I wasn’t talking about ‘content’, even if that was shabby, I was commenting on ‘style’, ‘nuance’, his language and movement …. close your eyes and listen again… very worrying at a time when Labour are not impressing the populace

        Additionally, New Labour including the current incumbents ended the Labour movement years ago. All the current labour party offers is a different version of ‘more of the same’ Exactly where has the opposition to the tories and the coalition come from – not this Labour party

      2. Mike Sivier

        You’re not alone in criticising the speech. Others, however, have rallied in support and some have even been won round by it.

        If the Labour Party has not been opposing the Coalition, why do the Tories complain so inanely about Labour opposing all their changes to social security?

        That’s not to say they couldn’t do better because they could – and this blog is concerned with that in many of its articles. But unilaterally pronouncing Labour ‘dead’ doesn’t make it so.

  2. Jonathan Wilson

    What gets me is how stupid they are, with what should be easily seen sums.

    If you sack “public” workers and then re-employ them via private companies, or individuals who set up as “ltd” service companies, which are needed to replicate the function as the job is still a needed and valid job then its obvious that the overall cost will be higher or the overall value provided will be less as there is the profit margin to be made… add to this the affect of paying a nominal wage and the rest via divi’s, and massive avoidance/loan offset/some other trick by the big boys, which reduces the tax take.

    Trying to reduce the HB bill when having policies that force HA’s etc to set aside a growing percentage of properties as “affordable rents” which are significantly higher, and which will increase in cost faster as private rents increase, than the dwindling number of “social/council rents” is just stupid… and we are expected to believe these people have any clue about things.

    BT, a policy that if its stated intent of “getting people into the right sized houses” worked would cost huge sums more than any alleged saving (which are only made if it fails and people cough up the money on the shortfall) like wise the OBC… not to mention the side affect of moving people from expensive areas that have higher job opportunities to low rent areas with low employment chances making it more likely they will not be able to get a job just beggars belief.

  3. Gavin MacMillan

    Skimmed through the article and it did strike me as being just a bit simplistic. If all it involved was transferring money back and forward between accounts, how come there is a deficit at all?

  4. elentari98

    Since their “money” is created by the private for profit banks such as the Bank of England (which is not England’s at all, but belongs to the Rothschilds and their friends and partners) OUT OF THIN AIR and is made of NOTHING, what on Earth can be “owed”? If I “lent”, or “gave” another person somethign I conjured out of thin air – phantom “money”, how could I honourably or honestly expect them to give me something of actual value – like the money created out of their actual labour and their actual, real resources?

    I am baffled by this. WHAT is “owed” to these banks other than thin air???

  5. Ryan

    This isn’t bollocks or too simplistic, it’s based on the work of people in MMT, here’s some good links to introduce yourselves to it.

    http://hir.harvard.edu/debt-deficits-and-modern-monetary-theory

    http://www.3spoken.co.uk/2011/01/how-governments-super-platinum-credit.html

    http://bilbo.economicoutlook.net/blog/?p=9281

    http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

    There’s plenty more out there, basically there’s a misunderstanding of the monetary system, people in power are still acting as if we’re on the gold standard, which hasn’t been the case for quite some time, when we were the government did need to tax to spend, but with a fiat currency that isn’t the case, taxes are essentially there to give the currency value and deal with inflation.

    There’s no sane reason why taxes couldn’t be lower and public spending increased, the only thing holding us back is the ideology of those in charge, Labour included.

    This isn’t something that the people behind MMT have mentioned, it’s just my opinion, but I don’t think it’s a misunderstanding, I think it’s willful ignorance, this ignorance is allowing them to talk about public services not being affordable and then using that as an excuse to asset strip, it’s a modern day enclosure of public property, this then gives the financial parasites that are funding most of the political parties the ability to charge rent, like landlords in feudal times, also imo again, a reduction in government spending forces people to go deeper into debt, providing another profit for those parasites in finance.

    It’s all about ideology not reality, we’re living well below our means because it suits a certain class of people.

    This is also a good blog about the role mercantilism is playing in the treatment of the poor.

    http://www.pieria.co.uk/articles/mercantilism_six_centuries_of_vilifying_the_poor

    1. syzygysue

      Great stuff Ryan… spot on. Some famous economist (whose name I forget) said that the truth was so simple, that we’d never believe it.

      Mike – you’re not entirely convinced by alittleecon because the UK government needs money to pay for services and (we are told) the tax take isn’t enough.

      Where do you think the money comes from in the first place, so that we can pay our taxes? The answer has to be, that originally, it had to come from the government because only the UK gov’t can create pounds, shillings and pence. The gov’t doesn’t need taxes to pay for services, it just clicks the computer button to credit the appropriate accounts. Taxes are effectively a way of making the money circulate through the economy.

      That’s where the £375 bn Quantitative Easing comes from.. clicking the computer at the BoE. As for the debt, gov’t can easily cancel (in fact almost certainly will) the ‘debt’ of the bought back bonds.

      ‘If the government simply cancelled the £300 billion of QE gilts held by the Bank of England, who would be unhappy?

      No default [would have] taken place (no CDS trigger, no D from the ratings agencies who are only interested in failure to pay private investors), the UK’s public finances become sustainable, the economy gets a boost from the knowledge that the QE cash injected will stay there for the foreseeable future, and a mechanism exists to remove cash from the economy should inflation return.’ (9)

      http://think-left.org/2012/07/27/simon-says-qe-is-the-biggest-confidence-trick-of-all-time/

      Both the ‘deficit’ and the ‘debt’ are just indicators of the state of the economic cycle .. we are misled by this government into believing that they are the same as household debt or having too little money to pay our bills. The UK can never be bankrupt (unlike the EZ countries who don’t use their own currency). After all, there’s never been any difficulty in their finding money for their wars, has there? We’re being conned in a big way by those with vested interests.

  6. hstorm

    LET’S DEBUNK THE MYTH OF THE ‘DEBT CRISIS’ IN THE UK.

    The ‘National Debt’ is just the total sum belonging to non-Government agencies (the ‘creditors’) in deposit accounts within the Bank Of England. All the Government has to do to ‘pay it all off’ is to transfer the whole lot to a current account within the same Bank, and then forward credit notes for the totals to its creditors. That credit note will allow the creditor to claim any British goods *available for sale* up to that total without paying for them.

    That’s it, that’s all the National Debt really is, it’s just a bunch of credit notes that haven’t been printed yet. And no, before you ask, those credit notes CANNOT be cashed in. The UK doesn’t have to send its creditors any money, just make a promise to let them claim sales goods to the value of the amount owed.

    There is actually no NEED to pay off the National Debt at all, because the creditors knew the risks when they sold their goods to the UK (and indeed to other countries) in the first place – that they were never going to receive any actual money for the goods, only credit to their agreed value that they could eventually purchase British goods with in return. When they exported the goods to the UK, the value of them was simply placed in a deposit account in their name in the BoE. While the sums are in a deposit account, the creditor can’t use it to make purchases, but gets a higher rate of interest. When it’s transferred to a current account, they can use it to make purchases, and so the debt is therefore classed as ‘paid off’.

    THAT’S IT.

    That’s all there is to it. The National Debt is NOT a crisis, and it’s barely an issue really (although it would be better if the Debt was lower for the sake of our trading relationships, especially our credit rating). But nobody in Parliament is aware of how it really works, so they see the huge numbers involved and nearly have a coronary.

Comments are closed.