Even if I would prefer the word ‘should’ in place of the ‘could’ in the headline, it is still encouraging to see someone else realise that government is borrowing from itself.
The pipe dream of direct financing by sovereign money—or debt-free government funding of social needs—has become an overnight reality. Here is the story of how it happened in the UK, and how it could bring about a very different future for public services and life opportunities.
The reality of these ideas contrast with an earlier article by Nicholas Macpherson, former Treasury permanent secretary entitled, ‘In defence of austerity’ – no less.
The British people, and the governments they elect, have always favoured consumption over investment. That means the UK has to rely on the kindness of strangers, as former governor Mark Carney once put it, to finance deficits. Foreign investors own a little under 30 per cent of Britain’s debt. Lose their confidence and we have a problem.
As a major food importing nation – roughly about half our food is imported with rather more in the winter – he has a point, which is why it was so inordinately stupid to put trade barriers between us and our nearest food suppliers in the EU. But if we had continued to make it easy for them, then those same EU suppliers would have been very reluctant to find other customers when they had a large one that was nearby, honest and reliable.
Now that may no longer be true.
If those strangers decide that the UK is no longer to be relied upon and too difficult to deal with – and so choose to ditch trade involving Sterling, then life for UK importers, and consequently UK consumers, will be much more difficult.
I think it unlikely, but with our current government, more likely than it was.
In the end the risk is there, but I suggest, still small.
So when therefore, Macpherson concludes:
But in the end, expenditure has to be paid for.
I can ask only to whom, and what with?