It was announced on Friday that government debt for the first time since 1963 is greater than GDP. Indeed it might be worse because GDP is currently declining.
Really that is all quite remarkable…
How fortunate we are that there were people waiting in the wings with the odd billion in their back pockets – just waiting to lend it to us.
Goodness only knows where these billions were before – because you’d expect wherever and whatever they were invested in before to be now screaming that there had say, been a run on their bank.
I haven’t heard that, have you?
So it must have been in cash under the bed – it really is the only possibility. We are likely to need still more ‘borrowing’ so let’s hope there is still more where the original lot came from.
All these sensible savers really are so good to us in our oh so highly indebted nation….
Except that actually, I fear this is all nonsense.
It is either propaganda or basic misunderstanding.
Simple logic suggests that these people with billions in their back pockets do not exist (well they do but at the last count there were only 147 of them in the UK and – in this context – that is not enough). The private banks could of course create the money – yet surely they couldn’t insist on interest as they haven’t paid back the principal of the last lot they received in 2008 so it would need to be at no profit – and I don’t think that is their style. And why would the government borrow from a private bank when, in the form of the Bank of England, it actually owns its own?
If we persist in the idea that asking the Bank of England to create money puts us in debt, then given its only shareholder is the government we are actually in debt to ourselves – and that is no debt at all.
And logic dictates that if you are not indebted you do not have anything to pay back.