Money is abstract not physical

There is an interesting piece from Joanna Montgomerie of King’s College London, on Storytelling about Debt in which she calls out the:

…£1.64 trillion of private debt [86% of GDP]. This enormous stock of debt must be fed a steady stream of present-day income, flowing from households…

and she shows that this private debt is almost as large as the government’s own [alleged] debt.

Debt is always considered a failing, whether personal or governmental, but one person’s debt is another’s asset. So alleged failure on one side is an alleged success on the other.

Of course every time the government prints one of these:

it adds to the debt (and ultimately of course the deficit) – so would we want them to stop?

And find the ATM’s empty?

I rather doubt it!

That’s our asset! A pluss for us…

So this all highlights that money is a relationship – one man’s credit is another man’s debit. Money is a government’s IOU, which we all use because we know the IOU will be accepted as tax.

And that’s another reason why tax is destroyed – when you issue an IOU which has been fulfilled you don’t hang on to it do you?

You simply chuck it in the bin.

That’s a story that needs telling and retelling….


  1. Geoff -

    Thanks Peter,
    although I rarely comment, I read every day. Thought I’d let you know.

    1. Peter May -

      Thank you!

  2. Jim Green -

    It would be interesting to hear from the Treasury/HMRC about the exact mechanics of the destination of tax receipts. Does someone somewhere really ‘press a button’ and actually delete it all off the government computer? i.e. chuck it in the bin. Or do they transfer those tax receipts/digital blips into a government ‘spending account’, as most people still think? MMT-educated people know what we think happens. What do they think they do, and what do they actually do? Someone, somewhere must know!

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