Tag Archives: national debt

We’re not going bust – but how will we manage our money in future?

In earlier days of Covid, I argued that we should spend whatever was needed to tackle the pandemic and not worry too much about the national debt. It seemed a no-brainer then but, as we move into post-pandemic or endemic times, things don’t look so straightforward. 

To outsiders, including me, money and banking can look horribly arcane and complex. Still, it has a big influence on our lives. Active democrats need at least some understanding of it. I’ve tried to expand my own understanding and here, in summary, is how I see things:

In the UK we are in charge of our own currency, which is not pegged to any other currency or to gold or silver. We can borrow in our own currency. This means that we can’t involuntarily go bankrupt –  we can create money to settle our debts. A sovereign state is not like a household. 

We have to be careful. If we put too much money into circulation, by spending too much more than we raise in taxes, inflation can run wild and it can be difficult and painful to get it back under control. Too little money can mean unemployment, empty buildings and idle machinery. Things are particularly tricky at the moment because we have inflation driven by the world price of energy and by bottlenecks in supply chains from Covid and Brexit.

The size of the national debt doesn’t always matter much – it depends partly on who is financing it and at what rates of interest. At the moment, nearly 40% of the UK national debt is owed to the Bank of England, which the government owns, and there seems scant evidence that the debt is itself a problem. However, the debt is often used by right-wing Tories as an excuse for the austerity they love.

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1 December 2019 – the weekend’s press releases (part 2)

  • Jo Swinson: Boris Johnson is running scared of scrutiny
  • Lib Dems: Tory no deal Brexit would increase national debt by £220 billion
  • Lib Dems: Johnson’s comments show that he despises the poor and vulnerable in our society
  • Swinson outperforms Johnson cheerleaders
  • Farage, Trump and Johnson singing from same misogynistic hymn sheet

Jo Swinson: Boris Johnson is running scared of scrutiny

Responding to Boris Johnson’s interview with Andrew Marr, Leader of the Liberal Democrats, Jo Swinson, said:

Given Boris Johnson’s dismal performance this morning on Marr it is no wonder he is running scared of Andrew Neil and refusing to be held to account in debates.

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Liberals and Tories row over national debt

Paying down the national debt: it’s always been a controversial issue. Here’s a Liberal poster (from the 1886 general election?) attacking the Tories for their failure to clear our debts:

liberal tory national debt 1885

For balance, here’s a Tory poster (from the same year?) accusing the Liberals of being high-spenders:

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Barclays and the Bank of England: BAD rate-rigging and GOOD rate-rigging

The Barclays rate-rigging scandal has conflated a number of issues — Bob Diamond’s bonus, ‘casino’ banking, failed regulators — making it hard to get behind the media’s shouty headlines to understand the issues which should really concern us. Here’s my brief show-your-working attempt, starting with what Barclays.

What Barclays did right: ‘fess up

LIBOR (London Inter Bank Offered Rate) is the rate at which banks in London lend money to each other for the short-term. It’s used as a proxy measure of market confidence in individual banks, as well as a benchmark for setting mortgage interest rates.

Barclays has admitted filing misleading …

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Opinion: Clutching at straws

I have spent the day clutching at a couple of straws.

Last week in the tractor factory Nick Clegg appeared to confuse the ‘deficit’ with the National Debt when he said, “We have a moral duty to the next generation to wipe the slate clean for them of debt. We have set out a plan – it lasts about six or seven years – to wipe the slate clean to rid people of the deadweight of debt that has been built up over time.”

It sounded like a fail in GCSE Economics. But suppose he wasn’t mistaking the policy to eliminate the structural deficit by 2017 for a moral crusade to wipe the slate clean by removing the deadweight of the National Debt, all £1,300 billion of it.

At the other end of my straw was the realisation that Nick Clegg might have become an extreme Market Monetarist and was revealing his plan to re-establish Nominal GDP back to its trend line, even if that meant buying in the whole of the National Debt in the mother of all quantitative easing exercises.

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Opinion: Who will sort out our colossal National Debt?

The one group I’d most expect to be drawing up a roadmap to a debt-free Britain would be true-blue Tories. Some of them at least understand the problem. In a new book by five Conservative MPs – After the Coalition: a Conservative Agenda for Britain,  dubbed by the Independent as the Bible of the new Tory right wing, there is an entire chapter on the National Debt and the risk it presents.

As I have argued elsewhere, it is wrong to think that debt doesn’t matter… that so long as you can keep getting enough out of Peter to pay Paul then …

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Vince attacks Gordon’s public debt “car boot sale”

Yesterday, Lib Dem shadow chancellor Vince Cable tabled an innocuous sounding emergency question in the Commons: “To ask the Chancellor of the Exchequer if he will make a statement on the proposed sale of Government assets announced today.”

But that’s not the Vince soundbite which has featured in virtually every headline in today’s newspapers reporting on Labour’s decision to sell up to £16 billion of assets to help fund the national debt. Here’s Vince’s statement in full:

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