George Osborne is facing awkward questions after a year-long search to replace the government's unpopular private finance initiative has failed to deliver a revolutionary way of raising money for new schools, prisons and hospitals
It's called borrowing George.
And right now it's almost costless to your government. You can even QE it to buy it back.
There: answered in about 15 seconds for you. What was the problem?
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Actually Richard, the solution pre-dates borrowing at interest – it’s called ‘stock’ and it was the way that sovereigns raised finance for 600 years or more.
https://blogs.ucl.ac.uk/resilience/2012/01/09/a-stock-answer/
The fact is that the National Debt is better described as the ‘National Credit’ or National Equity.
There is no need – and never has been – for debt and compound interest, although a return for the use of ‘money’s worth’ is perfectly reasonable.
What isn’t said nearly often enough is that PFI itself is actually borrowing. Entering into a commitment to pay in the future is borrowing. It’s only the dishonest accounting practices of successive governments which have kept it off the national balance sheet.
If we accountants in the private sector did that, we would be rightly censured.
On Radio Four’s PM yesterday (minutes 7:30-10:40 of the programme) a Lib Dem motion put forward by councillor Ed Randall for a Keynesian fiscal response was ‘overwhelmingly’ rejected by the conference. I can only think that years of Eurozone gold standard silliness has stopped most Lib Dems from being in contact with English language Keynesian economists.
As for Hayek, Bruce Caldwell has a nice ten-page biography on his academic website – although don’t expect people who cite Hayek’s name to know about his myriad writings. And as Krugman said in December 5, 2011 in ‘Things That Never Happened In The History Of Macroeconomics’: “Via Mark Thoma, David Warsh finally says what someone needed to say: Friedrich Hayek is not an important figure in the history of macroeconomics.”
This raised a little chuckle… only from the absence of the comma between borrowing and George.
Who wants to borrow George? Can’t they have him permanently? Please.
Amused – but remember that like many blogs I write, this one from reading and inception to publishing probably took less than 5 minutes
Mistakes happen
Actually the alternative is called operating leasing, which isn’t borrowing but which is how much of the world’s property is financed.
Er, no
It’s called ownership