This video was made after I'd done my initial research into what is really in the national debt. That research is here.
That research is ongoing. In fact, it's occupying most of my time at present. So treat this as an introduction to something on which I might have more to say:
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Not the sort of stuff to make the “heart beat faster” for most people – and that is fair enough. But for me, this is profoundly important. Good decisions require good data and the use of data to make a particular (preconceived) point is ABuse of data.
I must confess, that I am guilty of this (“cherry-picking” data to prove a point) and it always tempting …… but it is wrong.
Many thanks for the insight. Exactly what’s should we be asking of our MP for instance in this matter (mine is in the shadow cabinet).
What other action could we take?
We all need to be clear what is reality and my takeaway from your video is even the experts aren’t clear but they do have an agenda based on false premises.
There is much more to come on this….but not for a few weeks I suspect
Full marks to the ONS for engaging though….as they are.
… also, on the narrow point about Foreign bonds, I believe there might still some USD bonds outstanding from a Medium Term Note programme – to be honest, I thought they had all matured but I will check.
Richard – do you have a link to a spreadsheet – with your latest explanations/querie about each component of national debt? Thanks
Not yet
Not for publication, anyway
I am in discussion with the ONS and BoE
Is it worth asking the BBC to fact check this too.
https://www.bbc.co.uk/news/business-53859299?intlink_from_url=https://www.bbc.co.uk/news/topics/cv6rkrz2kqpt/uk-national-debt&link_location=live-reporting-story
Give that it draws its “story” from the ONS
https://ichef.bbci.co.uk/news/660/cpsprodpb/224B/production/_114597780_optimised-net.debt-nc.png
Paul
If you were to accept the semantic argument, that governments don’t SPEND, they INVEST in the economy, how much of the debt is actually investment? If the government has invested some or all of that money, then its investment has a value.
Or if you look at the government as a bank, creating money to lend to the economy, what is the value of the asset against which the loan is secured?
These are issues I am looking at
In the mean time, to promote public understanding, wouldn’t it be best to keep banging the ‘to whom do we owe the debt? ….largely to ourselves!’ drum. The could be intoned everytime the ‘deficit/debt time bomb’ is mentioned.
If that got into public consciousness it might go much further in getting people to question the ‘tax payers money needed to spend’ logic, than some of the more arcane issues around MMT, debt components etc, important as they are?
I am not sure I follow your logic
I was quite interested in Andrew Broadbent’s comment as I interpreted his meaning as being that a relatively easy way to engage the ‘uninitiated’ might be to pose them that particular question; i.e. ‘to whom do they think we owe the debt?
From there we can perhaps point out that much of what passes as National debt is a bit like the debt that we owe to our own household; i.e. its a debt that we owe to ourselves.
So for example, the component of National debt that the government owes to the BoE is perhaps the most transparent example since most people can recognise that in effect, the government owes the BoE.
So we can then ask ‘the novice’, if you owed a personal debt to your local bank, but you also owned the bank, would you still perceive it as debt?
I suspect that this is Andrew’s point and if so, perhaps this readily digestible metaphor could be a useful hook with which to pull the uninitiated into the broader debate.
It’s good
There is no such thing as the National Debt all that’s happening is the government is regulating the economy. Who else will?
People who believe there is a National Debt are lazy and primitive individuals who’ll not make the effort to understand why the monetary system they live under has evolved to be the way it is. Either that or they’re selfish individuals with vested interests, usually the rich.
http://www.levyinstitute.org/publications/the-origins-of-money-and-the-development-of-the-modern-financial-system
Nice video Richard, and I hope something that can be resolved (at least on the Bank of England contribution to net debt) quite easily – even if its proving tricky so far.
The ONS and I ate in discussion…..
If I owe myself money and a bank more money but pay both back, does it matter Who I owed the money to?
Derek. As far as I can see, for the debt that you owed to yourself, it does not really matter whether you repay or not. But for the debt that you owe to the bank it does matter, especially if you are paying interest and especially if, in the extreme case, failure to repay results in you getting kicked out of your house.
If I have this wrong please correct me (anyone).
Incidentally I note that in my earlier comment I said ‘the government owes the BoE’ whereas I meant to say ‘the government owns the BoE’. Fortunately I expect my sloppiness will have been filtered out by anyone who read this.
Whilst on this topic, Its perhaps worthwhile for us all to clarify what we mean by a trillion as there seem to be two definitions, depending on whether we are using long scale or short scale. Here is an extract from wiki that explains it quite well.
For whole numbers smaller than 1,000,000,000 (109), such as one thousand or one million, the two scales are identical. For larger numbers, starting with 10 to power 9, the two systems differ. For identical names, the long scale proceeds by powers of one million, whereas the short scale proceeds by powers of one thousand. For example, one billion is one thousand millions in the short scale, while it is one million millions in the long scale. The long scale system introduces new terms for the intervening values, typically replacing the word ending -ion with -iard.
The short scale is always used in finance
Thanks Richard. I expect all on this forum recognise the correct convention and you did spell out that definition clearly in your video clip. But I have met people who are still unsure of what we mean by billion and trillion respectively and this is obviously significant in the current context.
Thanks to Alan Fowler for trying to rescue my clumsily expressed suggestion from the oblivion to which Richard had probably rightly consigned it.
‘We are bequeathing £billions of debt to our children – which will hang around their necks for their whole lives ‘ seems to be the universal trope used to close down discussion of whether we can ‘afford’ public services, investment etc.
The frightening vision is that this is credit card type debt, or a mortgage type debt – (or even a drug dealers debt?} – a debt for which ‘they’ will come knocking, for our possessions, if we dont keep up the payments, or pay extra taxes .
If people begin to see that much of the ‘debt’ is not owed to ‘foreign bankers’, or the IMF, or The USA – war debt – or indeed anyone, but that we owe it to ‘ourselves’ – in that it is money created on our behalf to fund public investment/services by ‘our’ Bank of England/Government. Our government owes it ‘to itself’.
So the standard push-back in these debates might be simply to ask the pundit or politician with their dire warnings – to elaborate on whom they think we own the debt? Could it be one relatively easy way in to a more universal enlightment on these matters?
I quite frequently ask that question of people of twitter. “Who do we owe it to”
The answer is usually complete silence…
I tried today on Twitter – without joy
I suggest in trying to explain government debt by starting from something simple to understand such as cash. How the government prints pound notes which is included in the government debt. The government then spends it by funding the NHS etc. The government gets the cash back when taxes are paid and if is worn out it is destroyed thus removing it from the government debt.