I just posted this on Twitter, inspired by a regular commentator here:
A Q&A on the national debt. Who are we borrowing from? On what terms? When is repayment due? Is this sustainable? The answers are, the government borrows from itself via the Bank of England. This is effectively costless. This never need be repaid. And itâ€™s completely sustainable.
— Richard Murphy (@RichardJMurphy) November 20, 2020
Of course there are short cuts to get this in 280 characters. But four questions and answers in that space is worth doing on an issue as big as this.
And why is this not repayable? Because QE is money creation. It’s not borrowing. And the end result is new government created money in bank deposit accounts. And if the holder demanded the money back the government would just create new money to make the repayment, meaning that overall no repayment would take place. And that’s why repayment is not, in effect, due.
The money can be cancelled by additional tax due.
And it can be cancelled by new borrowing.
But it can’t be repaid, because it can only be repaid with itself. And that changes nothing.