I just posted this on Twitter:
From 1946 to 2021 is 75 years. In 63 of those years the UK government borrowed. In 12 it repaid debt. Total borrowing will have been £2,174bn. Repayments have been £38bn. So, for every £1 borrowed 1.7p has been repaid. In that case what is the debt repayment obsession all about?
— Richard Murphy (@RichardJMurphy) March 2, 2021
The data came from here.
So, why is there this paranoia with doing something that never really happens?
There is an obsession with repaying debt, but we don't do it.
There has to be another reason for the obsession in that case. And there is, of course. It is that the Tory narrative is intended to deliver an outsourcing state - which keeps the rentier economy that does not make money so much as extract it from the population at large via outsourced government contracts - and so want to feed the small state narrative.
I find it hard to explain this otherwise.
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Sadly I think most of the hysteria is down to the general (and not so general) public having swallowed the household economics analogy myth hook, line and sinker. People panic if they have personal debts that are growing and can’t work out how to pay them off, so they think national economics works the same way which, of course we know it doesn’t. But how is the myth broken if politicians of all colours, journalists and even economists still perpetuate it?
If you mess with the morality and sanctity of debt the masses will start demanding an improvement of their conditions, or God forbid a debt Jubilee. In that case, the massive flow of wealth from the workers to the wealthy might stop, and that would be terrible.
🙂
I think God, in the Old Testament, far from prohibiting , prescribed a Jubilee which involved debt cancellation.
Michael Hudson, an MMT advocate, wrote a book about debt in the ancient world.
Richard, the link to data source doesn’t work
Try this https://obr.uk/public-finances-databank-2020-21/
Thanks. I’ve forwarded the “public debt paranoia” blog to my wider family, including a grandson who gets his first vote in May’s Scottish Election. I wish I’d known about this stuff when I was his age, but then, as a heretic, I’d never have passed my Economics exams when I was a student!
I was a heretic even then
I just perjured myself
As my tutor noted
But we then went on to write some articles together
Surely debt is called ‘debt’ because it has to be repaid?
Otherwise it would have a different name.
Unless it is government debt
When repayment is entirely optional because the government makes the money it is denominated in
A key point is that states live forever. So there is a never a time when the debt needs to be repaid.
There are other interesting points too like if I borrow 100% of GDP today it is only 1% of GDP after 100 years assuming treasury/BoE target growth 2.5% and inflation 2%.
Government debt evaporates!
Agreed
But Charles that’s only true if we c an grow the economy at 2.5% for 100 years without trashing the planet and crashing, well, everything. Given all we know about soil, air and water that looks wildly unlikely.
I’m making a mistake in my calcs – the 38bn in repayments – can you elaborate, please. Thanks in advance
I sorted the data into paid and repaid years and added them up…..the result was consistent with times I have done this before
Are official details of the transactions between Government and the Bank of England making up this most recent ‘borrowing’ available anywhere online? That should be all that is needed to put an end to the confusion.
Asset purchase facility reports
Many thanks for that. Unless it has been superseded by a newer update, the notice linked to below states (under Operating parameters – Gilts to be purchased):
“The Bank will not offer to purchase gilts newly-issued by the UK Debt Management Office (DMO) within one week of their issue”
https://www.bankofengland.co.uk/markets/market-notices/2020/consolidated-market-notice-for-asset-purchase-facility-gilt-purchases-august-2020
Surely this means printing money currently is restricted to QE while new bond issues are auctioned on the open market by the DMO?
(https://www.dmo.gov.uk/responsibilities/gilt-market/)
It means binds must go into the market before being repurchased
That is all