I have just posted a series of Tweets on the national debt. It seems that politicians from all parties are now queueing up to say that this has to be repaid. This, as I note in my last tweet, is economic insanity.
These were the texts of those tweets:
Politicians are claiming the national debt has to be repaid. Why? It's owned by:
- Banks
- Pension funds
- Life assurance companies
- Individuals
- Foreign governments
- Our governmentAll want to own it. Why do we want to force them to sell something they want to own?
------
The UK national debt is critical to the smooth operation of our banking system, pension funds, life assurance and savings markets. Despite that the government wants to repay it. Do they want to create problems in the finance markets by doing so? What other explanation is there?
------
The UK national debt pays so little by way of interest that anyone owing it is effectively paying the government to save. The government makes money from the national debt, in other words. Despite that the government wants to repay this debt. Why? It makes no sense.
-------
More than a third of the supposed £2.2 trillion of UK national debt is already owned by the government. Despite this the government still claims that the national debt is £2.2 trillion when it is actually about £1.4 trillion. Why is it lying about this? Why not tell the truth?
-------
The government says it has to repay the debt created by Covid. But actually almost no government debt has been created by Covid. New money was created by quantitative easing instead. How is the government going to repay Covid debt in that case when there is none?
--------
These three were a thread - meaning they were linked to each other:
The government's created almost £800bn of money through using quantitative easing since 2009. This cancelled the same amount of government debt. They now say they have to repay that debt. To do that it first has to cancel the quantitative easing. Then it has to cancel the debt.
---------
So, to cancel the QE they'd have to. take £800bn of cash out of the economy. That would crash it. Then they have to repay the debt. That would take another £800bn out of the economy to repay the debt, destroying it in the process. And they already own this debt.
---------
Is this the closest thing to economic insanity anyone has yet suggested?
Literally what is being demanded is economic madness. It can only harm the economy, employment, incomes, the essential services we all rely on, and our collective wellbeing. And yet politicians are demanding that national debt repayment be a priority and that we must do it.
To be blunt, this should be the last item on any politician's agenda right now.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Agreed.
So let’s see them tell us who the Government owes it to.
And let’s see them tell us what the consequences of not paying it back are?
Who is sending the final demands with menaces?
Indeed. Bank of England Asset Purchase Facility Fund Limited (that is, HM Treasury) wants its money back!
It is probably about time you reminded us whether it is Labour or Conservative governments that have historically increased public sector borrowing more on average for each year in office. And then how often the UK has actually managed to reduce the amount of public debt in issue by repaying more existing debt than raised from new issues in any particular year.
You may be right…..
Maybe a 50ft high poster with that list of who the ‘debt’ is ‘owed’ to. Need to keep hammering that message home.
It’s a scare tactic to play on ignorance and fear of debt. Debt – bad. Govt. debt – very bad.
Craig
As most of the government debt is some one’s savings. The government must either tax it away (confiscate it) or make all the savers spend their savings. The Tory way would be to completely destroy the economy. This would have to include the rich.
It just shows how deeply ingrained are the tenets of small state, low tax/spend, neoliberal economics, in the minds not just of economists, but of politicians, media and the public.
Since I take nothing the government says at face value perhaps I can find a deeper meaning in the debate about Scottish Independence. Gove’s recent comments suggest that he now accepts that there will be a referendum, just not before 2024. They need to find compelling arguments against leaving, but I believe you have previously said that Scotland would be due to pay only a small contribution to service the interest on any National Debt as the UK Government rarely repays any capital. This is the argument I have been pushing at every opportunity. Could the stated intention to repay the capital be a way of putting the frighteners on soft Yes voters by loading unnecessary debt obligations on a free Scotland?