There is new national debt data out today. This was my reaction to the announcement from the Office for National Statistics on Twitter:
I am making a very deliberate point. In a world overflowing with savings (because the wealthy are getting ever-richer) a great deal is being deposited with the government. Isn't that good news? And shouldn't it be promoting the idea that people could do this to transform our economy for the better?
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Richard,
I know I bang on about this and I appreciate that your time is limited.
Apart from providing funding, what about the role of ‘National Savings’ in firstly helping those on a low income in particular to build up some savings. Secondly, and its not that easy to do without providing a subsidy to the already well off, what about its role in diverting money away from risky or undesirable ‘investments’ eg Buy to Let, vintage cars etc by providing products that are sufficiently good to discourage those sorts of schemes?
I like the former
The latter is about risk appetite. NS&I is not going to offer high risk returns
Of course, ultimately, all our government created money ends up with the government; either gilts, CBRAs or National Savings…. but the make up matters.
Every pound held in NS&I is one less pound in some bank’s CBRA account. The government is still paying interest but at 4% instead of 5.25% and direct to people rather than banks. Now, one may still be unhappy with the government paying too much interest…. but it could, if it wished, address this through the tax system.
Now, NS&I, time to start offering gilts to the general public! Currently, If I want to “lock in” to higher rates offered by their fixed term bonds I do get a rate that compares well with gilts but I can’t get my money out until maturity…. unlike gilts that can always be sold if I need the money in a hurry.
Agreed, entirely
The public can already buy gilts, what are you talking about?
1% of gilts are owned by the public
It is immensely difficult for most people to buy and sell them outside funds
Yes they can….. but odd-lot prices and commissions make it quite expensive and cumbersome. This has improved a bit over the last few years as some online brokerages now offer a service…. but it could be easier.
Gilt funds are an alternative but simple souls like me like a gilt with fixed cash flows that deliver regular income.
“It is immensely difficult for most people to buy and sell them outside funds”
You can buy or sell gilts instantly on investment platforms such as AJ bell and HL. They as easy to buy as funds or equities.
You prove my point. Most people would not do that. That is why NS&I should.
It should be easy for the public to invest easily, without risking money with a middleman they have never heard of (and why should they trust?), for commissions that may be expensive; and they should be able to buy a gilt and put it in an ISA without fuss or difficulty. There is no reason why NS&I could not do that; and the general public would feel a great deal more secure than if they have to dive into the internet, at their risk.
This is so obvious. Look at the finance sector. Look at the internet. Why should they have deal with either, because profit motivated people feel entitled to a cut of your money, in order that you can buy Goverment Stock. It is risdiculous, and insults our intelligence.
There is no reason why NS&I could not sell gilt funds as well i.e. a mixed portfolio to reflect age of bonds required
Hi Richard
According to the BBC, it is doom and gloom:
https://www.bbc.co.uk/news/articles/cgxqzp2zdw4o
However, is there anywhere to find a breakdown of what constitutes these savings?
Regards
Yes
The detail is behind the ONS release, but it is very messy andvtake me a long time to work out
It is better than it was because I engaged with them on one element – but I have not got time to explain now
Just posted this comment to the BBC article:
This is really good – it means that there are loads of people and companies that are trusting their money with the government. National Debt is nothing more than people willing to save their money with the Government knowing it is 100% safe. It really should be known as National Savings.
Thanks