We do not have a national debt
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- Опубликовано: 10 июл 2024
- The government says the fact that we have a national debt is a problem. But the truth is we
don’t have a national debt. In reality the government provides people, banks, pension funds
and foreign governments the chance to save with it, which is something very different. That’s
a national savings facility.
ABOUT RICHARD MURPHY
Richard Murphy is Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
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Japan survives perfectly well with debt at 290% of GDP
Our Governments pretend we must budget like a 1950s housewife in order to justify attacks on public services.
Austerity is s myth. We have never seen such wealth and progress.
The wealth has become polarized and concentrated in fewer hands.
@@johnwright9372😠 Indeed it has, as with the Duke of Westminster revealed by Forbes to have £8 billion in the bank 😧! And that there are billionaires in Britain who have INHERITED their wealth 😲!
Don't pay civil servants their pensions. See if they claim they are owed a pension
@@adenwellsmith6908Why would they not be?
Better still, why doesn’t the government just create new money free of any interest obligation - there’s a reason why some economists call government bonds near money. I know people will be worried about inflation, but that’s a red herring if the economy has spare capacity, which it always does in the form of economically inactive individuals. A lot of the inflation we experience is reckoned to be caused by external factors, which are out of a government’s control anyway. These could be international oil cartels or rising grain costs caused by the war in Ukraine. Inversely, the new money our governments created through QE hasn’t affected the price of very cheap imported goods from China.
Thank you! How come media and politicians are so keen to show this as a massive problem. Any party would do well to explain this??
So they can use it as a stick to beat people with to pretend "there's no money left" and the debt must urgently be repaid and thus assist their friends and lobbyists in the City of London to become even more wealthier than they already are.
It's the current go to for Labour and it's supporters to use an excuse for basically not doing anything economically
@@leehumphries7696Correct. It's how they justify privatisation. There's no government money, so the private sector has to rescue the railways, water and the health service. It's a big fat lie.
The problem is a lot of time (decades) and money (hundreds of millions) have been spent convincing the populus that the economy is just like a household budget, for ideological reasons. You dont want people understanding how the economy actually works because it'll upset the apple cart of the 1%. And the conditioning has been going on for so long that many politicians/decision makers have grown up believing the household budget analogy and make economic decisions accordingly.
It'll take a lot more than just a political party to explain it, will take decades to un-do the brainwashing. If you've ever tried to explain these concepts to the average person you'll know first hand that its easy to explain but people literally just cant get their head around the idea that debt = savings etc. theres a good clip online of a Question Time audience member explaining how the economy works to a panel which includes Varoufakis and confidently getting it completely wrong, the dunning-kruger is real. There is more dunning kruger with economics than there was with brexit. Huge numbers if otherwise intelligent people that you know, just cannot understand it. And the reason honest politicians dont bother trying to explain it is because" if youre explaining youre losing." Ive seen politicians who i know for sure understand how the economy works, resort to using credit card analogies to explain debt because it's expedient in the 30 seconds you have on whichever right wing press outlet you appear on that will probably just spin whatever you say anyway.
In short there needs to at least as much time and effort explaining how economics really works than was put in to brainwashing people about how they want you to think it works.
Thanks for coming to my TedTalk.
@@keithparker1346 Labour haven't been in power for 15 years. 🤦
If ~25% of gilt holders are overseas, the interest payments must represent a lot of value leaving the UK.
Issuing bonds is a choosing to create money that pays interest. It's a choice.
It shouldn't matter where holders are because it's British pounds.
@@WarrenPeaceOG Overseas bond holders will convert it into their own currency. Value has left the UK.
Yes but don't forget foreigners want access to British pounds to do business here. It's complicated
yes and got even richer during Covid.
@@metallitech explain by what mechanism they convert this into their own currency
USA has a 35 trillion dollar debt rising by a trillion dollars every 100 days. They must be so happy, all those people wanting to save with them!
Only if you ignore pensions.
Is that supposed to be sarcasm? The US *are* very happy that the dollar is the world's reserve currency, that is correct.
@@Banjo2030 when this status ends, it will not be good for the US
@@curryattack8985 Isn't that why the USA/UK invaded Libya? Gaddafi was planning to sell Libya's oil in Euros.
Government bond interest is a sort unemployment benefit for rich people. We need rid of these benefit scroungers.
This was an amazing episode! It really lifted my spirits🙌and provided clarity. Great series!
No clarity. Only half-truths and twisted logic and subterfuge.
I'm so happy I made productive decisions about my finances that changed my life forever,hoping to retire next year.. Investment should always be on any creative man's heart for success in life
Thanks for the advice! I'm new to financial planning and wasn't sure where to start. Any tips on finding a reliable financial adviser or resource to guide beginners?
As a beginner, it's essential for you to have a mentor that is verified by finra and SEC to keep you accountable. I'm guided by a widely known financial consultant Stacey Macken
Truly, investing has changed my perspective on how one can succeed in life; working multiple jobs isn't the optimal way to attain financial freedom and unfortunately, we discover this later in life. Currently earn as much as 12 grand weekly and this has improved my financial life
YES! that's exactly her name (Stacey Macken) I watched her interview on CNN News and so many people recommended her trading skills, she's an expert and I'm just starting with her....From Brisbane Australia
This Woman has really change the life of many people from different countries and am a testimony of her trading platform .
Hiss, boo time, but keeping the GBP was one of the central planks behind my reasoning for voting to leave the EU.
The UK's special opt out was never going to last forever and we would never have likely been offered the opportunity to have a referendum on membership ever again.
Great stuff, Richard!
Excellent informative video!
This seems like the worst period.
Even the market are now very unpredictable. Started investing recently when the market prices were a bit high,today I am more than 60% down!
Please educate me, i'm willing to make consultations to improve my situatio
Please how do I find this financial counselor?
I'd love to know this mentor of yours
When I saw her testimonies all over the place I thought it was all made up of stories till I was convinced and gave it a try and honestly I don't regret the move I made because I invested in a big way.
Yeah, 123k from sonia campbell. , looking up to acquire a new House, blessings
I am loving your videos Richard. I retired last summer and have spent lots of time reading and watching videos on many of the subjects that eluded me during my 30 year career in public service. Economics is very much one of those areas. I read and watched countless sources before stumbling upon your videos a week ago. These short, focussed and punchy videos are helping me reinforce my findings as well as developing the concepts further in my mind. Thanks again.
How about we don't pay your public sector pension?
For some reason I suspect you will claim you are owed the pension. ie. It's a debt.
If you think its not a debt, I'll buy it off you for £1.
@@adenwellsmith6908 You don't seem to understand how pensions work. Why would (not) receiving a pension necessarily mean it's 'a debt'? I expect to be able to access care in the NHS if I need it, does that mean the NHS owes me a debt if I don't need it? No, of course not.
@@adenwellsmith6908 Thing is, I paid a higher percentage of my salary into my pension fo 30 years than any other sector. Towards the end, that was over £700 a month. I also had to work 24/7 shifts for over 20 of those. Christmas Days, August BHs and Easters were all worked when others were enjoying time with their families. When others were enjoying expensive overseas holidays, I couldn't afford it. Am I complaining here? Not at all. I made choices in my life and made a huge contribution to creating a safe environment in which others had the opportunity to flourish. My pension had nothing to do with why I started my chosen career, but it was the reason why I stayed when, without it, I would have tried other things. You have choices too. If you make the same sacrifices as I have done, you have a high chance of achieving long term financial independence (nothing was guaranteed for me either) as well as a career you can be proud of. If you chose to complain and expect something for nothing, it's unlikely to work out for you in the same way. I truly wish you well in your choices.
MattBennett. I would suggest you read/watch someone who actually knows what they are talking about. This bloke continues to pump MMT for his political agenda.
@@curryattack8985 What is your critique of MMT then? MMT is much more economically honest then the nonsense we hear from politicians talking about the national debt.
The problem is the QE and money printing will make sure that what you get back has lost all its value. Don't buy government dept
look how much spending power the currency has lost against true money (gold), buy gold instead don't invest your time and effort
into something that can be printed by someone else.
Gold is not money it is a precious metal.
@@perkinscrane gold and silver are the only true money everything else is debt
The fact that such a high proportion of the world's gold has been turned into ingots and stored in vaults makes me think that its usefulness to humanity has been overstated. It's hard not to conclude that its price is inflated by the belief of investors in its status as a store of value. However, gold will always be worth *something* whereas the likes of Bitcoin have a potential value of zero.
You keep hold of your fiat currency and I with you good luck when the government and the BoE inflate it to zero. Take a look through the history books it's happened many times before
Keep hold of your fiat currency and it's derivatives and I wish you good luck when the government and the BoE inflate it too zero. Take a look through the history books you'll find they've done it many times before. Fiat currency always goes to zero
One big problem, the tax payer has to service the national debt. So servicing an increasing nation debt while trying at the same time to provide a reasonable level of public service for the same tax revenue, need a very vivid imagination. One can't keep financing public service with loans, at sometime tax revenues won't cover the cost without tax increases.
I would say the government does have a debt. The fact that it is someone else's asset is neither here nor there. Then again, I would say that my bank is indebted to me (on a good day).
It’s a fiction when you consider that the government can create money out of thin to pay it back. You and I can’t do that when we pay off our credit card bills.
So much misapprehension is due to language, ie. the so-called "national debt." Obviously people are going to think something NAMED debt is a debt.
Similarly, a positive like a 'net fiscal transfer' or a 'private sector surplus' is named a 'deficit,' which sounds bad. Even tho a deficit is normally the best of all possible outcomes.
Govt investment is an engine of both the economy and monetary circulation. If an economy is to grow, it needs more money - obviously not in excess of available real resources, as that would cause inflation - but growth is impossible in a closed system with a fixed amount of money
The government rarely ‘invests’. It spends money on certain people to buy their vote. The conservatives do it to buy the pensioners. Labour do it to buy the poorly paid.
interesting video. so why do international banks or credit rating s agency set up credit ratings?
“We do not have a national debt” is in the details
What if the country has large amounts of debt held by foreign governments?
Just how many countries since WW1 have defaulted on debt repayment?
Initially sounds compelling, but surely the big difference between govt and a bank is that a bank will then earn a yield on the liability it takes on (through investment in assets or provision of loans etc) whereas the govt will use the liability it takes on for expenditure only ie does not get an economic return on the debt. Only income is tax revenues which is totally independent of this
Other factors to bear in mind here - unless you want to end up like Argentina or Zimbabwe - are that you need to have a functioning, functional, reasonably robust and trusted economy and bond/debt market to sustain this, a reliable supply of foreign currencies particularly USD if you're a heavy importer like the UK plus, ideally, you need to be able to create your own national currency and sustain and stabilise its value in relation to other foreign curencies. Again, particularly the USD.
Plus don't take out loans in foreign currencies if it looks like your currency is permanently going south in relation to them.
And yet, 3 days earlier on this channel - ‘why we have a national debt’…
*why we need a national debt. It doesn't contradict this video because he explains that the debt is what the banks owe _us_ rather than something to be feared and used as a device to beat down the population.
And yet, even though this is quite simply explained to you, you still can’t grasp high school level monetary concepts. Sorry for your childlike intellect.
This, though essentially true, is clearly unpopular or inconvenient for some and something some do not wish others to know.
Put simply, the public debt is equal to the EXACT penny of the private surplus.
This fact raises extremely thorny questions.
Far more political than economic in fact.
Does this only hold true as long as the Credit Rating Agencies agree?
The agencies just care about the borrowing, not the other debts.
Wonderful, why not trebble the credit balance of the government and spend the money on improving National Health ?
There is Government debt and this debt does come at a cost to Government in the form of interest. The higher the debt, the greater the interest payments, unless interest rates fall. If Government debt were to continue to increase then so would the interest rate burden. This would in turn require higher taxes, yet higher borrowing or lower expenditure. The Government can resort to "printing" money, but this is the same as increasing debt. The Government can't be forced to default on its debt, but continously expanding Government debt relative to GDP will increase the money supply and crowd out private consumption and investment. There really is no such thing as a free lunch.
Fiat currency is back by nothing since 1971 , but the trust people have in its value . Its value is an illusionary.
As of the most recent data, the UK’s per capita debt in 2022 was approximately $46,797 per inhabitant1. This figure represents the total debt divided by the population, indicating the average debt burden for each person.
The Debt is important because the tax payer has had his future mortgaged to pay it, and it is too much. Size not principle is the point.
All money (financial assets) is debt. Think about that. If you added all money owed with all my owned it would sum to 0, leaving only non financial assets. Money is fundmentally government debt, including the banknotes in your wallet. If there was no government debt, there would be no stirling. Therefore it follows that if you were to pay back all government debt, you'd have destroyed the money supply. The real issue is when the bond holders are the top 10% of society - this is an inequality problem.
@@Vroomfondle1066
I’m sure, but I was not talking about paying it all back. Why is no one thinking it is historically too much? Gov spending will be decimated. The younger generation are waking up to this future inequality.
@@michaelhall2138people are thinking that. But they’re wrong.
Correct Michael.
If we take the pensions debts alone that is £600,000 per taxpayer increasing at 10% per year.
@@Vroomfondle1066 Wrong. On the sum bit, lets say I'm the creditor. I'm owed the debt. Who pays it? Someone else. You are missing that the debt is a transfer of wealth.
uk external debt at near 300%. highest in the world. is that a good thing?
Been like it for fifty years. So yes. We are more than three times as rich as we were in 1970
@@stephfoxwell4620 Are we really three times as rich as in 1970? For example, house prices have roughly doubled relative to average earnings since then.
It's pretty neutral actually. Money is fictitious anyway, it's what's done with the resources that money represents that matters.
@@metallitech We live in an era of Superabundance of commodities and services.
We have relatively six times as much stuff generally than we did in1960 and we work much less time to afford things .
House prices are fairly irrelevant unless you are a cash buyer
It is the cost of buying over 25-30 years on a mortgage that is important.
The monthly payment as compared to net income.
The overall cost of a house as a ratio to average income has risen from 6.6 to 8.3 since 1993.
Making housing about 25% more expensive.
one of my favourite things is going into the comments section of Richard's videos and seeing people losing their minds
Me too, clearly deprogramming is never easy.
The issue isn't the debt but the interest paid servicing it. Basically, the government is funding the wealthy who own bonds at the expense of services to the poor.
Extremely naive and asinine. My uncle is a retired principle economist at the World Bank for South East Asia... and was doing $3-5 billion/year in currency trades and repos for the Workd Bank... (and this money was being used to help stabilize the fiscal policies of developing governments bt giving them better loans than can be found anywhere else). And he had direct interactions with all of the major banking heads of the world if not the heads of state themselves. I can't wait to get his take on this notion! Clearly Venezuela is far ahead of us... we need to grow our deficits as much as possible, and as many weapons as possible to our allies in the middle east, have more banking crises and more FEMA spending. Perhaps we can persuade Exxon and Chevron to have a few more $100 billion dollar oil spills to follow in BP's cataclysmic example! Brilliant, absolutely brilliant! So in that case maybe Ronald Reagan really was the greatest president in the history of the US, he put us more in debt than every other president before him combined! Lol
But the more the government increases the size of its "savings" the more interest it has to pay to those who deposit money with it. When this interest repayment ends up costing more than the defence budget in a year, then more than the education budget in a year and so on (because politicians can't resist getting more "savings" can they) I am sure your grandchildren will be thankful that its really a savings account and not a national debt! Banks don't have to pay for none productive public services with the money deposited with them. Governments do, and they still have to find someway to pay back that annoying interest on those "savings."
Isn't it the interest on the debt that is the burden? Is that real?
the value of our currency and therefore inflation is determined by this "credit" arrangement, particularly if as is the case, the majority of creditors are not ordinary folks with a few quid in NS&I, yes sure we can always print more money, but then the value of that money is less, meaning you need to offer more interest to "savers" i.e bond holders and inflation spirals out of control. There will be a point where there is a "run" on our national bank i.e people withdraw or sell their bonds without buying more and that does not end well - catastrophe. So yes the national debt is a problem, how big is determined by how much is "saved" as you call it. All returns are paid for by future savings, its a ponzi scheme Richard, which if allowed to spiral up will end in disaster.
What if china Russia or some other country owns the bond is that not a national debt?
Like the way China owns massive amounts of US treasuries?
Yes it is. That’s why the video is half-arsed.
that is simply china choosing to buy £ in order to conduct trade
Tell me why we needed an emergency IMF loan in 1976?
Huge balance of payments deficit. Needed dollars.
@@karlkerr7348 That and a lack of understanding of the fiat system, which was only 5 years old.
We didn't need it, it was a political move, the IMF is a Washington based institution that imposes conditionality that place constraints on direct state investment within its agreements within loans agreements. Capital needed the monatery and fiscal policies to be set by this conditionality (held by the agreement throughout the loan time) to lay the foundations for Western style Capitalist democracy 1970s onwards.
Neoliberalism has very little to do with classical liberalism or laissez-faire, it didn't entail a retreat of the state in favour of the markets. It promoted anti state narrative with a twist : government intervention in the economy came to be seen not as dangerous and ineffective but, increasingly as outright impossible. A new consensus was set in place. Economic and financial internationalistion (Globalisation). Post Ww2 all the nation states came to accept a responsibility for creating the necessary internal conditions for sustained international capital accumulation, such as stable prices, constraints on labour militancy, national treatment of foreign investments and no restrictions on capital outflows. States were adding to their responsibilities rather than fading away that was the political rhetoric. The ideological shift towards a post national and post sovereign view of the world was to enable global capital accumulation in synchronisation.
What about the unfunded liabilities?
Governments borrow money from the public or wherever by selling pieces of paper called bonds, gilts, treasury bills or whatever, thus they become indebted to the lenders.
I'm missing the point that the gentleman is trying to put across here.
And pensions, nuclear clean up, the EU, ....
Governments don't need to borrow money. They can simply create it. That's what they do in fact. Via the Bank of England in the UK. Gov bonds are savings account for people who want a very secure investment.
@@alecdurbaville6355 Sure, but that's why taxation exists (one of the reasons...), to take money out of the economy. Currency = debt, sure, but not in a real sense that it will have to be paid back somehow. What could be used to pay it back? More currency/debt? Another IOU? Everything is debt, which also means nothing is ultimately. Which is what the video is saying, we don't really have a national debt that will ever need to be paid back.
@@alecdurbaville6355 Sorry, what are you on about? Taxing the rich / wealth is part of the solution yes, to control inflation. It would obviously be stupid and ridiculous to take out all currency from the economy and 'bankrupt' the population. No one is suggestion that, clearly. I don't know what enemy you're trying to fight, your strawman argument makes no sense, but it's not my position (MMT socialist).
@@alecdurbaville6355 I'm not sure what you're trying to get at. As a socialist, of course I think the way the BoE has executed QE is worthy of criticism. We agree on that. But why are you arguing with me about that? I'm not trying to defend the status quo. I want a socialist gov. Have you looked into MMT (which is what Richard Murphy is arguing for in these videos)? My answer to the neoliberal problems you're talking about (life being unaffordable, asset inflation, etc) is socialism; what's yours?
The problem with a very real National Debt is not 'repaying' it, per se, it's servicing it. That's fine, so long as the money borrowed is spent or invested in such a fashion that generates future income sufficient to pay the interest on that debt, and preferably more on top. When it isn't, it's a burden that soaks up tax revenue. BTW, you talk about debits and credits. Assets are indeed debits.. but you forget that expenses are as well.
😂. A background of books does not make a comedian an economist. Money loaned to a Government is the asset of the person lending it. I could go on but do I need to?
Your making it sound too simple, to keep investors money the government had to ensure interest rates stay competitive and that the pound stays strong against the Dollar (where money goes when investors get the jitters) the trouble with pushing interest rates up high is it hurts the economy and peoples buying power.
ARGENTINA?
Borrowing in US dollars when you aren't America is a bad idea.
I like ME (Mythos Economica) that fables when R > G kings lose their heads - fear not Richard King of Economics - we do not have a national debt (not now) because the Daily Mail confirms “Economy's Going Gangbusters”
The really BIG political question here is exactly WHO can afford to invest and keep investing , be they domestic or foreign, for interest bearing profit in this public debt-cum-private surplus?
Populations are always, to a greater or lesser extent, 'invested' in this private surplus but the clincher here is what about those who not only can't afford to but also what happens to them at the sharp end of this fallacious 'household budget' narrative in terms of enduring the financial and social consequences.
If Countries don't have a problem with debts how come so many Countries are in financial trouble ?
if words were money !!!
'The government is the ultimate safe place to put your money, because they make the money, therefore can always repay you without fail.'
That is the silliest, most naive statement I have ever heard and frankly we are all more stupid for hearing it. What do you think happens when the government cant pay? What happens with the value of your currency?
The government of a nation with a national bank can ALWAYS pay.
We're back to the circular arguments. If we enforce magic money then there is no debt we can therefore keep spending.
Only within our productive capacity (of full employment) or we risk devaluation. There is also the question of how the money is used and its potential effect on inflation.
@@davidmcculloch8490 - That's just more of the circular argument. Real money economies have no fear of inflation or deflation these are magic money concerns.
@@andyinsuffolk "Real money economies" meaning what? Which countries or a theoretical concept? Inflation (or deflation) is inevitable. Prices go up if costs are pushed in the global market or if supply and demand are out of equilibrium. The money supply is not the only issue.
OK. Then why all the sophistry?
A party political broadcast from Rishi Sunaks buddy.
And the super rich own that debt as an asset. Our taxes flow to them to pay interest on that debt, which for them is passive income which they use to buy more and more of our assets, and government assets, and our houses and land, with our money, so we can pay them more interest.
All this must be taxed heavily or they will bankrupt us all.
Or the government could stop issuing debt and do us all a favour. Profligate spending to buy your vore.
Great so why do we pay the record 10.4% the uk pays to service this non debt out of its gdp …. If it’s not debt …. Yes you can spin it as not an actual debt but it’s just word salad
UBI for people who are already rich.
Civil service pension
State pension
Nuclear clean up
Losses on insurance contracts
The EU
Unpaid wages
Unpaid invoices
Expected payouts - eg post office, NHS damages.
The actual amount going on the debts is 30%.
The interest you're referring to is the interest the gov offers to the people who have decided to put their money in the 'national debt' savings account with the gov. It's not servicing the debt, it's paying out interest to savers. Just like your bank pays you interest if you save with them. But I agree that the system should be redesigned so it's not a universal basic income for the rich as someone else said above.
@@adenwellsmith6908You can't just copy and paste this under every comment. You haven't made any coherent arguments. What are you arguing?
@@Banjo2030 Gilts are government debt. The interest paid is part of the cost of servicing the debt. The other is the repayment of principle.
Then we have the other debts like pensions, nuclear clean up, ...
Total cost of servicing the debts is 30% of tax.
On the UBI. They can't afford a UBI for pensioners. How are they going to afford it for all.
So how big are the pension debts?
Institutions that own the majority of government debt/bonds have a choice where to deposit their funds. I gurantee if the government starts issuing too much debt to support unrealistic spending plans those funds would be withdrawn (bonds sold) and moved elsewhere. Happens to many socialist governments. If government bonds are sold in large quantities prices collapse and yield goes up forcing the central bank to increase interest rates, else the currency goes down and prices rise as imported costs spiral upwards. Central banks do not control interest rates, the market does. Try to understand that because it's very important.
Wrong. You are not talking about debt, you are talking borrowing. Even then they have no choice.
Civil service pension
State pension
Nuclear clean up
Losses on insurance contracts
The EU
Unpaid wages
Unpaid invoices
Expected payouts - eg post office, NHS damages.
What about the other debts.
Stumac: perfect! At last, somebody on here who understands.
@@adenwellsmith6908 wrong. Capital flight is a risk. There is no compunction to invest in uk debt. If the government debt gets too big, the interest rate will go up as the debt holding is devalued.
@@curryattack8985 So lets look at the debts
Borrowing. Now for banks, they have to put their capital into Gilts, same for insurance and the way annuities are set up its the same. Forced lending.
State pension? Compulsion - no right of consent.
Public sector pensions? Ditto. You end up as a creditor, its a debt.
Unpaid wages, unpaid invoices. Less, but if you want the business, you ened up as a creditor.
Losses on insurance. For example, the NHS kills 20,000 a year from mistakes [just acute hospitals]. What there?
Same for things like damages. The post office for example.
If the debt gets too big to pay, the government will simply cut pensions - again.
@@adenwellsmith6908 Are you highlighting that government spending is out of control?
I think this is misleading because you’re drawing a conclusion by conflating 2 separate points in error.
People’s deposits in a bank will be a positive on the banks balance sheet, ie a surplus, regardless of where that money has been invested. And if the govt had done the same with bonds that it had issued, ie a sovereign wealth fund had been created, then yes it would be the same but they haven’t the money’s been spent, so it’s no longer a surplus as it would be in a bank. So yes there is a national debt.
Before making a video about a financial subject (which you very clearly do not understand) it is wise to study the basics of economy and bookkeeping.
Utter rubbish. Banks keep our money and use that money to lend (and of course they borrow too). Their viability depends on their ability to turn a profit between these two flows (the interest charged on lending and borrowing). When we lend our money to the governemnt in the form of bonds, their viability depends on the difference between their spending and their taxation. If that goes pear shaped they DEFAULT on their borrowing (as has happened in many countries) just like a bank collapses if it cannot meet its short term abligationa. Also, not all of government borrowing comes from within the UK...they also borrow from international creditors. This therefore cannot be national savings. To discard levels of national debt as simply "nationsl savings" and therefore nothing to worry about as it "balances out" is simply wrong as governments can default and they borrow internationally (see IMF). What scam are you up to?
This is a deeply disingenuous piece of framing. Currently approximately 10% of government spending is servicing interest payments on government debt, to put that in perspective that is approximately half the expenditure made on the health and social care budget which includes the NHS.
Nobody is suggesting that government shouldn't be able to facilitate borrowing indeed to enable infrastructure investment it is absolutely essential, what they are suggesting is that if this figure becomes too large relative to the size of the economy maintaining it becomes a very expensive drain on revenue, specifically when if a progressive taxation regime is implemented then it doesn't need to be as large, essentially we are paying wealthy people to fund government at interest rather than taxing them to fund that share this obviously has significant long term consequences.
Do you really believe the Tory propaganda?
the government can create whatever money it needs to service the debt, and in fact, also controls the % paid on bonds. Taxes do not in any way fund government spending.
You have been listening to Mr Murphy too much. He as usual concentrates on one specific part of economics. He makes no reference to how his theory would impact other parts of the economy. Your point unfortunately does not hold water. The cost of servicing government debt is set by the market not the government. If a government is not trusted they either have to pay a higher coupon or do not get the money at all.
@@perkinscrane And your point does not address the fact that this 10% of government spending is not funded by taxes, the money can be issued directly, which you cannot argue against.
The interest payments in question are around £40 billion a year - on new money that the government creates and spends into issue via banks. We could cut this by a) cutting the Bank of England interest rate (which is necessary anyway to prevent an economic crash) and b) not paying interest on some or all of this new money the government has created.
There is no legal reason to pay interest on these balances the banks have with the Bank of England. None was paid until 2006. The European Central Bank and Bank of Japan do not pay on all their balances of this sort. We can change our rules, without even changing the law. Regarding bonds - the average index-linked bond is not repayable for around 15 years and this inflation-linked payment is only due when the bond is repaid at the end of its life. But if you believe the government, this money is being paid out now. Except it is not.
@@perkinscrane True if you borrow in a foreign currency - not so if you issue your own currency and borrow in that. For the UK Bond issuance is a relic of the gold standard which is unnecessary but remains useful for a couple of reasons - facilitating monetary policy by acting as a reserve drain, providing guarenteed saving to the private sector and facilitating borrowing between financial sector actors via repo agreements. The amount of interest the points paid is a choice for the UK - it needn't issue the bonds at all, the money is created and spent into the economy and then after the event a corresponding value of bonds is issued. Amongst the many innaccuracies of neo-classical economics, the fact is that they didn't properly study the mechanics of the banking system / public finance is one of the most irritating.
Excuse you believe what you saying ? The UK assets maybe cover 50 % of the debt owed so with a simple sentence your whole 5 minutes are ruined.
Say let us take just 1 example NatWest Banking Group the government put in around £ 35 billion the 28 % stake left is worth £ 5 if lucky 6 billion
So what does that say to us ? A loss of around £27 billion ( took into consideration dividends) so ? That is the debt or the two years free loading during Cov19 cost the UK £ 256 billion no asset there
If we don't have a national debt which currently stands at 2.5 trillion pounds why are we paying 2 billion pounds a week just to service this debt ?
This is a total nonsense video of which you have lost yourself on technicalities .
"we"?
The reason we're paying that money is because the remit of the ruling party is oversee the continual transfer of wealth from the bottom of society to the top. As Warren Moseler describes it - UBI for people who are already rich.
Civil service pension
State pension
Nuclear clean up
Losses on insurance contracts
The EU
Unpaid wages
Unpaid invoices
Expected payouts - eg post office, NHS damages.
Other debts of course excluded. In particular the socialists will never talk about socialist pension debts.
@@Vroomfondle1066 The flow is the other way. The top 10% pay the same amount of tax as the other 90%. That's a massive flow in the other direction
On the wealth front, the big issue is the asset stripping of the workers by the welfare state. 20% of income. That's real wealth. What wealth would people have if that 20% had been invested in their name? The answer is a lot. Huge amounts.
But its all been spent and in its place is the pension debt. That's negative weatlh.
Applause for roddy
If the inflation rate is higher than the interest rate of the bond, then the purchasing power of the bond is actually negative.
This video also ignores unfunded liabilities.....
Mmt nonsense.
Thank goodness for somebody who describes the situation accurately and clearly. The national debt is simply not a problem. And when you consider that consumers who take out mortgages will commonly borrow 4 x their annual earnings, the national debt (mortgage ) is very small; around or < 1x national income / U.K. GDP of $3.09 Trillion dollars (in USD as an international comparator) I think we need to ‘borrow more’ as an investment in future security and prosperity. If I ‘only’ had a mortgage of x1 my annual earnings I would think it foolish not to increase my leverage to invest more and generate more wealth. People do this all the time when they build up a property portfolio.
All those books add to confusion
Lebanese government also had a lot of credit & that made up a lot of savings to the ppl, yeah that ended up well
They all withdrew their savings at their true purchasing power & lived happily ever after 😂
Nonsense. 1) values presented are public sector net debt I.e. assets minus liabilities. The outcome of that is trillions in debt 2) you're assuming government debts are owed to the private sector in the UK not globally 3) we can't service our ongoing costs without taking on more debt. We can't even service our maturing gilts without taking on more debt 4) we have an ageing population and trillions of unfunded pension liabilities which will be realised over the coming decades.... if your logic was correct and debt doesn't matter, why don't we borrow trillions and give every tax payer £100k
What about government debts in foreign currencies?
Try not to do that too much.
You've got it 👍
Adolescent type pedantry. I recall at High School smart arses saying that a Hoover does not suck up rubbish; it creates a partial vacuum. Duh .... it's the same damn thing! Two different words for the same phenomenon. Words and phrases have meanings which people ascribe to them - The National debt means what politicians and economists say it means. And, the ways of addressing the 'problem' are the same, no matter what words/phrases you care to use, or not use.
With one practical difference… Those who have _understood_ what Murphy explains are filthy rich - most (19 of 20) aren’t.
Currencies left the gold standard over 50 years ago. So, whatever “words” are used, few understood them. We simply called it “freedom” even if the freedom to speculate in nominal terms are practically limited to corporations or owners of other assets like property.
The value of fiat currencies aren’t against stuff - but against debt owed in it. The basis of capital is what you own, and the value extracted from it - so we aren’t all capitalists in a capitalist society.
That’s where “politics” could intervene - but, it doesn’t because we’re taught it’s _inefficient._
Now, where did _that_ story come from…? 😅
@@musiqtee Thanks for the info.👍
sirbarringtonwomle, the youtube commentator, has spoken. we should listen to him, rather than the professor of accountancy
So what were CDOs? Collateralised Debt Obligations were bundles of loans packaged together to sell to investors. So for homeowners they were agglomerations of debt, for investors they were assets and income streams. Which is exactly the same as the National Debt. It's borrowing for the government and assets / income streams for the lenders - which can include the public, pension funds whoever. If pension funds have invested in government bonds and little fellas like you demand we pay them off where do the pension funds get their income from?
@@OnlineEnglish-wl5rp That’s the whole point of liberal economics (liberal as in freedom in populist lingo). Owning debt is _very_ powerful, and that influence evades democracy by design.
To your question: By turning our money (pension savings) into collateral for new debt, interest being the growth. Feeded by the 3% inflation target - central bank money inserted (not revoked) into the finance sector.
Corporations can’t “vote”, but owning our debt - they make us vote in their favor through mainstream narratives of “freedom”.
Debt is traded every millisecond, just like currencies (FX) are. So, private banking & traders have both the currency (state), public (government) and private debt (people) “by the b***s”, pardon my language… 😅
BS has this guy never heard of servicing debt repayment which will eventually consume more and more of GDP to the point where less is available for public services such as health care the military and social security etc. Not sure them grandchildren will appreciate an inflation ridden nation because we can just 'print more money' 😂😂
rubbish.. if ones assets are far below the cost,one is in negative realm....
The national debt is real to organisations like the NHS etc.
Because the cost of servicing the national debt at £110bn per year deprives them of money that they could use.
🤣 yeah debt isn't a problem! It may be when it's you personally. If your companies owes some, in which case the bank takes your business. Or if you can't pay your mortgage the bank takes your house. In the case of the national debt of £4.5 trillion only. We never have to pay it off. Even if it was possible! Mind you we will have to impose austerity on 20 million of our own citizens for generations to come. In fact the debt is growing so fast austerity will have to be permanent.
But who cares about them? 😂
So.. If I am to believe this nonsense.. It would seem that the Government has no expenditure? All money they borrow is their asset and not the person lending it? And the government never spends the money people lend them but rather keep it all in a savings account? Mmmmm🤔... I suppose that interest paid by Governments on loans should now be cancelled as they are actually assets and not debts! 😂
I own a gilt which will get repaid in Jan 2025..The Govt will repay me and everyone else so of course it is debt...bloke is a crank
The government can just ‘print’ money, it only owes the nominal value
When I learned how new money is created, I realised that government debt is not the same as individual debt, despite the many parallels.
If the economy collapses under a liquidity crisis then think Argentina.
Civil service pension
State pension
Nuclear clean up
Losses on insurance contracts
The EU
Unpaid wages
Unpaid invoices
Expected payouts - eg post office, NHS damages.
Not included as well. The test is would he complain if his pension is cancelled.
So you bought one of the government’s assets, a gilt on the understanding that you would return it Jan 2025 for an agreed sum. Sounds to me like you’re in debt to the tune of one of one pound -sorry one gilt. You’ve really should avoid getting into debt like this.
Almost a quarter of the UK population is in poverty and they have no savings. The Government debt is over £2.6 trillion, more than 2.5 times what it was 14 years ago. Interest on that is £300m a day. If thd debt goes high enough it causes international bond holders to sell their sterling bonds, there will be a drop in the pound and a liquidity crisis. Domestic investors can move their money offshore. That leads to bankruptcies, job losses and more poverty. It would be all very well if the economy was closed and had no international exposure. What is your solution to that?
Nobody in Britain is in poverty.
Poverty is less than $2.50 a day
@@stephfoxwell4620😠 Your figure of $2.50 per day refers to conditions in THIRD WORLD countries. It is irrelevant in a FIRST WORLD country such as Britain. But wait until the British economy collapses into W3 level and then you will be correct. Until then, do try to compare apples wit( apples, not with bananas 😲!
@@sirmeowthelibrarycat How is living in a nation with free education, NHS, roads, street lighting, sophisticated food supply, police etc poverty?
Having a smartphone is worth £1.5 million alone.
@stephfoxwell4620 I'll have some of you're on please, then I can get totally detached from reality 😅
@@stephfoxwell4620 😠 What? Did you read my comment before posting your reply? Poverty is a RELATIVE term in economics, NOT an ABSOLUTE. It refers to the circumstances experienced by those within a specific economy, ie the British NOT the Bangladeshi for example. British living standards are much higher than Bangladeshi. But when those standards begin to decline so the poverty level increases. We have a National Minimum Wage. We have a National Living Wage. We have earnings that are not taxed as they do not reach the tax threshold. Why is that? It is in order to prevent poverty becoming a problem for millions. As was experienced during the 1920s and the 1930s, known as the Great Depression. AND what happened between 1939 - 1945? Poverty kills, slowly . . . 😡!
I agree with what you are saying, except that you use the term ‘money’. I believe that what is actually held by the banks and government is ‘fiat ‘currency’, which is not ‘safe’ because the purchasing power of that currency is constantly being debased by money printing and fractionalised reserve banking. We need a new form of sound money, and Bitcoin would appear to be the only viable solution. I doubt that anyone who has taken the trouble to read Lyn Alden’s ‘Broken Money’ would disagree with that.
So what you're saying is you prefer deflation to inflation and creditors instead of debtors. The Great Depression was a fantastic deflationionary episode...
This is totally wrong
Sadly, it's not.
@@gerhard7323 Unfortunately it is.
@@spanishjohn420 I'd point you to my other recent comments on this thread.
@@gerhard7323 And mine, to you
Depends on what the government invests its “debt” in.
Building social housing, with a rent return of at least 5%.
Or putting illegal migrants in 4 star hotels.
UK general government gross debt was £2,654.3 billion as per office national statistics. You have a national debt.
Well done for missing the point completely
@@PressureOnJulian Don't post factually incorrect video titles and I won't have to point it out
What about the other government debts?
Civil service pension
State pension
Nuclear clean up
Losses on insurance contracts
The EU
Unpaid wages
Unpaid invoices
Expected payouts - eg post office, NHS damages.
@@adenwellsmith6908 You seem to be confusing debt with liabilities.
@@ed7002Did you watch the video? Do you understand what he's saying?
Never have heard so much rubbish
Ah the old " owe it to ourselves" ... They do have a debt. The owners of those assets are not going to just write it off. They expect to be paid.
Also the people that can afford to purchase them are wealthy. The people who will have to pay for the interest are not.
You also ignore the government spending crowds out private jobs and investment. People are better off with private transactions because they get a choice.
Economists can argue debt is good with as many abstractions as they want - we all know it isn't. Debt is bondage, and immoral. Just because you can sell debt doesn't make it magically good.
All these arguments are ex post facto. Nobody ever made them before the accounts went red.
currency is debt. are you saying money is also immoral?
@@Spurros Not all currency is fiat.
@@Daimo83 but £ are. So are you committing an immoral act by using £?
That's all very well, but you live in a world where all money bar none is debt.
@@Daimo83 Name some non fiat currencies.
This guy is talking rubbish......inflation and buying power says so.....true clown.
When or why did printing money become a problem for Zimbabwe and the weimar Republic ? Why is it never a problem for us?
we have had inflation running at 12% thats the consequence of money printing
That is a very long and complicated answer, but 2 main reasons to briefly mention 1.) they had external debts not in their national currency i.e. massive enforced repayments to the Allies after WWI in the case of Weimar 2.) they had enormous issues with their productive economic capacity being reduced and crippled i.e. the military takeover of the Ruhr region by France and the collapse of the farming sector in Zimb due to the land grabs by Mugabe
@@Spurrosbrilliant comment!
@@Dc-uf1ln That's very Milton Freedman of you. However, the quantity of money in existence is not the sole determinant of inflation.
Good question - Warren Moseler wrote a paper on this.
But you can't get away from the fact that a whacking lump of government, ie taxpayers, money is lost every year paying off the interest on this loan. This impoverishes our public services.
?? I think you misunderstand finance.
Tax is not the Government income. It is merely a brake on Inflation.
A way of taking back money when they have printed too much.
I think you misunderstand finance, yes taxation is a method by which excessive money creation can be removed from the system using fiscal policy to act as a brake on the economy to prevent inflation. However taxation is also the method by which funds can be appropriated from economic endeavour to facilitate expenditure on infrastructure and redistributive policy to ensure a minimum standard of living for the general population, quite obviously if this distribution is left to wealth alone to determine then almost nothing that is not of interest to them personally will be achieved charity does not and never has achieved this objective to any reasonable standard. If you're not keen on paying taxes look around the world to where taxes are very low, short of a handful of mineral wealthy states and tax havens almost every low tax nation is a basket case, I would posit this correlation isn't merely coincidental.
Yes I agree with all of this, but surely money which has to be spent on servicing the government loan described, cannot be used for the public good. It's as simple as that.@@philipnorthfield
I'm sure you're right that I don't understand finance - but some things seem to me to be self-evident: a government can't go on borrowing or creating money without some consequence, ie that fewer funds are available for redistribution and the public good. The same principle applies to profits: they don't come from nowhere, and someone has to be poorer in order to provide them, eg when Sainsbury's makes a profit where does that money come from. @@stephfoxwell4620
Well vote for a government that will stop paying it.
Complete garbage, the higher the national debt, the higher the percentage of GDP is used to service that debt. So the lower the amount of money we have to spend on infrastructure etc.
If the debt is denominated in a currency you create, the following hold: 1) you don't need to issue bonds to create money - you do so as a favour to private sector; 2) you don't need to offer interest - their function as a safe haven is enough to make them attractive; 3) at any time the central bank can create reserves to buy all available bonds; 4) at any time the central bank can create money to service interest payments. Your statement is true if you've borrowed in a foreign currency, like many countries that the IMF has shafted...
@@Vroomfondle1066 If that's true then countries would always do that and not borrow in other currencies.
Correct. Debt causes austerity.
But does it matter if the government can create money out of thin air to pay it.
@@knobfieldfox Yes. Because the printing creates inflation and the big debts, pensions are inflation linked. That means printing doesn't work for inflation linked debt.
For fixed rate debts, you can print to pay. It screws your creditors out of their wealth so if you don't care about robbing people in that way, you can print to pay.
But inflation linked debt? Doesn't work.
Free Palestine 🍉