The Debt and Inflation Story
November 26, 2020
"If we borrowed from China and this fed through into higher bank lending and higher consumption, then this borrowing would probably cause inflation. However, I assume that any funds, the EU secure from China will be used to help finance government debt, and be part of austerity packages; I can’t see loans from China leading to a boom in spending."
Let’s work this through. It can’t be true. The UK borrowing money is - I do think it has to be - serving some other purpose than broadly ‘keeping the nation going’.
Consider: One borrows in order to spend what is borrowed. When one does not need to spend, one need not; one does not; borrow money.
Why should a person borrow when they don’t need to spend; and thereby incur interest repayment schedules to be adhered to and a final repayment at some future date? Persons loaning or borrowing on such terms, would be doing so only, maybe, to support the other party to the loan; who is perhaps in need of being seen to be, or who is being in some way advantaged by, loaning and or borrowing on such terms. I can’t think of any particular cases, but let that go; there may be cases and times when this is worthwhile or necessary? But always in such an arrangement the borrower will be offering an altruistic deal to the lender. Interest paid for no risk
So. A borrower borrows in order to be able to spend what is loaned to him/her.
So. government borrows money, by selling its bonds and gilts, to people with money credits to spare – pension funds, the Chinese, whoever. So the government intends to spend what it is borrowing.
The crucial role of the citation cited upfront above here now comes into play:
“ If we borrowed from China and this fed through into higher bank lending and higher consumption, then this borrowing would probably cause inflation. However, I assume that any funds the EU secures from China will be used to help finance government debt, and be part of austerity packages; I can’t see loans from China leading to a boom in spending.
How might money of any kind that is spent by government, NOT be “fed through into [higher bank lending and] higher consumption”? (These are my square brackets here.)
And what exactly does this item mean? “ I assume that any funds the EU secures from China will be used to help finance government debt, and be part of austerity packages. I can’t see loans from China leading to a boom in spending.”
The writer is clearly pointing to another form of usage of money by government, a form embodied in the words “ finance government debt, and be part of austerity packages” *and is opposing this form of spending to that which is *“fedthrough into [higher bank lending and] higher consumption”
The question arises then: how is this loaned money being spent in such a way that it does not feed through into the larger high-street economy and also to consumers' pockets? Is there a ‘sealed off’ other ‘economy’ into which this money is being poured? One which precludes such money spent seeping into the high-street economy?
If there is such a thing as a sealed off economy; what is it; where is it; how does it affect us and the workings of the high-street, if at all; why is it there; and why is it considered necessary to exist?
The clue we have is in the words: “ government debt” *and “ **austerity packages”; *these are the items borrowed money is being spent on. So governments borrow so as to pay interest on, and repayments of, previous debts, I assume. Yes, OK but does such borrowing have any bearing on UK government borrowing at this time of economic (‘Covid’) crisis? Some will have been borrowed to service older debt; but surely not the fantastical billions Rishi Sunak blurted out to us today (Wednesday November 25 2020); that would be incredible and ridiculous.
Surely most of Rishi Sunak’s borrowing on the nation’s behalf is going to be used to keep British enterprise afloat until whenever. And therefore fed into the day to day economy?
The second item: “*financing **austerity packages”. *This is questionable. Why do austerity packages need borrowed funding? It appears, perhaps, that austerity packages require greater sums than do funding for other kinds of economic package?
Big UK infrastructure investment projects such as those announced last week – the huge numbers of pretty aimless Royal Navy shipping to be built; and a ridiculously costly underpass for Stonehenge and its preservation; The Greening of Britain Project – including banning diesel and petrol vehicles by 2030, and so on – all these will need capital in huge amounts.
The ‘furlough’ scheme needs considerable funds. The re-employment drive projected for 2021 needs large funds pumped into it. So do those public sector pay promises to the lower paid; as also do the monies being set aside for NHS medical staff “and others” said Rishi Sunak, noncommittally. This funding needs to appear from somewhere.
So why, why, why, when all this avalanche of borrowing is inevitably going to dilute the value of British £s for the British consumer and worker; why didn’t we just print it, or just write the sum into the credit account of some, perhaps Central, bank or something? Create the money instead; ex nihilo?
I think the answer must rest in the behaviour of Britain and its government, and that somehow this borrowing is required of the UK government. I would not say it was necessary, but maybe it is required by the rest of the world? By us borrowing so heavily, instead of printing off the money; but either way allowing our £s to devalue against other currencies, how have we saved the value of the £, and prevented it from sinking on the international markets? Is there another reason why UK borrowing, and not printing-off, should be mandatory?
I have no idea of the reason for the UK borrowing as opposed to printing-off the money. I guess I have to go and see what effects would occur for British people, for the workers and the consumers, were it that the money was printed off instead.
I would also have to go and see what are the advantages in the International markets arising out of UK borrowing and not printing off money. And also what are the support and advantages for working and consuming Britons.
I cannot see how either borrowing or else printing money would differently affect our import and export levels. Were our incoming goods to suddenly skyrocket in price because we printed the money instead, and used that printed money to fund infrastructure projects; would this course of action manifest anywhere any differently, have any different effects, to us having instead set aside for infrastructure worksbillions which instead had been borrowed . And in both instances the people then build the infrastructure and so earn as wages that invested money, whether loaned or printed? Either way the money ends up spent and in the hands of wage earners etc
Cheaper £s in the international arena would be a boost to UK exports. Imports reciprocally would cost British consumers more, but British wages would be being earned still - and the infrastructures built would not have been built as mere follies – one would hope they would promote general welfare and living standards?
So who are we assuaging by opting for borrowing? Who are we financing? What great octopus of a mega-beast are we feeding these borrowed billions into and for what reasons?
Someone has lots of money, lots of sway, and is able to come up with, in a world crisis wherein GDPs have plummeted globally, such huge ridiculous amounts of spare money freely available to be loaned out. Where has it been kept till now that it’s just ‘there’ available right now, when the world needs it -not invested and not tied up – but sloshing around as ready cash?
I suspect the problem lies with credit and debt. With the offering of debt-owning (i.e. of what is termed blowsily ‘credit’) so ubiquitously; to the consumer, to the producer, to the nations- and in fact to anyone able to stand the terms for a loan. It’s not real money then. It’s just numbers arranged in a book and being rearranged appropriately as the credits and debits flow in and out.
This is the only way such huge sums can be readily available for loan at a time when the world and his wife wants money, and to a man in every nation.
This credit has us over a barrel we have made for ourselves I believe. We fed the ogre and the ogre has grown up and has begun feeding on us. Not China, No, I don’t mean China. I mean the manipulators of the credit/debit system. The faceless, voiceless, behind closed doors rulers of the world, the flesh - and the disciples of the devil.
They have created for themselves the ultimate economic intellectual property - and made it their sole monopoly – a right to create money.
This right is grown up a monster, elder brother to those Trade Marks which are ‘sold’ in the kingdoms of the world on a ticket of them ‘adding value’ - and adding it out of nothing. By way of branding goods and services, this is another right which ‘adds value’ but only for the holder; whilst the ordinary guy working and consuming is the beneficent, often unsuspecting, donor of the value added - and every time.
Credit or debit, whatever you call it – is just another lawful, behind closed-doors, top of the range, scam, the scammers' raison d’etre being to exploit the work of ordinary people like predators
Note: A Misinformation Spokeswoman just said on the radio: *‘What can we do – we cannot conjure up a magic money tree?” *But that is exactly, in metaphor, what the people running this show have, and do. At its root its manure is common labour and this is fed into the organism via a farming out credit loans - with the result being a general debt-enslavement