Interesting article on government debt-

It's a complex system and irritates me when adults pretend to be all knowing and just boil it down to paying a credit card bill. Nothing like it.

On the subject of governmental money management, I only found out recently why the Chancellor of the Exchequer is called that. There was a large chess board, the exchequer, used to track income and expenditure many centuries ago. Must've been a real panic when the 65th account was opened.
 
Some good answers and explanations on there.

In short, we don't owe someone else. Therefore there's nothing to pay back (unlike the money paid back to US & Canada for WWII).

The government creates money as and when it needs it, then uses taxes to remove it from the system.

The UK government 'behaves' as though it believes in the truisms behind MMT.

The UK government 'talks' about spending as household debt.

Pretty sure someone important once said to judge them not on what they say, but what they do...
 
jeff_potato said:
It's a complex system and irritates me when adults pretend to be all knowing and just boil it down to paying a credit card bill. Nothing like it.

On the subject of governmental money management, I only found out recently why the Chancellor of the Exchequer is called that. There was a large chess board, the exchequer, used to track income and expenditure many centuries ago. Must've been a real panic when the 65th account was opened.
Click to expand...
Yes, but do we owe anything or not.
 
We do, but it's a credit line which can always be extended and that helps when foreign debts need to be paid with greater priority too.

The Americans were pretty miffed about how they perceived Marshall Plan money was being spent after WWII. We were busy building nuclear weapons and rolling out the welfare state, but it wasn't with US dollars, which were eventually repaid. With their help for wider economic growth, we could take on the debt for large national projects like those because people were working and keeping the tax revenues flowing.

Stable democracies like the UK will always easily take on debt because population and economic growth means a constant potential to repay the debt.
 
jeff_potato said:
We do, but it's a credit line which can always be extended and that helps when foreign debts need to be paid with greater priority too.

The Americans were pretty miffed about how they perceived Marshall Plan money was being spent after WWII. We were busy building nuclear weapons and rolling out the welfare state, but it wasn't with US dollars, which were eventually repaid. With their help for wider economic growth, we could take on the debt for large national projects like those because people were working and keeping the tax revenues flowing.

Stable democracies like the UK will always easily take on debt because population and economic growth means a constant potential to repay the debt.
Click to expand...
But who have we borrowed the money from and who do we owe the debt to and is there interest to pay? Didn't the UK lose it's AAA status on financial reliability or trustworthiness ( or something like that) This is very confusing.
 
This may help:

www.economicshelp.org

Who does the UK owe money to? - Economics Help

A simplified explanation of who the UK government and private sector owe money to - incl. banks, pensions, investors and foreign investors.
www.economicshelp.org www.economicshelp.org

It's certainly a tangled monetary web.

The AAA status is dictated by major credit agencies. However, their accuracy is not exactly fantastic given their assurances about numerous lending institutions.
 
A country with a sovereign fiat currency and a flexible exchange rate doesn't need to worry about financing spending out of taxation or borrowing. They can simply spend the money into existence. Under these circumstances the purpose of taxation is twofold - (i) it confers acceptability on the currency and (ii) acts as a reserve drain to remove excess spending. The USA, UK, China aren't constrained by the need to borrow, Euro members, local councils are. It's not without consequences. Governments are creating claims on resources which has distributional effects. There are inflation risks, but that's a consequence of the volume of spending rather than the way it's financed.
 
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