A mild suggestion for Ritchie

The second was that as government borrowing increased so would the interest charges that had be paid on it, so increasing the cost of debt to the point where the government would collapse under the burden of its debt obligations. In 2010 George Osborne was all too anxious to draw comparison between the UK’s situation and that of Greece. This too has now been proved to be ludicrous despite the fact that the coalition government has now borrowed more since coming to office than the last Labour government did in 13 years on office. As the FT said yesterday:

Ten-year yields on core government bonds, which move inversely with prices, have edged lower in 2014 – defying a near-universal start-of-the-year consensus that the only way was up.

This, incidentally, is true across a number of major countries, and not just the UK. The fact in that case is that there has been no crisis of confidence. Instead people are actively seeking to buy government debt.

In that case the question to be asked is why we are not exploiting this now to raise the funds to invest in the way this country so desperately needs? It’s economically absurd not to do so.

How about this?

So, if we had been borrowing like drunken sailors then interest rates would be higher than they are now. So, we’ve got low interest rates because we’ve not been borrowing like drunken sailors. Meaning that if we did borrow like drunken sailors interest rates would rise.

This explanation may or may not be correct but it is a possible one. The logic stands after all: I have not gone splat on the ground as a result of leaping off a 10 story building as I didn’t leap off a 10 story building. But that I’ve not gone splat as a result of not jumping doesn’t mean that I would not go splat if I did jump.

17 comments on “A mild suggestion for Ritchie

  1. What on Earth is the point of a government borrowing money when it can print the stuff? And please I don’t want to hear the word “inflation” in response to that question: if enough money is printed to keep us at full employment without excess inflation, then there’ll be no . . . . excess inflation!

  2. Ralph:
    The reason is that ours is a fiat currency, it has no value of its own; I believe a 20 pound note actually costs about 30 pence to print. Print more indiscriminately and the value, the worth to others if you like, drops.
    Don’t think so? Imagine giving everyone a gold bar; are we all rich or has gold just become worthless?

  3. I think I’m giving up on even reading your Dick bits, let alone commenting on them.

    The man is stupid mad, bad and sad.

    What should be a sneer; “the coalition government has now borrowed more since coming to office than the last Labour government did in 13 years on office” turns out to be a criticism! Puch that debt up! Get it top a couple of trillion!

    He should fit right in with the current Labour thinking. They do seem to be determined to repeat history over and over. Get into power. Borrow shedloads of money to bribe the client vote. Wreck the economy. Leave office. Rinse and repeat.

  4. Invest in what exactly?

    Seems to me these debt and public works lovers never define what investment we ‘need’.

  5. What about the 375bn that the BoE injected into the economy via purchases of gilts? Wasn’t the entire aim of that to artificially depress long term interest rates?

  6. I’m currently reading an excellent history of 1970s Britain. I had to laugh when Healey reveals to a shocked Cabinet that Britain would borrow a record £8.3bn that year (or some such figure).

  7. abacab, its borrowing to spend on the wrong things.
    Should be spent increasing the civil service (especially the tax office), more money chucked at local councils, more money for doctors and so on.
    Anything like improving infrastructure or building new airports would not get a mention.

  8. Rob Harries

    Investing involves spending money on improving the terms and conditions of the Trade Union members who provide Murphy with a significant part of his income. This is called ‘creating world class public services’ in the lexicon of ‘civil society’

    When confronted with a question as to how the EHRC (for example) was an example of necessary infrastructure (given its productivity is at best absolute zero and probably actually negative in terms of GDP impact) I got the ingenious response from an acolyte of Ritchie ‘Infrastructure is not just physical’ – in short, don’t worry – there are thousands of unemployed graduates from the social sciences (Labour/Green voters to a person) in whom they can ‘invest’……

  9. Social science student who is opposed to the greens on account of they want to kill me and do not vote labour.

  10. john miller, he is not the mad bad & sad, that’s me :-). He is a bit of fruit and nut case though.

  11. The Murphmonster has taken to not publishing my posts so just in case, below is my latest post. Shows that either he is deliberately lying or really doesn’t know what he is talking about. I wonder if Toynbee, Hodge and the other idiots who lap up every thing he says really know what he’s like…..

    Richard

    A while back we were discussing HMRC stats. I said that HMRC stats showed total income so tax paid was a fair indication that the reality was tax avoidance among the wealthy was not as prevalent as you constantly claim. You stated I was wrong as HMRC stats showed only taxable income. I knew that unless HMRC had changed its methods that you were wrong but I thought I’d check. So I emailed the HMRC statistics people who confirmed:

    “Dear Mr C,

    When we refer to total income in our National Statistics we mean total income before allowances, deductions and reliefs…”

    In other words HMRC have confirmed that you don’t know what you are talking about when you discuss HMRC statistics.

    The email address is spi.enquiries@hmrc.gsi.gov.uk if you want to check.

    Might make people wonder what else you don’t know what you are talking about.

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