But this is easy to pay for, just print the money (copyright Snippa)

Jeremy Corbyn’s promise to wipe out student debts would cost at least £100billion, Labour’s shadow education secretary admitted today.
Angela Rayner insisted it was an ‘ambition’ for the party but that it would not become a manifesto pledge until Labour finds a way to pay for it.
Just days before last month’s general election, Mr Corbyn said he wanted a way to tackle the ‘historical misfortune’ of those burdened with student debts – promising he would ‘deal with it’.

As Smurf keeps telling us, just print the money. Or, even, just cancel the debt, same thing. It’s just QE from the magic money tree, you see?

Now on to second order effects. Roughly and around and about, pre-QE, M0 money supply was of the order of £50 billion or so (absolutely not accurate but right order of magnitude I think). We now cancel £100 billion in debt, that is don’t pull back in money we’ve already issued. Or, equally, we just print money to pay off the debt, same thing either way on the money supply.

What happens then? Ah, yes, that’s right, the magic money tree means that we use taxation to curb the inflation resulting from the increase in the M0 money supply, doesn’t it? And we’ve just tripled M0.

So, we must raise taxation then.

That is, there is no magic money tree. In order to spend that new money into the economy we must increase tax. We’re back to where we were, more spending means more tax.

28 comments on “But this is easy to pay for, just print the money (copyright Snippa)

  1. Leaving Spud aside for one moment, his must be the most brilliant election manifesto of the past couple of centuries: Don’t vote for our programmes; vote for our aspiration, that which will never even attempt to deliver

    The country is in the grip of madness.

  2. Well no, not exactly, is it? If all student debt was cancelled tomorrow, inflation next month wouldn’t go through the roof. Or even in 6 months time. Would it have had an effect in a year, who knows?

    Thats the trouble with this siren call – there will inevitably be a lag between the spending the ‘free’ money and the bill arriving in the form of higher inflation requiring higher taxes. Which is perfect for politicians, they can offer freebies safe in the knowledge the bill will arrive years later and may not even be linked to the free stuff they offered previously, and can be blamed on something else.

  3. Why not just borrow the money? It’s not like any western government anywhere is serious about tackling deficits, let alone debts. Sorry, but there really is a magic money tree: borrow ’til your heart’s content.

  4. I thought the student debt was all in the future taken from their taxes, and there’s no upfront cost to a degree now. It’s not like they’ve all had to write a cheque for 9 grand out of their bank accounts before being allowed on campus, is it?

    Even Tony Blair made them pay a nominal 1K which concentrated minds a little.

  5. @J .
    Right.
    Having had their extortionate debts cancelled the graduates can afford the monster extortionate house prices which in loopyland don’t count as inflation so this extra spending will go unnoticed.
    Thankfully our wise and beneficent crackpot government has arranged for everybody to stand on the Brexicliff awaiting the order to jump. This will take their minds off things!
    Meanwhile the ruling class can get on with breaking new records for historical sex abuse.

  6. Aside from obvious things like having an interest rate much lower than today – seriously 6%? perhaps we need to recognise that most of these ‘loans’ are in fact bad debts and write them down. The place where this money has gone of course is in inflation in the self serving sods in the education industry. In fact, perhaps we need to accept that the undergraduate scheme is simply an extension of schooling and that it should be funded like a ‘super sixth form’ while the real student grant system should only apply for masters’ degrees, which at one year and around half the price are only available to students who have ‘earned’ a place in proper higher education by completing the course and passing exams to a suitable level. Indeed, it is probably around the same 5% of eligible students it used to be for undergrad courses back in ‘the old days’. Undergrad courses could be taught using online lectures and proper tutorials exploiting modern technology and thus be considerably cheaper and possibly without the same level of institutional Marxism.

  7. @Firefoxx: exactly.

    When I was at uni ~10 years ago I remember all the upper middle class lefties heading down to London to protest tuition fees. My friends from actually poor backgrounds didn’t bother as it did not impact their decision (given that you pay it back based on post-uni income) and found it highly amusing all the rich kids going to protest on their behalf over something they did not think was that big an issue.

  8. I all of this we have an experiment going on about whether free education benefits the poor.

    Scotland has shown in doesn’t, with fewer people from poor backgrounds going to university and graduating.

    If the Tories can’t win this argument with such a glaring example they deserve all they get.

  9. “The place where this money has gone of course is in inflation in the self serving sods in the education industry.”

    Exactly.

    And what of all FUTURE student loans?

  10. They obviously have convinced themselves they will be in Government soon if they’re starting to consider reality.

  11. I love the expression “trying to find a way to pay for it”.

    Is it down the back of the sofa?

    Is it in Jeremy’s other pair of trousers?

    The search goes on…

  12. If like Murphy you can believe some bearded hipster fed 5,000 people with a couple of fish suppers and a few baps, it must be very easy to believe that a money tree exists.

  13. Ignore DBC, it was a full moon last night, it always has an unsettling effect on the mentally challenged. He’ll calm down now its passed.

  14. “I thought the student debt was all in the future taken from their taxes, and there’s no upfront cost to a degree now.”

    It is, so why they don’t just forget the whole ‘student debt’ concept and call it what it is, a graduate tax I don’t know.

    Perhaps the Tories should start talking about the ‘tax debt’ that hangs around everyone’s neck the day they leave education and start work. Work out what taxes the average person will have to pay over their working life, add some interest, and calculate the amount everyone ‘owes’ just for being a citizen of the UK. Its exactly the same concept as student debt……you only pay income tax above certain thresholds, future tax liability is not extinguished by bankruptcy, you stop paying at a future point (when you stop work and retire).

  15. Having paid off my student loan last year I have to wonder what would happen to folks like me if this scheme was ever enacted, would we get a refund of our repayments?

  16. BiND
    “If the Tories can’t win this argument with such a glaring example they deserve all they get.”

    What the Tories deserve is irrelevant. We don’t deserve Jeremy Corbyn, however incompetent the alternative.

  17. “In all of this we have an experiment going on about whether free education benefits the poor. Scotland has shown in doesn’t, with fewer people from poor backgrounds going to university and graduating.”

    A friend in Scotland has just posted on Facebook his offspring who has just graduated from a Scottish university. I followed the timeline and was surprised at how many and how frequent were “our two weeks in Thailand” “our month in the Amazon” “our time in exotic Foreign”. My thoughts were: cor! I’ve never been able to afford that, even without the costs of kids. I never realised what a different financial strata he and his kids were in.

  18. To our intense relief, our youngest boy, after a year out working, has decided not to follow his older brothers to uni. They were academic, and he is not so much, and has his eyes on a trade.

    It’s difficult to give advice and not lead the witness, so we never pushed him in either direction, though we did make sure his applications were in and all that.

    In the end he “came out” as not wanting to go, and it was obviously stressful for him, which is a sad state of affairs.

  19. @ BraveFart

    Are you suggesting that Murphy’s belief system has room for TWO Supreme Beings?

  20. I never realised what a different financial strata he and his kids were in.

    Some friends and I play golf for a week in St Andrews. We used to book a really beautiful detached 3-bed house right in the old part of town. One year we found it had been sold – to a student (or their wealthy father). Definitely a different strata.

  21. Because University in Scotland is ‘free’ for Scots (i.e subsidised by the English) the Universities, especiallly Edinburgh, have made a big effort to woo English Students with their nine grand such that it is now the default ‘didn’t make it to Oxbridge’ choice for the public school set. In fact it really is the new Oxford for all those (not very) ‘Bright Young Things’ whose parents were all but guaranteed a place at ‘The Varsity’ on account of their public school 35 years ago. Now that the rest of the country and more importantly the world are applying to Oxbridge what is an old Etonian to do? After all, it was never actually about learning anything, really just a social thing.
    Four years partying at a super sized sixth form – pace my earlier comment – in a city small enough to be safe, big enough to not be too claustrophobic, quality of teaching frankly irrelevant, then the few who care can go and do a masters somewhere else for an actual qualification. Total cost for the four years is 36 grand which is one year’s fees at boarding school. Plus rent and Ocado deliveries obviously.
    Notice I am not complaining here, just pointing out what the ever resourceful middle and upper middle class private sector parents are doing. I would say that in 20 years’ time the probability of the Prime Minister and much of the ‘establishment’ being English Edinburgh Alumni is rising extremely rapidly.

  22. @Mark T

    I went to Eton and was not all but guaranteed a place at ‘The Varsity’ on account of my public school background. This was more than 35 years ago and I received a modest open award to a rather left-leaning college because, I suppose, the admissions tutors must have liked my application.

    Now that the rest of the country and more importantly the world are applying to Oxbridge what is an old Etonian to do? After all, it was never actually about learning anything, really just a social thing.

    I wonder whether sometimes folk who would prefer to see themselves as libertarians are, below the skin, infected with the jealousies and prejudices of card-carrying corbynistas.

  23. Bertie Wooster didn’t get to go up on merit alone, though his Scripture Essay prize would have been hard to discount.

    If some still get in via money and connections, and I’m sure they do, then better we get the benefit here. One nice but dim student may well be paying for several brighter but poorer, and/or contributing to research activities.

  24. @ Mark T
    You are obviously unaware that Oxbridge entrance exams were marked blind, with numbers, not names, on the papers.
    I got in because I produced an exemplary answer to a question in the Part 1 exam that was cleverly designed not to rely on what anyone might have been coached (and did the other questions as well). My mother got in from a Grammar School [my father got in because he was bloody brilliant: an MSc. (then called BSc.) at 21 when it took 4 years to get an Honours BA in Chemistry].

    Yes, there are three or four scholarships only available to Etonians, but 99+% of entrants are on merit. Your petty exposure of your inferiority complex mostly demonstrates your ignorance.

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