That budget speech in full

The Right Hon Chancellor of the Exchequer says:

\”I have decided to take more of your money to spend as I see fit and leave you with less to spend as you see fit.

This is an advance in freedom and liberty.\”

In a few weeks time Gideon will be saying exactly the same thing.

Isn\’t democracy wonderful?

6 thoughts on “That budget speech in full”

  1. Where do bank reserves come from in the first place, Timmy? I know I’m asking you to think, but I will give you five pounds if you can get the answer right.

    Tim adds: Bank reserves? They’re either capital put up by shareholders or retained profits.

  2. Wrong. I keep my five pounds.

    Next question: define “fiat currency”.

    Tim adds: You’ll have to explain what you mean by bank reserves then. Fiat currency? Money that’s worth something simply because a government (or someone) says it’s worth something.

  3. How can there be any confusion over the definition of “bank reserves”? But in any case, they don’t appear by magic.

    You’ve done better with fiat currency. You need to now feed this insight back into the question of bank reserves. When govt spends, what actually happens (I mean, literally, operationally, at the moment the spending takes place)?

    Tim adds: Sorry, you’ll have to explain yourself. Not interested in playing 20 questions today.

  4. What, no more fun?

    When govt spends it creates reserves, when it taxes it destroys them. That’s where bank reserves come from. From nowehere–govt creates them ex nihilo, because it can and because it must. Hence “fiat”. From the perspective of the aggregate level of bank reserves, govt spending is an injection, taxation a drain.

    All bank/credit money is an “insider” asset, i.e. it nets out on aggregate (assets/liabilities). The money that govt taxes is the money that govt has spent in the past. No govt spending, no (outsider) money, no net financial wealth. Govt spending cannot reduce the amount of insider assets in the financial system.

  5. “Vimothy”… I can only assume from your quite alarming level of incomprehension of the basics of business that you’re an economic advisor to the present government.

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