Stump thinking par excellenceMarch 1, 2016 Tim WorstallRagging on Ritchie20 CommentsAnd, for the record, this is a good thing. The less UK government debt there is the more financially secure we are. previousRitchie and economic forecastsnextDear God these people are mad 20 thoughts on “Stump thinking par excellence” So Much For Subtlety March 1, 2016 at 11:54 am Could we have a link please? As I do actually believe this – and it would be a problem if Ritchie was saying it. Tim Worstall March 1, 2016 at 11:56 am He is…. Justin March 1, 2016 at 11:58 am link Justin March 1, 2016 at 12:01 pm The less UK government debt there is the more financially secure we are. I think this is true, but that’s not only what Mr Murphy is suggesting; he also says that as much debt as possible should be UK owned – so that interest payments are made to UK entities, which can then be taxed as profit. I’m less sure that this is a good idea. So Much For Subtlety March 1, 2016 at 12:06 pm Tim Worstall – “He is….” Damn. That can only mean the Keynesians were right and the more debt the government holds the better. Ralph Musgrave March 1, 2016 at 12:12 pm Government debt is effectively a bundle of £10 notes which pay interest. If people suddenly want a stash of £10 notes under their mattress, no harm done. And if they want a stash of £10 notes on which interest is paid, no harm either, as long as the rate of interest stays low. If the rate of interest rises, then they can be told to eff off. Worzel March 1, 2016 at 12:13 pm Richard Murphy Feb 11th 2016 (On low Gilt yields) ‘Any sane government would, as a result, be borrowing as a consequence to stimulate the economy, drive up investment, build” Richard Murphy March 1st 2016 ‘The less UK government debt there is the more financially secure we are’ I have a sneaking feeling the meds are making our professor a little forgetful ? Rob March 1, 2016 at 12:19 pm And, for the record, this is a good thing. In a very short time indeed he will deny ever having said this, insulting people who say that he did and then banning them. BraveFart March 1, 2016 at 12:37 pm It seems even less likely for Murphy to be readmitted soon to the inner circle of Labour’s economics policies now that Varoufakis is advising Corbyn. Interestingly, the Greek is an alumnus of and former lecturer at the University of Essex. Wonder if he’s a friend of Prem Sikka? Richard March 1, 2016 at 1:30 pm “The less UK government debt there is the more financially secure we are.” Didn’t he have a whole series of posts about how reducing government debt would cause financial meltdown because the whole monetary system is based on gilts? Luis Enrique March 1, 2016 at 1:38 pm why a certainly level of government debt might be useful: http://www.nber.org/papers/w22044 (this does not mean there is never such a thing as too much govt debt) Andrew M March 1, 2016 at 1:40 pm Tim, Since this is indeed a common misconception, perhaps you could expand upon why it is such a bad idea? I would imagine our national financial security depends more upon our productive capacity than on our balance sheet, but a full explanation would be welcome. Surreptitious Evil March 1, 2016 at 2:18 pm Since this is indeed a common misconception, perhaps you could expand upon why it is such a bad idea? It’s not that it is a bad idea, although there are limits, as Luis pointed out (and although low govt debt does not translate to personal financial security, even on average, very well – and a dynamic market in gilts has its uses for normal peeps at times). It’s that it is the complete opposite to everything the LHTD has ever suggested before (especially his deliberately inflationary variations on a name of, but not, Quantitive Easing.) Rob March 1, 2016 at 4:04 pm Perhaps his blog is actually written by several people, and there is a viscous power struggle going on at the moment for control of it. BraveFart March 1, 2016 at 4:10 pm viscous power struggle Quite possible, given the turgid and treacly nature of Murphy’s prose Ian B March 1, 2016 at 4:51 pm Less government debt is indeed better. In a rational economy there would be none at all, at least over the medium and long terms (i.e. there might be temporary borrowing for specific purposes which is then paid off). Any entity desiring to earn interest on their capital should invest in the private sector. I am intrigued indeed as to why Tim or any classical liberal would think otherwise. It’s worth remembering that the interest on a government bond is not the same kind of interest as normal interest, since it is not a share of the profits from productive investment (I lend you money to build a widget factory, I get interest from your successful widget production). It is, rather, a charge levied on taxpayers. So. The Good Thing about government debt is..? Ian B March 1, 2016 at 7:34 pm Well, that produced a flurry of answers. DBC Reed March 1, 2016 at 8:34 pm Why does the government need to be in debt? It can create its own money. Better than letting the banks create it then borrowing off them (at interest). Remember: All you think you know about Economics is wrong. diogenes March 1, 2016 at 10:51 pm Next week, Murph will advocate compulsory purchase of gilts by UK citizens and firms to stabilise tax revenues BlokeonaMotorway March 3, 2016 at 1:37 am @Ian B Sod it, I’m a bit pissed at the moment, so I’ll bite; Any group of stationary bandits may encounter a situation whereby it is expedient to borrow money from outside the group instead of having to raise it directly from its prey, avoiding the risk of both predator and prey discovering just how sharp agricultural tools can be. That is, it’s cheaper all round. This explanation involves neither Puritans nor the McKinnon Doctrine, so you might have missed the opportunity to fucking think it through from the perspective of a rational fucking economy, whatever the fucking fuckity fuck you might believe that to actually be. As for coupon payments received being qualitatively different , somehow, depending on their underlying source. I really can’t be arsed, and will simply refer you to my first sentence. C’mon Ian, apart from the usual monomania ‘cos it’s the internet, you haven’t thus struck me as actually being stupid to LHTD values thereof, but fuck me. And the poison’s in the dose, anyway. Did I mention I was pissed? Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment Name * Email * Website Save my name, email, and website in this browser for the next time I comment.