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.