This is fun

As I have explained repeatedly on this blog and elsewhere, government spending is not funded by tax. It is effectively funded by government creating new money in the form of promises to pay (which is why a promise is printed on bank notes), which promise is cancelled either by the government accepting back the cash it created in payment of tax or by the issue of debt to the market (which simply defers the promise from the present to the future because right now the government has decided to not tax enough to fulfil the promise by demanding tax payment).

Notes in issue are about £80 billion. Annual debt issuance (new, that is) is what, £80 billion? And I’m really pretty sure that £160 billion is less than the £700 billion in tax revenue.

10 thoughts on “This is fun”

  1. Seems to invalidate his own concerns about the tax gap and his insistent demands for MOAR tax. I’ve asked the question of him before – if tax doesn’t pay for spending what good does it do to make me poorer if it isn’t going to make someone better off ? Answers came there none but plenty of insults. As i have previously said – to a person only equipped with a hammer (MOAR tax) every problem looks like a nail.

  2. Bloke in Costa Rica

    Are we absolutely sure the powers-that-be at Islington Poly are aware they have an impostor masquerading as an academic on their books?

  3. which is why a promise is printed on bank notes

    I knew what this promise to pay meant when I was about twelve. Why is he unable to understand it?

  4. @bicr – someone on here wrote to the technical college and got an interesting reply – i believe his post is funded by the eu if memory serves correct- so they don’t wish to piss the eu off by dumping him. As for their paying students they know macdonalds aren’t that fussy in their hiring practices.

  5. BiCR, re Islington Poly, I occasionally email his head of department with links and suggest that he’ll get some of the blame when Murphy eventually comes a huge cropper.

    I have also told him that when the crash comes I shall share my warning emails with any legal or academic authorities interested.

    I too am tired of being insulted by that offensive arsehole.

  6. –“Venezuelan state oil company PDVSA faces a $1.2 billion bond payment on Thursday that will test the ruling Socialist Party’s resolve to pay its foreign debt…most economists say a default is increasingly likely in the medium term as Venezuela’s collapsing socialist economic model has left the once-prosperous population destitute…”

    https://www.reuters.com/article/venezuela-bonds/venezuelas-pdvsa-1-2-bln-debt-payment-to-test-socialist-party-idUSL2N1N72ME

    Clearly “most economists” haven’t heard of Ritchie, else they wouldn’t be worrying about silly ideas like governments running out of money.

    Someone should tell them. They’ll be so relieved.

  7. Bloke in North Dorset

    If I understand Spud correctly, all Venezuela has to do is raise taxes then it will be able to afford to buy some ink so that it can print more money which will allow it to raise taxes again? Then it won’t need to borrow from those pesky foreigners who insist on being paid in Great Satan dollars.

    But then again Spud might be using a different stump for Venezuela.

  8. wat: stuff I read suggested that both China & Russia are subbing Maduro. I expect eventually China will present its bill which will say “All your oil are belong to us”.

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