He’s just so accurate

All our cash is included in the so called national debt.

Erm, right.

The United Kingdom National Debt is the total quantity of money borrowed by the Government of the United Kingdom at any time through the issue of securities by the British Treasury and other government agencies.

And if you think about Ritchie’s statement there it can’t be true, can it?

There’s some £600 billion or whatever of QE out there. Which is the creation of cash to buy gilts. If the cash is part of the national debt then the national debt must be £600 billion more than the amount of gilts out there. Which ain’t how we do measure it. Thus cash ain’t part of the national debt, is it?

And here is the Bank of England’s definition of the national debt.

Cash ain’t part of it.

Now, I am entirely willing to agree that cash is something entirely made up by the Bank of England (and the Mint) and that it is a debt, in that they do promise to repay the bearer. It’s just that it’s still not part of the national debt, even if it is a debt and is even national.

What Snippa’s done here is start with his poor understanding of theory, made a leap and not bothered to check whether he’s actually right.

10 thoughts on “He’s just so accurate”

  1. Dennis, Proven Correct In Most Things Most of the Time

    What Snippa’s done here is start with his poor understanding of theory, made a leap and not bothered to check whether he’s actually right.

    Who’da thunk it, eh?

  2. I have been bothered for several years by claims that a Sovereign State cannot run out of money and the not unrelated suggestion that QE is not debt. I doubt my economic background is up to it, but I was thinking ..suppose myself and a friend are sitting on a desert Island, wondering how to share the last coconut?
    Ok so reading that a Sovereign State cannot run out of money instead we invent a country ( Fuckallia )and a currency. Not much better off are we, that Coconut is now worth a Gazillion Fuckallian dollars but the future is not great.
    Of course this is too small …so how many more people have to turn up at the desert Island before Fuckallia becomes rich?
    Nope … you can cram millions of us only Fuckallia and we are still going to starve when the nuts run out. This makes me think that the ability to print money does not mean as much as people sometimes claim it does.

  3. A sells a tree house to B. For which B takes out a mortgage.

    A has cash (current account at bank) of £100. B has a loan mortgage of £100.

    For the intermediaries, bank X owes A £100, and is owed £100 by Bank Y. Bank Y has an asset of £100 owed by B, and owes Bank X £100.

    A’s cash is not included in the national debt.

    He’s allegedly a bean counter, he might want to get his head around Table C in this Excel link – it’s the UK national balance sheet from the ONS. From a few years back when they used to get the columns and rows the right way round, but little has changed conceptually.


    Rows 38 through 62 for the “money bits”.

    A’s cash above is cell J40. B’s mortgage is cell J54 (via F40 and F52 for the bank’s bit).

    Government debt is cell H53.

    [ Note that row 40 in total materially equals row 52 (ie all financial asset types are represented by their financial liabilities. ie, we know that money is mostly someone else’s debt, rather than piles of gold and silver. ]

    If you read between the lines, and remover the middle men, it’s individuals’ pensions that are mostly invested in Government debt (and private equities). In column M, create a formula in each row that adds together columns J, H and E (from row 39 down to row 62) – and it’s mostly there (materially at the trillions level).

  4. Bongo, I have so many stories, you couldn’t believe it! My favourite one involves my grandfather, a parabellum and loads of russian war prisoners.

  5. Love it Jussi, it would work in “The Italian Job” in place of “On days like these” if only Matt Monro could get his tongue around it

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