Very fun indeed

The new Scottish pound:

The Scottish Pound would be entirely voluntary i.e. nobody would be forced to buy any so anyone could keep all their money in sterling (or anything else) if they so wished. However, if they wanted it then they would have to buy it with their existing sterling. That means that on Day 1 of its existence the Scottish pound (S£) would have 100% foreign reserves backing in the form of the sterling we used to but it.

OK, fair enough:

Fifth, ScotGov will and should run a deficit of up to 10% p.a. for the first few years of Indy. A state deficit is a good thing – it is the source of our money which is actually just IOUs from the state. It can do that for at least a decade before it reaches the average debt level of an EU member. This is also necessary in order to provide the additional S£ for all those folk that hung onto their sterling. Otherwise there will be shortage of S£ that will push it up in price in the FX market.

Gonna run out of that 100% reserve backing pretty quickly. And the value of a S£ when S is running an annual 10-% deficit is going to be interesting, isn’t it?

35 thoughts on “Very fun indeed”

  1. Gonna run out of that 100% reserve backing pretty quickly.

    Easy solution: Darien Scheme Part Deux.

  2. Erm…the UK has a pretty fucking substantial debt. Well north of a trillion quid. Scotland’s share of that is £X bn. Whether X is based on population, GDP, porridge production or ginger count – it’s a big number. From day 1 The People’s Democratic Republic of Jockistan is going to have a debt at least equal in % terms to that of the UK. Very likely much worse. Maybe £90bn? $100 bn? It will be denominated in Sterling. How by the power of Vectron are they going to service that and run a big deficit? Who is lending to a potentially insolvent and illiquid Scotland?

  3. One of the cute little assumptions being made is that they get to keep any public assets actually located in Scotland. But don’t have to pick up any of the debt at all as that’s run out of London.

  4. Tim – that’d fly for about a nanosecond.

    Crucially the UK’s debt will remain the UK’s debt. The UK will continue repay the holders of gilts. We would never allow Scotland to cover their 8% as a separate tranche as our credit rating and borrowing programme would be prey to Scottish default. We’ll cover the 100% and their 8% will be owed to us. It means Scotland’s birth debt would be to the UK and in Sterling. Any silliness about not repaying it would destroy overnight the goodwill and helpful attitude a rUK government might feel towards Scotland. It would the most cataclysmically short-sighted thing you could imagine for them to try going down that route.

  5. I didn’t say I agreed with it, only that that’s the assumption that this numptie is making.

  6. One of the cute little assumptions being made…
    Yes, that’s the way our poutine-wogs see it when they make noises about leaving. To tell the truth, we’d still be better off without them, even if they didn’t pick up their share of the debt.

  7. “How by the power of Vectron…”

    Shurely it’s by Grabthar’s hammer, by the suns of Warvan?

  8. Tim’s correct in his assumption. I don’t doubt that, after covering most of Scotland with windmills, they would also expect us to pay through the nose for their green energy to assuage our climate change commitments. Their share of the UK’s debt would be forgiven in exchange for a long lease on Fastlane, and in recognition of the ‘Scottish Oil’ that England looted over a period of five decades. Future fishing rights, as with oil, would remain theirs too.

  9. It’s “by Grabthar’s hammer, by the sons of Warvan”.

    As for Scottish debt, no doubt they would use the argument that since the Statute of Westminster 1933, as applied to the Dominions, effectively gave them independence without creating a subsequent debt obligation between the newly independent nations and Great Britain, the same should apply to any subsequent independence of Scotland…otherwise it’s unfair.

    Nicola Sturgeon and her band of demented porridge wogs are masters of the art of “The unfairness of Westminster on Scotland”.

  10. Actually the reason I support Scottish secession is that it will remove the insulation of the Barnett formula and all the notions of high public spending. On day one of a seceded Scotland the government can make all the leftish noises it wants but an indifferent capital market and finance sector will bring reality to the RISE/Green brigades and the commonweal clowns.
    The facts of life are capitalist and at present they don’t have to stand on their own two feet. Let’s do it now

  11. “The Scottish Pound would be entirely voluntary i.e. nobody would be forced to buy any so anyone could keep all their money in sterling (or anything else) if they so wished. However, if they wanted it then they would have to buy it with their existing sterling. That means that on Day 1 of its existence the Scottish pound (S£) would have 100% foreign reserves backing in the form of the sterling we used to but it.”

    How does that work then? The Scottish Government makes Bawbee Printer go Brrrr! and has lots of bawbees. Is it not going to spend them? Try and get stuff done with them? Give them to the alkies to spend on Buckfast? Pay people’s pensions in them? If they can only spend a Bawbee if they have managed to find someone with some hard currency to swap for it, then you might as well be spending hard currency surely?

  12. If you’re not forced to buy it, then you’re not forced to exchange your labour or your goods for it. So those people supplying their own labour, serology kits, office furniture or lecky etc to the Scottish Executive can ask to be paid in other currencies, can they?
    Chinese powders perhaps.

  13. “on Day 1 of its existence the Scottish pound (S£) would have 100% foreign reserves backing in the form of the sterling we used to buy it”

    “A state deficit is a good thing – it is the source of our money which is actually just IOUs from the state”

    So the Scottish Pound can be created at a point where there is no government state debt, but money can’t exist without state debt? Has he managed to contradict himself in a single report?

  14. Jim said:
    “How does that work then? … If they can only spend a Bawbee if they have managed to find someone with some hard currency to swap for it, then you might as well be spending hard currency surely?”

    I suspect your other bit is right – the Scottish government will use JockCash to pay people who can’t refuse. Bad news for Scottish pensioners. Even worse news for anyone living elsewhere with a Scottish pension. Be interesting to see whether the public sector workers get real money or JockCash.

  15. Suspect your other bit is right – the Scottish government will use JockCash to pay people who can’t refuse. Bad news for Scottish pensioners. Even worse news for anyone living elsewhere with a Scottish pension. Be interesting to see whether the public sector workers get real money or JockCash.

    Sure, but might work well for those with foreign earnings kept in foreign that have a holiday home in Scotland. A bit like the way the old Soviet block countries used to have an official rate of exchange and the backstreet rate was several multiples better.

    Alternately, stuff priced in JockCash would accept hard currency at a substantial discount to the “official rate”.

    Jocks stuck in Scotland would be a bit fuqued though.

  16. The Meissen Bison

    Why am I devotee of Tim’s blog?

    The Power of Vectron
    Grabthar’s Hammer
    The Suns of Warvan

    It’s the stuff you learn

  17. Bloke in North Dorset

    “ Jocks stuck in Scotland would be a bit fuqued though.”

    Unless they follow another other example of the Soviet Union, and in particular East Germany, and have the border guards’ guns pointing inwards Jocks won’t be stuck in Scotland.

  18. Unless they follow another other example of the Soviet Union, and in particular East Germany, and have the border guards’ guns pointing inwards Jocks won’t be stuck in Scotland.

    Welcome to Hadrian’s Anti-Fascist Protection Rampart Mark II with upgraded SM-70 anti-personel mines to prevent Republikflucht.

    “It is for your safety Comrade”.

  19. Debt and fixed assets are one thing but surely the real source of wealth for a nation, particularly a small one, is its human capital.

    So presumably wee Jimmie is intending to nail to the ground the feet of anybody in Scotland with marketable skills, ideas, intelligence or entrepreneurial flair.

    Bawbee, that doesn’t quite have the correct resonance. How about a Fuqued divided into a hundred Dariens, or maybe a Cumberland divided into a hundred Cullodens?

    After all, we all know who’s fault this disaster will be don’t we?

  20. It amazes be (but probably shouldn’t – for predictable reasons) that the SNP genuinely have not thought through the staring ’em in the face obvious questions about currency, debt, deficits, borrowing, lender of last resort, capital flight, security of their banking system, and managing a country’s money in general. Presumably they do actually want to become independent at some point? Or is this a some weird fucking Kabuki act? My vote says that they are zealots who lack any grounding in reality. Or more likely that the reality which the circumstances will dictate (sound money) are at odds with their religion (socialism). Fuck ’em. Let’s the rest of us buy popcorn and watch events unfold.

  21. The Lockdown bill is coming due.

    That will end Spud’s comedy script for Scotland quick enough.

  22. A Scottish pound?
    Given how strapped for cash they will be, this can only be called the Jockstrap.
    Hold Ref II with England voting also, and the Scots will soon get their independence.

  23. @ John Galt
    Is the SNP intending to make a takeover bid for Northumberland (which lies between Hadrian’s Wall and the Border). I think Earl Percy might have views on that.

  24. One hundred oats to the groat. Exchange risk can be resolved by fixing the currency against the Zimbabwe dollar.

  25. Presumably they do actually want to become independent at some point? Or is this a some weird fucking Kabuki act?

    The latter, since the SNP want the advantages of independence (autonomy, etc.) without paying the price of independence (fiscal responsibility, etc.). This is exacerbated by the fact that about half the SNP are “oot ooters” wanting both out of the UK AND the EU while the rest are fanatical Europhiles.

    This leads to them proposing seemingly impossible to achieve platforms such as “Independence within the EU, while retaining the pound sterling”. The conflicts, both political and fiscal would tear even more stable economies to shreds. It’s the equivalent of intending to fly by throwing yourself at the ground and missing*

    The art of the SNP is that they’ve managed to retain their seats in both the Scottish and Westminster Parliaments while promising the world, delivering nothing and continually bitching at Westminster while simultaneously being bailed out by them to the tune of £9 billion a year or thereabouts.

    * – H/T to the late Douglas Adams

  26. Is the SNP intending to make a takeover bid for Northumberland (which lies between Hadrian’s Wall and the Border). I think Earl Percy might have views on that.

    Wasn’t the whole point of the 1707 Act of Union to prevent the Scots destabilising the English by invading every time some bunch of South-of-Dover wogs threatened?

    Wassailing drunkenly over the Northumberland moors would hardly be an unusual activity for the SNP’s demented porridge wogs, regardless of the feelings of the Percy’s one way or the other.

  27. The head goblin of the Spiteful Nannying Party is adept at getting attention, remember her primary skillset is starting a fight in an empty room.
    They lost the last referendum decisively, despite everything in their favour, so the chances of them winning anything in the future is slim indeed.
    As regards Barnett formula, its not just Scotland, most of England is sudsidised by the SE profit making centre, which keeps the rest of the country going.
    As the SNP are mental centralisers who hate local autonomy, we need to write into law local control at shire level of most functions of the state and remove the minimums required so efficiencies can be made.
    As I’m approaching retirement age and have already been screwed by the panic merchants over reaction, the chances of me putting any of my remaining private savings where the SNP or other loons can get them are slim indeed.

  28. @ John Galt
    No that was the point of the union of crowns in 1603 – and it mostly worked when a Stuart was on the throne(less well when the claimant wasn’t).
    1707 was to sort out the Scots’ financial mess.

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