And the second error is to presume that the money created by the Bank of England to buy these debts is itself debt. It isn’t. There are two reasons for saying so. The first is that banknotes are not in the national debt – and I will publish my explanation of this soon – and that since notes and the central bank reserve accounts which represent the new money created by the Bank of England for quantitative easing are both described by it as ‘base money’ – then that QE created money cannot also be included in the national debt. This is why the ONS keeps the gilts in its calculation instead, to suit the government’s political agenda, whilst wilfully misstating the debt as a result.
Because on Mondays all money is debt. That’s why the government can never allow itself to run a surplus because it would reduce the amount of money in circulation.
On Wednesdays the government creates money by spending it into circulation.
Oh, and QE? His chart shows that we’ve increased the base money supply by 40% of GDP. As it used to run around 5% of GDP that means we’ve something of a potential inflation problem – potential! – already built in……