The worrying thing is that this is actual advice to a would be independent government

It’s also unnecessary. Given that exchange rates are largely set by relative productivity rates after hot money flows are taken out of account

Err, no. They’re – largely – set by differences in inflation rates/interest rates, those two being rather intimately combined. The FX rate is a monetary phenomenon, thus influenced by monetary factors.

We can indeed look at the real exchange rate and productivity, but not really the nominal.

And last, there is the rather odd assumption that the Scottish people would not be willing to lend their own government money after independence. As in the rest of the UK there are substantial savings owned by Scottish people. My research has shown that maybe 80% of UK savings are tax driven as to their location. This is likely to be true in Scotland, therefore. If the Scottish government decided that it wished to change tax incentives in ISAs, pensions and its own range of savings accounts to encourage people to save with it then that would very likely be successful in raising significant funds for it. The dependence on foreign money markets could be eliminated.

Better still, my solution puts Scottish savings to work, when at present few of those savings will actually fulfil any useful function within the economy. Much will be lying dormant in bank accounts earning almost nothing. And by Saving for Scotland what people will also do is provide the capital for the solid foundation of their new state – and in the process help build it for the generations to come. As a move towards national solidarity little could work better.

And that hot money he talks about is oft referred to, more correctly, as portfolio investment, which is exactly what those savings he’s talking about are. So, we’re to solve that FX problem of portfolio investment by portfolio investment. Hmm….

14 thoughts on “The worrying thing is that this is actual advice to a would be independent government”

  1. there is the rather odd assumption that the Scottish people would not be willing to lend their own government money

    When is a Scotsman willing to lend anyone any money?

  2. Speaking as a Scottish person in the only sense he can mean (a resident of Scotland), I can assure him that there’s no way I would lend money to the Scottish government. Also, my savings are working very hard indeed, in actual productive activities, and don’t need to be confiscated.

  3. And last, there is the rather odd assumption that the Scottish people would not be willing to lend their own government money after independence.

    No, the Scots who actually have money certainly won’t. The brain drain and capital flight after an independence vote will be spectacular.

  4. Much will be lying dormant in bank accounts earning almost nothing

    The money is not making much for the owner of the account but you can bet the bank is making good use of it. That’s what banks do.

  5. “And last, there is the rather odd assumption that the Scottish people would not be willing to lend their own government money after independence. ”

    There’s a word I’ve never heard him mention. Confidence. And confidence is the root of all economics.

  6. It’s certainly the root of Spud’s majestic economic failure. Too few people have the confidence he knows blathering about to pay him to blather.

  7. He is brazen about robbing the people of Scotland. Is not Edinburgh Castle full of old equipment that would once have been used to punish so arrogant a thief as Spud?

  8. “And last, there is the rather odd assumption that the Scottish people would not be willing to lend their own government money after independence.”

    Well, I can only speak for myself, but I sure as hellfire wouldn’t lend that gang of charlatans a penny.

    (Then again, I don’t intend to recognise it as “my own government” either…)

    “Reading things like this makes me hope for Scottish independence, just to be able to stand back and watch.”

    If I didn’t live here, I’d be thinking much the same. It certainly holds a sort of morbid fascination.

  9. “Reading things like this makes me hope for Scottish independence, just to be able to stand back and watch.”

    Do you think the treasonous bunch of c*nts who are our government these days (both elected MPs and unelected civil ‘servants’) would let the Scots suffer the consequences of their own socialist tendencies? Of course they wouldn’t. At the first hint of the undoubted catastrophe that an independent Scotland would be (not because independence per se would cause catastrophe, but because an independent socialist Scotland definitely would be an instant basket case) all the usual suspects would be demanding the Uk Treasury bail them out, and our spineless political class would do as they are told. Just as they did when Ireland needed a bailout after the GFC, and look how much goodwill that got us, less than a decade later they were stabbing us in the back over Brexit.

  10. All those nice pension funds just sitting there….why he thinks they will still be there come Independence Day is another matter

  11. ‘all the usual suspects would be demanding the Uk Treasury bail them out, and our spineless political class would do as they are told’

    Well Jim, I’m naturally thinking of the present howls to lavish more and more and more money on Afghanistan. So yes, I agree Scotland would be worse.

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