And what, anyway, does this debt represent? It is the money created by the government as a result of its spending not yet taxed back by it. It is, in effect, the national money supply.
Why has that increased? There are two main reasons. One is that commercial banks have not created enough liquidity to ensure the smooth operation of the national economy.
The other is that the amount of money needed to provide liquidity within the economy has increased because what is called the velocity of circulation of money has slowed considerably since the global financial crisis, but also because since the use of cash declined considerably, more money is required to compensate for that. The government has provided it by not taxing back money it has created.
OK, that’s the money equation. MV=PQ – which on other days he denies as being Friedmanite neoliberalism.
Anyway, just take what he’s said there seriously. The national debt is the money supply that government hasn’t taxed back yes. It necessarily rose because velocity of money circulation fell. OK, so what happens when V rises? Then we’ve got to do QT, plus pay down the national debt, obviously.
And guess what? The US velocity of money is increasing and so I’d assume that the UK one is. At which point Ricthie’s own argument should lead to him arguing to pay off some of the debt. But it never will, will it?