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What fun from a supposed accountant

First, they said that the national debt is now a little over £2,500 billion. As a matter of fact, it is not. That’s just what the Office for National Statistics (ONS) says it is, but they have got the accounting all wrong.

There are two massive adjustments required to that number. One is to take out what is called the Bank of England (BoE) contribution to the national debt. The ONS say that this is about £300bn. It isn’t. There is no such number on the BoE balance sheet.

In fact, this number only exists because the ONS refuse to recognise that the BoE has assets to match the liabilities that the ONS include in the national debt. Because the ONS refuses to recognise those assets it claims there is a debt when in real terms there is none.

Debt is debt, whether there’s an asset to match it or not. A company saying that the mortgage isn’t, in fact, a debt because, well, it owns the building, see? would swiftly be shouted down by their auditor. Debt is debt. Now, the net figure at the bottom of tge balance sheet will depend upon what assets there are to match the debt – but not the gross debt number itself.

It’s the usual Spud thing, reality changes to match the point he wants to make.

That takes about £300bn off the national debt. The second figure to take off is bigger. That is the money held on deposit by the UK’s commercial banks with the BoE. This figure is a bit over £800bn at present, having been £900bn a year or so ago.

This is not a debt because something. That something being tht as QE will never be reversde it’s not debt. But as we can see from Spud’s own numbers this hsa decreased by £100 billion. So, QE is being paid back – therefore QE is a debt.


6 thoughts on “What fun from a supposed accountant”

  1. Ah, book keeper thinking. Assets can only be exchanged for goods & services & there will always be insufficient surplus of goods & services in the economy to match the assets. Thus the true value of any asset is the utility it provides now in the present & nothing more. A tiny fraction of its book value. When you buy an asset you’re buying that future utility exchangeable for future goods & services.

  2. You are making me think of all those Roman roads and aqueducts BiS.

    I’ll agree that the empire had no success in flogging them off to the barbarians.

  3. It does lead me to believe if the maturity of the debt doesn’t match the incremental utility value of the asset over the period, you’re fucked.

  4. “That takes about £300bn off the national debt. ”

    Surely if you take off the debt you also have to let go of the balancing asset? A mortgagor can always make themselves debt free by letting the bank take the house (assuming the house is worth at least the value of the debt). Look Ma, no debt! Also: Ma, can I live with you?

  5. Tim

    You need to check the spelling – the resemblance to Murphy’s style is beginning to have me wondering

  6. Valuation is important. If the person repaying your loan is Spud, you would surely report the debt at a massive discount to par value. However, the underlying asset might be valuable once you remove the wall padding, the railway gear and the faeces’ stains on the walls. Maybe even the odd donkey dropping

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