We would never describe deposits with a bank as a threat to its viability and something that they must urgently pay back or limit in amount. So, in that case, why on earth are we saying that about this national savings bank?
Isn’t, umm, that the definition of whether a bank is bust or not? That it can, or cannot, pay back the deposits? That is, this is the very thing we do worry about with banks?
That’s only because we know that, like all savings accounts, the person depositing the money can at some time ask for it back. But we don’t say banks are in debt because they also owe the money saved with them back to depositors. So why do we do that in the case of governments?
Actually, we do, yes. Deposits are liabilities on bank balance sheets. They’re what the bank owes to other people. This is the basic point of double entry bookkeeping for banks.
To put it another way, almost everything politicians say about the economy is made up of convenient myths that they create that have not a single element of truth within them.
Snigger. Physician, heal thyself.
As a matter of fact, a country can’t have a credit card. It’s even questionable whether the UK has a national debt when what politicians describe as such is made up of all our notes and coins plus all the savings accounts that people have with the government.
I thought commercial banks made all the money In the economy, or was that last week? How can a national debt exist when the state doesn’t create any money?
Some of the savings accounts are literally with a bank, because that is what NS&I, or National Savings & Investments, which is what it used to be called, really is. Around £230 billion of the so-called national debt is made up of deposits with this state-owned bank.
So having siphoned off in his dreams ISAs and Pensions he’s coming for Ns&I savings, too?
Premium bonds are also part of this so-called national debt. I am pretty sure that most people who have such things have no idea that by doing so they actually own a part of the so-called national debt, but according to our politicians, they do.
The straw men are strong with this one
We would never describe deposits with a bank as a threat to its viability and something that they must urgently pay back or limit in amount. So, in that case, why on earth are we saying that about this national savings bank?
I think Tim has already handled that – besides which didn’t Gordon Brown save the world in 2008 by recapitalising the Banks to protect deposits? Was that another theme from last week?
Most of the rest of this so-called debt is made up of bonds. Saving in bonds is commonplace because most banks and building societies issue them. They’re pretty easy to understand. You save a fixed sum, for a fixed period, at a fixed rate of interest. They’re just savings accounts.
The only real difference between bank savings bonds and those issued by the government is that gov’t bonds can be bought and sold during their life because they are traded on stock exchanges. But they’re still savings accounts, just like those from banks and building societies.
If a Fixed income analyst gave this description of Bonds (certainly the second paragraph) after a week’s induction at a bank he’d be issued with a verbal warning.
And given that pension funds and life companies are the biggest owners of these government bonds we can be sure that they really are savings accounts – because our savings are what, after all, those companies exist to manage. So why do we call them debt?
When you are in a hole dig deeper
That’s only because we know that, like all savings accounts, the person depositing the money can at some time ask for it back. But we don’t say banks are in debt because they also owe the money saved with them back to depositors. So why do we do that in the case of governments?
Good luck asking as a Corporate bond holder for early redemption in many cases. His savings must be pisspoor.
It literally makes no sense to do so. But then there is something else really weird to note about this so-called national debt. This is that about one-third of it, or roughly £750 billion right now, is owned by the government itself. In other words, the government is saving money with itself, or it owes itself money, whichever way you want to look at it. In either case, who cares?
Is this some reference to QE? Anyone else know what he is talking about?
Saving with yourself is as economically meaningless as owing yourself money, so why do politicians pretend debt that the government owns exists when it really does not? The reality is that this debt (or these savings) is much less than what all our politicians claim.
I have some debts at the moment – I’m going to explain to the card companies that in fact these are all savings. I might even try it when the bailiffs are at the door.
Having said all that, let’s get back to this maxed-out government credit card story and let me ask a simple question, which is, have you ever heard of anyone who saved in their credit card account? No, me neither.
See above – I’m not sure this qualifies as a ‘straw man’ – what type of logical fallacy is he indulging in here I wonder?
In that case, and given that the government only provides savings accounts to people who want to save with it, it has nothing like a credit card. To suggest it has is utterly absurd.
What does it have then?
But, let’s for a moment assume that these politicians are right (I know, it’s hard to imagine, but do so, just for a moment). Assuming that they are, who is it that they think issued this credit card?
I guess the only bank that could would be the Bank of England. But the government owns that. Imagine for a moment having your credit card issued by a bank you owned. Do you think they’d get very stroppy with you about how you managed it? I don’t think so.
And do you really think they’d get tough on your credit limit in that case? I really do doubt that as well.
At times I regret the decision to close asylums
In other words, not only is there no credit card to worry about, nor is there any credit limit. And just to be clear, through the Bank of England the government can also set the interest rate it pays. If there was a credit card this one would be the best issued, ever.
The truth is that all this is absurd. There is no credit card. There is no credit limit on what our government can borrow. And, in reality, it’s borrowing a lot less than most other equivalent countries in Europe are and they’re generally doing a lot better than us.
Yes – the economies of Italy and Greece are doing brilliantly – the rolling power cuts coming in Germany are very helpful for an industrial nation as well.
So, what politicians are saying is total nonsense. They are telling you what might best be technically described as falsehoods. Other words are available and might be more appropriate.
That we have a debt problem is untrue. What we actually have are vast numbers of people who want to save thousands of billions of pounds with the government because they know it is the safest place to put their money.
I’d agree most current politicians are pathological liars – which is why as Tim says given them less power to do harm is fairly vital. You want to give them absolute power. Also – where’s this thousands of billions. I thought you said they were thousands on the verge of starvation?
What we also have is a track record lasting more than 300 years of the UK government always being able to repay sums deposited with it and without ever having any difficulty in doing so, not least because it can always create the money required to make that repayment whenever it wishes.
The past isn’t always a reliable guide to the future and in most instances you eschew any mention of it as vastly superior to the present
In fact, so good is the government at repaying deposits that most people in the UK would not save with a commercial bank unless they knew that the government was guaranteeing the first £85,000 of deposit that they saved with it.
Given what your policies have achieved – as the BiS says he has largely created the shit show that is the UK economy – there’s a very strong prospect that guarantee will be worthless in the next decade.
They don’t trust those commercial banks with their money unless the government guarantees the repayments owing by those banks. Saving with the government is that secure. It really is, ultimately, the only organisation most people ever trust with their money.
This could be true in his circles
Let’s also be clear that if the supposed cost of this national debt is currently high, that’s because the Bank of England wholly unnecessarily increased interest rates in a completely inappropriate attempt to control inflation, which those interest rate hikes could never achieve.
More absurdities from someone directly responsible for inflation through his policies
let me ask a simple question, which is, have you ever heard of anyone who saved in their credit card account? No, me neither.
I certainly did. I ran a sizeable credit (£5kish) on Barclaycard for years. The why: A credit card is a form of portable money. It’s also more acceptable for the payment of certain things (car hire etc) than debit cards. Since I was doing a great deal of travelling about & might need instant access to considerable funds in an emergency, I needed more than the credit limit of the card. It also meant I wouldn’t have to suffer credit card interest rates if I used it. Particularly for cash withdrawals where it supplemented my daily withdrawal limits. The advantages were greater than having the money in a deposit paying account. I can’t have been the only person doing this. It’s a logical thing to do if you’re living an uncertain life.
Typically brilliant and forensic fisking by VP.
It’s really time for ICAEW to look at his membership. He can’t even follow basic bookkeeping.
BF
Thanks – There’s actually about four more paragraphs but to summarise we can simply spend without limit and provide world leading public services with no issues – etc.
I do wonder about the ICAEW. This kind of publicity cannot be good for them. Might be worth dropping them a line. Although I am not a member could be a good way of getting back at him for what he did to Christie Malry among others.
Just looking at the ICAEW website and the facility to complain does exist although it’s usually due to some aspect of accountancy services which makes it slightly more complicated as he doesn’t provide such services (or hasn’t for many years and I maintain given his qualifications were obtained by nefarious means arguably never has)
I’ll contact their press office about members bringing the organization into disrepute.
“… more than 300 years of the UK government always being able to repay sums deposited with it and without ever having any difficulty in doing so …”
Nothing can ever happen for the first time? That’s useful to know.
“… it can always create the money required to make that repayment whenever it wishes.”
And nothing bad ever happened in the historical cases where people have tried this.
“as economically meaningless as owing yourself money”
I rent out a shop. I haven’t paid myself for the maintaince work I’ve done on the shop for years. I owe myself money. I can’t pay myself for the work done, because there isn’t enough money there, I can only pay myself in bits when the shop has accumulated enough. But I still owe myself money.
Also: When I went to Japan a few years ago I did indeed “save on my credit card” just as BiS did, as a PIN-protected piece of plastic was a lot easier and safer method of taking money with me that a pile of notes.
Newcastle United have recently barred a member for behaviours nothing to do with Newcastle United. Ok, they were gobby opinions on social media away from the football ground, but someone felt Newcastle United was not a safe space for the target of that gobbiness (a biological male trans woman woman whatever that is) if gobby Linzi Smith was allowed in.
The only way to ICAEW could bar Spud for hosting an intimidating blog (what PSR wants to do violently to Tories and Neoliberals, although they are non overlapping groups imv) and for other behaviours away from accounting, is if they felt ICAEW wasn’t safe and inclusive etc.
So no in my view, people shouldn’t be excluded from membership for what they do away from the stadium.
That post by Fatso might have been the most unbelievable I’ve ever read. And I’ve been reading that twat for more than a decade and a half.
This was in the same post, and is worth mentioning:
Wise economists (and there are, unfortunately, far too few of them) actually know that the government can never be constrained by debt because the government creates the money that we use, so it can always pay its bills.
Mr. No Sugar For You doesn’t understand the difference between creating money and printing currency, and he certainly doesn’t understand the mechanics of inflation.
@Bongo,
As an actuary, my behaviour away from work can certainly affect my membership, and potentially lead to disciplinary action, if it was deemed to discrediting the IFOA.
I do not see why the same would not apply to the ICAEW.
It certainly could Stuart. I just think it shouldn’t.
Kudos for persevering with the made-up names over there btw, some brilliant and thoughtful comments.
Well I’ve submitted a complaint via the ICAEW ‘contact’ page, highlighting some of his threads and identifying where they contradict the declared business values and standards of the ICAEW.
Rather than complaining to an accountancy body, which is something he no longer does, go straight for his pride and joy – the professorship.
Go through an application to do a postgrad at Sheffield uni go for a meeting with the applications officer / faculty. After some pleasant questions ask if Richard Murphy is actually a professor. On “discovering” this withdraw application telling them that any faculty employing such a dunce must have terrible teaching standards.
A few withdrawn applications for this reason and it’s goodbye professor Murphy and hello plain old Mr Potato
@Bongo
Unfortunately his new censorship policy means that I won’t be able to do that anymore.
Go through an application to do a postgrad at Sheffield uni go for a meeting with the applications officer / faculty. After some pleasant questions ask if Richard Murphy is actually a professor. On “discovering” this withdraw application telling them that any faculty employing such a dunce must have terrible teaching standards.
Pointing out to a bunch of morons that one of their own is a moron might not work all that well.
I did too, though in my case it was around 1p.
IIRC they’d manage to piss me off through incompetence (hard to believe that Barclays is ever incompetent, but anyway) so I stopped using the card and left a tiny credit there so they’d have to send me statements every month. I managed to keep it going for several years, until they introduced the annual fee and wiped it out.
It could be he’s hoping to be disciplined so he can play the martyr/victim card.
O/T, lol.
“A posh London clubhouse marketed as a a women-only space where the city’s most ambitious could rub shoulders with the likes of Amal Clooney and Gloria Estefan will be closing down after just a year after opening its doors. ”
“In August 2020, another American women-only club, The Wing, shut its Fitzrovia operation, and completely closed in 2022, following allegations of racism among its members.”
https://www.dailymail.co.uk/news/article-13069263/Women-clubhouse-offered-high-flying-Londoners-chance-rub-shoulders-Amal-Clooney-Gloria-Estefan-8-000-year-membership-shuts-lack-interest.html
Well I tried, or rather my alter ego did……all I got was a ‘I’m an accountant dont you know, now fuck off moron’ [I paraphrase].