In the case of our so-called national debt, undoubtedly, the government has a credit, which is said to be a debt, but somebody else has a debit, and that is an asset. Now, that asset is private wealth, because quite literally what the national debt represents is money that people have chosen to deposit with the government for safekeeping.
That’s something which is identical to what happens with a bank. People can choose to save their money in a bank, and when they do, nobody goes around and says, “Oh, the bank’s in trouble, it’s in debt, it’s got to repay, everybody put money into it, and therefore if it doesn’t it will all go bust.” No, they don’t.
How do you think bank runs happen?
Sheesh
He apparently doesn’t understand the difference between insolvency and bankruptcy. Whatever solvent he used on his brain has caused insolvency there. Whatever he has used on his morals has caused bankruptcy.
“… what the national debt represents is money that people have chosen to deposit with the government for safekeeping”
Does anybody else agree with Captain Redbeard Murphy on this? And secondly, “safekeeping” and “government” are not words for the same sentence.
I’m really not sure what rewards are on offer for pursuing Ritchie, but I am glad that someone is doing it.
Bill G
That did make me chuckle I have to say. Tim has been doing it for years without any real reward but it certainly is a worthwhile endeavour!!
As for the post, hard to argue with Martin – is there anyone who thinks the money deposited with NS&I is an ‘asset’ for the government rather than a liability?
The government is already the ultimate safe place to put your money because they make the money and therefore can always repay you without fail, whatever happens, because they can always make some more if they need to repay you whenever you demand it.
I am guessing Weimar or Zimbabwe didn’t happen then?
So if we’ve got piles of money being saved with the government, do we have a government with a debt crisis when none of those people want to be repaid, they’re all very happy to hold their money there, and they don’t want it back?
So the cost of paying out interest or paying Premium bond prizes is not a liability? and NS&I bonds issued for a fixed term do have to be repaid – I’d be peeved if the government spent the proceeds and I couldn’t get the money back at the end of the term,
So, the truth is that we don’t have a national debt. We just have a National Savings Bank, and just as banks have creditors on their balance sheets for the sums that they owe back to the people who save with them, so does the government, but it doesn’t mean it’s in debt as such. It just means it’s operating a banking facility, and that’s what, in this case, the credit on its balance sheet means. There is no possible debt crisis in the UK created by people wanting to save with the government.
Wasn’t he saying just yesterday that Banks actually have no need of deposits whatsoever? Does the guy even proofread what he’s putting on to the screen? If anything his videos on Youtube seem to have made his writing even more sloppy than before.
Just a deranged imbecile with no understanding of either economics or money.
The government … make(s) the money and therefore can always repay you without fail, whatever happens, because they can always make some more if they need to repay you whenever you demand it.
Neatly confirms he doesn’t understand money.
What is money? A token of value that is readily, widely & confidently acceptable in commerce. Where does the value come from? From acts of commerce in goods & services.
So as Van_Patten points out, sure government can create tokens of value but government can’t create the underlying value. Creating more tokens just reduces the purchasing power of each individual token. And if government creates too many they won’t be confidently accepted in commerce, nor readily nor widely.
So no, government can’t just make some more without risking the collapse of the currency.
BiS
Very good point. Years ago when debating MMT’ers I was often confronted with the quaint notion that any amount of helicopter money dropped into society would automatically trigger the exact commensurate amount of economic activity, just like that.
These people are highly dangerous.
Bill G,
re Murphy and Tim’s pursuit of him
“The only thing necessary for evil to triumph in the world is that good men do nothing.”
I’ve just learned that Morocco, Tunisia and Lebanon have broadcasters in the EBU, so eligible to compete in tonight’s woke singing contest. They decline as they always have as Israel is allowed in.
Even when there was an Arab singer co-representing Israel.
But I digress.
I’m just making a prediction that by Monday our potato brain friend will be an expert on this contest and its politics. He won’t want to speak of the shenanigans but ‘will feel obligated to’.
How anyone could think this moron has useful financial advice to give is a mystery. But there are many gullible fools on t’internet (apart from the Liebour Party), who accept his distorted and idiotic musings.
It wouldn’t matter if he didn’t influence a certain subset of decision-makers – the danger is those creeps could believe his distorted ‘ideas’.
He’s a potentially dangerous influence on leftist politicians who should know better.
” People can choose to save their money in a bank, and when they do, nobody goes around and says, “Oh, the bank’s in trouble, it’s in debt, it’s got to repay, everybody put money into it, and therefore if it doesn’t it will all go bust.” No, they don’t.”
Has he forgotten that the job of a bank is to lend money as well as take deposits? That the money that gets deposited doesn’t just sit there in a little box marked ‘Mr Smith’s Bank Account’? If it did then yes, deposits wouldn’t really be liabilities because the money to repay depositors would always be there. A safety deposit box in effect. Whereas in reality as even Hollywood managed to work out nearly 80 years ago, ‘your money’ in a bank isn’t actually there any more, its in Mr Jones house, via his mortgage, or Mr Brown’s bakery via his business loan etc etc. So when loads of people have entrusted you with their money to look after, and you only have the cash to repay a proportion of them in full at any given time, then yes, deposits definitely are liabilities. Big ones at that……..I mean the collapse of SVB was only just over a year ago, it had many billions in deposits that it hadn’t even lent out again, so I’m guessing according to Spud that banking crisis was an illusion and we were all part of a mass delusion.
I was often confronted with the quaint notion that any amount of helicopter money dropped into society would automatically trigger the exact commensurate amount of economic activity, just like that.
It’s difficult to see how “just like that”. It can increase demand for goods & services. But since, at that point, there are no more goods & services in the economy, it must cause inflation until supply catches up with demand because there’s more money chasing what’s available to buy. Those who missed out on the helicopters just got poorer. Printing money is always a transfer of wealth from one group of people to another.
The Professor is again using Real World word meanings, rather than Neoliberal meanings. It is again He who is right, and not you. As it is written:
In the case of our so-called national debt, undoubtedly, the government has a credit, which is said to be a debt, but somebody else has a debit, and that is an asset
If I use my bank card to buy something nice, that will appear on my statement as a debit. It is clearly correct to call this debit an asset, as i now have something nice.
We need to de-stigmatise words such as debt and debit