There’s the actual difficulty

Has anyone ever met these people with money to spare? Have the monthly bills arrived in Ely and he’s wondering why, as the polymath of the fens, he hasn’t got the pile he deserves so the envy has kicked in?

Worzel’s comment in spades – It’s as though the great Gideon Gono , governor of the Central Bank of Zimbabwe under ‘Bob’ Mugabe had been turned into an LLM.

Let’s take a closer look – apologies to those of a sensitive disposition.

All savings deposited with the UK government are part of the UK national debt.

I say that for good reason, and that’s because most people do not understand that simple, straightforward statement of fact.

I think most people do – I’d question whether you understand the implications of that.

If we understand the national debt to be money owed by the government to people who deposit funds with it, and that is what, at present, we describe the national debt as, then things like Premium Bonds are part of the national debt because you can go and buy a Premium Bond, you can save with the government as a result, and as a consequence, the amount of the National Debt goes up and, as a consequence, you, as the owner of a Premium Bond, become one of those people who is causing nightmares to right-wing politicians, journalists, commentators and others, all of whom are screaming that we must repay the National Debt because it is a burden upon our grandchildren.

No – what most people are saying, rather than the Strawman you seem intent on creating is that we must retain the ability to repay the debt if it is called in – Perhaps you like going to the IMF but I’d rather not.

You might plan to leave those Premium Bonds to your grandchildren in your will, and if you do, your grandchildren will thank you because they have very obviously got monetary value. They are a savings account that you may wish to pass on. But the point is that, apparently, they are a burden on your grandchildren.

They are realisable – they are a liability, not an asset. If those grandchildren want to retain them and rely on ERNIE giving them a ‘dividendd then that’s great but surely any accountant knows they are a liability, not an asset?

It’s a very interesting idea, isn’t it, that they are burdened by you giving them a savings account?

What does this even mean? Are we going for a record number of straw men in a post?

Or is it that other children are burdened by the fact that they’ve got to repay your grandchildren the savings account that you held with the government?

I’d hope if I want to redeem the Premium bonds there’s enough funds to get my money back and David Lammy hasn’t spent it all on reparations to Grenada.

Look, none of this does make any sense at all; let me be clear.

What I’ve just said is complete nonsense in the sense that you are not causing a problem by saving your money with the government.

Strawman Number 3 – has anyone said the Savings are an Issue?

If you, instead of saving your money with the government, went into Barclays or Lloyds or NatWest or Santander or whoever you might choose to bank with and placed your money on deposit with them, there would not be hordes of commentators and financial journalists saying, “Oh, the borrowings of these banks are out of control. We must ensure that they repay all their depositors or they’re about to go bust.” Not in the slightest would they say that. They would, in fact, celebrate the ability of those banks to attract deposits which supposedly strengthens their balance sheet because they have a hard core of depositor funds on which they can rely if anything ever goes wrong in the bank.

Indeed – 85K of all savings is backstopped by the FSCS which is ultimately funded by the taxpayer. I do think people worry about the ability of banks to repay loans. Remember First Republic or Silicon Valley Bank in the US? Northern Rock? I know he’s ignorant – but he seems completely unaware of goings on in the Real world.

Yes, that is really true; “they can rely” because you are a creditor of the bank, ranking not far ahead of the shareholders if the bank was to go bust. You provide the bank with security.

Well, the deposit that you provide with the government is very similar. You save with it. You provide it with money. It increases the security of the government.

He just doesn’t get it at all does he,.

It does also provide you with a very safe return for your money because there is only one institution in the whole of the UK that cannot go bust. And that’s the government, because it can always create some more money to repay you, whatever sum it owes you, whatever happens, and no bank can do that.

It can absolutely go bust- as both Zimbabwe and Venezuela prove. Despite the absurd notion that they somehow ‘vindicate’ MMT they don’t and they are clear limits on the ability of any state to create debt, especially one bedevilled by as many issues as the UK.

So, what is wrong with saving with the government? Nothing at all. In fact, my argument is that we should probably have more national savings in this country. Not only of Premium Bonds, but National Savings and Investments accounts, and even more government bonds or gilts. Those, too, are just savings accounts. You don’t buy many of those, I suspect. Less than 1 per cent of all government bonds and issues are owned by individuals, and most of those individuals will, almost inevitably, be quite wealthy because you have to be a pretty sophisticated investor to buy them in most cases.

They’re selling some Low IR gilts through platforms lie Wisealpha so that is untrue – GILTs are often bought by institutions but that’s largely due to government guidance on solvency.

Instead, the vast majority of the ones that are owned by people in the UK are owned by UK pension funds, banks, or life insurance companies. Why do they own them?

Because the law drawn up under Gordon Brown when he, and people ideologically aligned to him like yourself forced them to when you stole private pensions to create a Left wing Client state?

Because they are the bedrock of private pensions.

We’d best keep the value of the currency stable then hadn’t we?

They are the bedrock of the insurance funds that companies need to maintain if they are in that industry to guarantee that they can make payment out when claims arise.

And they are the basis on which the banking system of the UK operates when it comes to overnight banking arrangements, which are too complex to discuss in detail here, but which are a necessary function of the whole banking arrangement and for which purpose gilts are needed.

All of which is utterly irrelevant to the screed at hand

They’re also required by foreign governments who wish to hold sterling and foreign companies who wish to hold sterling. They don’t want to hold that in the bank. Why? Because banks can go bust and the government can’t. So they hold bonds instead.

Again not sure of the relevance of this to the rest of the Issue – Bait and switch.

But all of them are doing one thing. They are saving with the government.

That is what the national debt is. It’s a savings account. And yet, we obsess about the fact that it’s terrible.

We wouldn’t with anyone else. Why did we do it with the government? Because, well, I don’t know why. I said because, and then I ran out of steam because there is no explanation for this paranoia about the national debt.

Because it’s a burden on taxpayers – not on shareholders or anyone else. The future cost of items like public sector pensions is horrific. The last thing we want is to burden additional future liabilities on to the balance sheet.

Except, perhaps – and this is a big perhaps -we are paying too much interest on it at present. And that is undoubtedly true. The government is paying too much interest.

But everyone in the UK economy is paying too much interest at present because the Bank of England is keeping interest rates far too high for the sake of our economy.

We shouldn’t be obsessing about the fact that interest rates are too high for the national debt’s sake. We should be stressing that interest rates are too high for people who’ve got mortgages. We should be stressing that interest rates are too high for business, whether small or large. We should be stressing about the fact that far too much money is being diverted out of the productive economy and paying wages and everything else, or funding the growth that we want, to instead be used to pay interest on passive savings accounts. So yes, there is a problem with the cost of the national debt, but it’s a much bigger problem than the cost of the national debt. It’s the cost of interest.

I think a cut is coming but with unfunded increases in public sector pay still working through inflation is far from being slain. The cost of Net Zero is likely to run into Many hundreds of trillions. That is not factored into inflation calculations at all.

So, let’s stop this paranoia about the national debt. Let’s celebrate the fact that people want to save money with the government and encourage them to do so because it’s a great place for them to save. Let’s find constructive uses for that money, which is something I’ve long proposed.

One thing you do not do is spend the money as though it can be spunked away on your pet projects. the impact on savings culture of not being able to meet liabilities or a currency collapse is inestimable. And we know in the real world, as Worzel pointed out in examples like Zimbabwe or Venezuela this can happen.

That money should actually be used for positive engagement. For example, there should be savings accounts to encourage investment in schools, hospitals, the Green New Deal, transport, everything else that we need as communities, and this saved money could become the capital for that. But whatever we do, let’s stop being silly about the national debt.

It’s just our savings. It’s private wealth. And the only thing we have to make sure about is that it’s put to good use. And then we should celebrate the fact that the government can do that.

Is there any asset type he hasn’t looked to loot? Firstly, private pensions, then ISAs, now National savings and investments. Unrealized gains on things like houses are surely next.

The man is an absolute moron ‘sans pareil’ anywhere in the world – his university needs sanctioning and its ability to award degrees overall removed. This analysis would shame a Year 9 economics student.

“You might plan to leave those Premium Bonds to your grandchildren in your will, and if you do, your grandchildren will thank you because they have very obviously got monetary value. “This is wrong you cant inherit premium bonds as such as per ns&i “Premium Bonds can be held by NS&I for 12 months after death. During this time, they are still eligible for cash prizes. After 12 months have passed, the executor of the estate or a nominated beneficiary can contact NS&I to claim the prizes and cash out the Bonds. ” ie they get cashed out.

I’m not sure that he’s simply an evil cunt and that’s the end of it. I think he’s an extreme example of Dunning-Kreuger.

Most of us who think we can think dream up simple “solutions” to complex problems, solutions which it seems have never occurred to or been tried by anyone else in the entire history of humanity. Or we latch onto other people’s simple solutions, most of which originated in the brain of Marx. Or we decide to “give peace a chance” and write Imagine, because it’s nice. This describes the teenage and student hippy/revolutionary.

As we make our way through life we have experiences and encounter views which are dissonant with our simplistic world view. Then, if we’re lucky, we encounter people who challenge our views with points and examples that are undeniably correct. In this way we are disabused of our simple delusions and start paying closer attention to the way the world actually works.

Unless, that is, we are absolutely in love with our own moral rectitude and live within a structure that makes it possible to explain away all dissonance, no matter how fatuous those explanations may be. Large, bureaucratic organisations provide the ideal structure for this, because their primary purpose is to protect their members from the consequences of any failure, and this includes failure to recognise objective reality.

Poor ickle Murphy. He’s never stood a chance. The best thing he could do would be to read, and understand, Sowell’s Knowledge and Decisions. Unfortunately, were he to do that, he would lose his protective cocoon. Then what would he do?

@Norman “For every complex problem there is an answer that is clear, simple, and wrong.

H. L. Mencken”

Is anyone following the tosh he’s putting out on YouTube? In one outpouring he claims that there is no need to include accrued state employee pension benefits as a liability, as they will be met from future taxation! He rally hasn’t a clue! Still, it’s an opportunity to vote it down, or even leave a comment…;)

@BiS

No, he gets to spend your savings, you don’t. If you want it back in the future you’re a neoliberal fascist. The second-order effects on propensity to save are lost on him.

Speaking narrowly like an accountant…

I give the government £10. It then has a new asset of a tenner in the hand, and a liability of owing me my tenner back, (plus whatever interest was contracted, but let’s ignore that for a moment).

The government now owes more money to its creditors, so it is correct to say that it’s debt had increased. That’s the narrow view of the accountant on one side of the ledger and it’s technically correct. The fact that Net Assets of the balance sheet have not changed is irrelevant to that narrow contention… debt has increased.

The real question, as others have alluded to, is whether whatever government does with that new cash asset yields better than the interest commitment on its debt. That’s where the politicians come in… that £10 was spunked onto project XYZ and the wonderful benefits from that are never going to be expressed in a quantifiable manner.

And if the original lender wants their tenner back they can either whistle for it or be paid out from the loan providee by some other schmuck.