The new money in question can be left outstanding as owed by the government to its central bank, or the government can issue bonds or gilts (as they are called in the case of the UK) to clear that balance it notionally owes to its central bank, which is the Bank of England in the case of the UK.
In either case, the cumulative deficit incurred is described as the national debt, although it does not, as such, represent borrowing.
That is because the sum owed by the government to its central bank is a balance that disappears if the activities of the two are consolidated, as is always technically possible in accounting terms (and accounting is what is being discussed here). Consolidation is what happens if a single set of accounts for the government as a whole is created. The asset of the central bank that the government owes to it is, in that case, matched by the liability the government owes to the central bank: there is, in net terms, no overall liability as a result.
So, you know, the folks out there expecting the government to pay them back their £2.5 trillion are just shit out of luck, eh?
Bonds are issued purely for ornamental purposes? Is this how he used to do accounting for his clients?
And the debts owed by the Bank of England to all the individuals holding pieces of paper saying “I promise to pay …” signed by the Chief Cashier of the Bank of England disappear in a puff of smoke as Murphy waves his magic wand.
“And the debts owed by the Bank of England to all the individuals holding pieces of paper saying “I promise to pay …” signed by the Chief Cashier of the Bank of England disappear in a puff of smoke as Murphy waves his magic wand.”
They already disappeared when we left the gold standard. You can’t get jack sh*t from the BoE for your tenner now. A newly printed tenner maybe. Nothing of actual value though, like gold……..
If the only institutiin to whom the government owes money was its own bank, then there never need be a debt.
But I want my sodding Premium Bonds cashed in when I ask !
Don’t forget there’s very strong evidence, even if anecdotal that he didn’t actually take the exams. He also flounced away from ICAEW membership so he arguably isn’t even an accountant, practising as he did under false pretenses. This post is arguably even more proof of that.
@ VP
I generally look down on accountants but I should expect that ICAEW would have had words if he ran a partnership claiming to be accountants without taking the exams
“Shit out of luck” and about to witness first hand a crisis of invertor confidence, systemic collapse of the financial industry and probably a global recession.
And so much for Government bonds being essentially risk free hence not needing higher interest rates to incentivize people to by them.
Somebody took and passed the accountancy exams under the name Richard J Murphy. Whether it was the Great Tuber himself remains slightly opaque.