Government interest payments become somebody else’s income. They flow to the owners of government bonds and other savings, including pension funds, investment funds, banks and other financial institutions. But because financial wealth is distributed very unevenly in the UK, the benefits of those payments are also unevenly distributed.
I argue that this means higher government interest payments can contribute to wealth inequality. Those who already own substantial financial assets receive additional income, while households with little or no financial wealth receive very little direct benefit.
Is it the richer or poorer who save with government, buy gilts and NS&I etc?
Reading this stuff ls like trying to navigate a universe where logic works differently. It’s the 25th so I assume this is the “interest rates are too high because I say so” post wearing a different costume.
“I argue that this means higher government interest payments can contribute to wealth inequality. Those who already own substantial financial assets receive additional income, while households with little or no financial wealth receive very little direct benefit. [from government debt]”
Is the canary about to squawk? Or just keel over?
We solve this by giving the households with little a handout of enough money to buy government bonds with it. And means testing buyers of government bonds to make sure they’re not wealthy. Bingo – we just arrived at a total solution to how to deal with government borrowing fairly.
There’s a thought. Have a jar of Marmite.
The other thing he seems to be close to with that, is admitting that changes in the price of money can alter the benefits of having it now.
In a real way it is the poor, or some of us/them, who are borrowing the money in the first place via their elected representatives.
What the fuck does he think all this borrowed money is paying for? It’s not to keep the wealthy in yachts and butlers. Pretty sure the poor do ok out of the deal.
Of course one of his oft repeated mantras is that tax can be used to control inflation rather than interest rates. Putting to one side the lunacy of thinking you can dial up and down tax rates with the same relative ease and frequency that the BofE can change interest rates there’s still a glaring flaw in the idea. Which Murphy accidentally admits on his blog when discussing why billionaires don’t matter to the UK.
A contributor – “…tax on the wealthy has less effect on the economy than one might think… If you tax the wealthy, who have a low propensity to spend, it hardly matters”
Spud “Much to agree with”
And MMTs dirty little secret is out. If you rely on increasing taxes to control inflation, it isn’t going to be the wealthy you have to increase taxes on.
Wut? They are distributed evenly to the people who loaned money to the government, based on how much people loaned to the government.
Commie dick Murphy demands interest payments to lenders go to EVERYBODY, because it’s not fair that some people can’t loan money to the government.
Or something.
Worth pointing out that if the rich have lent their money to the government, they are as poor as church mice. Because the government has their money & all they have is a book-keeping entry. Money can’t be in two places at the same time.