Paying off the national debt
Paying off the national debt
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toasty

Original Poster:

8,405 posts

250 months

Monday 23rd July 2018
quotequote all
Would it be ruinous to the country to pay off all or some of the national debt by printing more sterling?

£48bn, or thereabouts, seems an awfully hefty chunk of change to be paying in interest each year. Would a period of hyper inflation be that much worse?


The Leaper

5,708 posts

236 months

Monday 23rd July 2018
quotequote all
Won't happen: no votes in it.

R.

The Leaper

5,708 posts

236 months

Monday 23rd July 2018
quotequote all
Won't happen: no votes in it.

R.

rossub

5,963 posts

220 months

Monday 23rd July 2018
quotequote all
I can’t even begin to imagine the consequences of that hehe

Welshbeef

49,633 posts

228 months

Monday 23rd July 2018
quotequote all
Remember it’s like a very long mortgage.

You invest in a massive scheme say a totally new motorway or whatever the benefit that will bring in is over future decades as it enhances ultimately the tax take.

Will we ever clear it? Only if we don’t invest in big projects and instead opt for rolling repairs.

sidicks

25,218 posts

251 months

Monday 23rd July 2018
quotequote all
Welshbeef said:
Remember it’s like a very long mortgage.

You invest in a massive scheme say a totally new motorway or whatever the benefit that will bring in is over future decades as it enhances ultimately the tax take.

Will we ever clear it? Only if we don’t invest in big projects and instead opt for rolling repairs.
The majority of the debt is not due to infrastructure investment, it’s due to decades of overspending. That’s very different.

Welshbeef

49,633 posts

228 months

Monday 23rd July 2018
quotequote all
sidicks said:
The majority of the debt is not due to infrastructure investment, it’s due to decades of overspending. That’s very different.
Veery true

But it “should” be due to investment

CoolHands

23,491 posts

225 months

Monday 23rd July 2018
quotequote all
The US deficit is more than 10 times ours, and they seem ok

rossub

5,963 posts

220 months

Monday 23rd July 2018
quotequote all
That’ll be because their economy is 10 times the size as well!

Simpo Two

92,807 posts

295 months

Monday 23rd July 2018
quotequote all
Imagine a country that's trading in the black. Wow.

I was in Norway last year; apparently they invested some of their oil revenue in the markets and take a nice return each year.

And our North Sea oil profits are... where exactly?

CzechItOut

2,156 posts

221 months

Tuesday 24th July 2018
quotequote all
The Leaper said:
Won't happen: no votes in it.

R.
There's no votes in freeing up 10s of billions of pounds of taxpayer money to spend on real stuff (NHS, schools, roads etc.) instead of interest payments?

CzechItOut

2,156 posts

221 months

Tuesday 24th July 2018
quotequote all
We've had £375bn of QE over the last decade without a noticeable increase in inflation.

Therefore, why couldn't we do the same to pay off a chunk of the national debt and reduce the interest payments?

DonkeyApple

69,988 posts

199 months

Tuesday 24th July 2018
quotequote all
CzechItOut said:
We've had £375bn of QE over the last decade without a noticeable increase in inflation.

Therefore, why couldn't we do the same to pay off a chunk of the national debt and reduce the interest payments?
Which third party is going to rollover your debt if you have a systematic currency devaluation program running? wink

The only reason QE didn’t trigger default was because everyone else was doing it in the West and the East needed the West to keep consuming.

CzechItOut

2,156 posts

221 months

Tuesday 24th July 2018
quotequote all
DonkeyApple said:
Which third party is going to rollover your debt if you have a systematic currency devaluation program running? wink
Isn't the other side of that argument, who will lend us money if they have no chance of ever receiving their capital back?

DonkeyApple

69,988 posts

199 months

Tuesday 24th July 2018
quotequote all
Simpo Two said:
Imagine a country that's trading in the black. Wow.

I was in Norway last year; apparently they invested some of their oil revenue in the markets and take a nice return each year.

And our North Sea oil profits are... where exactly?
All around you, everywhere you look.

The issue with comparing the U.K. to Norway is that as there are only 8 people in Norway, 3 buildings and a road there isn’t much you need to spend money on. biggrin

The best analogy is the difference between a household winning the lottery versus the NHS staff pool winning. One group gets more money than it can ever possibly sanely spend whereas in the other they each get a chuppachup.

I’m quite sure we have pissed a lot of oil revenue up the wall but it’s not as bad as comparing Norway directly to the U.K. and thinking the difference is due to fiscal mismanagement.

Welshbeef

49,633 posts

228 months

Tuesday 24th July 2018
quotequote all
Simpo Two said:
Imagine a country that's trading in the black. Wow.

I was in Norway last year; apparently they invested some of their oil revenue in the markets and take a nice return each year.

And our North Sea oil profits are... where exactly?
https://www.nationaldebtclocks.org/debtclock/norway

No they are not instead they are 29% debt to GDP.

loafer123

16,731 posts

245 months

Tuesday 24th July 2018
quotequote all
CzechItOut said:
DonkeyApple said:
Which third party is going to rollover your debt if you have a systematic currency devaluation program running? wink
Isn't the other side of that argument, who will lend us money if they have no chance of ever receiving their capital back?
They have 100% certainty of receiving their capital back, it just won’t be worth as much!

More seriously I do think this is actually a reasonable bet. Inflation, as we have seen in Japan, is resolutely low and creating GBP to take our own held debt from 33% to, say 50% seems to me to be fairly low stress, especially with Brexit as a decent excuse. I suspect the next Euro crisis will also provide cover.

I had a lot of discussions about it on FT Alphaville back in 2008/9 and no one could really come up with a decent reason why not.

rossub

5,963 posts

220 months

Tuesday 24th July 2018
quotequote all
Welshbeef said:
Simpo Two said:
Imagine a country that's trading in the black. Wow.

I was in Norway last year; apparently they invested some of their oil revenue in the markets and take a nice return each year.

And our North Sea oil profits are... where exactly?
https://www.nationaldebtclocks.org/debtclock/norway

No they are not instead they are 29% debt to GDP.
The interest on their debt is probably less than the returns they’re getting from the oil/gas investment fund - makes more sense to borrow than dig into their capital. I remember reading years ago that their fund was worth around £400bn. No idea what it is now.

sidicks

25,218 posts

251 months

Tuesday 24th July 2018
quotequote all
CzechItOut said:
We've had £375bn of QE over the last decade without a noticeable increase in inflation.

Therefore, why couldn't we do the same to pay off a chunk of the national debt and reduce the interest payments?
What would inflation have been without QE? Possibly negative?

The thing about QE was that it was positioned as a temporary solution which would be unwound at a later date. When you strat printing money with no intention of unwinding this in the future, that’s an entirely different situation.

Welshbeef

49,633 posts

228 months

Tuesday 24th July 2018
quotequote all
rossub said:
The interest on their debt is probably less than the returns they’re getting from the oil/gas investment fund - makes more sense to borrow than dig into their capital. I remember reading years ago that their fund was worth around £400bn. No idea what it is now.
But their tax rate is huge relative to ours