Will UK debt ever come down?
Discussion
I found out today that UK government debt is more now than during covid. The interest being paid back is £10b per month.
Can you imagine what we could use £10b every month for.
Is politicians debating reducing national debt just fanciful and should we now start discussing an economy with debt that will never get paid back.
Can you imagine what we could use £10b every month for.
Is politicians debating reducing national debt just fanciful and should we now start discussing an economy with debt that will never get paid back.
In all probability no, it might on occasion appear to reduce but that's only political posturing.
There are a multitude of factors but uncontrolled immigration including legal immigration is one of them.
From the late 1990's I had a share of a manufacturing business in Poland but by 2006/07, we struggled to get staff as they had all left for the UK, they had been machinists etc in our factory but I don't know what a lot of them did in the UK but many I can think of had married young and often had young families who came with them, whatever way you look at it, they were never going to be net contributors after tax credits, help with housing, health and child care costs. I recall one guy who brought his mother over after and she had a plethora of medical issues, all landing on the Hants health system, he was working in a chocolate factory in Southampton so unlikely to be a mega earner.
Multiply this by X and add in the ones who don't work and add in the gold plated pensions of a bloated government and free money to Ukraine and no only will debt never be repaid, it is likely to get much more expensive as lenders will want more risk premium.
The debt contrary to some thinking is probably too big to inflate away.
It truly is a worrying situation especially as taxes will have to rise to merely service the debt.
The problem is that it gets built up over a long period ( 15 or 20yrs) and to deflate it would require austerity for a similar amount of time and that's not going to happen.
I recall standing behind an old lady in a chemist' and her, with pride telling the Pharmacist that she was on 17 different medicines, with government buying how much is that.
There are a multitude of factors but uncontrolled immigration including legal immigration is one of them.
From the late 1990's I had a share of a manufacturing business in Poland but by 2006/07, we struggled to get staff as they had all left for the UK, they had been machinists etc in our factory but I don't know what a lot of them did in the UK but many I can think of had married young and often had young families who came with them, whatever way you look at it, they were never going to be net contributors after tax credits, help with housing, health and child care costs. I recall one guy who brought his mother over after and she had a plethora of medical issues, all landing on the Hants health system, he was working in a chocolate factory in Southampton so unlikely to be a mega earner.
Multiply this by X and add in the ones who don't work and add in the gold plated pensions of a bloated government and free money to Ukraine and no only will debt never be repaid, it is likely to get much more expensive as lenders will want more risk premium.
The debt contrary to some thinking is probably too big to inflate away.
It truly is a worrying situation especially as taxes will have to rise to merely service the debt.
The problem is that it gets built up over a long period ( 15 or 20yrs) and to deflate it would require austerity for a similar amount of time and that's not going to happen.
I recall standing behind an old lady in a chemist' and her, with pride telling the Pharmacist that she was on 17 different medicines, with government buying how much is that.
Jumpingjackflash said:
I found out today that UK government debt is more now than during covid. The interest being paid back is £10b per month.
Can you imagine what we could use £10b every month for.
The national debt goes up on average 50-150 Billion a year (2001-2021) so we are getting that to use each year, less the 10 billion for interest. Can you imagine what we could use £10b every month for.
This new debt is new money 'created' we run a deficit pretty much every year, like the US and Japan etc etc.
It doesn't feel right compared to say your household budgetting but that's the status quo.
The way things are going (increased debt with not a matchingproductivity increase) the interest payments trend up ie get a larger and larger portion of the annual tax take, such that at some point in the future the interest repayments could be all the tax take, which leaves nothing left for any other publics services, defence health pensions etc.
But we just create/borrow more? Japan's debt to GDP is the highest I believe so perhaps watch them
https://economictimes.indiatimes.com/news/internat...
https://www.reuters.com/markets/asia/japans-debt-t...
No easy pain free solutions to this? just a political "not on my watch" self preservation outlook and the hope you aren't around when something big does happen.
One of those things to think about a lot or perhaps not at all?
Terminator X said:
Perhaps naive but what would happen if we simply stopped paying it?
TX.
I'm with you. Does it exist? If it was you or I drumming up proportional personal debt, you would soon run out of credit, so does our credit rating matter as we are infinitely debt ridden and debt growing so still people are "lending" to us.TX.
Billions, trillions, bazillions. Do they exist? When would lenders stop lending to us, the drunk in the bar?
Terminator X said:
Perhaps naive but what would happen if we simply stopped paying it?
TX.
Probably something worse than what happened last year with Truss/Kwarteng. Money markets lose confidence, crash the pound, inflation shoots up,etcTX.
Government debt may just be numbers on a spreadsheet, but there is a whole industry that trades government debt. Which is why money rules the world - politicians are just the public face of it. And when they don't do as they're told they're brought to heel pretty quickly.
Indeed, we all know we can't be seen to (extreme example) simply open up the printing presses and buy everything we need and not produce anything.
So the confidence in the pound would suffer and investment go elsewhere and if not reacted to the pound would suffer even more inflation.
If you look at Lebanon and places like that then you see things like the pension that people get and could live off, now just covers their food shop, ie it buys say 10% of what it used to.
If there were no consequences we could just keep issuing more debt and keep interest rates low.......we and the country can just borrow what we like to buy whatever we want, easy!
So the confidence in the pound would suffer and investment go elsewhere and if not reacted to the pound would suffer even more inflation.
If you look at Lebanon and places like that then you see things like the pension that people get and could live off, now just covers their food shop, ie it buys say 10% of what it used to.
If there were no consequences we could just keep issuing more debt and keep interest rates low.......we and the country can just borrow what we like to buy whatever we want, easy!
Tom8 said:
If it was you or I drumming up proportional personal debt, you would soon run out of credit, so does our credit rating matter as we are infinitely debt ridden and debt growing so still people are "lending" to us.
When would lenders stop lending to us, the drunk in the bar?
When they don't think they'll get their % interest or when they can get the same or more interest from somewhere else with the same or less risk. When would lenders stop lending to us, the drunk in the bar?
If we don't raise rates when the FED does then more money would move to US treasuries and away from UK gilts? Lot's of (most) things are linked to the pounds value, a serious drop in it would exacerbate the cost of living crisis. A full on armageddon currency crisis and currently huge pension pots could become a fraction of their value, All those £50K of premuim bonds, would still be £50K but might only get you a 20 year old Toyota Avensis etc etc.
It's not likely to happen any time soon, but as far as I'm aware that's what stops us going all out printy printy.
Terminator X said:
Perhaps naive but what would happen if we simply stopped paying it?
TX.
This is thing I don't really understand..... What would happen if the whole world just cancelled all debts that countries owed and started again? TX.
It's not like we owe Martians money who are gonna break our collective legs if we don't pay?
Jumpingjackflash said:
I found out today that UK government debt is more now than during covid. The interest being paid back is £10b per month.
Can you imagine what we could use £10b every month for.
Is politicians debating reducing national debt just fanciful and should we now start discussing an economy with debt that will never get paid back.
Probably not the uk’s an absolute mess, far too many people receiving handouts greater then the value they will ever contribute in taxes and then factor in things like foreign aid, test & trace app, bogus covid business loans among many many other wasteful clangers it’s no wonder this countries fCan you imagine what we could use £10b every month for.
Is politicians debating reducing national debt just fanciful and should we now start discussing an economy with debt that will never get paid back.
ked !! Bluemondy said:
Terminator X said:
Perhaps naive but what would happen if we simply stopped paying it?
TX.
This is thing I don't really understand..... What would happen if the whole world just cancelled all debts that countries owed and started again? TX.
It's not like we owe Martians money who are gonna break our collective legs if we don't pay?
You can tell I didn’t major in economics
Maybe one day they'll be a debt Jubilee.
https://www.lynalden.com/debt-jubilee/
"In the Athens of 594 B.C., according to Plutarch, ‘the disparity of fortune between the rich and the poor had reached its height, so that the city seemed to be in a dangerous condition, and no other means for freeing it from disturbances seemed possible but despotic power.’ The poor, finding their status worsened with each year- the government in the hands of their masters, and the corrupt courts deciding every issue against them- began to talk of violent revolt. The rich, angry at the challenge to their property, prepared to defend themselves by force. Good sense prevailed; moderate elements secured the election of Solon, a businessman of aristocratic lineage, to the supreme archonship. He devalued the currency, thereby easing the burden of all debtors (although he himself was a creditor); he reduced all personal debts, and ended imprisonment for debt; he cancelled arrears for taxes and mortgage interest, he established a graduated income tax that made the rich pay at a rate twelve times that required of the poor; he reorganized the courts on a more popular basis; he arranged that the sons of those who had died in war for Athens should be brought up and educated at the government’s expense. The rich protested that his measures were outright confiscation; the radicals complained that he had not redivided the land; but within a generation almost all agreed that his reforms had saved Athens from revolution."
It wasn’t necessarily out of kindness that rulers did this (although a significant subset of them aged well in history and were wise); it was basically just a solution to a societal math problem. It’s like if you run a computer long enough, eventually it starts to work less efficiently, as memory leaks and other issues build up. it starts to freeze and slowdown, frustratingly. It’s a mildly unstable system in other words. Refreshing the power and rebooting the system gets the computer running smoothly again.
Debt jubilees generally served that purpose; an occasional reset to wipe out some of the growing instabilities from prior generations, and begin with a cleaner slate and a renewed social contract. Otherwise these societal imbalances tend to cleanse themselves with more violent revolutions, with the many poor vs the few rich.
https://www.lynalden.com/debt-jubilee/
"In the Athens of 594 B.C., according to Plutarch, ‘the disparity of fortune between the rich and the poor had reached its height, so that the city seemed to be in a dangerous condition, and no other means for freeing it from disturbances seemed possible but despotic power.’ The poor, finding their status worsened with each year- the government in the hands of their masters, and the corrupt courts deciding every issue against them- began to talk of violent revolt. The rich, angry at the challenge to their property, prepared to defend themselves by force. Good sense prevailed; moderate elements secured the election of Solon, a businessman of aristocratic lineage, to the supreme archonship. He devalued the currency, thereby easing the burden of all debtors (although he himself was a creditor); he reduced all personal debts, and ended imprisonment for debt; he cancelled arrears for taxes and mortgage interest, he established a graduated income tax that made the rich pay at a rate twelve times that required of the poor; he reorganized the courts on a more popular basis; he arranged that the sons of those who had died in war for Athens should be brought up and educated at the government’s expense. The rich protested that his measures were outright confiscation; the radicals complained that he had not redivided the land; but within a generation almost all agreed that his reforms had saved Athens from revolution."
It wasn’t necessarily out of kindness that rulers did this (although a significant subset of them aged well in history and were wise); it was basically just a solution to a societal math problem. It’s like if you run a computer long enough, eventually it starts to work less efficiently, as memory leaks and other issues build up. it starts to freeze and slowdown, frustratingly. It’s a mildly unstable system in other words. Refreshing the power and rebooting the system gets the computer running smoothly again.
Debt jubilees generally served that purpose; an occasional reset to wipe out some of the growing instabilities from prior generations, and begin with a cleaner slate and a renewed social contract. Otherwise these societal imbalances tend to cleanse themselves with more violent revolutions, with the many poor vs the few rich.
BoRED S2upid said:
You can tell I didn’t major in economics
Wouldn't matter if you did as far as I can see! It's an inexact science, else it would all be under more control?Also we aren't well informed on the basics, whether that's on purpose or not who can say. I would say even most MP's haven't got any more clue than us?
Bluemondy said:
Terminator X said:
Perhaps naive but what would happen if we simply stopped paying it?
TX.
This is thing I don't really understand..... What would happen if the whole world just cancelled all debts that countries owed and started again? TX.
It's not like we owe Martians money who are gonna break our collective legs if we don't pay?
This is exactly what he wanted to do for the 3rd world 30 years ago
Bluemondy said:
Terminator X said:
Perhaps naive but what would happen if we simply stopped paying it?
TX.
This is thing I don't really understand..... What would happen if the whole world just cancelled all debts that countries owed and started again? TX.
It's not like we owe Martians money who are gonna break our collective legs if we don't pay?
Correct me if I'm wrong but national/government debt isn't a country lending to another country it's lent by investors and banks in the form of bonds so that means people like us via our shares and pensions, domestically and abroad.
I think there will always be a national debt in the same way that most people are always servicing a debt such as PCP or a mortgage. The more interesting thing to watch is the national debt vs the national GDP. At the moment I think it's over 100% which is not good at all but many countries are doing the same. It's like an individual earning 50k a year but servicing 60k in debt.
I think there will always be a national debt in the same way that most people are always servicing a debt such as PCP or a mortgage. The more interesting thing to watch is the national debt vs the national GDP. At the moment I think it's over 100% which is not good at all but many countries are doing the same. It's like an individual earning 50k a year but servicing 60k in debt.
hotchy said:
Who do we pay the debt too? Ourselves? Thin air?
We owe it to ourselves. The government borrows money by issuing interest paying bonds. A great many of these are bought by peope with cash who want long term interest. So if we 'just stop paying' as some have asked about, all these instutions would crash. Insurance and pension companies, banks, plus some overseas of course. hotchy said:
Who do we pay the debt too? Ourselves? Thin air?
It's not complicated. The people who lent it us. People or organisations. It's just a loan. We would effectively be defaulting on our loan or loans if we stopped paying. Now I dont know if anyone has ever considered this as a course of action - anyone in power. But it would in effect make the UK a turd. The GBP would tank and lose serious value. Anyone with a brain would flee the country or at a minimum the currency. That would cause all sorts of chaos with companies trying to do trade across our border either way. The other option is we just inflate it away. Or the MPs in power just ignore it and carry on as if nothing is there to worry about. In the meantime they continue getting handouts from companies looking for influence. And these MPs get rich while the UK gets shafted. Tony Blair is a multi millionaire now because he was the Prime Minister. No one thinks this is suspicious. Come on lads. Wake Up.A good link
https://www.lynalden.com/debt-jubilee/
and it expands (quite a scroll down) under the heading below the difficulty of not paying or a jubilee of sorts.
"Why Central Banks Can’t Outright Forgive Debt"
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