Where does the money come from?

Discussion in 'Current Affairs, News and Analysis' started by old_bloke, Jan 25, 2010.

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  1. Can anybody tell me where all this cash comes from.

    Brown was having a "show and tell" on Tv at lunch saying:
    Afganistan - troops fine job, got all the kit , safe as houses, increase from 30 million to 2.4 Billion from the "Emergency Fund"

    WTF which fund is he on about ,...

    The reading now about Cameron giving a speech saying that

    So where is all this cash comng fom.

    I thought the world wasin a bit oa a recession and was shot a bob or two.

    Can anybody explain?
  2. We all give it to him. Joking apart, he sells gilt-edged government bonds on the international market to raise a loan, and then buys it back over 20 years or so, with our tax money. So I wasn't joking after all.
  3. Gilts. Government issuing paper which is controlled by the UK Debt Management Office (http://www.dmo.gov.uk/).
  4. By borrowing, he means created from thin air.
    Its called quantative easing I believe, otherwise known as smoke and mirrors.
    Brown is having the Bank of England print loads of new money which he then borrows on the never never
  5. Brown is borrowing money on IOU's to use as collateral borrow more money on IOU's…

  6. Perhaps it is going to come from here

    Warning to taxpayers to check tax codes

    Millions will need to check their coding notices carefully
    Incorrect tax codes may have been sent by HM Revenue & Customs (HMRC) because of a new computer system.

    The codes tell taxpayers how much their employers and pension firms will deduct in income tax in the coming financial year 2010-11.

    The Chartered Institute of Taxation (CIOT) says taxpayers could be asked to pay up to £108 a month too much.

    The Revenue said it had no evidence of a widespread problem but advised taxpayers to check carefully.

    More here: http://news.bbc.co.uk/1/hi/business/8478271.stm
  7. Where does the money come from? Other countries, apparently. Just like the old days.

    Except this time round, they're not just buying what we make. They're buying pretty much everything we have.
  8. From my buy-to-let days I kind of thought that it is/was illegal to use one form of credit to pay as a deposit to establish another credit line.. Or have things changed..?
  9. And isn't that sort of deception the thing that got us into this whole mess as well?
  10. Only if you're dull enough to buy the properties at the same time that everyone else is, i.e. jumping on the wagon after the train has left the station. The smart money will be out now buying back "Distressed" property from the very same people that they probably sold them to at the peak of the market, after having bought them during the recession of the 90's from other distressed sellers. One big vicious circle really. However, you're correct in surmising that the current climate has been generated by bad debt, which was largely taken by people who could ill afford it in the first place.
  11. Not quite.

    About 2/3 of government expenditure is funded through tax, NI, fire sale of gold reserves, flogging warships, renting out Gurkhas to the highest bidder etc, etc.

    The rest is funded by 'borrowing'. Except that it aint borrowing in any normally understood sense of the word. The bond markets wont touch the 6,000 quid a second that Gordon needs to borrow to keep paying all those carbon footprint reduction managers while funding the Indian space programme.

    Over 90% of government bonds are now bought, indirectly, by the Bank of England. The Bank pays for them by printing money under the 'Quantitative Easing' programme.

    The government is paying one third of its bills by printing the cash. This is commonly known as 'Mugabenomics' after dear old uncle Bob in Rhode, err I mean Zimbabwe who earned his country a place in the Guiness Book of Records for having the world's highest inflation rate.

    Quantitative Easing is supposed to stop next month. I'll eat my hat, pants and socks if that happens. The government simply won't be able to pay its bills without running the presses and bouncing pay checks aint going to happen in the run up to a general election.

    We're doomed I tell ye, doomed.
  12. Wot 'e sed...

  13. Except you need to add into that the banks were lending out money they didn't actually have to people who couldn't actually pay it back.
  14. Wordsmith

    Wordsmith LE Book Reviewer

    The underlying problem with UK PLC is what's called the structural deficit. That's what the government burrows to pay for money it can't raise through taxation, etc, even in the good times.

    Now a government with a bit of financial sense knows that there will be boom and bust and puts money away in the good days to pay for the bad times. It means that when a recession comes along there's enough in UK PLC's bank account to cover the increased money needed by the government. (Less tax take and more unemployment benefits, etc).

    In other words, even though there will be recessions, etc, a sensible government has 'budgeted' for the problem, and when the recession is over will be able to start putting money away for the next rainy day. Over the economic cycle, the books will balance and there will be no 'structural deficit'.

    A government without any financial sense (Hi Gordon) was burrow to pay for its grandiose spending plans even in the good times. It was running a 'structural deficit'. This means that even if there was no recession, UK PLC's debt was going to go up and up and up because Gordon was financing his public spending with money he did not have.

    We now are heading for exceptionally painful times because:

    (a) We have to pay back Gordon's burrowing for the structural deficit he ran up in the good times (when he should have been putting money away for the bad times).
    (b) We have to pay back the stupendous amount of money Gordon has lent/given to the banks (cos we ain't going to get all that back).
    (c) We have to pay back the money Gordon is burrowing to pay for the recession because he put nothing away in the good times. (Less taxes/more unemployment benefit, etc, during a recession).
    (d) When we've done all that we have to eliminate the structural deficit which means we can't afford the size of public sector we currently have.

    We're actually in a worse state than when dear old Dennis Healey had to go cap in hand to the IMF for a loan back in 1974 - and that had pretty painful consequences.

    We are heading for some seriously painful tax rises/spending cuts after the next election, whichever party get in. The Conservatives are only being half honest about the pain, and Labour are trying to pretend its not even going to happen.

    To say Gordon (Prudent) Brown has made a complete and utter bollocks of the economy is the understatement of the week.

  15. Yes AM I agree
    "We're doomed I tell ye, doomed."
    Brown/Labour have spent the Gelt for years ta cum.