QE for the people?

[unbeliever]

So does that mean that the cost of QE is added to the debt?

 

I think that's right. A good portion of the current state debt is held by the state bank. That's one of the reasons for doing QE. It pushes down the cost of borrowing for the state.

[Obelix]

So does that mean that the cost of QE is added to the debt?

 

There is not necessarily a cost as such, so no it's not added.

[Anna B]

I think that's right. A good portion of the current state debt is held by the state bank. That's one of the reasons for doing QE. It pushes down the cost of borrowing for the state.

 

So we owe the £1.6 Trillion debt + £375 Billion Quantatitive Easing on top?

[unbeliever]

So we owe the £1.6 Trillion debt + £375 Billion Quantatitive Easing on top?

 

No, as I understand it some of £375 billion is included in the £1.6 trillion. So the state essentially owes some of that money to itself and has the option of making it vanish. That's not without consequences, but it is possible.

 

We do owe more than £1.6 trillion if you include the off-books borrowing such as PFI. I think this adds up to about another £200-300 billion.

Add all that on and total state debt is about 100% of GDP. Which is a hell of a lot by historical standards.

 

Thanks again Gordon Brown.

Whilst a fair chunk of the £1.6 trillion was added to the debt after 2010, it almost all arises from the public spending deficit which was left in 2010 and is being gently reduced so as to minimise the impact on public services etc. So as far as I'm concerned, Labour are responsible for it. Which is why I get so infuriated with them when they try and blame others for public spending restraint.

I suppose you'll still be voting for them though?

 

Obelix obviously understands this stuff substantially better than me, so hopefully he'll wade in and correct any mistakes I may have made here.

Edited August 17, 2015 by unbeliever

[Anna B]

No, as I understand it some of £375 billion is included in the £1.6 trillion. So the state essentially owes some of that money to itself and has the option of making it vanish. That's not without consequences, but it is possible.

 

We do owe more than £1.6 trillion if you include the off-books borrowing such as PFI. I think this adds up to about another £200-300 billion.

Add all that on and total state debt is about 100% of GDP. Which is a hell of a lot by historical standards.

 

Thanks again Gordon Brown.

Whilst a fair chunk of the £1.6 trillion was added to the debt after 2010, it almost all arises from the public spending deficit which was left in 2010 and is being gently reduced so as to minimise the impact on public services etc. So as far as I'm concerned, Labour are responsible for it. Which is why I get so infuriated with them when they try and blame others for public spending restraint.

I suppose you'll still be voting for them though?

 

Obelix obviously understands this stuff substantially better than me, so hopefully he'll wade in and correct any mistakes I may have made here.

 

So why have we been giving the money to the banks?

 

I've never voted Labour.

[El Cid]

Thanks again Gordon Brown.

 

Whilst a fair chunk of the £1.6 trillion was added to the debt after 2010

 

More than half of our debt was created after 2010, but I guess you know that.

[unbeliever]

More than half of our debt was created after 2010, but I guess you know that.

 

As I said, the post-2010 debt arises from the deficit left in 2010.

 

You're already complaining about the restraint in public spending and benefits arising from gradually reducing the deficit over the best part of 10 years. Do you really want to start complaining that the pace of deficit reduction should be faster? That's not remotely consistent with your other posts.

 

---------- Post added 17-08-2015 at 20:47 ----------

 

So why have we been giving the money to the banks?

 

I've never voted Labour.

 

Some of the banks were over-lent and were in danger of collapsing.

Gordon Brown took the decision to but shares in these banks at over market value with taxpayers money to see them through those problems and keep them alive.

 

My preferred solution was either to lend them money against collateral (i.e. secured loans) or to let them die and just bail out the depositors. Unfortunately that's not what happened.

[Obelix]

So we owe the £1.6 Trillion debt + £375 Billion Quantatitive Easing on top?

 

Owe is a trickey word to use.

 

The QE isn't a debt per se - in fact that is money that the banks owe us, but since we are going to destroy it as soon as we get it back it's kind of irrelevant.

 

The bank bailout is an asset that we bought (shares in Lloyds, etc) using debt that we raised on the market. So whilst we have a large debt because of that, we also have an asset that in theory should make back what it cost us initially (minus the interest we had to pay on it for a few years)

[El Cid]

 

The bank bailout is an asset that we bought (shares in Lloyds, etc) using debt that we raised on the market. So whilst we have a large debt because of that, we also have an asset that in theory should make back what it cost us initially (minus the interest we had to pay on it for a few years)

 

I have bought some shares like that too; how does the Government magic these shares back up to a higher price?

I have said bye bye to the majority of the my money invested in RBS and a few other shares.

The Government sold some shares the other day, at a loss, so I guess its quite difficult, for the Government to make share prices rise, by magic.

[unbeliever]

I have bought some shares like that too; how does the Government magic these shares back up to a higher price?

I have said bye bye to the majority of the my money invested in RBS and a few other shares.

The Government sold some shares the other day, at a loss, so I guess its quite difficult, for the Government to make share prices rise, by magic.

 

The government investment and intervention was supposed to boost the success of the business and therefore increase the share price to above what the taxpayers paid for them.

I wouldn't hold my breath. Gordon Brown organised it.