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Naive & Simplistic Question
bfgun
Posts: 238 Forumite
We and other countries owe so much money.
Why don't we just wipe the slate clean, print all the money that needs repaying and just start again?
Why wouldn't this work?
As my title suggests, probably a naive and simplistic question from one who really doesn't fully understand the way economy works but would like to know why my solution is not a possibility.
Why don't we just wipe the slate clean, print all the money that needs repaying and just start again?
Why wouldn't this work?
As my title suggests, probably a naive and simplistic question from one who really doesn't fully understand the way economy works but would like to know why my solution is not a possibility.
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Comments
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We and other countries owe so much money.
Why don't we just wipe the slate clean, print all the money that needs repaying and just start again?
Why wouldn't this work?.
No need, when we can inflate the debt away over time, without the panic such an overt default would cause.
In any case, 1/3 of UK debt has now been bought by the BOE with printed money, effectively meaning we pay interest to ourselves on that debt. So it's as close to free money as you can get.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
We and other countries owe so much money.
Why don't we just wipe the slate clean, print all the money that needs repaying and just start again?
Why wouldn't this work?
As my title suggests, probably a naive and simplistic question from one who really doesn't fully understand the way economy works but would like to know why my solution is not a possibility.
The main problem is that it would cause inflation as you'd have more money chasing the same amount of stuff. As a result, bond holders would get money of a lot lower value than they were expecting back.
People would be reluctant to lend to the UK Government in future. A current problem would be resolved but a bigger one created in future.0 -
What you're suggesting probably happens in countries that have had revolutions and aren't immediately concerned with obtaining international loans afterwards.We and other countries owe so much money.
Why don't we just wipe the slate clean, print all the money that needs repaying and just start again?
Why wouldn't this work?
As my title suggests, probably a naive and simplistic question from one who really doesn't fully understand the way economy works but would like to know why my solution is not a possibility.
Years ago I read a depression-era book called Sound Economy.
It suggested the government fill bank vaults with enough printed money to cover all debts /loans etc. The banks would only issue the usual number of notes and keep these in reserve. If the public became alarmed at the state of the economy it would stop there being a run on the banks as you knew the banks did have your money available as notes if you went in to collect them at any time, and they wouldn't run out.
The last page of the book was a petition to the king for us to tear out, sign and post to His Maj.;)There is no honour to be had in not knowing a thing that can be known - Danny Baker0
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