No such thing as gov 'deficit'

Legacy_user

In the long term, anything the government spends circulates the economy and comes back as tax, although it may take a while which is why you see a deficit at the moment, its not like personal finances as they essentially get cashback as tax on whatever they spend, and is more like investment in its own economy.

This is as long as the money doesn't actually leave the country, and in theory it can't leave the sterling zone, just modify exchange rates

pogofish

And your campaign is?

Taking-on a government is a brave thing though, although the consequences can be rather hefty. Good luck!

System

I suppose mad government spending

antrobus

MatthewAinsworth wrote: »

In the long term, anything the government spends circulates the economy and comes back as tax, although it may take a while which is why you see a deficit at the moment, ....

How long does it take for all this government spending to come back as tax? I only ask, because government deficits have tended to be on the large side in recent years. Indeed, it must be getting on for about a £1 trillion's worth by now, and so when all that money starts 'coming back as tax', we're all going to be humongously rich.

System

Antrobus - not sure how long on average but it must depend on who you give it to, poor spend quickly whereas rich hoard wealth for the next generation. Worst case scenario is when a rich generation dies/ goes into care home. Basically it can't leave the UK and can't disappear, it has to be spent at some point, and any debt the government owes is someone else's savings (invested via banks). I think a lot of money printing has happened over the years as the only reason why debts read a higher value today that years ago, and why wages and property prices can increase

System

What hasn't already come back will come back using inheritance tax / care fees, so demographics could show what age has the highest concentration of wealth -baby bloomers perhaps?

System

Also means that cutting tax credits isn't a real way to cut the deficit as that is quickly returning cash, it'd be better for the deficit to hit the rich, and raising min/living wage and the stamp duty reforms are examples of that that even the Tories have seen as necessary

antrobus

MatthewAinsworth wrote: »

Antrobus - not sure how long on average but it must depend on who you give it to, poor spend quickly whereas rich hoard wealth for the next generation. Worst case scenario is when a rich generation dies/ goes into care home. ....

As a country we were bankrupt in 1945, thanks to spending all that money fighting a war. That was 70 years ago, and that generation will be mostly dead or in nursing homes by now. So why hasn't all that money come back as tax making us all rich?

MatthewAinsworth wrote: »

...Basically it can't leave the UK and can't disappear, ....

What do you mean it can't leave the UK? £647 billion quid left the UK between 1993 and 2014. Haven't you heard of the current account deficit?

MatthewAinsworth wrote: »

..it has to be spent at some point, and any debt the government owes is someone else's savings (invested via banks). ...

Everything gets invested or indeed spent via banks, because a lot of transactions go through bank accounts.

Has it occured to you that the savings that are financing the borrowing aren't necessarily savings made by UK residents?

MatthewAinsworth wrote: »

....I think a lot of money printing has happened over the years as the only reason why debts read a higher value today that years ago, and why wages and property prices can increase

I think you'll find that the amount of money the typical Brit owes is a much greater relative to their income irrespective of inflation.

System

That was 70 years ago, and that generation will be mostly dead or in nursing homes by now. So why hasn't all that money come back as tax making us all rich?

By baby boomers I was meaning those now in their 60s, maybe I mislabeled, the country was poor as you say and so was property, some of that sadly available because of the war, there was a government drive to build council houses and interest rates were high at one point meaning savers could buy at a lower price relative to income. Then with lowering of interest rates house prices rose as a multiple of income, so it now generally requires 2 incomes to buy a house where before it required one. They are equity rich therefore even if not cash rich, the value of that equity based on peoples future earnings via mortgages. As well as that strict greenbelt rules came in bottling up housing supply further, with the rich and banks who have so much tied up in mortgages terrified of actually allowing prices to fall.

. What do you mean it can't leave the UK? £647 billion quid left the UK between 1993 and 2014. Haven't you heard of the current account deficit?

It remains sterling, simply exchanged, sterling can only be spent here as far as I know, exchange rates might change but having our own currency means internally £s circulate. Sterling might be owned by foreigners and foreign nations, but it can still only be spent as sterling in the uk. Sooner or later chinas foreign currency reserves have to be spent, or we just print to steal it back.

. Has it occured to you that the savings that are financing the borrowing aren't necessarily savings made by UK residents?

As long as it remains sterling its still part of our economy as it can only be used here, it can't be destroyed only exchanged, and if it is exchanged it just becomes someone else's sterling deposit

. think you'll find that the amount of money the typical Brit owes is a much greater relative to their income irrespective of inflation.

The typical Brit especially across all age ranges maybe. That's an indicator of inequality and there are some extremely rich. The older Brit will have mortgages largely cleared and be more equity rich. The ones currently in nursing homes who suffered the war are poorer I believe equity wise than those currently in their 60s who I'm more angling at

System

And also mortgages allow the young to get into massive debt to buy the property of the old, feeding money up when things are sold, it has to go somewhere and hasn't disappeared, just hoarded at the moment

antrobus

MatthewAinsworth wrote: »

By baby boomers I was meaning those now in their 60s, maybe I mislabeled, ....

What difference does it make? The UK has almost consistently run deficits since 1945. Whe hasn't any of this money come back as taxes?

MatthewAinsworth wrote: »

...It remains sterling, simply exchanged, sterling can only be spent here as far as I know, exchange rates might change but having our own currency means internally £s circulate. ...

No it doesn't. If you sell sterling and buy US dollars, then you have US dollars but no sterling.

MatthewAinsworth wrote: »

...Sterling might be owned by foreigners and foreign nations, but it can still only be spent as sterling in the uk. Sooner or later chinas foreign currency reserves have to be spent, or we just print to steal it back....

You can spend any currency anywhere it is accepted.

MatthewAinsworth wrote: »

..As long as it remains sterling its still part of our economy as it can only be used here, it can't be destroyed only exchanged, and if it is exchanged it just becomes someone else's sterling deposit....

Be honest. You don't really understand how FX or foreign trade works, now do you?

MatthewAinsworth wrote: »

....The typical Brit especially across all age ranges maybe. That's an indicator of inequality and there are some extremely rich. The older Brit will have mortgages largely cleared and be more equity rich. The ones currently in nursing homes who suffered the war are poorer I believe equity wise than those currently in their 60s who I'm more angling at

So we're all going to be very rich real soon when this generation "in their 60s" start popping their clogs.:)