Debt

It is a basic financial premise that when people borrow money, they are moving money away from the future and towards the present day.

Borrowing = more now + less later.

Borrowing impoverishes the future.

The UK national debt is over £1.8 trillion.

Interest payments on the national debt are around £50bn per year. That’s nearly £1bn per week being spent just to stop the debt bubble from bursting.

Even after the recent government cuts, the UK government continues to borrow more than £24 billion per year. This equates to borrowing an additional £275,000 every hour of every day.

There are 3 ways in which a government can reduce its debt:

  1. Pay it back. The idea that the UK government might be able to pay back this debt is so ridiculous that nobody in the government or banking sector even discusses it. There is no plan to pay it back. Ever.

  2. Default. The UK is one of a very small number of countries that has never defaulted on its debt. Countries that default on their debt obviously find it harder to borrow money again in the future. Were the UK to default in the future, it would certainly cause another global financial crisis, as when a debtor defaults it impoverishes the lender.

  3. Inflation. In very simple terms, pumping the system full of fake money makes the prospect of owing £1.8 trillion pounds a lot less daunting. The creation of all this fake money doesn’t increase the debt, but makes the debt small in relation to prices, earnings and tax receipts. Indebted governments rely heavily on inflation to keep the system going.


Editor