Comments by "" (@blackbulldog4897) on "The IMF is worried about a low growth future when that’s exactly what we need" video.

We have a government which issues it's own fiat, floating currency; therefore it's self financing. Bonds are issued ex-post of spending and by political choice.
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@dboynette we have a currency issuing govt, it's self financing. Simplified, every time it buys something/spends it instructs it's bank, the BofE, to mark up accounts of recipients; new £s created every time.
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@kaz4845 you're right, there's no need to issue bonds, it's a political choice. It's true to say govt neither has nor doesn't have £s, it issues them into existence every time it needs them.
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@dboynette it really doesn't matter who owns the debt as it's all denominated in £s.
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@kaz4845 Good question. When govt buys something/spends, it instructs the BofE to mark up the reserve accounts at recipients retail bank, the retail bank then marks up the relevant deposit accounts. For example, if govt is buying something from me today for let's say £1,000 then HMT instructs BofE to mark up the reserve account of my bank by 1,000 (Nat West or whatever), NAT west will then mark up my deposit account by £1,000. At this point, if that's all that's happening with govt spending today, there are £1,000 more reserves in the system than yesterday. Govt policy is to drain any excess reserves in the system, in this case £1,000, by issuing securities for the excess amount. It does this to control the bank rate. It's a purely political choice.
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@dboynette it works exactly as I described, that's how our fiat money system works. Last time I looked £1 would buy three freddo bars.
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Creating money from nothing is literally how fiat works.
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@richardsillett9802 Creating new £s is how govt buys things/spends every day. This is a simplified version of the process: . Parliament authorises spending . HMT instructs the govt's bank, the BofE to mark up accounts of recipients . BofE must comply so it marks up the reserve accounts of recipients retail bank . Retail banks mark up deposit accounts of recipients . BofE marks down the Consolidated Fund . new £s created every time So, govt, via parliamentary can indeed does create £s as necessary, that's how fiat works. I think RM's description of "equity" is tenuous. It's important you understand the difference between the currency issuer (HM Govt) and a currency user (everyone else). Govt debt is the difference between the £s govt has spent into the economy and the £s it's taxed out of the economy. In other words, it's the net financial assets in the private sector. If tomorrow the govt spent £1,000 and received £800 in taxes etc. then govt debt would increase by £200; there would be £200 more in net financial assets in the private sector than today. What are the limits? Good question. The UK govt faces no purely fiscal constraint, the only constraints it faces are availability of resources at a price it's willing to pay and politics.
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@richardsillett9802 there is indeed a "magic money tree", it lives in the Supply process and it's fed by the Consolidated Fund.
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@richardsillett9802 The basics are pretty simple, all govt spending is new £s. Simplified, here's the process: . Parliament authorises spending via the Supply and Appropriation Bills - normally. . HMT instructs BoE to mark up the reserve accounts of recipients retail bank . BoE must, by law, comply so it marks up the relevant reserve accounts, retail banks then mark up recipient deposit accounts . New £s every time Whatever spending is included in a supply act cannot legally be prevented.
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What we refer to as "government debt" is simply the difference between all the £s govt has issued into the economy by buying things and all the £s govt has taken out of the economy via taxation.
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The private sector cannot create the currency, it can only create credit denominated in £s which nets to zero. The only way net financial assets are added to the private sector is via govt spending. The only motivation for the private sector to do anything is profit so, if there isn't a profit to be had in looking after these aged etc. (why should there be) then who is going to do it?
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