- 19 Dec 2016 00:26
#14751608
'Money' is a commodity like any other form of goods that are traded.
Of course, it takes it's form as 'currency' within countries, or trading areas, but, essentially, it is subject to the law of 'supply & demand with it's price(interest rate) being reflected accordingly.
As most of the world's countries have a 'central' bank, which governs the rest of the banks operating within their borders, these central banks are either 'owned' or 'controlled' by that country's government.
Indeed, those banks serve the interest of their governments, raising money out of thin air(printing money electronically-crediting the Bond purchasers accounts directly)
As that money, 'Gilts' is a long term 'investment', the decision to buy gov't Bonds depends on the yield at the maturity date, which is determined by the inflation over that period.
Why government borrowing matters is that the sums are vast, in times of 'cheap' money, that 'price' is determined by the central bank & it's government.
That is wrong, because there is a mismatch between what savers get by return(nominal)& what government is paying by way of yields on 'Gilts'.
A government(lender) influences the cost of the money through the central bank, whereas a saver has no influence on what he\she is able to receive by lending the bank their money in the first instance & which is often taxed as well.
The Bank of England, indeed, ALL 'central' banks should be privatised to allow the free market to operate & control inflation.
Pension funds, insurance companies, along with overseas investors & other financial institutions hold(own) most the UK debt.
Banks, households & others actually hold very little though of recent years has grown exponentially.
The interest on ALL UK debt is phenomenal, it can only get worse, because governments have got the spending habit in their veins, a UK 'Weimar' is a not too distant prospect for our children & grandchildren.
One should bear in mind that before mass uncontrolled immigration, this country was in pretty good shape,given that our population has increased by some 10% in 2 decades, with a 4/1 ratio of births to immigrants compared to indigenous couples, one would expect our real wealth to have increased proportionately, this is NOT the case.
In FACT, people are poorer than they have been since the late 1950's-60's.
Governments take a higher proportion of incomes in direct\indirect taxes than at any time since the last war, YET, real welfare spending per head has fallen, thus spending on 'projects' outside of household incomes has increased disproportionately.
Of course, it takes it's form as 'currency' within countries, or trading areas, but, essentially, it is subject to the law of 'supply & demand with it's price(interest rate) being reflected accordingly.
As most of the world's countries have a 'central' bank, which governs the rest of the banks operating within their borders, these central banks are either 'owned' or 'controlled' by that country's government.
Indeed, those banks serve the interest of their governments, raising money out of thin air(printing money electronically-crediting the Bond purchasers accounts directly)
As that money, 'Gilts' is a long term 'investment', the decision to buy gov't Bonds depends on the yield at the maturity date, which is determined by the inflation over that period.
Why government borrowing matters is that the sums are vast, in times of 'cheap' money, that 'price' is determined by the central bank & it's government.
That is wrong, because there is a mismatch between what savers get by return(nominal)& what government is paying by way of yields on 'Gilts'.
A government(lender) influences the cost of the money through the central bank, whereas a saver has no influence on what he\she is able to receive by lending the bank their money in the first instance & which is often taxed as well.
The Bank of England, indeed, ALL 'central' banks should be privatised to allow the free market to operate & control inflation.
Pension funds, insurance companies, along with overseas investors & other financial institutions hold(own) most the UK debt.
Banks, households & others actually hold very little though of recent years has grown exponentially.
The interest on ALL UK debt is phenomenal, it can only get worse, because governments have got the spending habit in their veins, a UK 'Weimar' is a not too distant prospect for our children & grandchildren.
One should bear in mind that before mass uncontrolled immigration, this country was in pretty good shape,given that our population has increased by some 10% in 2 decades, with a 4/1 ratio of births to immigrants compared to indigenous couples, one would expect our real wealth to have increased proportionately, this is NOT the case.
In FACT, people are poorer than they have been since the late 1950's-60's.
Governments take a higher proportion of incomes in direct\indirect taxes than at any time since the last war, YET, real welfare spending per head has fallen, thus spending on 'projects' outside of household incomes has increased disproportionately.
Andre PREVIN : "Your playing all the 'wrong' notes" .
Eric MORECOMBE ; "I'm playing all the 'right' notes,but, not necessarily in the 'right' order".
Eric MORECOMBE ; "I'm playing all the 'right' notes,but, not necessarily in the 'right' order".