enyam said:There is no debt, the bank of England has printed more money ie quantitative easing,there is no one to pay it back to.
If I understand that correctly, when governments create extra money - as only they can legally do - it appears on some balance sheet as 'borrowed' money. That would certainly explain a lot. So, since we don't actually owe the money to anybody, does this mean we don't have to pay any interest? Or is there some perverse mechanism whereby we, the taxpayers, have to pay interest on it anyway - in which case who's getting it?
On a slightly different note, for longer than I care to remember I've heard of "government borrowing". Now I think I understand this. When the government runs out of money they do what everybody else does and borrow it (from a bank?). The downside is that they have to pay interest and that comes out of our taxes.
So, I think to myself, wouldn't it be better if the government managed to build up a surplus and then lend it. Taxes would be higher in the short term but then they would come down because of the interest the government was raking in on its loans. Could we even reach a position where the government was making so much money on loan interest that we wouldn't need to pay any taxes at all.
The thing is, I've never, ever heard of "government lending". Is this because no government has ever managed to build up the necessary surplus? Or is there a fatal flaw in the plan?