UK Governments have successively “unlearned” to issue money interest-free. Economists have been claiming that “printing money” leads to “inflation”. Taxation and borrowing are supposed to be the only two income streams for governments. But when central banks print money and call it quantitative easing, it’s supposed to be ok.
The following charts are an analysis of the Budget data published by the Treasury since 2001. In relation to Public Debts, the following items are worth noting:
- the steady growth of all expenditure items
- the steady growth of all income items until the crisis hit the fan
- the sudden growth of the difference, i.e. the ‘budget deficit‘. This is also called Public Spending Borrowing Requirements, i.e. the built-in mechanism to increase the public debt is cranked up since 2008.
Since the crisis hit in 2008, we see increases in
- the budget deficit – thus ensuring more and more burden on the taxpayer through governmental indebtedness
- the payments of interest, especially in the recent Budget 2010, thus proving that the Bank of England‘s version of ‘quantitative easing‘ takes place at the cost of the taxpayer – for the benefit of those who buy treasury bonds or other forms of sovereign debt.
My interpretation is:
- the rule of central banks becomes stronger and stronger
- the role of the state is reduced to a “paid service” for them
- central banks plan to step in as the Grand Rescuer of “the system”
- the people won’t realise what’s happening to them
- while civil servants are ‘just doing their job’…
Please click on the graphics for enlargement! The numbers refer to £bn, i.e. billions of pounds.
| Expenditure | Receipts |
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And now the same data in 3d metric perspective – just to show that there is more to see – for those who want to. Of course, any detailed interpretation requires a customized version of the generic prototype.
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Another analysis shows the growth of interest payments in the austerity budget.
Absolutely right, when the debt service begins to overtake a nation’s capacity there’s either the posibility to begin cutting spending (radically and across the board), a thing that’s hardly ever happened or central banks step in (anyhow, haven’t we “learned from the Great depression”?). The situation today is rather unique in several ways though: never have we had such globalised division of labour nor have we had such widespread entitlement spending (dubbed “social” “welfare”). Nor are people prepared for severe cuts. The last time depression hit, most of them didn’t even have sewered appartments! Nor did they have to pay for that either.
Thanks, CrisisMaven, may every reader click through to your remarkable blog on http://crisismaven.wordpress.com so that, together, we can “face the crisis like a man!”
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