Question about UK 'debt'

If anyone can answer my questions, I would appreciate the input in helping me understand the current situation.

1- Who is the UK in debt with?

2-- Is the debt being paid off by our tax money?

3- If the answer is 'yes' to 3, does that mean tax money that could be used to improve the country is being used outside of our country for other people?

So basically, who are we in debt with and does the majority of our hard earned income tax etc go to paying off this debt?

Thanks.

I guess I have my assumptions but would appreciate someone to tell it outright to help clarify it for me.

Debt is held by debtholders wich are investors, banks and pensionfunds.
Interest has to be paid on that debt and how much UK has to pay on its debt depends on how high the interestrate is when the UK sells bonds to investors.

reply to post by Wonderer2012

This should help. Apparently it is mainly overseas investors and insurance companies that the money is owed to.

reply to post by Wonderer2012

most the debt we are in is because the money never existed in the first place, it was just created on a computer screen and transferred to our banks in the form of credit,

lets put it this way, just a small example, if there was only 100 pounds in circulation in the entire world and it was loaned to someone else at 1% interest, where would he get the 1% from to pay back the interest,

hope this makes sense

reply to post by Wonderer2012

We mostly owe ourselves the money via pension funds! These being the investment vehicles needing a safe haven for the money. The UK gov bonds are guaranteed to be paid with interest and thus they are very safe for pension funds.

We pay these off through taxes. Now , the problem kicks in when the income through taxes falls and expenditure on benefits increases due to sever cutbacks......it is NOT rocket science just common sense.

Two choices:

A. cut back, reduce demand, reduce taxes increase the time taken to eliminate the debt and cross your fingers you don't go into meltdown.

B. Invest in infrastructure, which reduces benefits by employing people, this increases taxes and demand for PRIVATE goods and services and THEN the private sector expands. When this happens the economy recovers and the debt is paid of much much quicker. NB the extra expenditure in two or 3 years is significantly less than the increase in expenditure covering benefits and just doesn't compare to the absolute total debt !!!!!!!!!!!!!!!! (but shhhh the right wingers won't tell you that)

Needless to say certain political ideologies don't like B and try to highlight that there is no problem with A if you reduce benefits.........sound familiar?

reply to post by Minnie1985


Labor has value

Banks do not create money, they simply lend out money that people have on their accounts.
But it is fractional, so if you deposit 100 pound, they lend out 90 pound of that money.
That is if the leverage is 1/10, but in the UK that is far higher to my knowledge.
Only a central bank can print money, but it is not practice to stuff banks with printed fiat.
If they did, or if bank were able to create money, they would not fail and would not need a bailout either.

reply to post by yorkshirelad


There is a third option which involves the central bank, depreciate the currency.
By doing that labor in the UK is cheaper thus good for export, the downside for people in the UK is that import becomes more expensive.

reply to post by earthling42


Thats not how I understand it!!!!

Fractional reserve banking means

They only have to retain a FRACTION of the deposit.

Lets say I deposit 1 million into a bank. That bank can now lend out 10 times that amount.

Money created out of thin air, and they want YOU to pay it back with interest.

reply to post by VoidHawk


Yes there are sources enough that explain it like that, but they are wrong on this.
The fractional system works through lending out the money.
Calculate for yourself

100 pounds, if the leverage is 1 to 10, they can lend out 90 of it.
That 90 is deposited in a bank and it is lend out again, 9 remains in deposit and 81 lend out to someone.
This continues until the last penny, then that 100 pound has become 1000 pound.
That is how it works

This is why banks will fall over if we all take our money out of our account, through the lending mechanism they have multiplied the original 100 pounds by a factor 10.

Originally posted by LightSpeedDriver
reply to post by Wonderer2012

 

This should help. Apparently it is mainly overseas investors and insurance companies that the money is owed to.

Thanks for all the replies guys, this link was especially helpful.

Crazy that in the last ten years our lending has increased so dramatically, and it is getting way out of control- how long can the current system hold up?

When you think how much more petrol costs, and how much more everything costs, and the debt is getting worse, it's mind blowing really.

Originally posted by yorkshirelad
reply to post by Wonderer2012

 

We pay these off through taxes. Now , the problem kicks in when the income through taxes falls and expenditure on benefits increases due to sever cutbacks......it is NOT rocket science just common sense.

B. Invest in infrastructure, which reduces benefits by employing people, this increases taxes and demand for PRIVATE goods and services and THEN the private sector expands. When this happens the economy recovers and the debt is paid of much much quicker. NB the extra expenditure in two or 3 years is significantly less than the increase in expenditure covering benefits and just doesn't compare to the absolute total debt !!!!!!!!!!!!!!!! (but shhhh the right wingers won't tell you that)

Needless to say certain political ideologies don't like B and try to highlight that there is no problem with A if you reduce benefits.........sound familiar?

Thanks for that, makes perfect sense and sounds so simple.

With immigration out of a control, increasing numbers of people depending on welfare (one of the links provided shows that our biggest government expenditure is on benefits and pensions), it feels to me like they know what the solutions are but want the collapse to happen.

reply to post by Wonderer2012

There are many youtube clips that incorporate parts of it but if you watch the first Zeitgeist The Movie movie they handle the banking system quite well in simple to understand language. You can either order a dvd or just watch it online via their site youtube style. It's a most excellent documentary imho.

Browser version.

reply to post by earthling42


I thought it was illegal for banks to use deposits as loans. heres how i thought lending from banks happens -

banks go to the BoE or the fed, get a loan at 0.5% then loan it to someone and rape them for interest so they can have massive bonuses.

reply to post by juniorchubbs


Well i was partly right about the banks

secondary banking is what i have been talking about, they are unable to create money.
They loan out deposited money, so it is not illigal, but they cannot create money.
But primary banks are able to do just that, if they issue a loan, they create giral money out of thin air.
Depending on the trust of the people that they won't take their own money from their account because that will mean the end of the bank or as we are seeing now for the last 5 years, bailouts for the banksters from taxpayers.

good business for them to make sure that they are to big to fail, free taxpayer money and bigger bonusses

The UK owes 436% of its GDP to foreign countries, so not a huge amount really!!! Thats the equivalent of about £95,000 that each UK citizen owes!!!

We should be fine if we borrow more money to pay off our debts!!

Move along please...

Linky - The Best One!

Originally posted by earthling42
Debt is held by debtholders wich are investors, banks and pensionfunds.
Interest has to be paid on that debt and how much UK has to pay on its debt depends on how high the interestrate is when the UK sells bonds to investors.

I beg to differ with the bit in bold above...i'm more of a "it doesnt really" kinda guy, they just like to tell everyone that it does and force it into law!!!

Originally posted by earthling42
reply to post by VoidHawk

 

Yes there are sources enough that explain it like that, but they are wrong on this.
The fractional system works through lending out the money.
Calculate for yourself

100 pounds, if the leverage is 1 to 10, they can lend out 90 of it.
That 90 is deposited in a bank and it is lend out again, 9 remains in deposit and 81 lend out to someone.
This continues until the last penny, then that 100 pound has become 1000 pound.
That is how it works

This is why banks will fall over if we all take our money out of our account, through the lending mechanism they have multiplied the original 100 pounds by a factor 10.

And then they call that an asset and add the amounts to their majical accounting books! Then, when they see how rich they are, they celebrate! Then, when they get caught with their pants down, they blub and cry to governments. Then, they get rewarded!