Metropol

If there is no money around and we are in a global recession, no other country has money to lend us, the banks are in trouble and the taxpayer is at the limit, could someone tell me exactly where is the government borrowing money from? Is it just an imaginary amount they have to pay back to themselves eventually or is there an actual source where a figure like 37 billion pounds is borrowed from?

is it not for the IMF -- International Monetary Fund

lets be honest, now adays money is all in computers, IMF could get away with making £5 billion appear out of thing thin air and when it gets repaid it all disappears!

although Why can;t the current government do this with all the business, give all the business the money there need There pay it all back and it all disappers

malcyb wrote:If there is no money around and we are in a global recession, no other country has money to lend us, the banks are in trouble and the taxpayer is at the limit, could someone tell me exactly where is the government borrowing money from? Is it just an imaginary amount they have to pay back to themselves eventually or is there an actual source where a figure like 37 billion pounds is borrowed from?

There's plenty of money around if you know where to look. China and most oil-producing countries are awash with cash that is looking for something productive to do (not that I consider government spending productive in most cases...). Governments are generally regarded as pretty safe places to lend to, because they have a unique 'power to coerce' - they can compel people to pay taxes. So as a lender to government, you can be fairly confident you'll get your money back when the time comes. Except if you're dealing with Iceland.

Like Norway? and there oil surplus money? does it not have the biggest surplus of any EU country?

same uk never did the same and saved the money,

barcode wrote:Like Norway? and there oil surplus money? does it not have the biggest surplus of any EU country?

Well, I don't know enough about Norway to make judgment - but yes, if it runs a current account surplus, that would suggest they are net saver. The UK, like the US and Australia, run current account deficits. Now, there's nothing necessarily wrong with that. I might suggest a smaller deficit would be better than a larger one, but equally I would argue that a smaller surplus is better than a larger one as well. When looking at the global economy, they're two sides of the same coin.

Part of the reason that we've seen large current account deficits in the US over the past decade or so is because there have been massive current account surpluses in oil producing countries and China, as well as in Japan and throughout South East Asia etc. In the case of South East Asia and Japan, their surpluses have come about simply due a lack of domestic investment. Capital sits idle because there's little dometic demand for new investment. In the case of oil producers and China, there are issues relating to the official value of their currencies perhaps not reflecting true market values (that is, they manipulate their exchange rates). But even setting that aside, I just don't think they've been able to spend their money as fast as they've been able to earn it. That will change now with the current economic downturn - China is being hit, and oil prices are plunging.