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Does the government have a bottomless pit of finance?
I remember when there was talk of Gordon Brown's £7 billion war chest of accumulated taxes, and there was great fanfare when this was spent. Then we've had millions of pounds to give money back to those who lost it in the banking crisis, then a few more billions promised in the bank recovery packages, and yet, I believe that the government has not yet stooped to printing more money to pay for all this.

So, where is it coming from? Have we taken out a mortgage on Wales or something to release some capital? Or is this fictional money which we'd have to sell public buildings to raise, should the people it has been promised to suddenly need cash in hand?
asked in money, economics



robinsamuels answers:

Most of this is money promised if the bank's get into trouble. Only then would it get paid out.

Of course they have a bottomless chest. Us!


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siasl74 answers:

If they couldn't get the funds when needed (after all, it's mostly a guarantee), then they can either borrow or print it. The former is less likely in the current climes.


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rasputin1309 answers:

He has essentially taken out an enormous mortgage on us - if it is not paid back by the bankc then us, our children and our grandchildren will pay it all back


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wumpus answers:

No, we don't have a bottomless pit of finance.
But Gordon hasn't realised it yet.

Next time you see him, be sure to let him know, won't you?



Effectively what he's done is borrow against our future productivity as a nation. I seem to recall headlines saying that my 3 month old daughter owes £17,000 to the world bank thanks to Gord.
That's before today's announcement of yet another £200bn being thrown at the banks.

Borrowing money is fine, as long as you can earn enough cash to be able to pay it (and the interest) back. But as a nation, we don't actually produce that much any more.

Nor do many people want to visit here (weather, terrorism, expense, rip-off-britain, red tape, better alternatives elsewhere) so tourism isn't a huge earner either.
Particularly when the potential visitors are also suffering lack-of-funds in their own country.


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nbyward answers:

This is the kind of question that grounded people ask of the so-called financial experts. In 60 years I have met but two financial experts: one of them handles my pension, and the other one is my wife - an amateur, but a damn good one.

This is my best answer to your question:

1. Nobody or thing or country is a bottomless pit of finance. You should think of the UK as a sort of shallow grave of money.
2. Our borrowing credentials as a nation are among the worst in the world.
3. We have lower gold reserves than almost any other EU member state
4. We have frittered away some £950 billion already on bank/depositor bailouts, very little of which we needed to spend
5. We do not have the money to afford the level of bailout and stimulus being put into action by Salvador Darling and Gordhelpus Brown
6. The huge increase in welfare costs and fall in tax income (alongside the enormous medium-term debt we are taking on) means we will need to raise three times more money from gilts issues during 2009 than we have ever managed in our history
7. The gilts/bonds markets are very conservative anyway at the moment. In short: we have no and f-a chance of raising the money via that means
8. Thus if there is no change in policy, short of an invasion of aliens bearing untold wealth for us alone, the UK will be bankrupt by mid 2011 at the latest.
9. By that time, the £/Euro exchange rate may well be 200:1. But even if it isn't, the IMF will have intervened.
10. So no, the Exchequer is not a bottomless pit. The current Government is, however, a spineless, brainless nit


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