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Just where is all this money coming from?

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Just where is all this money coming from?

Old 7th Oct 2008, 21:07
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Just where is all this money coming from?

BBC NEWS | Business | Government to unveil bank rescue

Up to 50bn of taxpayers' money will be used to stabilise the banking system.
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Old 7th Oct 2008, 21:12
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Yer got me puzzled that has as well,the cousins got loads of gold bars stashed away in Fort Knox so they can prolly come up wi the cash but that wock eyed tw*t sold all ours off cheap,so from whence cometh all that wedge in our case?

Ah of course,they own the Royal Mint,they got lots of paper and the proper plates and printing presses so they prolly just order em to print 50 billion squids.
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Old 7th Oct 2008, 21:18
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Not the hardest question to answer.
The gov't only have one source of income, it's called TAX.
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Old 7th Oct 2008, 21:20
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Maybe the biggest question is where did all the money GO??
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Old 7th Oct 2008, 21:25
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To take a line from Derek & Clive, "feckin nowhere" "that's where I sent it, c**t"
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Old 7th Oct 2008, 21:30
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Not the hardest question to answer.
The gov't only have one source of income, it's called TAX.
I know, seeing as there are insufficient funds to provide the current commitments such as Defence, NHS, Education it can only mean that there is going to be a big hike in taxes at the next budget.
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Old 7th Oct 2008, 21:52
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MReyn24050 has a good point. Just where is all this money coming from? Other than by HM government's autocratic decree engaging the responsibility and future income of every UK citizen whether or not they like it...?!

I was thinking about all the fuss over the Paulson plan in the USA involving a paltry $700 billion. A 'last-ditch' effort to 'save the financial system' if you prefer. If you added together what the UK taxpayer has already taken on in liabilities, what with Northern Rock, Bradford & Bingley etc. plus this latest initiative of a further 50 billion, I reckon that on a comparative GDP basis*, the UK has engaged its taxpayers far more heavily than the USA has to date. And Gordon Brown / Mr. Darling haven't yet declared any dire emergency...?!

*GDP of USA 2007 (IMF) $13.84 trillion, compared to UK $2.77 trillion, so roughly speaking the UK has 1/5th the GDP of USA. So add the 120 billion exposure to Northern Rock, 50 billion to Bradford & Bingley and the latest 50 billion and you get 220 billion (or $386 billion). In other words, the UK taxpayer is already on the hook for just over half of what the USA (with a GDP 5 times that of the UK's) has managed to commit after a whole lot of wrangling...? It almost beggars belief dunnit?!

Whatever, the US sub-prime crisis is costing investors outside of the USA far more than it is costing US investors. I can only assume that such investors will remember this lesson for many years to come. That will have an affect on the USA's growth prospects if that depends on foreign-based inward investment. Until Americans become net savers, this situation will continue for many years until memories become hazy. Especially as the Paulson plan appears mainly to succour home-based investors, leaving everyone else to take their chances, or else plead for help from their own governments...? The UK's appears to be especially generous, all things considered.

To think that just a few months ago, Briton's major worry was whether or not the London Olympics were going to run over budget and they'd have to fork out another (mere) 3-5 billion...?!

God save the Queen. Good night and good luck.
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Old 7th Oct 2008, 22:42
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The way it appears from darkest Hampshire, Gordon 'Robber' Brown will switch on the printing presses and throw 50 Billion into the economy (to be first picked over by financial institutions in order to ensure correct bonuses are paid). You can't throw a high proportion of money into a system without the 'cost' coming from somewhere (apart from 'us' who must carry the debt). What simply happens is debasement of that currency. It becomes worth less. This is exactly what has been happening in Zimbabwe- printing more and more money. We have seen the result....inflation. More money floating around, people want more for their services and goods because money buys less. Galloping inflation is unavoidable. At some stage when this money hits the economy, inflation will start lifting off, which is why the Bank of E has been rather unresponsive so far- because its priority is to stave off inflation. Combine this with the deflation effects of a slump/recession, and something very peculiar happens. They do not cancel each other out. I shall leave it to someone else to explain the next effect.
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Old 7th Oct 2008, 23:00
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Well, 50billion divided by 20 million taxpayers, that is about 250,000 each, is that a problem?
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Old 7th Oct 2008, 23:34
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Correct Rainboe,

however in the US you can print dollars and throw em out there, deflation will happen but much more covertly due to the greenback having a lot of fingers in a lot of pies worldwide, particularly in oil. It's good to be a reserve currency. Unless holders of all those dollars start to get twitchy and dump them for greener pastures of course. All of these rescue efforts will catch up to the dollar eventually and the value will drop significantly.

Personally I think this bail-out will only delay the crisis slightly and make the next punch that much worse. Look for the CDS markets to go boom next. At the end of the day, the countries that have actual wealth, countries that produce something of value will prevail over the ones that have made their wealth pushing money that exists in a computer around buying and selling credit. Borrow and spend Vs produce and save.

Russia bailing out Iceland, nice one Putin!

(You don't suppose he'll want a return in favors, say a couple of missile silos in between the horse farms?)

Interesting times.
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Old 8th Oct 2008, 02:20
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The gov't only have one source of income, it's called TAX.
Not so. A Government's source of "income", or operating finance, is in fact the Imprest Supply Bills passed by the Parliament. Via this mechanism, Governments vote to issue money into existence. Most of it, naturally, is not printed or minted, but exists only as book entries, which these days are electronic. Cash itself only accounts for about 3% of all monies in circulation.

Tax (or the dividends paid by State-owned enterprises) is what the aforementioned Governments then take back in, to ensure that the available currency in circulation does not greatly exceed the available goods and services on which it may be spent. When a Government takes back more in tax than it spends into circulation, it runs a surplus. When it takes back less in tax than it has spent, it runs a deficit.
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Old 8th Oct 2008, 05:42
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A Government's source of "income", or operating finance, is in fact the Imprest Supply Bills passed by the Parliament. Via this mechanism, Governments vote to issue money into existence. Most of it, naturally, is not printed or minted, but exists only as book entries,
Which is inflationary, (of course).

But there's nothing like a good surge of inflation to get house prices back on the up and up,
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Old 8th Oct 2008, 06:23
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It's not inflationary unless it's excessive, or unless the goods / and or services created by, and with, the new money, can be destroyed and replaced again in quick order. This is why a war is the usually the best way out of a recession; it stimulates both production and consumption.
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Old 8th Oct 2008, 07:53
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The answer is simple, income tax is going up to three guineas in the pound.

parabellum, check your maths.
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Old 8th Oct 2008, 08:12
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Spot the difference:

The Banks got themselves into trouble because they lent money which they didn't have to people who could not pay it back. They called it an "investment".

The Government is lending money it can't afford to lose to people who are unlikely to pay it back. They call it an "investment".

"No more boom and bust" ~ G.Brown 1997
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Old 8th Oct 2008, 08:44
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Errr - De La Rue, the only(?) company in the UK with a bona fide license to print money?

DP
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Old 8th Oct 2008, 10:45
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Well, 50billion divided by 20 million taxpayers, that is about 250,000 eac
2500 old bean.

million=6 zeros
billion=9
trillion=12
quadrillion=15
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Old 8th Oct 2008, 12:15
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Track Coastal, are you American by any chance?

million=6 zeros
milliard= 9
billion=12
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Old 8th Oct 2008, 12:54
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The billions quoted now are 9 zeros. I'm afraid the British billion is a lost beast. I haven't seen one for ages but these smaller US billions are everywhere

As to the original OP. The new money comes from the same place the old money went. It's like fairies. As long as you believe it exists, its there. No-one destroyed billions of notes or threw gold into the sea, people just stopped believing the valuations, so it disappeared.

So if you concentrate very carefully, and clap, all the money will appear again and we can all live happily ever after
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Old 8th Oct 2008, 13:06
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The definition of a billion in financial terms is always 10^9 not the UK 10^12.
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