Economics, by me

On the cusp of returning to the salt mines, it occured to me that we're all utterly screwed no matter what we do. No, really. I was wondering what happened to all the money that we don't have any more. I reasoned that money doesn't just disappear, so that must mean that someone else must have it. It isn't me. Nor is it anyone I know. A few Russian oligarchs have a shit-load of it, and China presumably has heaps in return for all the plastic shite we collectively buy, but surely that can't account for all of it.

The UK's national debt is currently £940 billion. We have bought almost £1,000 billion of crap from China. If you include the cost of all the bank bailouts, the debt number is £2,266 billion. That is two trillion quid. Maybe - I've never really understood trillions. Anyway, a staggeringly large amount. Money that we don't have, and therefore have to borrow from other people. It costs yet more billions in interest payments. There are three ways the country can get money. The first is taxes. I start paying them again tomorrow - don't say I never help. The second is by selling stuff, such as our entire national infrastructure. This was called privatisation, and we have nothing left to sell anymore. The third is the easiest, whereby we just print more money, and then say "Golly, look at that, where did that come from? Very handy." This is called quantative easing and is generally accepted as a bad thing as it devalues all the other money that we don't have.

So, add up those three things, and that's what we get coming in. Call it a salary if you will. But then come the outgoings. For you and me, it's food, the mortgage, binoculars, that kind of thing. For the country it's stuff like building hospitals and paying nurses to work in them, paying interest on our national debt, and ensuring that thousands of utter layabouts can continue to smoke, swill lager, and watch Sky TV with their benefit cheques.

And that's the problem. The cost of doing all of that far exceeds our salary, and has done for years. If you and I were to do this, we'd be out on the street living in cardboard boxes in shop doorways. For countries, you just call it a budget defecit, blame it on the previous governent, and sell some more gilts to fund it. The actual number this year is forecast to be about £170 billion. That number simply gets added to the £940 billion of money we don't have.

But worry ye not, there is a plan. It is called the goverment's economic strategy, or to use another well-used term, austerity measures. These measures are designed to save £81 billion over the next four years, but of course come at the expense of having policemen on our streets, or even police stations. Oh, and we're all going to have to continue working until we DIE, but on the plus side we are still going to have nice new shiny Aircraft Carrier.

It's a huge amount of money, and is going to be painful for a generation, perhaps longer (see below) But here's the rub. Even if the country does manage to save that £81 billion, some simple maths indicates that we're still screwed. Assuming the budget defecit stays stable at £170 billion a year for the next four years, rather than increase the national debt by £680 billion, we're dramatically slashing that number to only a £599 billion increase. What is the bloody use in that? To even shave £1 billion off the national debt, we need to save £171 billion a year! And even then it will take the best part of a millenium to even get back to zero! To get back to zero in a useful timeframe doesn't even bear thinking about. We're screwed. Utterly screwed. And we're in good shape! Look at Greece. Look at Ireland. Look at Spain, look at America. The western economic model, that of spending money you don't have (and will never have), is well and truly broken. The austerity measures are pie in the sky. What is the bloody point? We're doomed.

It's amazing what you can think of during a short car journey isn't it? All of the above came to me on the M11 between Cambridge and London this afternoon. I've never had any interest in economics whatsoever, apart from on a personal level. But the real worry is what actually is money? Is it a number I see online when I check my bank balance? Or is that ethereal? Is it the the bits of paper I have from time to time in my wallet that promise to pay the bearer on demand? Yeah, with what exactly? All the gold reserves we already sold? The UK ran out of "money", whatever that is, years ago. The situation is only getting worse, and the austerity measures only mean it's getting worse fractionally more slowly.

So the answer is........?

No idea. Just enjoy your birding before you have to sell your binoculars.