Thread: Coronavirus
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Old 16-10-2020, 22:40   #313
jfman
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Re: Coronavirus

Quote:
Originally Posted by OLD BOY View Post
Yes, I get that, jfman. But we still have to pay back the instalments for those debts in the meantime, which have increased massively with the increased borrowing.
Fundamentally Old Boy, no Government, anywhere in the world has any sincere intention of ever repaying debts. They intend to find someone else to lend to them at a later date to repay the initial creditor.

Inflation can erode that over time. Similarly so can economic growth (and tax receipts presumably - not in real terms economically but in practice for the budget). The question Governments really ask themselves is can they fund the cost of borrowing - the interest essentially.

Inflation does erode the amount borrowed and Governments continue to throw more debt on top. Why? Because money now is worth more than money when it's due. Will we be ever unable to pay? Not for debt borrowed in pounds sterling, no. Because the Bank of England - the Central Bank - acts as the lender of last resort.

UK GDP 2019: £2.21trn. Interest on Government debt £0.05trn.
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