Where do people think money comes from?

[MrsBlobbyOnLockdown]

Everyday we are hearing pay the NHS an extra 30% pay them £26 per day extra is the latest one.

I’m not disputing they deserve it of course they do & if we had an endless supply of money it’s the first place it should go.

But seriously, where do people think all this money is coming from?

What are your thoughts

As consultants you could be self employed and pay NI. Remember the BBC personalities who became companies and were asked to pay ££££ in back tax. The BBC avoided NI and so did the personality. It’s wrong on many counts. Some were asked to pay in excess of £250,000. If someone works for a sole entity, the BBC, they are employees. If they work for several, they are self employed. A sole trader company is avoidance.

MPs do not earn vast amounts. We have a major problem in that we need first class brains to be MPs. It’s vital. We can see the problems of not having them (JC comes to mind). We must value them and stop bleating about them! Their scrutiny and work for constituents is vital but so is their intellect and ability to understand complex situations and leadership. We need better MPs. Paying them less than other professionals isn’t the way forward.

The Bank of England is not controlled by the Government but is owned by them. Not quite the same thing.

Not sure I understand why being a sole company director is tax avoiding and being self-employed isn't?
Yes, the self-employed person would pay NICs (or maybe not if they don't reach the threshold of £183 per week).
NICs and income tax are no longer hypothecated. So it is not about the total tax take rather than being seen to make the qualifying NI contributions to qualify for a pension (which many seem to think won't exist in the future etc).

And I don't necessarily agree that MPs should be paid more if they are simply a constituency MP.
Yes if they are a minister, but then they are paid more anyway.
But, when they are on camera cheering when they blocked an increase in pay for public sector workers whilst they seem to enjoy pensions/pay increases way beyond what many in this country on much lower salaries are receiving then I disagree that they have great minds tbh. Yes, they might be clever (but I don't necessarily think that they are) but morally they seem a bit, I don't know, bankrupt perhaps to me.

There is an interesting parallel between the credit creation theory of money and Modern Monetary Theory.

The credit creation theory of money tells us we were wrong to believe banks get deposits then lend them. In fact it's the other way around, the act of lending magics deposits into existence, which then flow around the banking system. (When loans are repaid, the money is destroyed. So I guess if all bank loans were repaid, no-one would have any money in their bank accounts!)

Similarly, Modern Monetary Theory tells us we've got things backwards, if we believe that taxes and borrowing pay for government spending. They sat that taxes exist in order to create demand for government money, that the government must print before they can take some of it back in tax. They have some lovely stories and examples where they hammer home the point that historically when taxes have been paid with actual paper money, what the government does with the tax money is burn or shred it.

MMT story: the colony of Virginia wanted to raise some money. They could not legally create more of the British currency that was in use. They legislated that 10,000 Virginia pounds be printed, and in the same bill, legislated 10,000 pound of taxes, that could be paid with Virginia pounds. They printed the money and spent it to buy what they wanted. When some of it came back to them in taxes, they burned it. (They also accepted British currency, so not all the printed money came back.)

Teresa May didn’t introduce austerity. Cameron and Osborne did.

Not forgetting the EU's role of course;

"On 5 December 2017, the Council closed the excessive deficit procedure for the United Kingdom, confirming that its government deficit has dropped below the EU’s 3% of GDP reference value."

"It abrogated its 2008 decision on the existence of an excessive deficit in the UK."

"As a result, only two of the EU's 28 member states remain subject to excessive deficit procedures.This continues an improvement observed since 2010-11 when, during a 12-month period, procedures were open for 24 member states."

"The UK has been subject to an excessive deficit procedure since July 2008, when the Council called for its deficit to be corrected by the 2009-10 financial year."

"However the 2008 economic downturn, as well as stimulus measures adopted in response to the downturn, led to a substantial deterioration in the UK's budgetary position."

"In April 2009, the Council extended the deadline for correcting the deficit by four years, to the 2013‑14 financial year. In December 2009 it extended it by an additional year, to 2014‑15, in the light of unexpected adverse events.The contraction in economic activity in the UK had worsened to 3.3% of GDP, and the projected government deficit for 2009‑10 had been revised upwards to 13% of GDP."

"In June 2015, the Council granted the UK a further two years to correct its deficit. It recommended headline deficit targets of 4.1% of GDP in 2015-16 and 2.7% of GDP in 2016-17, consistent with improvements in the structural balance of 0.5% and 1.1% of GDP respectively."

"Over the period, the Council found twice, in April 2009 and June 2015, that the UK had not taken effective action in response to its recommendations. But as the UK is not in the eurozone, fines could not be imposed."

www.consilium.europa.eu/en/press/press-releases/2017/12/05/uk-s-deficit-back-below-3percent-of-gdp-council-closes-procedure/

In order to cover COVID emergency spending, the Bank of England is just printing money. (In this case printing money just means bumping up the balance of a government account with a computer keyboard.) This has got some people very excited, as it is confirmation that it can be done, without even employing the fig-leaf of pretending that money has to be borrowed by selling bonds. (However I believe the extra spending will eventually be covered using more conventional procedures.)

The Chancellor was given a 'windfall' to spend at the end of 2018 - unexpected rise in tax receipts I think;

www.theguardian.com/uk-news/2018/oct/29/philip-hammond-budget-tax-cuts-spending-theresa-may

No, you’re mistaken. Refuse collection comes out of council tax, so that breakdown wouldn’t have come from HMRC. It would have come with your council tax bill.

Central government also breaks down it's spending in terms of your tax bill. I've just logged into the self-assessment web site to confirm I wasn't imagining this. I guess people who don't do tax returns might not get this.

The bigger line items for 2018/2019 were (in descending order)

Welfare (23.5%)
Health (20.2%)
State Pensions (12.8%)
Defence (5.3%)
National Debt Interest (5.1%)
Transport (4.3%)
etc.

If someone works for a sole entity, the BBC, they are employees. If they work for several, they are self employed
Unfortunately, it's nothing like as simple as that - as for example Lorraine Kelly (though on ITV) proved when HMRC pursued her and lost. HMRC lost against BBC presenter Kaye Adams.
It is a very very complex area.
Even HMRC acknowledged that the BBC had demanded some of the presenters worked in this way.

@RandomLondoner, what about the interest on the loans? Surely that will go towards the bank's profits? So banks can conjure up money out of thin air, lend it out and make money on it...

stellabluesky
The government provides the money for school budget so regardless if the admin staff were furlonged or not, it's all coming from the same money.

I think you need a good salary for MPs or you end up with what we seem to have - people with inherited wealth (many of whom attended fee paying school) rather than people from an ordinary background who have done well for themselves. If you are from a poorer background you will probably want to make as good a salary as you can, rather than dedicate your future to the country.

The gov had saved a packet on pensions by raising the age you receive it. There are 11 million pensioners.

You don’t have to do this - you could pay yourself entirely in salary and pay the extra tax. I entirely understand why you don’t but can you then complain if this choice to pay less tax leads to less benefits.
I am not complaining - but by the same token HMRC can fuck off continually trying to reclassify me as a disguised employee when I have no employee rights and don't work like an employee.

The gov had saved a packet on pensions by raising the age you receive it. There are 11 million pensioners
They are about to save a whole lot more - I work in an area that deals with death and I'm seeing an awful lot of people in 70s/80s/90s dying at present.

My argument was we need to entice the best people to be MPs. They are better if they have had a great career before. They know more about life outside the Westminster bubble. Paying lower levels people demand isn’t going to achieve that. It achieves people of some ability but not great ability.

@bubblesBuddy
You seem to imagine that pay is proportionate to competence in some way. That is sometimes true, but far from always in my experience.

If pay for MPs is too low, we simply won’t attract people who have made a career in other professions. I do actually think doctors, barristers, CEOs of companies and other people who rise to the top of organisations are better than the average person and are used to problem solving and even might have something to offer over and above a former political adviser or someone who really didn’t try very hard at school. I tend to think cream rises. Companies like John Lewis, Sainsbury’s and similar well known high achieving companies are not staffed by idiots at higher levels. We simply need more of them to become MPs. Paying peanuts won’t achieve that.

Yes but where does money come from. It is just a small piece of paper promising to pay the bearer another worthless piece of paper. The debt that has been printed to support the economy since the banking crisis has left us with no fiscal weapons in the cupboard. More debt. More austerity. More were all in it together. It is not working.

Contrary to popular belief by some you can't just print more it doesn't work like that

So if you won’t fund this crisis by debt, what will fund it?

The BBC did a great resume for the election last year.

Here: