Yesterday (the 19th June) the headlines reported –
Massive borrowing to fund the fight against coronavirus means the UK’s debt is now bigger than the country’s entire economic output for the first time since 1963, official statistics have revealed
Ministers borrowed a record-setting £55 .2 billion in May according to the Office of National Statistics, sending public sector borrowing nine times higher than this time last year.
It means the UK’s debt mountain has also now grown to more than the entire country’s annual output.
The UK’s total stands at 100 .9% of the country’s Gross Domestic Product, the first time that has happened in 57 years.
So, my question is who do we owe the money to?
If all the countries (other than a very few oil and gas rich countries) in the world have a significant Sovereign Debt Problem due to the economic implosion as a direct consequence of the Covid 19 crisis, and have reported significant borrowing, who’s lent the money and who is it that gets paid back.
I’m no economist and have never understood macro-economics but if all the central banks just print money as the good old Bank of England is currently doing, does it really matter? The list of countries that have defaulted on their Sovereign debt is endless, and if all the Nations defaulted on their debts what can happen? Sure, there’ll be inflation, but if EVERYBODY suffers the same fate it is effectively a Zero-Sum Game.
OK I get it, that if we owe money to the few Petro-Rich Nations and then default what exactly can they do? Do they send in the Bailiffs? Do they try and take over the country – all of them? – I don’t think so!
Anyway, the Petro-Rich Nations need those defaulting Countries to keep buying their gas and oil.
So, I come back to my original question – if we are in debt to whom do we owe the money to? If its those Banks and Institutions who are seemingly buying Sovereign Bonds, they can’t afford for all these nations to default or go bankrupt, and anyway where does their money come from?