by This a brilliant explanation of how the British fiscal system works, and probably the American system is similar, I would have thought. Ann Petrified demolishes the myth about left wing governments 'spending other people's money'.Governments either borrow money from their own central banks, she says, or issue bonds to borrow the money from the private sector. This money is then invested into the UK building its infrastructure and public services, etc, creating jobs which helps the private sector to flourish and grow. And with the increased GDP the government gets the money back in taxes to help pay off the loans.Some people on the right might still see this as the government taxing too much, and yet their job, or the security of their job, or their next decent pay rise, may well depend
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This a brilliant explanation of how the British fiscal system works, and probably the American system is similar, I would have thought. Ann Petrified demolishes the myth about left wing governments 'spending other people's money'.
Governments either borrow money from their own central banks, she says, or issue bonds to borrow the money from the private sector. This money is then invested into the UK building its infrastructure and public services, etc, creating jobs which helps the private sector to flourish and grow. And with the increased GDP the government gets the money back in taxes to help pay off the loans.
Some people on the right might still see this as the government taxing too much, and yet their job, or the security of their job, or their next decent pay rise, may well depend on this government expenditure, but they don't know this as they can't see the link. Ann Pettifore's explanation of how the government's fiscal system works should be made into a video, or a short film, or even picture book so that people can understand it easier.
But this is the really good bit, pension and insurance companies really want the government bonds because of their security. The government pays interest on these bonds and the right might get concerned about government borrowing and spending, but when the pensions, or the insurance policies, pay out, people get the money back that they had paid in taxes - the profits the pension fund made came from the taxes that were paid in. In other words, the government borrowed to invest into the economy making everyone richer, and from this new wealth the government was able to collect the necessary taxes to pay off the loans, which also boosts the pensions.
So the government isn't taking your hard earned money away art all, because it actually made you a lot richer and in the end you would have made a net gain, even after taxes, while your health services, your schools, your roads, and all public services improved the quality of your lives. Win, win!
But there's more, what if the government sometimes saved people's money by issuing the bonds, because the interest paid was below the rate of inflation.