#RethinkMoney — Part 1: The National Debt…And lots of it

All One Point Nine Trillion of it.

A sphincter quivering amount. This is the total amount in sterling, we owe as a nation. But who exactly do we ‘owe’ this money to? And is it even debt to begin with?

Depending on who you believe, the word ‘debt’ originates from Latin, French or German but to avoid arguments, they are all in agreement to its meaning, ‘To owe’ And most of us understand that if you borrow an item (The Elgin Marbles, Gibraltar, Falklands etc. being obvious exceptions) then you have to return it to the lender, and if it is money, it is generally payable with interest.

So typically, whatever the Government deficit is — the difference between tax receipts and spending — it has to go into the financial markets and make up that shortfall with borrowings in sterling. 1.9 trillion at last calculation. Roughly double what is was in 2010, when the Coalition took the helm. So far, so good.

So how does the Government do this? Does it go cap in hand to the banks and ask for a wads of 20 pound notes?

No, it sells Gilts:

1. A fancy name for an IOU, that is worth a denominated amount.
2. Has a redemption date that can be short — perhaps up to 7 years, long 60 years, or even no…