I have been continuing my studies into how money works – inspired by the excellent folk at http://PositiveMoney.org.uk
This has led me to the High Wycombe MP – Steve Barker – who is a director of the Cobden Centre and a thinker of some depth.
In turn, he led me to the Institute of Economic Affairs and Nick Silver, who wrote a shocking and sobering report in 2008 – A Bankruptcy Foretold – about the real size of UK debt – when you account for pension (and other) liabilities in the way you would for a company.
With the latest figures, UK government debt is not £772 billion (54% of GDP) but £4.8 trillion (333% of GDP).
The figures quantify the situation, but what moved me most was his succinct summing up when he had to update the figure to £6.5 trillion:
Looked at this way, the UK is effectively an enormous unfunded and effectively bankrupt pension scheme, with a large speculative holding in some banks and a sideline in running a small island state off the northern coast of France.
I wonder – is it better to continue with the perverse (but accepted for countries) accounting policy that ignores pension liabilities, or face the reality that the UK – if it were a company – would be bankrupt?
Would that acceptance change our responses to anything – in particular, the spending cuts?
Somehow, I doubt it.