By Richard Greaves
When it comes to debt, there’s no disputing that we are in a rather big hole and it’s getting bigger all the time.
Private debt in the form of loans to individuals and businesses is rising at more than £60 billion per year and is probably set to top £1000 billion very soon — the latest figure I have is £680 billion for 1997 (Mike Rowbotham’s The Grip of Death).
Public debt in the form of the National Debt touched £430 billion in 1998 after rising continuously for more than 20 years.
Then suddenly a few weeks ago we had the Chancellor basking in the limelight of having been able to pay off £30 billion of national debt at a stroke.
The financial pages were full of praise. For a while, there’ll be a little less interest to pay, but as all those who understand the debt based money system know, sooner or later the figure will inevitably rise again.
You can’t really blame the Chancellor — after all no-one, government included, wants to run up more debt than necessary — especially in an election year when it’s important to keep taxes down.
And there’s that other important matter of the convergence criteria for joining the EU single currency which the government is keen to do — national debt has to be kept within certain parameters in relation to gross domestic product.
But how on earth was he able to spring this one? Out of our taxes?
No. What is actually happening is that the burden is being transferred to the private sector instead.
Firstly there’s the Private Finance Initiative. There’s hardly any sector of public services now where privatisation isn’t the order of the day, from the health service to education to housing — you name it and the private sector is in it. It’s a great way for the public sector to cut expenditure and borrowing in the short term. But to fund their involvement the private sector must borrow from the banks.
In addition, the Treasury has had a dramatic windfall in the form of £25 billion from the sale of licenses for the new generation of mobile phones — a tidy little sum that almost covered the national debt repayment.
However as BBC2’s Money Programme pointed out a few weeks ago, the telecommunications companies have run up huge debts to do this and many are in a precarious position as a result.
British Telecom has run up £30 billion of debt, and consequently the board has had to face the full wrath of the shareholders.
While Gordon Brown continues to pat himself on the back for his “sound management of the economy”, will BT’s outgoing Chairman Sir Ian Vallence, appreciate how the debt based money system landed his company in such a big hole?
And as for you and I, well, even if for a while, we aren’t paying quite so much of our tax to cover the interest on the national debt, we can rest assured that we’ll soon be paying more for the products and services of BT and all the others to cover the interest on their debts.
Anyone else want to buy a hole!