Cameron announced this morning the era of public sector pain http://www.guardian.co.uk/politics/2010/jun/07/cuts-change-british-way-of-life-david-cameron in his speech he claims that the looming cuts would affect Britain's entire population as he laid out the lie of taking "the whole country with us" in dealing with the so called debt crisis. He did not give details on how the cuts would be implemented other than to say that the government would not cut the deficit "in a way that hurts those that we most need to help".
Cameron is not telling the whole story, because firstly the cuts will not hit the bankers and the rich they will fall mainly on public sector workers and working class communities. Secondly he is not telling us the truth about government debt and how the debt could be repaid without the pain.
Governments borrow money by issuing ‘gilts’ these are pieces of paper that promise to pay the money back with interest. They are sold at auction to the bankers, who then trade them on to our pension funds and insurance companies. So it’s our pension funds that fund government debt, so when Cameron says jobs must be lost to pay back the debt, ask the question who is the government paying back? Answer you and me via our pension funds.
What Cameron fails to tell us as well is that the government could pay back the debt by issuing its own money, without debt, to pay back our pension funds and others. Governments have the power to issue money without debt and they did this to rescue the banks. How did they do that? The Bank of England just credited each bank’s account electronically with an amount, just the same as a bank credits your account with a loan or mortgage.
The lessons of history are stark if the austerity-minded ConDems wish to press hard to balance budgets, (as occurred prior to the Roosevelt administration during the 1930’s in America) then a deeper recession will be the only outcome, unless we demand a different approach of course!
