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Where does all the money come from

  • 03-09-2021 11:03am
    Registered Users Posts: 803 ✭✭✭ fun loving criminal

    They put thousands of people out from work during covid and put them on the PUP.

    Now that things are opening back up and employers should be hiring, they created a jobbridge 2.0 scheme, but paying more than the last jobbridge, essentially minimum wage job for 30 hours a week.

    And that's not all, someone earning under 35,000 after tax can apply for social housing and get the housing assistance payment. Nothing against this housing assistance payment, 35,000 isn't all that much.

    But makes me think, where is all the money coming from?



  • The European central bank print it, our government borrows it, then rolls over the debt when it becomes due, and so on and so on.

  • Taxes

  • Taxes, PSRI and borrowing.

    The Govt does not borrow directly from the ECB, that is illegal.

  • trees.

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  • In a round about way that is what is happening though.

    The ECB buy bonds via QE money, it's needs must but it is worrying all the same that the Eurozone is so reliant on it, many countries can borrow at minus rates on 10 years, or below 1%. That is largely true up to 30 year bonds.

    Either way they are borrowing for free.

    Just imagine if something happened to say significantly damage the Italian economy, like knock its tourism sector for 6 for 2 years, that's about 10% of its GDP. A country already at massive debt but admittedly well able to service it prior to Covid. It can borrow for free, it's viewed as that solid. One of the most solid economies on record for bonds.

    It may well work out but it's a hell of a distortion.

  • Got to pondering this when they announced this so called "new" super duper housing building policy..........billions per year....... then I got to pondering what I'd have for dinner & that felt like something more pressing so I focused on that.

  • In many Dutch cities a million will not buy you a reasonable house in a reasonable neighborhood. Ultimately it feeds through.

    The Hague makes Dublin seem like a cheap place.

  • From Micheal Martin's bank account

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  • closer than you'd imagine. except they're money trees, magic money trees... @KyussB might have more to add?

  • Watch Ray Dalios economic machine video on youtube

  • The magical money tree of course.

  • It comes from general taxation eg landlords pay 40 to 50 per cent tax , paye tax on salaried workers, capital gains tax, also just because someone earns 30k does not mean they will even apply for hap payments, in our housing crisis many young people simply live at home rather than pay high rents Couples rent one bed apartments. Not all landlords accept hap payments. Or the rent is above the max limits for gap in the area you work in. It's very hard to find a single flat if you are claiming hap payments as a single person. And the government can say we can spend billions but there's a shortage of building workers in Ireland many workers left when the pandemic started.

    The cost of building a house has increased 35 to 40 per cent.

    David McWilliams said buyers should wait and step away from the housing market,

    Post edited by riclad on

  • I just listened to his latest podcast , David says potential buyers would be better off renting, as the government says it will build 30 k housing units per year, it can borrow money from the ecb at 1 per cent rate eg the present market does not give full value to most buyers at least in urban areas, or city's

  • Ireland's national debt per head is about €42,000, which works out at around €90,000 per person in employment.

  • I don't believe there is the requisite labour force to build that number.

  • In the new age of economics around the world (look at what Joe Biden is doing) you don't have to worry about that.

    Money is a concept issued by central banks, ie umlimited. Borrowing is cheap so economies are changing and money supply is practically unlimited so governments are changing their polices.

  • America can simply print money and sell treasury bonds, Ireland can only borrow a limited amount per year, but it makes sense to borrow enough to build 30k units from the Ecb

    As David says the present situation cannot continue , with single people working full time on a good wage stuck renting for the long term

    The government realises they have to take action to provide more housing and housing for people on different wage grades especially people under 30

  • The ECB's programme called PEPP is an emergency programme to purchase Govt debt.

    It will not continue forever.

    I see discussions about when it might begin to be tapered off.

    But with that in mind, is it not too early to determine whether or not the European economy is ready for the emergency purchases to be withdrawn?

    The monetary policy measures were intended to limit the impact of the pandemic on the economy, maintain favourable financing conditions and ensure we met our inflation target. Looking at the European economy, you can see that the recovery was very strong in the second quarter, and we believe it will continue to be fairly strong in the third and fourth quarters. Our emergency [purchase] programme is linked to the pandemic and its economic consequences. But one thing is clear: recent data are very positive. The European economy will be able to recover its pre-pandemic income levels by the end of this year or the beginning of next year. We will have new projections in the coming days and will take our decisions accordingly. In September we will also have to decide on the volume of purchases for the last quarter of this year. If inflation and the economy recover, then there will logically be a gradual normalisation of monetary policy, and of fiscal policy too.

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  • The Govt does not borrow from the ECB, that is illegal.

    The ECB has been buying huge amount of public debt in the secondary market.

    That has driven down bond yields.

    The ECB purchases will not continue forever, which is good, as that's a sign that the economy has recovered.

    As this huge buyer scales back its purchases, bond yields will rise.

  • A computer screen.

    Money is among the greatest scam in human history.

  • If you are interested that is a good book on the subject.

  • Money is printed. More money around devalues all the existing money in things like savings and pension funds and causes inflation, which is price rises on everything from food, to fuel, house prices new and used.

    Those who can't get decent pay increases like unemployed, minimum wage workers, pensioners etc. end up with an effective less money or an income reduction, in that they can now buy less with their fixed income. Also all earners have an effective pay cut.

    In terms of borrowing all this in theory needs to be eventually paid back, and future generations will be burdened with this government debt. At the moment interest rates are at an all time low meaning repayments for massive dept is hardly anything, but if rates rise, then the annual cost of paying the debt will balloon. In terms of David Mc Williams take what he says with a pinch of salt. He is becoming a shock jock and writing regular articles to shock and give an alternative to the main stream. He says don't buy now, but not that prices will necessarily collapse any time soon. Banks are loaning now, and in the future they main not loan (such as during a crash). Rates are very low for loans now, they may not be in a crash. Many people get a home loan when they reach a certain stage in life, such as a couple planning on having kids, and market forces don't really apply as they have urgent needs. There are many downsides to renting, but one upside of buying is that it is very hard for banks in Ireland to evict you during a crash, so it's likely once you get your home, even if you lose your job, you should be able to stay for a number of years.

    Electronic money is a construct, but inflation, supply and demand and international investors in the property market including government intervention in the housing market is all skewing a normal market. County Councils are buying whole housing estates from builders, so supply to ordinary first time buyers is heavily impacted by the local lack of supply. There are sheep graising in unused lots in industrial estates near the red cow, so there is lots of undeveloped land with land owners holding back.

  • People think governments are funded by taxes and money doesn't just come from 'the magical money tree'.

    When in fact, that's literally how the fiat system works. Money is printed out of nowhere. Look up fractional reserve banking.

  • I don't understand what is going on with this clock, but it is very pretty to look at.

  • Money is created by the commercial banking system, yes.

    But this thread is not about money specifically, it asks a question about Govt revenues.

    The answer is that Govt revenues come from taxes and borrowing.

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  • Next you will be telling me the temporary measure that is USC won't continue forever.