£700bn Covid Money - What is it & Where did it come from?
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The £700 billion refers to the total government deficit since the beginning of Covid-19 as of February 2023. Gary CLEAR'S UP CONFUSION ON THIS FIGURE & explains how this is a mix of conventional government borrowing & quantitative easing The total size of the government debt (and thus the total deficit since covid) can be found here: tradingeconomics.com Here is our video on how this money ended up with the rich: youtube.com For a deeper understanding of the concept of money and what it is, watch our "What is Money Video" here: youtube.com SUBSCRIBE, SHARE & START A CONVERSATION SOCIAL MEDIA: WEBSITE - wealtheconomics.org TWITTER - @garyseconomics FACEBOOK - @garyseconomics INSTAGRAM - @garyseconomics TIKTOK - @garyseconomics Spoken by Gary Stevenson GARYSECONOMICS Uploaded by Simran Mohan MOHAN MEDIA
The video opens with a precise definition of the 700 billion pounds figure, describing it as the total government deficit since the start of the Covid-19 pandemic. The presenter emphasizes that this number equals the total increase in government debt, representing the amount spent beyond what was raised in taxes. He clarifies that the figure is drawn from public records and links to official debt data so viewers can verify it themselves. A key point early on is that government spending financed without taxation increases the overall money in circulation, unlike spending funded by taxes which merely redistributes existing money. The explanation sets the stage for distinguishing two main funding sources for the 700 billion: quantitative easing (QE) and traditional borrowing from private sector entities, with roughly 450 billion from QE and 250 billion from borrowing. The host then transitions to a deeper dive into QE, promising a simplified but accurate depiction that helps viewers understand the mechanics and the broad societal impact. He frames QE as central bank money creation that finances government spending, thereby expanding the money supply and increasing cash holdings across the economy. The narrative acknowledges that QE is often misunderstood, and the simplified model presented shows how central banks print money, lend it to the government, and how this money ultimately circulates through the private sector into public spending. By walking through the steps, the video connects the act of government borrowing and spending to observable outcomes like higher cash balances, asset price dynamics, and potential inflationary pressures. The discussion then shifts to the implications of this money flow, arguing that even though QE can be complex in its mechanics, the end result is a clear increase in money held by individuals and institutions in society, which in turn affects inflation, asset prices, and the distribution of wealth. In subsequent segments, the presenter teases further exploration of who received the money, the broader economic consequences, and how this framework aligns with or challenges traditional economic theories about money and debt. The overarching message is that the 700 billion pounds represents a public deficit that ultimately translates into increased private wealth for some and heightened debt for the government, with substantial social and economic consequences to be unpacked in future videos.
Topics · finance · economics · public_policy · current_events
Questions answered
- What exactly does the 700 billion pounds represent in terms of government spending and debt?
- It represents the total increase in government spending beyond tax revenue since the start of Covid, i.e., the total deficit which equals the increase in government debt.
- How does quantitative easing create new money in the economy?
- QE involves the central bank printing money and lending it to the government, with private sector borrowers issuing debt to banks and the central bank later buying that debt, resulting in more money circulating in the economy.
- Why does government borrowing and spending make society richer, according to the video?
- Because when the government borrows and then spends, the money is injected into the economy, increasing the total money held by private agents, which can be measured as higher bank balances and asset values.
- What are the potential social and economic consequences mentioned for such large deficits?
- Large deficits can shift wealth toward those who hold financial assets, influence inflation and asset prices, and create long-term debt burdens for the government and broader economic implications for inequality and investment.