DURING the current covid pandemic, the UK Government has poured huge sums of money into the UK economy to compensate for the dislocation of many commercial enterprises. That government has also been somewhat selective in the people it has chosen to support. The current situation, it seems to me, offered a splendid opportunity to experiment with a tentative form of universal income. I will let that pass for the present, because it is not the focus of my attention in this letter.

What does puzzle me, however, is that there seems to be a lack of comment about the basic assumption being made (and pressed upon us) that all that money has, somehow, to be “paid back”.

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Most of us are not economists. Our experience of matters financial concern paying our way as ordinary individuals or families. In these circumstances money borrowed does indeed have to be paid back, or several bad consequences will follow. But what is not clear to me about this money the UK Government has made available to itself is where it has come from.

From time to time countries large and small have gone through difficult times and have resorted to the printing of money. They did not borrow that money from anyone in particular. They just printed it.

And that might have been okay had it not been for the fact that they had to trade with other nations to obtain commodities that were unavailable within their own territory, and if there was not a need to exchange their own currency with those of other territories. In these circumstances just printing money leads to rampant inflation. That is, relative to other, unaffected currencies, the value of that particular country’s currency falls dramatically.

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That is what happened in Germany in the years between the two world wars. Tales of those times are told of people walking about with a clothes-basket full of paper bank notes, leaving it down for a moment to look into a shop window (in a desperate attempt to find something tangible to buy which would preserve the value of their paper money) and then turning round to find that their clothes-basket had been stolen – not the paper money, which was lying in a heap – just the basket.

I have also heard of students from other countries, studying in Germany and in receipt of a grant, being paid in some other currency, and then finding themselves being rich enough (in Marks) to buy a city centre apartment block.

But the point about the situation in which we find ourselves in at present is that this financial problem is affecting nearly every country in the world.

So, if every country just prints money to get through the emergency, and does so to the same extent, why does anyone need to pay anybody back? Who would suffer if it was not paid back? It seems to me, therefore, that all that is needed is to have an international agreement to the effect that we all print a certain amount of money and another agreement later that we may do a little bit of adjustment to level things out.

So why not? Do we really need to pay anything substantial back? Perhaps you can find a financial expert who can explain where I have got this all wrong.

Hugh Noble
Appin

NOW that we’re in a second lockdown, I trust that we won’t repeat glaring inconsistencies like the first occasion, with people from abroad not undergoing sufficient vetting or quarantine procedures and jetting in and out of the country – not just from different countries, but from completely different continents.

Stephen McCarthy
Glasgow