I genuinely don’t understand it. We had years and years of brutal public services cuts and them being ground to the bone, where’s the money gone? People around me just say “tax cuts/payoffs for billionaires” but idk if that’s verified
The money went to the budget deficit. Typically, a government takes on an amount of debt to effectively pay for today’s problems with tomorrow’s (devalued via inflation) currency, assuming that their interest rates are less than the rate of inflation. During the 2008 crisis, QE made the debt a problem for some people. Austerity measures are designed to catch up on the repayment of the debt.
The austerity measures disproportionately impacted the poorest households, while the wealthiest bore a much smaller burden. Spending cuts impacted the social security and public services the poor households rely on. The top rate of income tax was reduced, which left more money for the richest households. Quantitative easing shoved money into the financial system, which made loans easier to come by, which drove up prices of assets such as homes, which made those who owned them wealthier while those who didn’t own property are now unable to buy.
The UK can pay someone to make sure that farm shops have slate roofs, and an inspector to ensure 16 mile radius goods sold there, but won’t fund social housing or medical care. The rich get what they want, and the poor get fucked.
During the 2008 crisis, QE made the debt a problem for some people.
I read this as “Queen Elizabeth made the debt a problem for some people” and was struggling to figure out what she had done or said in 2008 that influenced this, before I eventually realized you meant “Quantitative easing”
This is a really helpful answer thanks. I understand the first 2 sentences of the 2nd paragraph, can you ELI5 the rest of the paragraph?
Income tax rates go up like this (purely example) 0-20000 - 10% 20-40000 - 15 40-80000 - 20 80-100000 - 30 100-150000 - 40 150000+ 45%
If you make 75000 in this example, you’re taxed 10% on the first 20k, then 15% on the next 20k, then 20% on the remaining 15k, so 2000 + 3000 + 4500.
Lowering the top rate of income tax means that the people who earn more than whatever the limit is (150k in this example) pay less tax. Generally, the consensus is that the rates should shift to the higher income rather than the other way around.
Quantitative easing is the government buying up bonds to support their value. If everyone stops paying their mortgage, the economy tanks because the bonds that represent those mortgages go to zero. If the government promises to buy some them in spite of the zero value, the value is propped up. The people who benefit, by and large, are capitalists (those who make their money from already having lots of money ie wealthy). But it makes the cost of loaning money lower, so it becomes easier to get a loan, which combined with limited housing leads to an increase in sale prices of houses.
That’s really helpful thanks 😊
Military contractors mostly. “More aid to Ukraine” is usually code for “we’re giving money to the US MIC”. Also the money isn’t “saved” in that it now exists somewhere and therefore has to have gone someplace to exist there, the government simply doesn’t borrow as much for those services anymore. Probably borrows a lot more for other stuff though so in the end it doesn’t even balance out.
