It’s an economic truth that every time a government spends, it creates new money to do so. It does not spend what is commonly called taxpayers’ money. Nor does it spend funds borrowed from the City. It simply asks the Bank of England to make a payment – and that’s what that Bank does, extending an overdraft to the government to let it do so.

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The Economic Truths Series:

1. An introduction to the economic truths series
   • An introduction to the economic truth...  

2. You’ve got no money in the bank
   • You’ve got no money in the bank  

3. Banks don’t loan out depositor’s money
   • Banks don’t loan out depositor’s money  

4. Bank loans create bank deposits
   • Bank loans create bank deposits  

5. Austerity does not save money
   • Austerity does not save money  

6. Repaying bank loans destroys money
   • Repaying bank loans destroys money  

7.There is no such thing as taxpayers’ money
   • There is no such thing as taxpayers’ ...  

ABOUT RICHARD MURPHY
Richard Murphy is Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best known book is ‘The Joy of Tax’.

This video was edited by Thomas Murphy.

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