Why won’t Rachel Reeves could cut the interest paid by the government to the UK’s commercial banks?

0:00 why won't Rachel Reeves save at least 20 billion pounds a year when the opportunity to do so is available to her i wish I knew the answer to that question because as we know she has chosen to penalize pensioners with the removal of the winter fuel allowance to save a few Bob here and there and she is now penalizing those who are on disability benefits to the tune of6 billion pounds a year to supposedly save the government money and balance it books and she doesn't need to do so because she could save 20 billion pounds or more a year as a consequence of reducing the cost of the interest payments that the government makes in the UK year in year out how could she do that she could simply stop paying

0:46 interest on all the bank deposits that the commercial banks in the UK supposedly hold with the Bank of England and I used the word supposedly in that last sentence very deliberately because the deposits in question were not made out of funds that the banks in question had generated for themselves or out of the funds that other people had deposited with them but they were instead created by the UK government as a consequence of money creation during the period from 2008 to 2015 as a result of the global financial crisis and in the years 2020 and 2021 as a consequence of the COVID crisis during those two periods more than 800

1:34 billion pounds of money was created and injected into the UK economy by the UK government via the Bank of England who was responsible for the money creation in question and because double entry requires that there be both a debit and a credit with regard to every single bank transaction this process of money creation required that there be a deposit in the bank of to match the money that was injected by it into the global economy through the commercial banks the sums in question were called deposits by the banks even though they had been created by the Bank of England and absurdly although the banks had literally nothing to do with the creation of those

2:20 deposits they are paid interest on them it's like you discovering that your bank has decided to put 10 million pounds into your bank account and then pay interest on it even though you've done nothing to deserve that or earn it it is quite literally that crazy and yet Rachel Reeves continues to pretend that these are genuine deposits by the commercial banks that they somehow created and which she therefore has to pay interest on via the Bank of England that is not what happens in Europe the European Central Bank does not pay interest on all such deposit accounts maintained by European commercial banks with the European Central Bank and likewise in Japan the equivalent

3:08 balances held by commercial banks with the Bank of Japan do not by any means all earn interest the vast majority of the balances there in fact earn no interest at all so Rachel Ree could do the same thing here she could simply cut the interest paid on some or all of the near enough 700 billion pounds of balances remaining on these accounts but which she seems entirely reluctant to do how much could she save as a result well the current interest rate on that 700 billion is at 4.5% so the interest is running at over 30 billion a year now I'm not saying she should cut all the interest but I can see some reasons why the bank of England needs a mechanism to pay some interest so that its decisions

3:56 on bank bay straight have an impact upon the economy that's an acceptable thing for it to do but it could for example cut interest payments on 500 billion and that would save over 20 billion a year the cost would be entirely borne by those commercial banks who have been favored with that 20 billion a year of excess money payment year in year out for years gone by and have profited as a result with the benefit going through the dividends that they pay to the wealthiest in the UK economy so we have a direct choice we can continue to benefit the wealthy by making these payments or we can cut them and we can benefit those with disabilities those on low pay and pensioners who need to be

4:42 supported during the course of the winter because of the excessive costs of energy which are being imposed upon them and so much more which would you prefer would you rather that we continue to give handouts to the biggest banks in the UK who never earn this money or would you rather we support those who really need money to make sure that they can actually survive in a pretty brutal economy i know where I stand where do you stand and if you think that these interest payments are wholly unnecessary and should be stopped why don't you tell Rachel Reeves or better still tell your MP just write to them and say "Dear whoever it might be I am aware that the Bank of England pays at cost to the UK government more than 20 billion pounds a

5:28 year on the central bank reserve accounts maintained by our commercial banks with it and that this is unnecessary because such payments are not paid by the European Central Bank in a similar situation or by the Bank of Japan why then do you want these payments to continue when the money could instead be used to support those who have disabilities or those who are living in poverty yours sincerely sign it send it if you don't know who your MP is check on the parliamentary website and they'll tell you simply by entering your postcode and that way you'll have done something to try to make the world a better place