Blatant Lies from the BBC

Article here
"The overnight deposit rate was cut from -0.2% to -0.3%, to push banks to lend instead of parking money at the ECB."

And here it begins. Banks don't lend reserves. Loans create deposits. Of course most readers don't know that and our 'national broadcaster' knows they don't.

"The cut in the interest rate on overnight bank deposits means that banks in effect pay more to the ECB for holding their reserves.

The policy is designed to make it more profitable for banks to offer loans to consumers and businesses, ensuring a free flow of money."

OK, BBC how does it make it "more profitable for banks to offer loans to customers and businesses"? It doesn't.

"Instead, Mr Draghi said it would go on longer but at the same monthly rate. And the markets expected a bigger cut in the interest rate on banks' deposits at the ECB. It's already below zero which means the banks are being charged to park excess funds at the central bank.

A bigger cut would have given them an even bigger incentive to lend more rather than sit on idle cash."

Nope. Again, when banks lend they create a deposit (an IOU of the bank) and a loan (your IOU to the bank.) The reserves needed pop into existence. Banks lend when there are profit-worthy customers at a certain price of money. This will do nothing, except perhaps slightly reduce bank profits. How people think this will boost lending is beyond me.

This isn't really separate lies - just repeating the same lie over and over!

As the Bank of England say:

"The reality of how money is created today differs from the description found in some economics textbooks: • Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits. • In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits."

Quote of the day - suck on it oldies!

From Neil Wilson
""But that all changes when you have a JG. So is it reasonable to expect an unemployed person of 60+ to work for a fraction of his previous wages or salary? What about 55+?"

Yes. It's called obsolescence. 

Your 'higher wage' is only there because you have multiple bids in a market to drive the wage above the living wage. If that stops happening then your wage drops as well. That's what redundancy and economic shrinkage does in the actual job market that most people operate in (the secondary job market), where economic pullback and the effect on wages is a fact of everyday life. And you've recently seen it with the steelworkers in Redcar, etc. 

In the current system you drop onto JSA at £73.10 per week - where you will likely stay until you get to state retirement age or finally come to the realisation that a minimum wage job at B&Q is your only option. 

In the new world you will get a JG job at the living wage where you can do stuff that makes you happy and add great value to society. A significant improvement.

There are far too many people who think they get higher wages because they are somehow magically brilliant or wonderfully skilled. Nope. It's simple supply and demand in a market alongside unionised activity to help keep that in trim. 

Nobody has any right to a higher payment than anybody else regardless of how wonderful they think they are. The JG is very much an equal pay employer - and it needs to be because that wage fall is part of the reset mechanism of capitalism. It is one of the auto-stabilisers. 

The JG changes an unemployed buffer stock into an employed buffer stock. It deliberately tries to avoid disrupting the private sector wage structure and in particular changing anything so that it artificially maintains boom or obsolete skill wage rates."

""The introduction of a JG will give the neo-liberals , the not-so-innocent fraudsters, a very powerful weapon indeed to force down wages. We need to be careful about that."

One person's forced down wages is another person's greater equality. 

Try telling the 20 something struggling in the private sector 'gig economy' that a 50 year old is worth paying until they retire on a six figure salary they no longer provide the output to cover. 

You will get cycles of the right forcing down wages, and the left forcing them back up by raising the living wage. It's a useful tension that keeps things where they should be - about equal. 

Those who want a higher waged public sector job are very welcome to put the proposal to council tax payers (via their unions if they have one) - including the increase in council tax necessary to cover it. If your peers agree that you are a Very Valuable Person doing something Really Useful then they will pay the council tax necessary to cover your increased salary expectations. 

So you have a democratic way of getting what you want. You just don't get it 'by right'."

Who are Genel Energy?

Here

"Key allies in the US and UK led war on Islamic State (ISIS) are covertly financing the terrorist movement according to senior political sources in the region. US and British oil companies are heavily invested in the murky geopolitical triangle sustaining ISIS’ black market oil sales.

The Kurdish Regional Government (KRG) in Iraq and Turkish military intelligence have both supported secret ISIS oil smuggling operations and even supplied arms to the terror group, according to Kurdish, Iraqi and Turkish officials.

One British oil company in particular, Genel Energy, is contracted by the KRG to supply oil for a major Kurdish firm accused of facilitating ISIS oil sales to Turkey. The Kurdish firm has close ties to the Iraqi Kurdish government.

Genel operates in the KRG with the backing of the British government, and is also linked to a British parliamentary group with longstanding connections to both the British and KRG oil industries.

The relationship between British and Kurdish energy companies, and senior British politicians, raises questions about conflicts of interest — especially in the context of a ‘war on terror’ that is supposed to be targeting, not financing, the ‘Islamic State.’…"

Of course, the Western explanation is that ISIS is selling the oil to Assad.

Worse —

“Turkey has sponsored Islamist groups in Syria, including ISIS, since the beginning, and continues to do so. The scale of ISIS smuggling operations across the Turkish-Syrian border is huge, and much of it is facilitated with the blessings of Erdogan and Davitoglu, who see the Islamists as the means to expand the Turkish foothold in the region.”

WTF??
https://en.wikipedia.org/wiki/Genel_Energy
"Genel Energy plc is an oil company with a registered office in Jersey and field office in Turkey. It has its exploration and production operations in IraqiKurdistan with plans to expand its activities into other Middle East and North African countries.^[1] The company owns rights in six production sharing contracts, including interests in the Taq Taq, Tawke, and Chia Surkh fields.^[2]"

It warps the mind

First, this is the coolest website design ever. Zoom!
Then look at this 4D Cube, loyal readers

On Steel

Steel making from iron ore is a silly thing to be doing in the UK. We no longer have supplies of Iron Ore and there is sufficient diversity of steel supply from elsewhere. So why is there a difference between importing steel and importing the ore? UK steel works should be about recycling steel that is already here – and it should be near fully automated.

The engineering the steel workers should be doing is constructing automated housing production lines – creating energy efficient houses that can be simply bolted together on site.

What I find annoying about the ‘save the steel’ campaign is that there wasn’t a ‘save the wool spinning’ campaign when all the spinners shut down due to competition from Turkey. Is that because it was a female/immigrant industry?

UPDATE: Bill Mitchell has a blog on the structure of jobs in the steel industry here. It makes for interesting reading.

Well done lads...

Excellent news here

Hmm...

Dodgy Dave may be backing the out campaign. Although probably not.

"David Cameron will issue a dramatic warning to fellow EU leaders this week that he may have to recommend a UK exit from the European Union if they reject his demands for reform.

Turning up the pressure on the other 27 EU heads of state, the prime minister will formally table his list of demands – including a four-year ban on EU migrants claiming in-work benefits after entering the UK"

Hmm, and will this "four year ban" apply to young people? Probably!
UPDATE:
Senior government officials have indicated Cameron may think again about granting a vote to 16- and 17-year-olds, if, as is expected, the Lords backs the move in a vote on 18 November.
Haha. Turkeys voting for Christmas!

Who is behind the EU?

At Raging Bullshit
"During research for an article on Brexit, which will be published on WOLF STREET in the next day or two, I stumbled across an undetonated bombshell of a pìece from the Internet 1.0 era. Written by the DT’s Ambrose Evans Pritchard, the article reveals documentary evidence of historic U.S. covert (read: CIA) support for Europe’s federalist project. Part of that support was funded by (cue drum roll…) the Ford and Rockerfeller Foundations.…"

Remember:

In the interview, Obama said Britain was the US’s “best partner” because of its willingness to project power beyond its “immediate self-interests to make this a more orderly, safer world”.

A No 10 source said: “It’s right for Britain to have this renegotiation and this referendum to address the concerns that the British people have about Europe and to make sure the British people have the final say about whether we stay in a reformed European Union or leave.”

Obama also welcomed Cameron’s commitment to continue meeting the Nato target of spending 2% on defence. He said: “We don’t have a more important partner than Great Britain. For him to make that commitment when he has a budget agenda that is confined, a budget envelope that is confined, is significant.”

The US administration has previously expressed concerns about the UK’s commitment to military spending and had pressed for Cameron to commit to the target.

In June, US defence secretary Ashton Carter said the UK had always “punched above its weight” militarily and it would be “a great loss to the world” if it cut defence spending in a way that suggested it was “disengaged”.

The natural rate of interest debunked

Steve Keen post here (multiple parts) debunking the "natural rate of interest" BS. Also compares and debunks the Marxist "labour theory of value." This is a key weapon in the arsenal of bullshit economics and models.
The "natural rate of interest" is zero. Unless the Bank of England offers interest on reserves or the Treasury issues Gilts banks will try to lend out excess reserves in the interbank market but won't be able to in aggregate. The rate will fall to zero.

As Neil Wilson says:

"If you and I have only £10 between us then there is a limit to how fast we can move it between us in exchange for goods and services. That's the natural friction within the system (and is lower in the financial sector which is how it appears it generates so much money. Really its just a velocity shift).

However if there is more money in the economy - say £1000 then we can each have savings and still have enough liquidity to move real goods and services between us as fast as a possible in the real sphere.

Which is actually what we need.

The belief that is wrong is that the system naturally has enough liquidity. It doesn't. The unemployed have insufficient liquidity to demand the goods and services they need, which if they could would actually result in them being employed.

And the paradox of thrift caused by financial saving just isn't automatically offset by sufficient loans from banks. The market doesn't 'clear' at full activity, the quantity wanders up and down dependent entirely upon its own dynamic and with little direct connection with the real activities that need financing.

Money is made round to go around. What matters in turnover of money stock, not the size of the money stock."

EU goes over the deep end

Read it here. WTF?

Perhaps the Jade Helm people aren't so mad after all...

Ho hum
“Unbeknownst to most Americans the United States is presently under thirty presidential declared states of emergency. They confer vast powers on the Executive Branch including the ability to financially incapacitate any person or organization in the United States, seize control of the nation’s communications infrastructure, mobilize military forces, expand the permissible size of the military without congressional authorization, and extend tours of duty without consent from service personnel. Declared states of emergency may also activate Presidential Emergency Action Documents and other continuity-of-government procedures which confer powers on the President, such as the unilateral suspension of habeas corpus—that appear fundamentally opposed to the American constitutional order. Although the National Emergencies Act, by its plain language, requires the Congress to vote every six months on whether a declared national emergency should continue, Congress has done only once in the nearly forty year history of the Act.”

Why you can't hand out land value tax as citizens income

You can of course - the title is clickbait :b
However it would be probably be better if the citizens income is slightly less than the land value tax. Stick with me.
The reason is the same as why you don't "tax the rich" and hand it out as citizens income.
Yes this "boosts" the "productive economy." But there are limits - real resources limits.
You can't "print prosperity" unless you are wasting resources ;)
Rentiers tend to be very rich (yes, I know there are Poor Widows in Mansions) and save a lot. Taxing these savings is not an inflation control. It does not control the flow of real goods and services, which is induced by money changing hands.
Yes a lot of money is earned unproductively through rent-seeking. But not a lot of stuff is consumed and its the stuff that matters.
It's a bit like the "tax the rich" idea to "fund the NHS." Doctors have to be trained, or stolen from abroad.
Inflation is a function of the flow of money and not the stock.
So Mark's proposal is really equivalent to "handing out" LVT as Citizen's Income, plus a citizen's income "printed."
Yes, a few resources are wasted (e.g. FIRE industry.) But that is not enough.

What I am ready looking for is a dynamic model like this instead of a static model like the VAT models Mark uses. This is my challenge to the Georgists :)

The way to beat MMT and enforce fiscal discipline

There is a very simple way to beat MMT, when you think about it. It is a very simple flaw.
It is the "savings are Voluntary Tax" bit.
And the flaw is thus...
The government cuts taxes for the rich. Yeah, so what? You say.
The rich save the money.
The govt then makes an explicit quid pro quo that if taxes are to be cut, rich people must spend (some of the) money on a variety of things including the things poor people buy. The poor people are then crowded out.
You can make this a condition of a Labour government being elected (or austerity ended.) Or just do it all the time.
The money saved from the tax cuts can be shuffled to various tax havens.
Rich people are too worried about saving money and don't realise the power they actually have - spending the money.

EDIT: What is this post about? Am I trying to be evil? No. This is about rent seeking. You have to end rent seeking. Rent seeking is not a problem because they save the money, right? Well yeah but what if they don't. Most of the time you save but you spend when there is any action to stop rent-seeking.

Krugman the Homeownerist?

http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html
2002- Krugman calls for a housing bubble. Busted!
See also:
http://moslereconomics.com/2015/08/22/krugman-on-debt/
Mosler's (MMT) response to Krugman's mumbling speculative nonsense on debt.
Debt is good? Comments say that debt is obviously bad. Well folks its not good or bad it is what it is.

Collection of MMT Links

This is a collection of links on Modern Monetary Theory. MMT is a heterodox (alternative) theory of economics.
Basics of MMT
Primers:
Full/Detailed MMT primer (comments closed)
MMT graphically - Part 1  and Part 2
Then read - More Basics:
The fixed exchange rate at the heart of MMT
MMT vs Mainstream comparison
What do MMTers mean by saving- the National Accounts
Introduction to Sectoral Balances Model
Money multiplier is wrong
See also (same point):
Bank of England explains why money multiplier found in "some economic textbooks" is wrong
Canada and bank reserves

What if public debt reaches gazillion %
More MMT basics
Sectoral balances causalities and interest rates
Investment and Saving
MMT - Inflation and debt burdens

MMT explains:
MMT and inflation - Part 1 and Part 2
Cigarettes used in prisons as currency
QE
Positive Money Debunked
Bitcoin
US Treasuries
Zimbabwe hyperinflation
Russian Rouble (2014) and solutions
Persistent trade deficit MMT explanation

MMT books/e-books:
7 Deadly Innocent Frauds (Free download)
Understanding Government Finance
Full Employment Abandoned
MMT papers:
Non exhaustive list of MMT papers
Centre of Full Employment and Equity
MMT websites:
3spoken blog (Neil Wilson)
Billy Blog (Prof Bill Mitchell)
Bond Economics
Peter Cooper
Mike Norman

Generic labour market reform

These proposals are for the Spanish Labour Market that is pretty screwed up, but on second thought can work as a generic package.

First off there needs to be a radical supply side reform, abolishing all or most labour market regulations and banning trade unions. Some may say this is "illiberal." Well there are laws against "cartels", businessmen colluding for theirown benefit. Trade unions are basically workers colluding for their own benefit. The proper name is labour cartels. So if you support trade unions logically you should support cartels. Finally welfare (payments to fit, able-bodied people who can work but don't) should be abolished, except for the disabled and sick and elderly and perhaps an unemployment benefit for between-jobs unemployment that can be claimed for say 3 months.
Immigration needs to restricted (see must read article here) via a points based system so businesses invest in the native population.
 I feel that the left wing really hate this part of the reform.
But hold up lefties because before you've called me an ultra-right wing, evil scum of the earth you've missed out the second part of the reform.
The second part is that we need serious competition in the labour market and the government should introduce a - Job Guarantee
This is an open job *offer* at £x/hour (start at the living wage) available to all provided by the government. It offers an employed buffer stock instead of the current unemployed buffer stock, which is superior to it for several reasons, but mainly because it reduces hiring costs and the "long term" unemployed issue. The government operates a buffer stock of jobs to absorb workers who can't find employment in the private sector. The pool expands (declines) when the private sector expands (declines.)
What sort of jobs will the JG create?
The jobs will be nonessential but useful, and that will serve public purpose for example a Teacher's aide. You will have JG open source software projects. But the *output* is less essential than the reduction in hiring costs. It also helps reduce black market activity, especially prevelant in places like Spain. You allow open borders to nations also with a Job Guarantee and similar social infrastructure (universal education and healthcare.) So you would exclude third world countries like the USA. This is a sanction that says "improve your social infrastructure and join us" and a pragmatic way to open borders.

The Government operates a buffer stock of jobs to absorb workers who are unable to find employment in the private sector. The pool expands (declines) when private sector activity declines (expands). The JG fulfills this absorption function to minimise the costs associated with the flux of the economy. So the government continuously absorbs into employment, workers displaced from the private sector.

As Neil Wilson (3Spoken) says:

"the majority of people on the JG will be unskilled and from the secondary job market. And anybody else, almost by definition, likely has an obsolete skill set. 

A derivative trader will not be trading derivatives on the Job Guarantee because those skills are obsolete and serve no public purpose. A lawyer that ends up on the Job Guarantee for whatever reason will find work using their legal skills at, say, the Citizen's advice bureau - because that has a public purpose.

The Job Guarantee will use people's *transferable* skill set and help them transition to a different role. That's one of the reasons Warren Mosler calls the Job Guarantee a 'transition job'. 

The Job Guarantee wage is set as it is because that is what the people coming to it are worth. There is no better bid in the market, otherwise they would not be applying to the Job Guarantee."

Confusion - Govt debits reserve accounts of banks when it taxes

Anyone can create IOUs in govt currency. I can create a Random IOU for £2, but the govt don't accept it as tax payment!
This is the difference between 'inside' and 'outside' money. The government is the only entity that can issue inside money e.g. US federal government issues dollars, Treasury pounds in UK (BoE is a subsidiary as seen in the consolidated accounts released by the government - see HERE.)
An excellent comment at Mosler Economics:
"When a bank creates a deposit balance for someone, they have thereby created a liability for themselves. And that liability is a liability for the state’s money. If you pay your taxes by drawing on that deposit balance, then the clearing of the payment results in a transfer from the bank’s reserve account to a treasury account. The government doesn’t simply accept the bank liability itself as payment, but requires payment in the form of the government’s own liability – that which the bank liability is a liabilityfor."

Be careful what you wish for...

http://www.bbc.co.uk/news/business-33074500
Plus, can't present parliaments not bind future parliaments?

Half-Satire

But seriously, why not have Germany exit the eurozone, as they fear inflation so much and won't budge on making the currency union work properly? Their savings will also boost in value when they change to DM.
http://www.telegraph.co.uk/finance/economics/11573909/Defiant-Greeks-hold-firm-over-bail-out-red-lines.html

Berlin Rightist government risks "unprecedented economic contraction" as it insists it will not cross red lines over economic reforms

The German government reaffirmed its commitment to carry out key Right wing electoral promises in a stance which makes sure that it can avert the "unprecedented" consequences of an exit from the eurozone.

With talks over the country's cash-for-reforms programme continuing in Brussels on Thursday, Berlin's radical Right government said it was still not willing to blink over spending plans to cut the poorest in society.

A CDU source said the government did "not have a public mandate to bring a deal outside the red lines, and for this reason it will not do so."

The spokesman added Germany would submit to any agreement which would prolong the "crimes" of austerity against the country.
The government are worried about local government not achieving the holy surplus and are hoping to sue the government in the court, saying it violates the balanced budget amendment.

Debtors are continuing to demand the new government carry out measures to cut VAT, continue with its pledges to implement a minimum wage, and run a housing bubble to please borrowers and homeownerists.

But with government not forced to choose between paying its public sector salaries and pensions, over the Troika, economists have warned that a looming "Germexit" would plunge the economy into an "unprecedented expansion".

"With the country sovereign in its own currency and not needing markets, gentle currency appreachiation with full ability to print DM and gain forex reserves, a credit boom, and a forced looser fiscal stance, the German economy would suffer a GDP expansion of unprecedented magnitude, even by German standards," warned some bank economist.
In an ominous harbinger for what lies ahead, elderly Germany gained access to their pensions on Thursday as normal, as an Athens local authority was hit by a "technical glitch" in making its monthly obligations.

 a voluntary exit would inflict a further blow to the exporters who control the country, equating it with Switzerland's removal of its peg in January 2015.

Fears Germany has broke the sanctity of monetary union have become widespread among its debtors. An internal memo from the International Monetary Fund cautioned that a Germexit would lead to rampant deflation in the country due to irrational fears of hyperinflation and high saving rates. "At least now, the austerity policies they impose are mainly on others."

Despite hope that a refreshed negotiating team on Athens was getting closer to securing a release of funds, Wolfgang Schauble said his government was only willing to compromise at the margins of its Rightist promises.

"When you have a political plan, you have to be stubborn and see it through," said Wolfgang Schauble, insisting the government would not cross the "red lines" it has laid down in talks.

"Germany's government needs to understand that other eurozone members will be very willing to accommodate its demands if it means delegitimising their own painful "reforms"," said Mr Fisher. He also cautioned that Europe needed to "abandon their illusions" about containing the after-effects of a Germexit.

"With the clock ticking on prosperity, the German authorities need to persuade their partners through action, not promises."

Life Copies Satire

For my ginger friend, Mr Wadsworth, and a reminder to not use South Park for actual policy. I mean WTF?? But it is even more extreme than that as they have banned daywalkers as well. Is this not a hoax? Says 15 April. And the 'vast majority' of parents support this as well. If it true then seriously WTF?
http://www.mirror.co.uk/news/uk-news/redhead-banned-school-just-weeks-5525832
Some quotes:

was told she cannot return to lessons until she dyes her hair a more 'natural' colour

"I've had the same colour for the past three years, and nobody at school has commented on it.

"Trinity School sixth-form students are role models for the rest of the school.

"We have a policy of maintaining high standards.
"The vast majority of parents are very keen on our high standards."

Just needs a few adjustments...

The new homeownerist anthem...
Boy! 
Boy!

Now in the street, there is violence
And-and a lots of work to be done
No place to hang out our washing
And-and I can't blame all on The Sun

Oh no, we gonna rock down to Electric Avenue
And then we'll take house prices higher
Oh, we gonna rock down to Electric Avenue
And then we'll take house prices higher

Workin' so hard like a soldier
Can't afford a thing on TV (homes under the hammer)
Deep in my heart, I abhor ya
Can't get food for the kid

Good God, we gonna rock down to Electric Avenue
And then we'll take it higher
Ho, we gonna rock down to Electric Avenue
And then we'll take it higher

Oh, no
Oh, no
Oh, no
Oh, no

Oh God, we gonna rock down to Electric Avenue
And then we'll take house prices higher
Ho, we gonna rock down to Electric Avenue
And then we'll take house prices higher

Who is to blame in one country?
Never can get to the one
Dealin' in multiplication
And they still can't feed everyone

Oh no, we gonna rock down to Electric Avenue
And then we'll take house prices higher
Ho no, we gonna rock down to Electric Avenue
And then we'll take house prices higher

Ho, out in the street
Out in the street
Out in the daytime
Out in the night

Oh, we gonna rock down to Electric Avenue
And then we'll take house prices higher
Ho, we gonna rock down to Electric Avenue
And then we'll take house prices higher

Out in the street
Out in the street
Out in the playground
In the dark side of town (near all the council houses)

Ho, we gonna rock down to Electric Avenue
And then we'll take house prices higher
Hey, we gonna rock down to Electric Avenue
Oh yeah (And then we'll take house prices higher)

Rock it in the daytime (We gonna rock down to Electric Avenue)
Rock it in the night (And then we'll take house prices higher, Electric Avenue)
Rock it in my ya-tee-pa-bombay (We gonna rock down to Electric Avenue)
Whoa, in the Brixton, yeah (And then we'll take house prices higher, Electric Avenue)

MMT- where is the money going to come from to pay for cuts?

Dear Mr Osbourne,
Where is the money going to come from to pay for your austerity measures? Your plans are not credible Mr Osbourne, not credible.
The cuts target overwhelmingly people in poverty-http://www.centreforwelfarereform.org/library/by-date/briefing-on-how-cuts-are-targeted.html
These people are broke.

Killer Arguments Against Range Voting, Not

Complete fail of anti range voting organisations:
http://rangevoting.org/RVcrit.html

Oh no...

Once upon a time, a government decided to spend some money on a school. It built it, paid the teachers' wages, etc... These people had to pay a property tax so they needed the money. They couldn't pay it in bitcoin or gold.
But something terrible happened. The teachers and builders, etc decided to save some of the money. As a result, the teachers didn't spend all the money into the economy. And the people who got the money after them saved some too. As a result, after several taxes (VAT, property taxes, etc) the government didn't get all of its money back. Or perhaps people spent money on net imports. This led to real goods and services being given to the country for pieces of paper. The foreign central bank is running export led policy and prints some money and swaps it for our money to keep the exchange rate constant, and then stores the money forever for as long as they have export led policy.

This is part of the 'export led recovery' mantra advanced by the IMF that forgets that for every exports there is an input.

I know this is all terrifying, but that could lead to a deficit in the "public finances" (!!!) It is OK though because politicians say the have the 'deficit under control' and can 'cut useful spending or raise harmful taxes' to get rid of it. If we don't we could end up like 'Greece' (except for the borrowing in a foreign currency part.)
We can't have Scandalnavian spending at American taxes you know. The markets will punish us.

This is the story told by the current UK government since 2010. They have used ridiculous tactics like comparing the UK government to a credit card and say the UK should have ran surpluses (to increase household debt hopefully, along with even more financial deregulation) prior to 2007.

Where money gets its value from

Have you ever stared down at a pound bill and wondered why it has value? Why does a worthless piece of paper have value?

Is it because you can exchange it for gold? This was true until the 1970s, where there was something called the Bretton Woods System, where you could convert other currencies into the US Dollar which could be converted to gold. Some people would say it has value because others think it does. If we all have faith in the currency, it has value. And this is partially true - look at bitcoin for example. Money also has value as legal tender, the only way to pay debts.

But what is the main reason currencies have value. It is surprising. The main reason is taxation. Taxes require people to find money to pay for them. Otherwise, they go to jail. This is not the only thing needed though - governments need to carefully manage their currency and not print too much or it will cause inflation, and there has to be proper enforcement.

This is the real reason for taxation - not to "fund" spending. Where will the money come from? The taxes come first, then when there is demand for the currency, the government spends money on stuff - infrastructure, public sector workers, social programs, etcetera...

Let's take a teacher's wage for example. The teacher pays some income tax and NI on the money. The teacher pays some Council Tax. The teacher will save and spend money. When the money is spent, it attracts VAT. The money goes to a corporation and they pay wages and corporation tax. It is invested, attracts capital gains tax, etcetera... The point is money is a flow.
The only money that the government does not get back as tax is saved. In a closed economy, this is what is meant by the "deficit." The deficit is the private sector's surplus. As long as the government is a currency issuer, there is low default risk (the government could go mad and default) Of course you need to include the external sector (foreigners) and the banking system.
With a foreign sector, a government running a trade surplus (imports less than exports) can run surpluses while a trade deficit nation can't without private sector deficit (going deeper into debt.) You also need to take into foreign investments, foreign aid, remittances, etc to get a current account surplus or deficit.
Banks can create money. Say you borrow £100,000 from a bank. The bank enters it as a "deposit" in your account (a promise to pay money.) Although it does not create any money, the bank's credit money is accepted by most (i.e. non cash only) stores. These Bank IOUs are treated like real money. When you pay back the loan, the money is destroyed.
You get an equation:
Private deficit + Public Sector Deficit + Rest of World Deficit = 0
So for a country with a trade deficit like the UK it is a silly idea to aim for a budget surplus.