Saturday, 12 January 2008

UK cash shortage crisis

I love the nonsense the Daily Express produces. Today's edition was a classic. It announced that the value of UK housing was now £4 trillion. But that wasn't all; the Express also told us that in ten short years wealth in the UK has doubled on account of increased house prices.

Someone help me out here. I am just too simple for this high-falootin' Daily Express thinking. In 1997, the country had some houses; ten years later, we had basically the same houses, but now we are twice as rich? I don't see it. What am I missing here? I thought being rich meant you had more stuff.

This is what I think being twice as wealthy means. Yesterday, I had one house, but today, I have two houses, therefore I am twice as rich. Here is another one. Yesterday, I had ten quid in my purse, but today, I have twenty quid there. Oh I don't know, all this talk of money just leaves me confused.

However, after I read the Express article, I was gripped with panic. What if there isn't enough money in the country to buy up all this housing wealth? After all, you can not go down to the corner shop and offer your house as payment for your copy of the Daily Express. In my world, you need cash to pay for things. So I quickly ran to my computer, signed on, and logged onto the Bank of England's website, wanting to know how much actual cash we have in the country.

Prepare yourself for some bad news. If everyone wanted to sell their house today, there isn't enough money in the economy to pay the sellers. According to the Bank of England website, there are only £51 billion worth of notes and coins in the country. This is barely a fraction of what is needed if homeowners are going to get that £4 trillion that the Daily Express promised.

The conclusion is obvious. The Bank of England hasn't produced enough money. The wealth is there but the money isn't. There is a cash shortage in the UK today. I, for one, demand that the Mervyn and his MPC mates get cracking and start producing the lolly. Homeowners of Britain need that money, and they need it today.

Anyone fancy pointing the cash shortage out to the Bank of England? Perhaps, the Daily Express should follow up with another outraged headline "Mervyn starves UK of money".


amigauser said...

Where I come from, only drug dealers buy property with cash, everyone else uses bank transfers between the buyers bank and the sellers bank.

As we move to a cashless society, the amount cash and coins in circulation will have less and less meaning

john said...

which English banks and mortgage companies will fall?

Budvar said...

Cashless society my arse, never happen.

Hands up all you drug dealers who accept American express, visa or mastercard?

What about all you claiming on the sick with your bad back who are putting in a 12hr day as a scaffolder or doing a bit of window cleaning on the side, anyone take their wages in a cheque or bank transfer?

Thought not.

If it wasn't for the black economy, the country would grind to a halt, thats fact. A senior politician under the Major government once asked a Whitehall mandarin what to do about official estimates that the black economy amounted to over 10% of GDP, the reply came "Why nothing".

Rick said...

I think your being ironic, but obviously the total amount of money in the economy is much greater the amount of notes and coin, which represent less than 3% of the total money supply. In effect, if each one of us were to go to the bank simultaneously we could only withdraw about £27 in cash for every £1000 that we had in our accounts.

Laplace77 said...

I bet you have seen this:

...since it's been reported even on our (italian) housing bubble forum:


Anonymous said...

AC: ¨The conclusion is obvious. The Bank of England hasn't produced enough money.¨

Don´t worry Alice, they are working hard on the problem.

Josh said...

A clever comparision; the Daily express provides one absurd number - the value of housing, and then the amount of cash in the economy compared to the value of housing.

Yes, the whole thing is absurd.