Bubblesofearth wrote: In the short term, whether this money comes from borrowing or taxation is irrelevant from the pov of inflation.
It doesn't come from either. Government spending is *always* money creation - every penny every day. The Consolidated Fund Account at the BoE starts each day at zero. Yet the ~£400m state pension payment made every day at 8:30am never bounces.
Every penny is always 'borrowed' in an accounting sense and it occurs automatically and costlessly as a function of recording the payment journal in the Bank of England accounts. What was called in the 1850s 'book debt'.
What happens then is a function of the government's belief in Monetarism. The DMO swaps the zero interest zero cost borrowing for higher cost borrowing via refinancing 'cash management' repos (some of which expire on tax payment days when the flow is in the opposite direction).
Longer term HMG needs to balance its books (or at least appear to be doing so) or risk lack of confidence in the bond markets.
It doesn't. There is no need to do the cash management or debt management at all. Those are done entirely as a favour to the finance industry - because of the belief in Monetarism and the 'full funding rule' policy that instigates.
We don't need to do that at all. Paying the money changers in the temple is a political choice. Other stabilisation policies are available once we reject the failed Natural Rate hypothesis.
The simple act of saving Sterling - in any form - automatically causes the government sector to 'borrow'. Just as a bank deposit is the bank 'borrowing' from you. It's merely a balancing item in double entry bookkeeping that has been weaponised to frighten those who are hard of accounting.
"Balancing the books" means eliminating Sterling savings. If you believe that has to happen, then if you send all your Sterling savings to the Donations and Bequests Account at the Commissioners for the Reduction of the National Debt, that will move the books towards balance. It should be compulsory for anybody talking about 'balanced books' to donate any money they have saved - since that is what is causing the unbalancing.