Scottish Indyref 2

[Metalmicky]

MM.
I get that was a joke but this is serious. They would absolutely have to slash public spending if they took on the Euro, because they (like Greece) would not be able to borrow at anything less than frighteningly high interest rates.

I'm on the same page BST - I have loads of Scottish relatives and the majority are blinded by the SNP hype and 'Willy Wallace' type clamour for independence...... forgetting that they would begin with a budget deficit that was substantially higher than the rest of the UK...... and growing.  I'm guessing that as Sturgeon states that the main reasons 'another' referendum were that Scotland should not be forced to leave the EU "against its will", she will be trying to rejoin once independence is gained....

[albie]

BST,

Governments can issue currency, we are no longer held to a gold standard.

The matter of any structural deficit is entirely a matter for any independent Scotland.
You keep arguing that you think it is not viable, but that is not the point of the discussion about the right to a referendum.

It is very simple.....do you believe a majority in favour  means they should be respected?
You are either a democrat, or you think an outside body like the HoC should know best......which is it?

[big fat yorkshire pudding]

Albie the Scottish government could yes issue currency. It would be worthless outside Scotland but they could.  The problem is what accepted currency they hold (which is nil).  Say they wanted to trade in Euros with their own currency they'd have to pay for the euros somehow and if their currency is useless it goes nowhere does it?

But you are in some ways right it is for Scotland to determine and currently they don't have a viable option and that has consequences for us all.

[BillyStubbsTears]

BST,

Governments can issue currency, we are no longer held to a gold standard.

The matter of any structural deficit is entirely a matter for any independent Scotland.
You keep arguing that you think it is not viable, but that is not the point of the discussion about the right to a referendum.

It is very simple.....do you believe a majority in favour  means they should be respected?
You are either a democrat, or you think an outside body like the HoC should know best......which is it?

Albie.

Yes of course central banks can issue currency. And if they do so to address a structural deficit, they devalue the currency and produce inflation. That's Economics 101.

And yes, of course a structural deficit and the consequences thereof are a matter for an Independent Scotland to DEAL with. But they can't change basic economics on what the consequences should be. And the consequences are that Scotland would simply not be able to continue to run that deficit without incurring crippling borrowing costs or crippling inflation. No ifs or buts.

And of course I want the will of the majority to be respected, but that comes with a massive caveat. If the majority are deliberately misled over what they are actually voting for, that isn't democracy. That was what happened in 2014. The SNP deliberately avoided any discussion of the fiscal consequences of independence. That was utterly disgraceful. They willfully and deliberately misled their supporters on a matter of such huge importance. They said that people who pointed out that issue were playing Project Fear and denigrating the potential of an Independent Scotland. Sound familiar? It should, because the SNP and the Leave campaign are birds of a feather. They deliberately mislead people to achieve a political objective. You seem to be happy to support that.

[albie]

OK, I reckon we will need to agree to disagree on some aspects of this.
My last word.

I am not supporting "project fear" as you put it, at all.
Just mindful of the pitfalls of being seen to stand in the way of a democratic majority.

The Brexit comparison is relevant, because Labour trying to pitch for Ref2 was the single biggest contribution to the 2019 election defeat beyond question. Had Labour agreed to support an orderly departure on the basis of supporting a Norway Plus type of solution, they would have been in a better place.

I don't think your "crippling borrowing costs" applies to a situation when rates are so low, but I agree about the possible inflation rise.
In a recession, with periods of deflation, it is possible to increase the money supply without causing inflation.
This is because the money supply depends not just on the amounts in circulation, but also the velocity of circulation.

During the liquidity crisis from 2008, the Bank of England pursued quantitative easing (increasing money supply) but this only had a small impact on underlying inflation. This money was channelled via the commercial banks, without conditions attached (a serious mistake).

The point here is that Central Bank digital currency (CBDC) removes that sector from the equation. A CBDC can implement a targeted policy response by direct transfer to specific sectors. By contrast, a DC provided by Amazon or Facebook is not concerned with wider economic questions, which is precisely why Central Banks are in a hurry to develop their own.

The Fintech sector sees this as a key battleground, with investment to match.
 
If Scotland intend to rejoin the EU, keeping the sterling currency is a nonsense. Presumably, they would look to the Euro and the DC provided by the Eurozone.

All of which is not to approve or disapprove of the principle, but simply to say that there is not enough detail to comment.

[BillyStubbsTears]

Albie.

1) Global borrowing rates were low in 2011. But they exploded for Greece and Italy, for precisely the reasons they would explode for Scotland if it was in a shared currency.

2) When we had huge QE in 2008-10, the pound lost a third of its value. The reason that didn't lead to a big rise in inflation was that we had the deflationary effect of the global recession, followed by Austerity. So that comparison simply doesn't apply to a soon to be Independent Scotland. As you say, you CAN increase the money supply in a recession without kicking off inflation. What you CANNOT do is to increase the money supply to fund a structural deficit - not without debasing your currency.

3) "The Brexit comparison is relevant, because Labour trying to pitch for Ref2 was the single biggest contribution to the 2019 election defeat beyond question."

That is simply nonsense. But it is going to be the Left's Betrayal Myth for the next 50 years.