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NS&I Guarantees

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lennich
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NS&I Guarantees

#100847

Postby lennich » December 2nd, 2017, 4:35 pm

I notice that in NS&I adverts they state that *all* money invested (no £85,000 limit) is safe because it's backed by the government. Is this guarantee backed up legally in any way or is it just a government promise? ;)

DrBunsenHoneydew
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Re: NS&I Guarantees

#101005

Postby DrBunsenHoneydew » December 3rd, 2017, 11:03 am

lennich wrote:I notice that in NS&I adverts they state that *all* money invested (no £85,000 limit) is safe because it's backed by the government. Is this guarantee backed up legally in any way or is it just a government promise? ;)

Government-backed NS&I holds only a bit more than £100 billion invested by UK savers. Although technically it's not a legal guarantee, the amount is so small in the great scheme of overall government debt, the cost could be created by QE if really needed and gilt issues were not possible because of lack of confidence from investors.

gryffron
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Re: NS&I Guarantees

#101249

Postby gryffron » December 3rd, 2017, 9:46 pm

Afaics anything that is "Legal" just amounts to a government promise to enforce the rules. So what is the difference?

They can change the rules whenever it suits them, and have done so in the past.

Gryff

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Re: NS&I Guarantees

#101251

Postby 1nv35t » December 3rd, 2017, 9:58 pm

More or less the same as Gilts I would have thought i.e. full amount 'guaranteed' as the state can always increase taxes or print money in order to avoid being seen as having 'defaulted'. But as Gryff said, the rules can be changed ... so a possibility of no apparent official default, but where investor losses actually occur via some 'technicality'.

lennich
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Re: NS&I Guarantees

#101947

Postby lennich » December 6th, 2017, 12:31 am

OK, thanks guys for taking the trouble to reply.

I mentioned 'legal' because that would raise the possibility of court action against the government i.e.some sort of recourse to them saying "times are tough, you can't have your money right now" or some such. And, of course, the courts have ruled against the gov in the past.

I shall go away and do a bit of hand-wringing.

Cheers,
Len

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Re: NS&I Guarantees

#102091

Postby gryffron » December 6th, 2017, 12:16 pm

I think you're worried about the wrong thing.

The Westminster government has NEVER defaulted on a debt in 700 years.
Since we came off the gold standard in 1931, it is even less likely to happen, as they can easily print more money to repay your debt.

What matters, is what inflation has done to your money. You WILL get it back. But when you get it back it might be worth a fraction of what it was worth when you invested it.

Gryff

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Re: NS&I Guarantees

#105682

Postby 1nv35t » December 22nd, 2017, 8:54 am

gryffron wrote:I think you're worried about the wrong thing.

The Westminster government has NEVER defaulted on a debt in 700 years.
Since we came off the gold standard in 1931, it is even less likely to happen, as they can easily print more money to repay your debt.

What matters, is what inflation has done to your money. You WILL get it back. But when you get it back it might be worth a fraction of what it was worth when you invested it.

Gryff

Westminster might declare they have never defaulted on debt, but
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The Pound is 1240 years old and originally in Anglo Saxon times was something tangible, the penny coins of that time were silver coins (sterlings) and 240 of them weighed a (Saxon) pound. Issac Newton during his time as the Master of the Royal Mint pegged the Pound to a fixed weight of gold.

The UK has defaulted, both on bonds (war loan bonds were restructured to pay less) and in disconnecting tangible value of the currency, enabling defaults to be much more easily made (counterfeit (printing) more money devalues all other notes in circulation). Just that the liars wont admit it. Neither is Parliament sovereign, just that they voted themselves to be so, but as they control the forces what they declare as 'legal' has weight behind that.

If money is a broken promise and more can just be counterfeited (printed) then they can declare guarantees based on such twisted conditions. For yet another example look at how certain "legal tender" coins more recently were declared/imposed as not being legal tender http://www.thisismoney.co.uk/money/savi ... uyers.html

Bear in mind that when Banks defaulted the state bailed them out, and ask who will bail out states? The crux of the problem hasn't been resolved, just deferred - but scaled up considerably in the process.

Many believe that when they deposit their money into a bank they are doing so for safe keeping. Wrong. Its a transfer and your money becomes the banks money for them to do whatever they like with. In return for a typical offer of a element of fixed interest, assuming the bank doesn't fail. They can speculate and if they win then they have the funds to return your money along with interest. If they fail then the state steps in to bail them out with taxpayers money and compensating depositors up to limits.

Inflation is a form of default. Devaluation of notes in circulation, made worse by how the state taxes deposit interest which more often is just reflective of the inflationary uplift of the devalued value of the currency.

Rich China is aware of the failings in the West and has in effect bought up all of the worlds gold. Much of gold in circulation is transacted by paper/electronic rather than physical (gold in hand). As per paper money, paper gold has way more out there than there is physical gold.


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