@ken, Re: Austertity is a choice
I call bollocks on that one. The reason we didn't *start* paying back until 2010 was because Gordon didn't want to. He was, in fact, the first example of a politician jettisoning austerity because it was politically useful to do so. It didn't mean the money wasn't due.
It's not a loan, it's an investment which is now starting to return some of the costs, so in the longer term this will be a very good deal for the taxpayer.
On the so-called profit, I would ask what was the opportunity cost of investing umpteen squillion in a bank, only to get umpteen squillion and one back a decade later.
We were rather forced into the position, and the dire truth was that it was marginally cheaper to recapitalise the banks on the expectation of a future return, than to compensate all the individual account holders under the government backing of deposits in bank accounts.
On the wider point of printing your own money, this *might* be true if we were the only country in the whole world. The point about issuing your own money is that you can inflate away your debts. It also allows you to lend yourself unlimited sums of money with only inflation as a penalty - obviously http://www.technovelgy.com/ct/content.asp?Bnum=735 (TANSTAFL) applies here.
In practise, the whole money system is rather baroque and illogical, but despite that it has been rubbing along with occasional crashes for quite some time now.
The amount you can buy with a fiat currency depends just as much on how much other nations value it, unless you are 90+% self-sufficient in everything.
This is not quite the point, that is an exchange rate and not the point of "floating" currency, the idea is that inflation is controllable by manipulation of interest rates. The only other lever to control inflation is taxation, (removing money, dampens the growth of inflation).
The central point of issuing your own money is that taxation is not required to fund spending, but rather to control inflation as TANSTAFL indeed will start to effect the pricing of your securitized debt (guilts/bonds) meaning the .gov would need to offer really high interest rates to price in the depreciation in the value of the currency relative to something else, e.g. euro clearing rate on day of purchase.