When the UK government found £1 billion to for Northern Ireland to secure Democratic Unionist parliamentary support, critics accused it of turning to the same magic money tree it had previously mocked others for believing in.
But it may just be that the tree is flourishing in plain sight. UK national debt is currently issued at a yield of less than 1% far below the rate of inflation (2.6% in July). And this means Britain can effectively raise money free of charge in real terms.
On paper, this is a golden age for gilts, the bonds issued by the UK Treasury named after their certificates gilded edge. The governments cost of borrowing, as measured by yields on those gilts, has fallen steadily from more than 12% in the early 199…
Read the full article at: http://theconversation.com/how-vanishing-debt-costs-helped-the-uk-forget-about-a-never-ending-deficit-83321