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Post by zanygame on Feb 4, 2023 8:16:01 GMT
Heard an interesting take on public debt the other day from one of our financial advisors. He claimed the BBC's proffered view that debt in the country in unsustainable is wrong. He stated a debt to GDP of up to 300% is perfectly acceptable provided the lenders are confident that the country can make the payments. He was keen to point out that comparisons between public and private debt are not absolute, but he did say you can do some comparison. So he pointed out that someone earning 40k a year and having a 300k mortgage would not be considered in trouble even though their 'debt to GDP' equivalent would be 750% So my question to the panel of experts on here is: Would you back significant further government borrowing and if so for what purposes?  |
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Post by Pacifico on Feb 4, 2023 8:23:10 GMT
Currently we are spending around £20 Billion on servicing Government debt - at some point you have to start living within your means.
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Post by zanygame on Feb 4, 2023 9:00:36 GMT
Currently we are spending around £20 Billion on servicing Government debt - at some point you have to start living within your means. Yes, that's 3.9% of the governments income. So what in your opinion is living within your means? |
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Post by Orac on Feb 4, 2023 9:17:13 GMT
It depends what you want. If you are trying to create a situation in which your democracy is short-circuited by its liabilities, then a gigantic debt might even bee seen as beneficial
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Post by The Squeezed Middle on Feb 4, 2023 9:22:29 GMT
I would not support further borrowing simply because governments waste money prodigiously hence more money simply equals more waste.
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Post by The Squeezed Middle on Feb 4, 2023 9:24:38 GMT
It depends what you want. If you are trying to create a situation in which your democracy is short-circuited by its liabilities, then a gigantic debt might even bee seen as beneficial Good point: Politicians like to create problems so that they can present their policies as the "Solution". |
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Post by zanygame on Feb 4, 2023 9:27:11 GMT
It depends what you want. If you are trying to create a situation in which your democracy is short-circuited by its liabilities, then a gigantic debt might even bee seen as beneficial Is 3.9% a giant debt? Would a 3.9% of tax take debt prevent democracy? |
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Post by zanygame on Feb 4, 2023 9:31:29 GMT
I would not support further borrowing simply because governments waste money prodigiously hence more money simply equals more waste. That's why I asked if there were things you would increase debt to provide. By example; Would you increase public borrowing to help the setup of a semiconductor (Microchip) company in the UK, to stop our dependence on chips from Taiwan? |
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Post by zanygame on Feb 4, 2023 9:32:06 GMT
It depends what you want. If you are trying to create a situation in which your democracy is short-circuited by its liabilities, then a gigantic debt might even bee seen as beneficial Good point: Politicians like to create problems so that they can present their policies as the "Solution". Vanity projects. |
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Post by steppenwolf on Feb 4, 2023 9:35:10 GMT
It basically depends on growth and inflation. If there's a lot of inflation it's sensible to borrow money because inflation will erode the value of the debt - but it's not so good if inflation is low or negative obviously. You can also support more debt if your country is growing (or if you think your salary is going to grow significantly). Not so good if growth is hard to come by.
I always think relying on growth is dangerous. Countries can't necessarily carry on growing all the time unless they make major gains in productivity. And when did we last improve productivity in the UK. The only gains we make in GDP are by letting in vast numbers of unskilled labour (which is just stoking up problems for the future) or by expanding the state (which "false" growth).
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Post by Orac on Feb 4, 2023 9:36:16 GMT
It depends what you want. If you are trying to create a situation in which your democracy is short-circuited by its liabilities, then a gigantic debt might even bee seen as beneficial Good point: Politicians like to create problems so that they can present their policies as the "Solution". I think notions like this would evaporate quickly if politicians were told that would employ and pay them in proportion to the discretion they had over tax. If the tax policy is governed by your creditors and all the country is really doing is paying a debt back at a predictable rate, we don't really need politicians to manage it. |
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Post by Fairsociety on Feb 4, 2023 9:49:40 GMT
Wait to see if Labour get in ... you aint seen nothing yet LOL
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Post by zanygame on Feb 4, 2023 10:10:02 GMT
It basically depends on growth and inflation. If there's a lot of inflation it's sensible to borrow money because inflation will erode the value of the debt - but it's not so good if inflation is low or negative obviously. You can also support more debt if your country is growing (or if you think your salary is going to grow significantly). Not so good if growth is hard to come by. I always think relying on growth is dangerous. Countries can't necessarily carry on growing all the time unless they make major gains in productivity. And when did we last improve productivity in the UK. The only gains we make in GDP are by letting in vast numbers of unskilled labour (which is just stoking up problems for the future) or by expanding the state (which "false" growth). I agree here, particularly in the UK where we are trying to stop population growth. The primary way countries see growth is by increasing the workforce, part of our current decline is because companies cannot get staff. I'm not saying this is a bad thing, I am personally in favour of reducing our population, but we must accept that in doing so we remove one of the prime drivers of increased GDP. To me this emphasises the need to stimulate the other contributors to growth, which at this time in our history is likely to be scientific breakthroughs and automation/artificial intelligence. Certainly you are right in that with the loss of our industry based production we fell back on Financial services and low paid work supplying services to the few. |
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Post by zanygame on Feb 4, 2023 10:14:23 GMT
Good point: Politicians like to create problems so that they can present their policies as the "Solution". I think notions like this would evaporate quickly if politicians were told that would employ and pay them in proportion to the discretion they had over tax. If the tax policy is governed by your creditors and all the country is really doing is paying a debt back at a predictable rate, we don't really need politicians to manage it. We could bypass that by just getting some decent politicians back into power. Personally I think many people go into politics to change the world, but it seems only the cronies and the corrupt get to positions of real power. Maybe its time the public got to vote on who's Prime Minister. But your leading me way off topic.  |
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Post by Orac on Feb 4, 2023 10:28:24 GMT
I think notions like this would evaporate quickly if politicians were told that would employ and pay them in proportion to the discretion they had over tax. If the tax policy is governed by your creditors and all the country is really doing is paying a debt back at a predictable rate, we don't really need politicians to manage it. We could bypass that by just getting some decent politicians back into power. Personally I think many people go into politics to change the world, but it seems only the cronies and the corrupt get to positions of real power. As you load up the debt, the difference made by politicians gets smaller and smaller until their role becomes ceremonial proxies for the creditors. You might feel better with your favourite smiling psychopath at the helm and that's got to be worth something? Right? |
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