It is Obvious

Chris Rick has got altogether too much to say

Put the oven on

Posted by chrisrick13 on June 9, 2017

It is obvious: Christmas is early this year

 

The country has had enough of austerity. For any number of reasons the young voted for Labour but one of them was wanting to be done with austerity.

Why is austerity even talked about let alone become a part of Conservative policy? The reason is that as a nation we have borrowed more than we produce each year. This money will have to be paid back…sometime. It is not an invention of the Conservatives it is a (poor) response by them to do something about it before it becomes a problem. That is saying it too nicely. Need to do something before an utter disaster strikes.

The finances of a country are like yours and mine but not the same. Beware. A country can borrow and be quite profligate. The lenders know that the peasants will be whipped into the fields to work to pay off the debt…look at Ireland and eventually Greece.

Some overspend is looked on as good governance, but too much… It is paid off in one of several ways. Decent inflation robs the lenders and mostly that is the population. Strong growth allows maintenance of the interest payments so the can is kicked. Problem is that at some point the exponential curve takes over. This is why debt to GDP ratio of 80% is recognised as a step too far. The government can squeeze taxes and cut spending. Over a long period were it maintained then the debt could be reduced.

If you don’t succeed with at least one of those then the country will default on its debts and the lenders suffer. There follow many years of extreme pain as the lenders take their revenge and then the country is rehabilitated.

The problem with any success at paying off debt is that a new government will come along and spend it again. So paying debt off never works.

What do all these scenarios have in common? The money is spent now for the benefit of the older generation and the next generation (or the one after) has to pay the bill and/or suffer the pain.

This next generation is the one that has just supported Labour in large numbers. This is the Labour party that will continue to run up national debt and proposes to set up a bank to borrow a further £250bn and spend it…for that generation to pay off.

Do I care? At 66, no I do not.

 

It is obvious: Christmas is early this year – the turkeys have been out in force voting.

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