[quote author=singlerider link=topic=46360.msg1377396#msg1377396 date=1312985839]
[quote author=Krump link=topic=46360.msg1377389#msg1377389 date=1312984216]
[quote author=singlerider link=topic=46360.msg1377386#msg1377386 date=1312983915]
[quote author=Krump link=topic=46360.msg1377373#msg1377373 date=1312982914]
But SR, we shouldn't be borrowing anything at all, never should have except in emergencies. Philosophically I don't agree with the concept of state, pragmatically I realise we're stuck with it. In the meantime tax rises alone aren't the answer. If we expect to operate not increasing the debt we need to generate 150 billion through extra taxes and cuts. Massve cuts. It doesn't matter what people are used to or what some assume to be rights, they're not affordable.
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I don't know where the borrowing bit has come into this, but can I just ask if you own a house - and if you do did you pay cash or get a mortgage?
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I borrowed based on an ability to pay it back over a fixed term and not with the full certainty that I was going to overspend my budget by 15 or 20% again this year and need to borrow that too. I borrowed once and that was it. The kind of borrowing the govt does is getting a credit card to pay off another credit card, all the time. It's the kind of borrowing that we all rightly try and discourage our friends from getting involved in. It's the kind of borrowing that leaves you entirely reliant on the whims and terms of your creditors.
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That's not exactly true though Krump. The kind of borrowing the government does is more like re-mortgaging rather than using one credit card to pay off another, because that implies that it doesn't actually bring in any money, it's just playing a game shuffling it around from place to place while all the while it gets deeper and deeper into debt.
Not true.
Now that I'm back home I can post pictures again, so hopefully with the aid of shiny pictures I can make my point clearer. This is what the public net debt looks like for the UK over time - I'm showing this as a percentage of GDP as that is far more relevant than as sums of money (you can spend as much as you like, as long as you earn more, but if you earn nothing then even spending a little will fuck you up):
So over the past century and a bit it's actually been a lot worse for a fair bit of the time. We're around 60% of GDP now, which isn't great - but to put this into context think about the mortgage analogy - people are getting 3x mortgages, which is the equivalent of 300% of GDP - at the height of things, people were getting 5x mortgages - 500% of what they were earning. As a household how much more do you owe than you earn in a year? Twice as much, three times as much, more?
Scary, no?
Well actually, no - because as long as you've got employment prospects and can keep the money coming in, you'll be okay. Same for the country - borrowing is fine, as long as there's money coming in.
So what about the interest? Some people get interest only mortgages and they spend everything just paying off that and not even touching the capital. Well, as a country the interest is currently about a shade under 3% of GDP, no biggie. Again, in the context of the past century and a bit, it looks like this:
So in actual fact, apart from the time when "Labour went crazy with the credit card" - you have to go all the way back to before WW1 to find a time when we were paying less interest.
This whole rhetoric that borrowing is out of control and dangerous is a complete fallacy, as is the idea that things keep getting worse and worse. Sure, the amounts of money keep getttng bigger, but that's just the way of things - Mars bars used to cost under 20p when I was a nipper, cans of Coke were 14p, an Escort only cost a few grand, a house was 30K. Times change, money goes up.
The only truly important measure is against GDP - against what is being earned. In that context, the problems are being hugely exaggerated to promote an agenda that really will send us into a spiral of doom - because these savage cuts and austerity measures will damage growth - and that is the most important thing.
We can spend as much as we like, as long as it's affordable relative to what we're earning. The austerity measures are causing significant damage to how much we're earning.
Once again the forecast for growth has been revised, down from 1.8 to 1.4 now.
I've been banging on about this for ages now, and so far of all the people talking shit about the economy (on this site at least) I'm the only one who has A) backed up his argument with solid evidence, and B) been proven right time and time again.
Seriously, I can do this shit all fucking day
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This is all bullshit. From the first paragraph. It's not comparable to a repayment mortgage because no one is ever talking about repaying a principle - only growing the debt.
It's ridiculous, it's a pyramid scheme.
Of course we had to borrow fuckloads when we were in a war, but we borrowed through the 2000s for stupid reasons. Now we're skint because of it.