Chancellor on course to hit targets

Degenerate

ILW wrote: »

Do you think the country would be in a weaker or stronger position if there was no national debt?

If we could magic the debt away of course we'd be stronger.

The reality is that the economic impact of the extreme measures necessary to fully pay if off would devastate our economy and leave us much weaker.

That is why successive governments have been content to manage and roll-over the debt burden, rather than dispose of it, for centuries.

ILW

Degenerate wrote: »

If we could magic the debt away of course we'd be stronger.

The reality is that the economic impact of the extreme measures necessary to fully pay if off would devastate our economy and leave us much weaker.

That is why successive governments have been content to manage and roll-over the debt burden, rather than dispose of it, for centuries.

As a matter of interest, would you know what percentage would public spending have had to have been to be reduced over the last 15 years to have put us in a debt free position today?

Degenerate

IronWolf wrote: »

Uhm, yes it is a measure of spending, do you need me to paste the equation again?

No, it's a measure of production that can be derived from spending. It can also be derived from income, but that wouldn't fit the way you are trying to apply it.

Its not a measure of production, its a measure of the prices of everything produced.

In economic terms there is no difference.

Now who's showing their lack of knowledge. Im talking about the deficit, not the debt, so yes the nominal £ amount is very relevant, because it means you are spending more than you receive in tax revenue.

In my previous post I set out clearly how in a growing economy, even with a deficit (yes, that means continually adding to the nominal debt), the debt/GDP burden can shrink, and therefore the abilty to service the debt improve.

You see in the calculation of the deficit, you include tax revenue, and if it decreases, your deficit increases. So you see there's no use in making it a % of GDP.

You're digging even deeper. This whole point of my original argument was that potential tax revenue increases with GDP. That's why we need to go for growth.

ILW

ILW wrote: »

As a matter of interest, would you know what percentage would public spending have had to have been to be reduced over the last 15 years to have put us in a debt free position today?

Sorry to quote my own post, but it appears it would have been less than 10%.

If the last government had not gone so wild with the countries credit card we could have been in a very strong position now and reaping the benefits rather than suffering the consequences.

Degenerate

ILW wrote: »

As a matter of interest, would you know what percentage would public spending have had to have been to be reduced over the last 15 years to have put us in a debt free position today?

Off the top of my head, no. What you're asking for there is a piece of in-depth economic research that would not be trivial, and would be subject to considerable dispute.

I daresay you may have some commentator's back-of-a-fag-packet calculation ready to whip out for argument. I also daresay that said calculation does not take into account the effects of reduced economic growth, increased unemployment, and the consequent reduced tax revenues and increased benefits bills and is therefore completely invalid.

ILW

Degenerate wrote: »

Off the top of my head, no. What you're asking for there is a piece of in-depth economic research that would not be trivial, and would be subject to considerable dispute.

I daresay you may have some commentator's back-of-a-fag-packet calculation ready to whip out for argument. I also daresay that said calculation does not take into account the effects of reduced economic growth, increased unemployment, and the consequent reduced tax revenues and increased benefits bills and is therefore completely invalid.

Why assume that decreasing government spending (in boom times) would increase benefit payments or reduce growth?

That is unless you support the Greek model.

Degenerate

ILW wrote: »

Why assume that decreasing government spending (in boom times) would increase benefit payments or reduce growth?

Reducing public spending means reducing public sector jobs and/or wages. Like any such reduction, public or private, this means a reduction in tax receipts and an increase in the benefits bill. This can only be offset by the private sector picking up the slack, just as Osborne apparently hoped with his austerity agenda.

Proponents of this policy never seem to explain exactly how the private sector will magically expand in a way it wouldn't have done anyway, just because the Government made cuts. In fact the opposite is likely, as a lot of public spending feeds through into the private sector via outsourcing contracts too. Public spending is a major component of GDP.

That is unless you support the Greek model.

We have never been close to being a basket-case like Greece, and having control of our currency gives us options they lost when they joined the Euro.

grizzly1911

ILW wrote: »

Sorry to quote my own post, but it appears it would have been less than 10%.

If the last government had not gone so wild with the countries credit card we could have been in a very strong position now and reaping the benefits rather than suffering the consequences.

Or if we had not had global financial crisis that was out of control of whichever party had have been in power.

This isn't the fault of any one party it is the end result of weakening position of the country over decades. Successive governments have merely used smoke and mirrors to keep the allusion of prosperity. Constant remortgageing until someone pulls the plug when they realise you have run out of income and no longer have anything to pawn.

All the cutting in the world isn't going to help if we as a country can't export and rely on imports for so many key commodities.

The downfall for labour was winning their last election and being in the wrong place when the music stopped.

We have gone from a country built on strong foundations to one built of straw.

grizzly1911

Thrugelmir wrote: »

Didn't realise the ONS operated the countries finances.

Never said they did. There is a full stop in there.

I believe the BoE is totally independent too;-)

IronWolf

Degenerate wrote: »

No, it's a measure of production that can be derived from spending. It can also be derived from income, but that wouldn't fit the way you are trying to apply it.

In economic terms there is no difference.


In my previous post I set out clearly how in a growing economy, even with a deficit (yes, that means continually adding to the nominal debt), the debt/GDP burden can shrink, and therefore the abilty to service the debt improve.


You're digging even deeper. This whole point of my original argument was that potential tax revenue increases with GDP. That's why we need to go for growth.

The "ablility to service debt improves" does it. How is GDP a better measure of tax revenue than tax revenue itself? 'Potential tax revenue' just means one thing, increasing taxes in the future, taking more money out of the hands of ordinary people to pay back the debt.

Noones arguing that growth is beneficial to the deficit, but its ludicrous to increase spending to increase growth to reduce the deficit, it just wont work. For every £ you spend, you will get less back in tax revenue, everyone knows it. And the markets will penalise us with higher interest rates, making the deficit even worse.